The Phillippines can grow by as much as 10 percent, according to John Forbes, senior adviser of the American Chamber of Commerce of the Philippines (Amcham). Forbes, however, quantified that the country needs to work on several stumbling blocks.

Forbes listed these stumbling blocks as corruption, infrastructure, policy inconsistency and red tape which should be resolved at once. The Joint Foreign Chambers (JFC) pointed this out under its Arangkada (accelerated growth) advocacy paper.

“Corruption is less, red tape is there, policy consistency and stability are both better and infrastructure is starting to move. Those are the top,” said Forbes

He added that JFC is particularly concerned about growth in infrastructure spending since unsustained spending “would undermine the growth of the economy.”

“So we should spend, and wisely (in infrastructure), as wisely as we can, let’s get the private sector,” Forbes added.

Rhicke Jennings, president of the American Chamber of Commerce of the Philippines, in reporting the second year progress of the Arangkada advocacy paper of the Joint Foreign Chambers, said 64 percent of the 471 recommendations of the paper are now moving and only 36 percent have not, which is a stark improvement from the 55-45 ratio in 2012.

While this is a marked improvement, said Jennings, this is not enough

For one, he said, the share of infrastructure to GDP at 2.6 percent is still half of what it should be.

Second, the driver of growth in the country should shift from consumption driven to investment and trade as “these would accelerate growth higher in accelerated and inclusive way.” 

Ian Porter, president of the Australian-New Zealand Chamber of Commerce, said the Philippines has the potential to grow faster, maybe by 8 percent, if the 6.6 percent GDP it registered in 2012 and one mine, the $5.9-billion Tampakan project, is opened.

US Ambassador to the Philippines Harry Thomas said in his speech that despite progress made, more work should be done in the Philippines to make it attractive to investments.

Leveling the playing field for investors, according to Thomas, requires addressing corruption as well as infrastructure in the Philippines and the streamlining of the bureaucracy.

“There are encouraging signs for the economy. The Philippines is in a bright spot,” Thomas said.

By ramping up investments, reigning in inflation and reducing corruption, optimism for the Philippines by the US reaches a new level in 2013.

“But the picture is not all rosy,” according to Thomas.

Michael Raueber, president of the European Chamber of Commerce of the Philippines said two years since the 470-page Arangkada Philippines advocacy document was launched by the Joint Foreign Chambers, the paper has come out with 471 recommendations worked on by 9 focus groups and participated in by 300 Philippine and foreign investors.

In it second year assessment yesterday, the JFC reported that 65 percent of recommendations are underway compared with 51 percent last year.

Rauebe said the output of the Arangkada paper is aimed at generating sustained rapid employment and GDP growth through investments in the Seven Big industry sectors

Raueber was happy to note that the 2012 GDP of 6.6 percent was almost twice as high that of the previous years’ and the highest among the larger Asean economies.

He said a similar pace is expected this year despite weakness in the economies in th EU, Japan and the US.

With the theme “Realize the Potential,” the Arangkada paper identified the winners as agribusiness, BPO/creative industries; infrastructure (airports, power roads and rails, seaports,, telecommunication and water); manufacturing; logistics; mining; tourism/medical travel and retirement.

“The Philippines can become a middle-income economy within two to three decades if it can duplicate the high growth rate path that other Asian tiger economies have followed,” Raueber said.

He added that the Philippines should pick up the pace of foreign investments to sustain and even raise the high growth rates of 2010 and 212.

Raueber noted FDIs will create many new jobs, a continuing challenge in a country that send 4,500 of its citizens abroad every day to work overseas.

When the Arangkada was launched in 2010, the JFC said the Philippines will be able to get $75 billion worth of FDIs by 2020 if government follows the recommendations in the Arangkada paper.

The Philippines lags behind in attracting FDIs in Asean with out of the $100 billion that was poured in 2012, half went to Singapore, $18 billion to Indonesia and a measly $1.2 billion to the Philippines.

Source: Malaya; Business; 27 February 2013