NEDA strives to boost Phl investment climate

CEBU, Philippines - With the remarkable economic performance of the country this year, the National Economic Development Authority (NEDA) aims to continue its efforts to enhance the investment climate, accelerate the confidence in the global market and ensure to achieve inclusive growth among Filipinos by 2013.

In the agency’s year-end report, NEDA Secretary Arsenio Balisacan stated that the Philippines managed to have posted an outstanding 6.5-percent Gross Domestic Product (GDP) growth in the first three quarters of 2012 amid the risks and challenges in the global economy.

He expressed optimism to surpass the full-year growth assumption of 5 to 6% as set by the Development Budget Coordination Committee (DBCC) for this year which is closer to the targeted 7 to 8% annual real GDP growth set out in the Philippine Development Plan for 2011-2016.

With the latest DBCC-approved monetary and external assumptions and fiscal program, NEDA forecasted the growth in 2013 to be between 6 to 7% and between 6.5 to 7.5% in 2014.

Higher than any other ASEAN country, Balisacan cited that the recent economic growth was attained without having to sacrifice stability as low inflation has been sustained and fiscal deficit-to-GDP ratio is only at 1.4%.

“Our good performance has been recognized by credit rating agencies as well as by foreign businesses and the country's development partners. Our credit rating has been upgraded to just below investment grade and we have moved up several notches in various competitiveness ratings,” he stated.

He, however, admitted that good-quality job generation remains the greatest challenge for the country.

Despite the remarkable economic growth, unemployment rate has remained at around 7% and underemployment rate at 20% in 2012.

He then pointed out that improvement on the country’s competitiveness could attract more investments coming in, thus creating the needed employment in the medium to long term.

For now, NEDA has collaborated with other agencies such as the Department of Labor and Employment, to determine strategies to increase employment in the short term.

With the world economy projected to recover between 2013 and 2014, Balisacan said that a more vibrant industry sector and an improved manufacturing sector buoyed by the semiconductor and electronics industry could also be expected in the country next year.

It is on the same period, he revealed, that oil prices may tend to rise due to higher global demand for petroleum products particularly in the advanced economies.

The same projection could be noted for the construction sector with the robust growth forecasted in 2013 due to the onset of major public infrastructure projects and additional boost coming from private construction.

Utilities sector, on the other hand, will be driven by the increasing demand for power, water and gas.

While the continuous expansion and development in the Information Technology-Business Process Outsourcing industry, tourism, financial intermediation and trade are projected to fuel the growth in the services sector.

“On the demand side, household consumption will remain robust, and the expected expansion of exports and construction will further boost growth. Capital formation, especially in the private sector, is expected to contribute a greater share of overall growth,” Balisacan added. 

Even with such positive outlook next year, he noted that they remain vigilant of the global and domestic risks that may negatively affect the competitiveness such as the unresolved problems in the Euro area, slow economic recovery and emerging fiscal cliff in the US, strong macroeconomic fundamentals, good economic prospects, and appreciation of our currency.

He cited that NEDA commits itself to continue to improve the country’s business climate, reduce the cost of doing business, leverage monetary and fiscal policy to achieve inclusive economic growth, maintain fiscal prudence, properly manage inflation expectations, and sustain the social investments on the poor.

“The institutional reforms that we have started are undeniably pushing the frontiers of our economy and boosting the confidence in the market. We hope to institute more reforms, and it is our earnest desire that these reforms in the bureaucracy should fully cascade in all the departments and local government units. Through these and other programs, we hope to stimulate the economy in the countryside,” he cited.

He named tourism, BPO, electronics, housing and real estate, agribusiness and forest-based products, logistics, shipbuilding and manufacturing as key priority sectors.

NEDA is also eyeing bilateral partnerships to further diversify external trade and undertake measures to improve our trade relations.

Taking into account the strong growth of Asian neighbors, Balisacan said that the government will actively adopt policies to fully utilize the institutional setup provided by the ASEAN and the existing free trade agreements with Japan, China, and India to increase the Philippines’ role in the regional production chain.

“Overall, these policy directions are aligned with the PDP for 2011-2016. We will be reviewing our targets and strategies in consonance with the ever-changing environment to achieve our goal of inclusive growth. We look forward to addressing the challenges awaiting us,” he concluded.