Economic chief cites constraints to growth

The country’s chief economist said Friday that further improving infrastructure as well as lifting restrictions in foreign investments would bolster an already growing manufacturing industry.

“The fundamental sources and drivers of our recent economic growth are changing. In particular, we are observing the growing importance of investment spending (capital formation) on the demand side and the resurgence of industry, especially manufacturing, on the supply side,” Economic Planning Secretary Arsenio M. Balisacan said in a speech at the induction ceremony of the Laguna Technopark Association in Santa Rosa City, Laguna.

Balisacan, who is also the director-general of the National Economic and Development Authority (Neda), noted that manufactured exports “have not only grown despite global trade slowdown but also diversified beyond electronics and semiconductors.”

“About 10 years ago, electronics and semiconductors represented about 70 percent of our total merchandise exports; today, this sector accounts for just about 42 percent. This development has reduced the vulnerability of the economy from shocks in a region of the world or from a major trading partner. For example, when the EU or Japan catches cold, our economy, particularly the industrial sector, remains healthy and robust, largely protected from developing or catching full-blown cold,” Balisacan said.

According to the Neda chief, now was “a great time for the Philippine economy, particularly the industrial sector, including logistics.”

But Balisacan pointed out that there remained challenges to manufacturing growth, which he claimed the government was currently addressing.

“Some of the critical constraints that need immediate action are the country’s weak public infrastructure and regulatory environment,” he said.

“While infrastructure spending as a percent of GDP [gross domestic product] has been increasing in recent years, there is a constant need for the infrastructure system to keep up with rising demands in our fast-growing economy, especially these days as new property investments flood the market. Poor public transportation and congestion in our roads, ports, airports and seaports threaten to hamper the pace of economic activity and cap the growth of many major cities if left unaddressed,” Balisacan explained.

To address the lack of infrastructure, the Neda chief said the government “is already devoting greater focus on infrastructure investment and putting into place comprehensive transport roadmaps and critical logistics infrastructure roadmaps to keep up with the significant growth of the country’s primary business hubs.”

As for concerns on restrictive ownership rules, Balisacan noted that “strict restrictions on foreign ownership could also hamper the growth of foreign direct investments in the country.”