A FOREIGN investment group said the Philippines needs to create more quality jobs and generate wealth within the domestic economy to cope with East Asian integration benefiting emerging giants like India and China.

Michael Clancy, chairman of the Philippine Business Leaders Forum, said the Philippines is extremely vulnerable in the economic integration of the East Asian economies, noting that its domestic economy is driven by wealth coming from remittances of overseas Filipino workers and not from foreign direct investments.

Clancy, who recently presented his assessment at a Manila forum on the implications of the Association of Southeast Asian Nations (Asean) Charter on East Asian integration, also criticized the government’s heavy reliance on foreign loans mostly coming from China.

He noted that 70 percent of the Philippines’ gross domestic-product growth comes from domestic consumption.

“But this consumption is artificially skewed by remittances and, as such, is vulnerable to the vagaries of the global cycle. Take remittances out of the equation and domestic consumption would collapse.”

Clancy noted that in 2007, an estimated $96.1 billion went to China as foreign direct investments (FDIs), while India attracted $20 billion. He added that although Asean economies got around $60 billion worth of FDIs, which are investments in fixed assets, almost half, or $27.4 billion, went to Singapore alone. Even Thailand, which just emerged from a political crisis, managed to get a share of $11 billion, while the Philippines only managed to get less than $2 billion, or 1 percent, of the total FDIs flowing into East Asia.

At the same time, IBON Foundation, a Philippine think tank, said that despite the economic growth in the last quarter, there were only poor-quality jobs created between 2001 and 2006.

It cited data from the National Statistical Office Labor Force survey that showed most jobs created during those periods were in agriculture, wholesale and retail, and private households.

IBON research head Sonny Africa said the informal sector of wholesale and retail trade created 1.02 million jobs during the period. However, those working in the sector only receive P228.72 as average daily wage and not the legislated P300 minimum wage in Metro Manila as of July 2006. He said the agriculture, hunting and forestry sector created 681,000 jobs, but the workers were merely unpaid family workers.

Private households with employed persons as helpers accounted for 409,000 of new jobs, but the average monthly wage for these workers would not even reach P3,500. IBON Foundation also noted that the growth of the agriculture and manufacturing sectors from 2001 to 2006 at 3.6 percent and 4.3 percent, respectively, failed to create regular and productive jobs. The number of new manufacturing jobs from 2001 to 2006 was just 153,000 and the sector even lost 18,000 jobs in 2006.

“The sectors with the biggest annual average growth over the period, and thus the biggest contribution to overall economic growth, were mining and quarrying, transportation, communication and storage, and finance. These sectors, however, have low and short-term job-generating capacity,” Africa explained.

Clancy lined up factors where the Philippines should focus on to be able to fare better in the East Asian integration in terms of attracting more foreign investments.

These include improvements in governance by weeding out corruption in the bureaucracy and reforms in labor laws to conform with best practices in the global market.

“Problems of governance are the most pressing of all. Nobody underestimates the problems of bringing corruption and rent-seeking behavior to heel, but equally it has to be recognized that it is the biggest single deterrent to long-term foreign investment. It simply has to be addressed,” said Clancy.

He also suggested the lowering of transport and logistics charges to facilitate more efficient and cost-effective shipment. Clancy also urged agricultural collateralization in the Philippines to allow farmers and rural dwellers to borrow against their land value.

“In the Philippines sadly, the elite appears to want both the politics and the economy to itself. Yet, people in this country are hardworking and industrious. Give them the means to prosper and watch this country take off big time,” said Clancy.

THE United States has increased credit guarantees for American companies selling rice to the Philippines, allowing its businesses to profit from the Asian nation’s grain shortage. The Philippines is the world’s biggest rice importer.

A FOREIGN investment group said the Philippines needs to create more quality jobs and generate wealth within the domestic economy to cope with East Asian integration benefiting emerging giants like India and China.

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