The Philippines has long been regarded as having immense potential for economic progress for many reasons—its rich natural resources, an increasing middle-class demographic, and a large pool of highly educated, English-speaking talent, just to name a few. In fact, in 2019—just before the COVID-19 pandemic struck—the Philippines landed 34th on the list of the world’s largest economies and 13th in Asia.
Gross domestic product (GDP) has also grown at a consistently impressive rate—by 6.9 percent in 2016, 6.7 percent in 2017, and 6.2 percent in 2018, with per capita income increasing by as much as 17 percent over this period as well. Thanks to record-breaking total foreign direct investments of USD 10.05 billion in 2017, joblessness has also decreased and the Philippines enjoyed highly favorable rankings among global credit-rating agencies.
At the moment, the country is already considered by many experts as a “newly industrialized country,” one that is evolving from a largely traditional, agriculture-based economy to one that is more industrialized, modernized, and globalized, focused on services such as business process outsourcing (BPO), manufacturing, and the like. Despite this, there are still a number of important issues that the country needs to address to fully unlock its potential to become a developed economy. Here are some of them.
Infrastructure Development
Public and private infrastructure development is a sure-fire way to generate millions of jobs while at the same time creating the economic backbone needed for businesses to flourish, which is basically quicker transport of people and goods. Thankfully, if the current administration were to follow through with its commitment, it is estimated that the Philippine government could spend as much as USD 150 billion worth of infrastructure across the nation, which include projects like roads, airports, dams, trains, bridges, and the like. These are all expected to help prop up the economy through more brisk trade, commercial, and tourist activities. The challenge is in ensuring that these investments in infrastructure actually unfold as planned.
Socioeconomic Gap
Historically, the Philippines has been characterized by a wide divide between the rich and the poor, and this needs to be continuously addressed. Consider that as of 2016, as much as 76 percent of the economy resided within the top 40 wealthiest families in the country compared to the rest of the Filipino population. And while the poverty rate did improve from 23.3% in 2015 to 16.6% in 2019 according to the World Bank, this is expected to rise back to 21% in 2020 due to the COVID-19 pandemic As the country continues to strive toward a more vibrant economy after the pandemic, a mindset for inclusive growth and policies to distribute prosperity for all ought to be part of the national agenda.
Human Capital
A large part of addressing poverty reduction involves increasing investments in the Filipino people themselves. After all, its people are the country’s most readily and widely available resource, what with the current population being more than 111 million. This human capital sitting right under the leaders’ noses, so to speak, needs to be tapped and developed to its full potential. Filipinos should be capacitated through quality basic education, more accessible and reliable public health services, and increasingly relevant and diverse job skills. These will allow them to identify and seize opportunities better, and to build more resilient and prosperous families as basic units of a stronger society.
Bureaucracy and Corruption
A big obstacle for foreigners to continue bringing in investments is rampant corruption and a stifling atmosphere of bureaucracy within government agencies. Toward addressing this long-standing problem, the government has already embarked on measures such as the Ease of Doing Business Law, which seeks to standardize the business application process and whittle it down to as fast as three days. A reporting system will also be instituted where enterprises can seek recourse in case they encounter any difficulties. These are all a good start, but more work needs to be done toward a more institutionalized culture of integrity and efficiency, especially within the government.
Corporate Governance
For its part, the private sector needs to keep up with more exacting corporate governance standards that are coming along with the influx of valuable foreign investments and global business activity. Experts have identified the need for Filipino companies to step up practices in terms of disclosure and transparency, as well as defining board roles and responsibilities better. The main government financial body, the Bangko Sentral ng Pilipinas (BSP), is also undertaking measures to improve consumer and investor protection as well as to curb criminal activity, such as money laundering, in order to make the Philippines a safe, welcoming, and conducive destination for foreign investors.
Along with all these actions, a positive and optimistic mindset is very much needed to help bring the country to its rightful status as a developed economy. A pervasive belief and concerted attitude among Filipinos that they have what it takes to succeed as a nation is just as important as material and financial resources to propel themselves forward to progress.
