August 29, 2021 | 12:00am
MANILA, Philippines — Boosting the manufacturing sector will significantly help the Philippines move up to high-income country status.
Socioeconomic Planning Secretary Karl Chua said the long-term development of the agriculture and manufacturing sectors would aid in the transformation of the economy to a high-income status.
Chua emphasized that policy distortions hampered the growth of the two sectors, failing to significantly drive growth and create jobs. In fact, the sectors’ share to gross domestic product has been stagnant over the years.
“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,” Chua said.
Typically, the NEDA chief said workers in agriculture are absorbed by labor-intensive manufacturing then to a high-technology manufacturing to high-skilled services as the overall economy transforms.
Unfortunately, this has not been observed in the Philippines for the longest time as workers in agriculture migrated to informal services, while the manufacturing sector share of employment has largely remained stagnant.
“What we need to do, moving forward, is to make sure that manufacturing, aided by agriculture, actually helps pave our growth path toward our 2040 vision of becoming a high-income country,” Chua said.
Further, Chua said the manufacturing sector has benefited from the country’s macroeconomic policies which resulted in stable credit rating.
“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,” he said.
The Ease of Doing Business law also simplified transactions by reducing the maximum processing days of permits, licenses, or other documents that businesses require from the government, enabling micro, small, and medium enterprises to participate in the formal sector.
Amendments to the Public Service Act, Retail Trade Liberalization Act, and the Foreign Investments Act will also improve the country’s competitiveness and attract more investments.
Likewise, Chua said infrastructure spending is crucial in building and developing the country’s manufacturing sector, as it relies heavily on the movement of people and goods.
“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,” Chua said.