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THE
country’s macroeconomic fundamentals may be improving in
recent years but it needs to be strengthened further to
weather downturns and external shocks, according to the
Asian Development Bank (ADB).
The ADB
said in its Country Assistance Program Evaluation for
the Philippines Evaluation Approach Paper, it plans to
extend additional loans for 2007 and 2008 to support the
local government financing and budget reforms, a
comprehensive justice program, and a follow-on on the
agrarian-reform communities project.
“The
[Philippines’] strength and capacity of [its] public and
market institutional structures to manage downturns and
shocks is still uncertain,” the ADB said in the paper.
“The
impact of past policies on import substitution and price
controls and a legacy of ‘crony capitalism’ in the past
led to industry concentration in several sectors,” the
ADB report added.
In
addition, the evaluation report stated that “vested
interests” were interlinked with banks, which limited
competition, market reforms and discouraged private
investment. The ADB said an example of this is the stake
of dominant family business groups in the banking
sector.
Further,
the ADB said the results of its 2005 study, titled
“Improving the Investment Climate in the
Philippines,”
stated that corruption is a major concern for business
and investors.
“While
reforms on meso-level constraints are advancing,
continued market and nonmarket failures contribute to
lower macro and microeconomic performance,” the
evaluation report said.
The
report stated that while the Philippines’ gross domestic
product (GDP) from 2002 to 2006 grew at an average of
5.2 percent, there was a low amount of foreign direct
investments (FDIs) seen in the country.
In
recent years, the bank estimated that FDIs were only
about 0.5 percent to 0.7 percent of GDP, which is
relatively low compared with other countries in the
region.
The ADB
cited the results of its 2007 report, titled “Private
Sector Development and Operation: Harnessing Synergies
with the Public Sector,” which recommended that
competition laws need to be furthered to address
problems of oligopoly.
“While a
consumer protection law is in place, a comprehensive
antitrust law does not exist, and unfair trade practices
are addressed through ad hoc legislation,” ADB added.
The
report also said that unemployment, underemployment and
labor productivity remain to be a concern.
The
country’s labor-force growth rate in 2006 was 1.4
percent,, or only 35.8 million Filipinos, while the
unemployment rate was at 7.9 percent.
“Reasons
include high minimum wage rates and moderately
restrictive employment laws,” the ADB said.
In terms
of the country’s achievement of the Millennium
Development Goals (MDGs), the evaluation report stated
that based on the joint ADB, United Nations Development
Programme and the United Nations Economic and Social
Commission for Asia and the Pacific report on the MDGs,
the government needs to start acting and act faster on
nine targets included in the MDGs.
The
joint report stated that in terms of achieving the
targets for primary school enrollment, the retention of
children until grade 5, forest cover, minimizing carbon
dioxide emissions, and providing water for urban areas,
the country’s score was 4 which means no progress has
been made or the results have been regressing.
The
report also stated that the government needs to act
faster in reducing $1 a day poverty, underweight
children, providing water for rural areas, and improving
rural sanitation, which got a score of 3 which means the
achievement of these targets were slow. |
