Colleagues in APEC, good morning.
I would like to thank you for this opportunity to share with you the Philippines’ successes and challenges in implementing structural reform.
Let me start by saying that the Philippines has been implementing structural reform since the late 80s.
And the Aquino administration has followed through, staying true to its basic principle that good governance plus good economics equals good-quality growth.
The experience has generated some good lessons, which I will share with you later on. It has also yielded for us quite good results. Needless to say, the task is far from complete, especially since we know that the overall goal is really to improve people’s well-being.
Going forward, we should embark on deeper and more extensive structural reform. For us, international cooperation can facilitate the process of deepening structural reform.
Going back some three decades ago, perhaps you are aware that despite the country’s vast potentials, economic growth has been constrained by decades of bad policies and bad governance.
Until recently, we have always gone through boom-and-bust cycles. Low-income growth and unequal access to employment and development opportunities barely made a dent on poverty.
With the restoration of democracy in the late 1980s, structural reform in the country began:
Monopolies in selected industries, including telecommunications, airline, water and power utilities, were broken up.
The oil industry was deregulated.
An independent monetary authority was established.
The banking sector was liberalized.
Tariffs were brought down and continue to be brought down. Imports were likewise liberalized.
The current administration, under President Benigno Aquino III, has essentially followed through with the reform agenda. However, its focus is on addressing key constraints to growth and its weak translation to people’s wellbeing through the following:
* Massive investment in infrastructure and human capital development to address backlogs brought about by periods of financial and economic crises
* Improving effectiveness of the regulatory systems and building regulatory capacities
* Ensuring peace and human security, especially in Mindanao; and
* Given the country’s high vulnerability to disasters due to natural hazards as well as man-made extreme events, improve disaster preparedness and management as well as social protection
At the core of the Aquino government’s agenda is building credible institutions and practicing good governance.
Recognizing the key constraints, we crafted development strategies and they all align with the five pillars of the APEC New Strategy for Structural Reforms:
More open, well-functioning, transparent and competitive markets
Better functioning and effectively regulated financial markets
Labor market opportunities, training and education
Sustained SME development and enhanced opportunities for women and for vulnerable populations; and
Effective and sustainable social safety net programs
These are operationalized in the Philippine Development Plan 2011-2016, which has been updated, with the goal of achieving rapid, sustained and inclusive growth that creates jobs and reduces poverty.
The reforms undertaken thus far have yielded quite good results.
The present administration’s strong governance and anti-corruption agenda has restored people’s confidence, including business and consumers.
The implementation of the game plan for competitiveness has led to the country’s rise in Global Competitiveness and Ease of Doing Business rankings. The country’s investment grade ratings also rose.
Further liberalization of the banking sector has paved the way for inclusive finance. The pocket open skies policy and the improvements in air travel security and safety regulations that earned civil aviation upgrade, have promoted growth in tourism and services sectors.
Sound fiscal management resulted in more than enough fiscal space that has allowed the government to undertake massive investments in human capital, as well as in critical infrastructure.
Together with partnerships with the private sector owing to restored investor confidence, we have been reducing, in a significant way, the backlogs in classrooms, health facilities, roads, among others.
Massive resources were also poured into education and training, health and poverty reduction and social protection programs such as the conditional cash transfer.
Thus, while in the past, the Philippines was labeled the “sick man” of Asia, we see that the country’s economic growth has outperformed most of its neighbors in Asia during the period 2010-2013.
This is because the Philippine economy is now traversing a higher growth trajectory. And this has come alongside structural transformation where services has expanded while the share of agriculture and industry sectors in GDP decline.
The Philippine economy has always been driven by the services sector marked by its high share to total output as can be observed in the graph.
During the 80s, the services sector accounted for 43 percent of the Philippines’ GDP. The share has increased over time reaching 56 percent this current decade. This is composed mainly of trade, other services, and real estate, renting and business activities.
Colleagues in APEC, good morning.