Government hires consultant to study micro reforms

President Arroyo and her Cabinet agreed yesterday to hire an American consultancy firm to undertake a study on possible micro-economic reforms needed to jump start the Philippine economy based on the experience of other countries.

The President and the Cabinet decided to employ the services of McKinsey Global Institute to conduct the study under the direction and supervision of the National Economic Development Authority (NEDA).

The decision was reached during the weekly Cabinet meeting at Malacañang yesterday, President Spokesman Rigoberto Tiglao said.

Briefing Palace reporters after the Cabinet meeting, Tiglao said it was the initiative of President Arroyo to tap the services of McKinsey which was highly endorsed to her by businessmen she met during her just concluded state visit to Singapore.

Tiglao said President Arroyo and her Cabinet were briefed yesterday by Jaime U. Ayala, president of McKinsey.

"He (Ayala) is not related to Jaime (Zobel de) Ayala," Tiglao quickly added, referring to the top man of the Ayala Group of Companies.

Tiglao said the briefing of the McKinsey executive dwelt on their company’s research on how countries like Singapore, Korea, Poland and Japan achieved growth through micro-economic reforms.

"Their basic conclusion is that it is micro-economic reforms which clear obstacles to growth in very specific sectors and which improve their productivity, that are crucial to overall economic growth, rather than macro-economic policies," Tiglao said.

"Recognizing these, the President will undertake a program along these lines, to institute micro-economic reforms for each sector," he said.

Towards this end, Tiglao said, McKinsey will lead the task force that will be organized to identify the areas where such micro-economic reforms will be undertaken.

"This research will be completed, in four to six months," he said.

On instructions of the President, Tiglao said, the Task Force will invite such Philippine economists’ organizations to participate in this undertaking such as the so-called ‘Yellow Paper’ group which have earlier issued bitter criticisms of the Arroyo economic policies as well as economists from the University of the Philippines, Ateneo University, the Foundation for Economic Freedom and Romulo Nery, the "resident" economist of Congress.