With reforms, RP unlikely to slip into recession - JFC
Manila, June 5 (PNA) -- Foreign businessmen said on Thursday that despite the very modest 0.4 percent growth in the country's gross domestic product (GDP) in the first quarter of this year, the Philippines is unlikely to slip into recession as long as the necessary reforms are put in place.
"We don't think the Philippines will go into recession," said American Chamber of Commerce and Industry director John Forbes. However, he stressed the need to introduce the needed economic reforms to prevent the country from slipping into recession.
"The more reforms, the more growth," Forbes said.
AmCham executive director Robert Sears also said that despite the economic difficulties, the domestic economy is holding its own.
"There are bright spots like the still robust business process outsourcing, tourism and mining," Sears said.
"We are holding our own," he added.
Philippine Chamber of Commerce and Industry president Edgardo B. Lacson also discounted the likelihood of the local economy slipping into recession as what other analysts portrayed.
"It is unlikely," he said, adding "the economy has proven its resiliency and the economic stimulus (package) of the government is stimulating growth."
Expenditures for the national elections next year are going to help, he noted.
"That is part of the economic stimulus," he added.
The Joint Foreign Chambers has urged for the passage of the pending bills in Congress to help stir the sluggish economic growth.
This is part of the chamber's eight-point recommended strategy for rapid recovery and future growth. The recommendations are part of the JFC paper, "Impact of the Global Economic Crisis on the Philippines: Preparing to Rebuild Foreign Investment Inflows" presented to the media Monday.
Foremost, the JFC urged government to avoid complacency, stressing that the crisis justifies the implementation of the needed reforms.
The other recommendations of the JFC include: passage of reform legislation, reduce barriers to foreign participation, take forceful and effective actions against corruption, build modern infrastructure faster, vastly improve education, create a more efficient and competitive business environment, and build really big winners.
To avoide complacency, the JFC would like the government to be more aggressive in its growth targets by setting 10 to 11 percent by 2013 and 2014 instead of getting complacent and preaching about the local economy's resiliency.
Forbes stressed the 10 to 11 percent growth may not be feasible this year because of the global financial crisis, but is feasible in the medium-term, say 2013 or 2014.
"We urge the Philippine leaders to develop an ambitious vision for the country, to undertake a program of bold reforms, to target double-digit economic growth, to aggressively remove obstacles co competitiveness, and to develop vigorous strategies that give more Filipinos better alternatives to working abroad," said European Chamber president Hubert d'Aboville.
"The current administration speaks of resiliency, but not ambitious reform, implying that Filipinos will survive and are less affected than other economies and that the status quo will see the nation through tougher times," the JFC said.
The foreign business community even proposed that government organize a Special Crisis Experts Group comprising of leading economists, businessmen and senior government leaders to recommend key reforms that will help the economy recover and grow at least 10 percent by the middle of the next presidential term.
"Why not set a recovery growth target as high as 10 percent by 2013 or 2014 and design and implement a plan to achieve high growth?" stated the JFC with seven foreign chamber affiliates and 2,000 individual members.
GDP growth has been targetted to reach as much as over 7 to 8 percent in the past few years, but not double-digit. The highest growth was registered in 2007 at 7.1 percent.
The GDP growth target this year was set at 3.1 to 4.1 percent, but with growth in the first quarter at 0.4 percent, the foreign business community was skeptical over growth sustainability.
The JFC paper noted that since the 1997 Asian financial crisis, few efforts have been made to undertake reforms, noting that the government's development plan did not even target double-digit growth even at the time when the global economy was booming.
On pending legislations, businessmen said they are pushing for the important bills such as the Customs Brokers Act Amendment, Department of ICT, Investment and Incentives Code, Pre-Need Code, Real Estate Investment Trust (REIT) Strengthening the Stock Market, Reproductive Health Bill, Residential Free Patent, Freedom of Access to Information, Ratification of the Revised Kyoto Convention and Reform of the Labor Code.
On foreign investment participation, the JFC paper has reiterated the foreign chambers' earlier call to make the Foreign Investment Negative List less negative, particularly on the restrictions on foreign equity on ownership on utilities, land ownership and retail trade, practice of certain professions, and special taxes and fees on foreigners.
"Progress in reducing barriers to foreign participation sends message that the Philippines is seriously preparing for free trade negotiations with the EU and US and would facilitate access of such negotiations," the paper said.
The JFC paper also called for a solution to smuggling as this undermines investment, depriving the government of much-needed revenues.
On infrastructure development, the JFC said there are over 10 major road projects designed but not implemented, with only one light rail line on EDSA expected to open in the next 18 months.
In 2008, only slightly above 2 percent of GDP was devoted to public infrastructure, while per capita spending on social infrastructure for education and health was relatively low.
The JFC has urged the building up of power infrastructure to satisfy future demand as construction of power plants takes time.
Sean Georget, executive director of the Canadian Chamber, stressed the need to add two more years of basic education to align with other countries.
"JFC supports massive increase in education budget and extending basic education by two years, and higher salaries for over 500,000 teachers," he said. (PIA) [top]