ADB urges Philippines to push industrialization in cutting poverty


MANILA, Philippines—The Asian Development Bank has urged the Philippines to aim for high level of industrialization—indicated by an ability to produce and export more goods—to squarely address the long-standing problem of poverty.

In a comprehensive study on the Philippines titled “Taking the Right Road to Inclusive Growth,” ADB said poverty incidence in the country has remained high, even if the economy has been growing year after year, because of weak industrialization.

ADB said that the services sector, led by business process outsourcing (BPO) firms such as call centers, has indeed helped keep the economy growing but the sector’s success has not had a significant effect toward poverty reduction. The country could lift more people out of poverty by boosting the industry sector, including manufacturing, the ADB said.

The industry sector, unlike the service sector, is capital-intensive and provides jobs even to individuals with low educational attainment, according to the ADB.

Latest official poverty statistics showed that Filipinos living below the poverty line accounted for 26.5 percent of the country’s population as of 2009, the highest among emerging Asian economies. The figure marked an increase from the 26.4 percent in 2006 and the 24.4 percent in 2003, even as the economy actually grew during the period.

“Despite high and sustained growth over the 2000s, the Philippines has failed to generate inclusive growth that is broad-based across the sectors and benefits the entire population. The country’s standing problems of unemployment, poverty and low investments remain,” the ADB said in the report.

To achieve the level of industrialization that the country needs to trim poverty incidence, the Philippines must come up with a road map that identifies measures that will increase private-sector investments in the production of more goods, besides intermediate electronics goods that account for the bulk of the country’s export revenues, according to the ADB.

One policy recommendation is for the country to identify more products that it can competitively sell offshore so that export revenues will rise and more domestic jobs will be created. ADB pointed to a wide range of products – from machinery, food and jewelry to musical instruments and fabrics – that the Philippines could invest in to become a more competitive exporting country.

Once the products are identified, the government should implement measures that will address problems that prevent the private sector from investing in the manufacture of these products, according to the ADB.

ADB suggested the creation of councils that would be in charge of conducting dialogues between the government and the private sector on the needs of the latter to invest and generate decent profits.

“This problem (of inviting private firms to invest in target products) could be alleviated by setting up an institution to interact with the private sector in identifying firms’ obstacles in exporting new goods, and determining the most appropriate interventions,” ADB said.

ADB said that other emerging Asian economies, unlike the Philippines, were able to significantly trim their poverty rates over the past decade because of stronger efforts toward industrialization.

“This is not to suggest that the growing services sector, in particular the BPO industry, should not be the centerpiece of the long-term development strategy… [However], without dynamic industrial development, the country will continue to suffer from the long-standing problems of high unemployment, slow poverty reduction, and low investment,” the ADB said.

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  • Beguine

    Why didn’t ADB point out that wealth in the Philippines is in
    the hands of probably less than 10% of the population, and that
    there’s a substantial portion of ill gotten wealth in the hands of
    government officials and civil servants with bank accounts and
    properties and assets overseas?

    Unless the government moves vigorously towards equal distribution of wealth,
    the Philippines will remain a basket case economically.

  • Ralph L

    Haha.. i can imagine sawang-sawa na ADB sa kakapuna sa Pilipinas kase wala naman talagang plano mag industrialize ang tamad at corrupt na bansa kahit magunaw pa ang mundo.. Everyone in Asia is racing and competing to be developed while ang kawawang Pinas, nakatanga lang nakaupo sa isang tabe at nakataas ang paa..

  • tower_of_power

    Ang isinusulong ni Pnoy ay ang “level playing field”. Ito ay napakahalaga para umunlad ang ibat ibang negosyo … pangangalakal dito sa Pilipinas.

    How can an honest entrepreneur compete with smugglers and tax evaders? How can businesses react to fast changes in the business atmosphere kung ang mga kaso ay inuupoan sa korte! Yes, indeed, how can we have an atmosphere conducive to business kung ang THIEF JUSTICE at ang kanyang mga cohorts ay palaging nagpiflip flop … o pagnakatanggap ng sulat sa malalakas na tao ay nababago ang mga decisions.

    To have a level playing field … an UPRIGHT JUDICIARY cannot be overemphasized!!! Reform the Judiciary … there is no better way to signal the start of the reform by unseating the THIEF JUSTICE!!!

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