Gov’t pressed on economic reforms

Poll results give Aquino a chance to push PH forward


President Benigno S. Aquino III Malacañang Photo Bureau

After consolidating power during the recent mid-term elections, now is the time for President Aquino to “sink his teeth” into substantial reforms to raise the productivity and efficiency of the economy, according to a research report by British banking giant HSBC.

HSBC said the outcome of the recent elections—in which the administration is poised to take control of both the House and the Senate—raised expectations that the President would use his stronger mandate to push forward stronger steps to tackle the country’s structural challenges: Low investment and jobs growth.

“Raising public investment, loosening of FDI (foreign direct investments) restrictions on foreign ownership and improving the business environment are all required reforms to address the economy’s structural weakness,” said the May 16 report titled “Stronger Mandate” and written by HSBC economist Trinh Nguyen.

Since coming to office in May 2010, the current administration has made gradual progress to lift the profile of the Philippines as the administration has raised the efficiency of public spending and closed tax loopholes to raise revenue collection, instilling confidence in the governance of the country.

Such important steps built the foundation for deeper reforms and the upgrade of the sovereign to investment-grade status by two rating agencies. But Nguyen said these reforms were not enough to: raise revenue, reduce regulatory bottlenecks and attract foreign direct investments (FDIs) to strengthen the manufacturing sector, raise productivity and diversify the economy.

Nguyen said economic indicators in the first quarter were reflective of the structural issues weighing on the economy: A gradual loss of manufacturing sector competitiveness, an over-reliance on services and weak revenue generation. She added that the erosion of manufacturing competitiveness, particularly in the electronics sector, had contributed to the recent export contraction. As a result, she noted that the economy had become more dependent on remittance flows.

“The State of the Nation Address in July will reveal President Aquino’s reform agenda for the remainder of his term. A relaxation of foreign ownership for some sectors is possible and measures to raise revenue collection—such as mining reform—are also expected. But deeper reforms are needed for the Philippines’ fortunes truly to turn,” Nguyen said.

“Hope is pinned on Aquino using his mandate to deliver potent policy actions that can help the Philippines capitalize on its favorable demographics and fulfill its economic potential,” she said.

While the Philippines impressed the international community with a strong 6.6-percent year-on-year gross domestic product (GDP) growth in 2012, the report said much of the growth was because of a favorable base effect, accommodating fiscal and monetary policy and strong remittances.

While rising remittance inflows support private spending, they have also put pressure on the peso to appreciate. Such local currency appreciation, the report said, has added to the headwinds “that have, over time, sapped the competitiveness of the export sector, including deteriorating infrastructure, an inefficient labor market and worsening business environment.”

The report also noted that the gradual decline of the manufacturing sector (most vividly represented by the fall in exports as a share of GDP) has raised the Philippines’ dependence on the service sector and caused a loss of job opportunities, especially for low-skilled workers.

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  • Chris Delos Reyes

    There’s a 1000 ways to kill a cat. If the foreigners cant buy lands why just least it to them say 20 years. At least the next generation will have the option to terminate them if the need arises.

  • Facebook User

    According to HSBC – the same HSBC that laundered billions for mexican drug cartels.

    I agree about focusing on improving the economy; I just don’t think HSBC is in the position to be talking about reforms.


    please, mr. president. don’t sell the nation’s future to the foreign investors. you have to be the president of the people who put into your hands their highest aspirations.

  • joboni96

    reforms for pilipino control and benefit from pilipino economy

    1. direct retail sale of government bonds to pilipinos only specially overseas pilipinos
    not through intsik switik banks
    to fund mega infrastructure projects
    stop getting loans for government projects

    2. pay off all government foreign loans using excess foreign reserves
    replenished by $20 billion by pilipinos every year
    resulting in additional P400 billion per year in the budget for projects

    3. anti trust law and bumiputra law

    4. organize new government BANGKO NASYONAL NG PILIPINO owned by pilipinos only
    transparently run, standards monitored, benchmarking of operations with other banks

    5. nationalize water, power, oil, mines, tollroad etc companies
    resold to pilipinos only

    6. nfa full blast rice operations
    buying, processing, transport, retail by pilipinos only

    7. gocc monitoring by a transparent government-ngo agency
    continually changing composition

    8. 100% no foreign maritime resources poaching

    9. to rollback intsik switik control of pilipino economy
    stop getting loans from intsik switik banks
    minimize bsp loans to intsik switik banks
    stop intsik switik export of dollars to tsina, carribean

    10. project definition by pilipino based on needs
    not by foreign vendors specially bot projects

    11. stop all unnecessary borloloy expenses in the government
    to fund more projects para sa mahihirap

    12. free education to produce productive 15 year old pilipinos
    stop pro business, anti poor k-12

  • Dibs

    poverty alleviation is a long shot, it would take at least 2 presidential terms to make a dent on this area… even china, which is an economic powerhouse, it took them decades to make a dent on poverty alleviation…in spite of that, at least 10-15% of chinese are still in poverty (quantity wise, that’s huge and larger than the whole Pinoy worlwide).

    given the current situation, this admin’s only options are: (1) attract FDI and loosen restrictions on foreign ownership — I don’t care if the EU’s, Kano’s, Jap’s, Korean’s (no tsekwa pls!), etc are running our factories; (2) modernise our agriculture, (3) invest in infra/education, (4) let the next president do the rest….

    oks lang na magpayaman si PNOY & et al basta focus on the 3 areas mentioned above and everybody would be happy…baby steps muna tayo…and, never mind the poor people (hope di sila aalsa at mag re-rebolusyon), it’s tragic but there’s nothing we can do with the 30M+ na mga mangmang na Pinoy—they maybe poor, but they are enjoying thier lives thanks to the noon time shows and telenovelas…mindanao has one of the highest incidents of poverty, but mindanaoans are not that really in bad shape — mas marami pa ngang tao na nagpapakamatay sa ibang ‘advance’ na bansa kesa mga taga Mindanao….

  • Exo

    Export is falling from every country in the world. Even Singapore’s export fell in 2012 and the first quarter of 2013. The world economy is weak. The peso stopped appreciating due to creative decisions made by the BSP to curb the peso appreciation.

    But restrictions on foreign ownership really needs to be scrapped except for some important sectors like media and the power grid. We don’t want the Chinese to control our power grid. Baka bigla nilang iblack out ang buong Pilipinas pag inutos ng presidente nila.

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