The ability of the Philippines to move up to high-income country status hinges on the long-term development of the agriculture and manufacturing sectors, the National Economic and Development Authority, said.
In his keynote speech during the Department of Trade and Industry-Board of Investments’ Manufacturing Summit Thursday, Socioeconomic Planning Secretary Karl Kendrick Chua emphasized the importance of the manufacturing sector in the Philippines.
“If we are to grow and sustain our upper middle-income country status and eventually move up to high-income country status in the next two decades, we have to focus on agriculture and manufacturing. A strong, productive agriculture sector will provide a very good foundation for a competitive manufacturing sector,” he said.
Chua said that in countries that experience successful structural transformation, agricultural workers are typically absorbed by the manufacturing sector. This paves the way for a capital-intensive and high-technology manufacturing sector, then eventually a high-skilled services sector.
However, in the Philippines, the share of agriculture and manufacturing to the gross domestic product has been stagnant. Moreover, agricultural workers typically migrate to informal services.
“What we need to do, moving forward, is to make sure that manufacturing, aided by agriculture, actually helps pave our growth path towards our 2040 vision of becoming a high-income country. That is why this administration has put strong importance on achieving our 10-point socioeconomic agenda. This will support the growth of manufacturing,” Chua said.
For instance, the government’s prudent macroeconomic policy has resulted in the highest ever credit rating of the country.
“This does not only mean lower borrowing costs for the government. This also translates to lower borrowing costs for households and businesses. By keeping interest rates low, we are able to help finance a lot of investments, including those of manufacturing,” the NEDA chief said.
Meanwhile, the Ease of Doing Business law simplified transactions by reducing the maximum processing days of permits, licenses, or other documents that businesses require from the government.
This enables micro, small and medium enterprises (MSMEs) to easily participate in the formal sector.
Chua also highlighted the role of the amendments to the Public Service Act, Retail Trade Liberalization Act, and the Foreign Investments Act in improving the country’s competitiveness and attracting more investments.
He added infrastructure spending is crucial in building and developing the country’s manufacturing sector, as it relies heavily on the movement of people and goods.
Chua said the government will continue to invest in infrastructure because it is an important indicator that will pave the way for the economy’s robust growth in the future. “All of these are important elements to support the growth of our manufacturing and agriculture sector and bring us out of the Covid-19 crisis sooner,” he added.*PNA