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Private sector: Engine of growth

THE buzzword these days in the development community is “inclusive growth.” In simple terms, that means economic growth that directly benefits the poor.

But how exactly do we achieve inclusive growth? According to the Asian Development Bank (ADB), we have to create more income opportunities and social benefits for the lower-income people, who comprise more than half of the total population.

ADB principal economist Armin Bauer is correct in pointing out that for ordinary people, economic growth is the least of their concerns. What’s relevant to them is how much money they have and how they can send their children to school.

“To achieve that [inclusive growth], everybody calls [on the government to bring jobs]. But the government does not bring the jobs, it’s the private sector that brings the jobs. Most people are working in the private sector. Normally, jobs come from the private sector,” he said.

In other words, the private sector must work with the government in delivering jobs and affordable services to Filipinos.

That the private sector is key to translating the country’s robust economic growth to jobs and social services that would benefit the masses is recognized even by nonprofit organizations.

The League of Corporate Foundations, for instance, said that with the better-than-expected gross domestic product growth, “we are at the stage where there is a need for the public and private sectors to have a unified approach toward how we can extend, innovate and collaborate to drive inclusive growth.”

The challenge for the Aquino administration in its remaining three years, therefore, is how to effectively mobilize the private sector so that it lives up to its role as the engine of growth.

The government’s role, as we see it, is to lay the foundation for the private sector to create more jobs and, therefore, pave the way for inclusive growth.

It can do this by making it easy for entrepreneurs to set up new businesses without going through the hassle of red tape and corruption in the granting of licenses and permits, as a case in point.

Needless to say, government policies should be consistent and equally applicable to all.

In short, there should be an even playing field for all investors, whether local or foreign.

If foreign investors are reluctant to come in because there are many obstacles to doing business here and the government keeps changing the rules along the way, local entrepreneurs would just as certainly keep their money in their pockets instead of creating new business ventures that would create new jobs and spur inclusive growth.

Inclusive growth is well-nigh impossible without the private sector creating the jobs that will uplift the quality of life of the poor.

 

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