The National Economic Development Authority (NEDA) said the Philippines’ ability to move up to high-income country status hinges on the long-term development of the agriculture and manufacturing sectors.
In his keynote speech during the Department of Trade and Industry-Board of Investments’ Manufacturing Summit held last August 26, Socioeconomic Planning Secretary Karl Kendrick Chua stressed the importance of the country’s manufacturing sector.
“If we are to grow and sustain our upper middle-income country status climb 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 emphasized.
Chua noted 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.
In the Philippines, however, the contribution 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 to move forward, is to make sure that manufacturing, aided by agriculture, actually helps pave our growth path towards our 2040 vision and target 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,” he shared,
Chua said the government’s prudent macroeconomic policy, for instance, 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,” he added.
The Ease of Doing Business law has meanwhile simplified transactions by reducing the long processing days of permits, licenses, and other documents that government requires businesses to secure. This enables micro, small and medium enterprises (MSMEs) to easily participate in the formal sector.
Chua also highlighted how the amendments to the Public Service Act, Retail Trade Liberalization Act, and the Foreign Investments Act help in improving the country’s competitiveness and attracting more investments.
He also added that infrastructure spending is crucial in building and developing the country’s manufacturing sector, as it relies heavily on the movement of people and goods.
The NEDA chief 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 sectors and bring us out of the Covid-19 crisis sooner,” he concluded.