Government gung ho, raises GDP growth bar

By Max V. de Leon, BusinessMirror

Posted at Feb 26 2013 07:41 AM | Updated as of Feb 26 2013 03:41 PM

MANILA -- The government has committed to complete its institutional reforms through the passage and implementation of critical reform measures this year to support the country’s goal of attaining growth in gross domestic product (GDP) of up to 7 percent in 2013 and 7.5 percent in 2014.

The passage of urgent and critical bills, including national land use and the rationalization of fiscal incentives, as well as implementation of necessary institutional reforms and policies, is crucial to strengthening the fabric of rapid, sustained and inclusive growth said Socioeconomic Planning Secretary Arsenio Balisacan, who is also director general of the National Economic and Development Authority.

“The reforms and measures that we will undertake and prioritize this year are crucial. The sooner we can address the challenges ahead of us, the sooner we can achieve inclusive growth and development for our country,” Balisacan said in his address at the Management Association of the Philippines general membership meeting on Monday.

He added that government agencies have been putting their acts together and convening more often to ensure consistency of policies, alignment of plans and priorities and efficiency of regulation, which the private sector has been demanding for a long time.

In 2012, the Philippine economy, as measured by GDP, grew 6.6 percent to outpace its neighbors Thailand (6.4 percent), Indonesia (6.2 percent), Vietnam (5 percent) and Singapore (1.2 percent).

This year, Balisacan said, the Philippines is looking at another broad-based growth amid global risks such as uncertainty in the euro zone and fiscal problem in the United States.

“On the supply side, agriculture will be buoyed by the government’s conscious efforts in pursuing programs and projects that will increase the efficiency of producing staples and high-value commodities and crops. The positive agriculture outlook benefits from improvements in infrastructure, logistics and reduction in price volatilities,” he added.

The industry sector, meanwhile, is set to expand faster in 2013 and beyond, mainly driven by manufacturing and construction, Balisacan said.

Construction, he added, is expected to grow robustly due to strategic public and private infrastructure projects, while manufacturing is seen to be more vibrant, particularly semiconductor and electronics, food manufacturing and light manufacturing industries.

Also, the services sector is expected to remain robust brought about by an upsurge in the number of domestic and local tourists, domestic trade, real estate, renting and business and business process outsourcing.

“On the demand side, household consumption is expected to remain as the main driver of growth buoyed by the sustained inflow of OFW [overseas Filipino worker] remittances, better employment and job opportunities and low inflation. However, private-sector investment and exports are expected to increasingly account for a greater share of overall GDP growth in the next two years and beyond,” Balisacan said.

He added that there is a need to spread economic activity to tap the full potential of other regions, especially those in Mindanao, as currently, 60 percent of the country’s GDP is concentrated in three regions in Luzon, the country’s largest group of islands.

“Hence, we need to focus our infrastructure and policy priorities to ensure that the rest of Luzon, the Visayas and Mindanao actively take part in the growth process. It is important to connect these regions, physically [through infrastructure] and economically [through trade],” Balisacan said.

“There is also the need to address the critical constraints to investments, particularly high power cost, poor infrastructure, policy inconsistencies and administrative inefficiencies. Furthermore, we will improve revenue and tax efforts to increase the resources available for infrastructure and social spending,” he added.