How Philippines can reverse 'brain drain'

ABS-CBN News

Posted at Mar 11 2015 02:57 PM | Updated as of Mar 11 2015 10:57 PM

MANILA, Philippines - As some Filipinos continue to seek greener pastures abroad, it may seem as if the decades-long "brain drain" shows no signs of stopping.

But there's still hope for the Philippines in reversing "brain drain".

In its latest Economic Insight report, Institute of Chartered Accountants in England and Wales (ICAEW) noted that ASEAN economies are benefiting from growing populations, but some, particularly the Philippines and Malaysia, are facing difficulty in "brain drain."

"In terms of labor force, the Philippines is faced with a brain drain issue, which is depriving the labor pool of much of its greatest talent. This has been a problem for a while now, with the country having lost an estimated 10 percent of its population to work abroad, including many highly qualified professionals," Charles Davis, ICAEW economic advisor and Centre for Economics and Business Research (CEBR) director, said.

In 2013, the Philippines deployed around 1.8 million workers. Most of the OFWs were deployed to Saudi Arabia, United Arab Emirates, Qatar, Bahrain, Kuwait and other Middle East countries.

The Philippine economy benefits from remittances the overseas Filipino workers send back home, but Davis noted "most of the productivity gains accrue to the developed economies in which these emigrants live."

Similarly, in Malaysia, around 295,000 skilled workers left the country in 2012, out of only 4.3 million Malaysians working in skilled occupations. Over half of Malaysian emigration flowed to Singapore.

ICAEW acknowleged that the Philippines and Malaysia cannot compete with the wages being offered in Singapore and United States.

Plus the establishment of the ASEAN Economic Community (AEC) later this year would likely lead to more skilled workers moving to other ASEAN countries for better job opportunities.

But ICAEW noted that brain drains have been reversed before, particularly in India and China where many emigrants are returning.

"As we have seen, in China and India for example, emigrants are willing to return to their home countries despite even wage cuts, so long as they are confident their sector of expertise exists. One key strategy will be to make sure that the Philippines' high-tech industrial centers are integrated into relevant international networks; this means that people can return to their home nation without fearing that their career progression will suffer," Mark Billington, Regional Director of ICAEW South East Asia, said.

This could include providing incentives, such as grants for knowledge businesses.

"Creating clusters of businesses in areas with good-quality infrastructure can catalyse the development of a viable new sector in an economy, particularly if those with the requisite education exist. There is little point in investing in upgrading higher education systems to cope with the new economy, if those workers will simply leave to start a career elsewhere," the ICAEW report stated.

ICAEW noted the Philippines will be pursuing more infrastructure projects this year, due to strong public finances.

It forecasts Philippine GDP growth at 6.2 percent for 2015, the highest growth forecast among six ASEAN countries.

"Infrastructure problems persist, threatening the Philippines’ stellar growth rate, and blackouts are foreseen next year. A focus on this area over the next year, made possible partly by strong public finances, should enable the islands to pursue a raft of infrastructure projects," ICAEW said.

The Public–Private Partnership Center has already 26 approved infrastructure projects, collectively worth $24.5 billion.

ICAEW is a world leading professional membership organisation that promotes, develops and supports over 144,000 chartered accountants worldwide. The report on South East Asia is produced by Cebr, ICAEW’s partner and economic forecaster.