The ability of the Philippines to move up to high-income country status hinges on the long-term development of the manufacturing and agriculture sectors, Economic Planning Secretary Karl Kendrick Chua said Wednesday.
Chua, in a keynote speech during the Manufacturing Summit, stressed the importance of the manufacturing sector in the Philippines.
“If we are to grow and sustain our upper middle-income country status 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 said.
Chua said in countries that experienced successful structural transformation, agricultural workers were typically absorbed by the manufacturing sector. This paved the way for a capital-intensive and high-technology manufacturing sector, then eventually a high-skilled services sector.
He said that in the Philippines, the share of agriculture and manufacturing to the gross domestic product were stagnant. Agricultural workers also typically migrated to informal services.
“What we need to do, moving forward, is to make sure that manufacturing, aided by agriculture, actually helps pave our growth path towards our 2040 vision 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,” Chua said.
He said the government’s prudent macroeconomic policy 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,” the NEDA chief said.
Meanwhile, the Ease of Doing Business law simplified transactions by reducing the maximum processing days of permits, licenses, or other documents that businesses require from the government. This enables micro, small, and medium enterprises to easily participate in the formal sector.
Chua also highlighted the role of the amendments to the Public Service Act, Retail Trade Liberalization Act, and the Foreign Investments Act in improving the country’s competitiveness and attracting more investments.
He said infrastructure spending would be crucial in building and developing the country’s manufacturing sector, as it relies heavily on the movement of people and goods.
Chua said the government would continue to invest in infrastructure because it is an important indicator that would 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 sector and bring us out of the COVID-19 crisis sooner,” he said.