A rather bullish economic mood has been seen in recent years due to an enhanced local market. Is the Philippines headed toward stability, much like some emerging economies now enjoy? Pre- development experiences are in place, initiated by accolades from reputable international credit rating agencies. Interested foreign and local investors are flocking to glimpse at opportunities within these shores.
The latter years witnessed an unprecedented growth rate; from a low of 5 percent to a high of 6.5 percent of our gross domestic product aided largely by consumers’ spending pattern. Inflation rate, moreover, remains low and ideal the past few years, the highest being at 2 percent. Such inflation rate by any standard seems negligible and should not be a cause for worry, especially at a time when the country’s macroeconomic fundamentals remain strong and steady. Unemployment, despite being a lingering concern has been gradually abridged, thanks to largely to the business process outsourcing industry.
There is much more that is needed to concretize our investment target, but it is just a matter of time before we the fruits of development is felt. After all, confidence building measures we have long been placed for years.
To fully maximize gains from growth, however, investments should pump development in the countryside where unemployment persists. The countryside development program has long been overlooked and should be a mainstream of administrative priorities. This can achieve a two-pronged objective; address the lingering problem of massive unemployment, and at the same time decongest urban areas.
To fully maximize gains from growth, however, investments should pump development in the countryside where unemployment persists.
Demography is at the core of urban congestion. High population density is also linked to problems of crime and delinquency, intertwined with broader issues that hamper economic development. The availability of jobs as a major indicator of growth and development can be done by providing opportunities for workers in rural areas, eventually encouraging urban dwellers to return to their province of origin. Countryside development is not a new scheme, in fact was a major initiative of the former Pangasinan Rep. Oscar Orbos in the 80s to address urban congestion.
Known as Kalakalan 20, the objective of the Orbos-led program was to open opportunities for rural communities to grow on their own. An aim of the program is to encourage investors to put their money in neglected and “forgotten” areas of the country. Because much is at stake for investors in tapping untested communities, the chances of them doing business in the countryside is next to nil unless government and various sectors come up with radical ways of attracting businessmen.
The chances of investors doing business in the countryside is next to nil unless government and various sectors come up with radical ways of attracting businessmen.
Among these radical schemes to attract capital to the countryside is the granting of tax exemptions—whether it be corporate, income or import taxes—to stakeholders. These can be in the form of tax holidays or moratoria for would-be investors. Although it will take a lot more than guts and government support to persuade investors, subsidy and incentive can be made commensurate enough for investors to earn profit.
Inclusive growth will remain elusive if basic fundamental economic structures and installations that are consumer essentials remain hardly affordable. Employment structures, meanwhile should be sound enough to accommodate a good number of the 6 to 8 million people who remain without jobs. These indicators, namely inflation and unemployment, hinder the nation’s claim of inside-out growth.
Emmanuel J. Lopez, Ph.D. is an associate professor at the University of Santo Tomas and the chair of its Department of Economics. Views reflected in this article are his own. For comments email: doc.ejlopez@gmail.com