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THE
export of Filipino talent overseas is the Philippines’
chimaera, according to a foreign economist.
On one
hand, overseas worker remittances have been helping the
country achieve decent growth from below 5 percent real
gross domestic production rate six years ago to nearly 8
percent last year, according to Justin Wood of the
Economist Intelligence Unit (EIU).
“The
country’s large overseas work force continues to support
the economy with strong flows of remittances that are
growing despite the global slowdown,” a press release
quoted Wood as saying.
“These
flows will ensure that private consumption continues to
be the key factor driving the economy.”
However,
it appears this isn’t sustainable, Wood said, as
fundamental features of the economy dampen growth
drivers like remittances of overseas Filipino workers (OFWs).
According to Wood, real GDP growth has been falling and
is seen to fall to nearly 4 percent by next year.
Citing
Bangko Sentral ng Pilipinas as source, Wood said this is
compounded by upward spikes in consumer price inflation.
Compared
to other Asian countries, the Philippines has been
moving from relative wealth to relative poverty as per
capita GDP, compared to fellow labor-exporter Indonesia,
said Wood.
Likewise, the Philippines lag behind nine Asian
countries in terms of generating investments.
“And it
has always been too low,” Wood wrote in his presentation
for the Roundtable Discussion the EIU organized on
Thursday.
The
country’s gross fixed investments as percentage of GDP
in Southeast Asia is 15 percent, compared to Malaysia’s
21 percent.
“Foreign
direct investment is far below where it could be,” Woods
wrote, comparing leader China’s FDI inflows of $138
billion in 2007 to the Philippines’s $3.44 billion.
Based on
data from the United Nations Commission on Trade and
Development, OFW remittances of $9.608 billion in the
first seven months of the year is three times bigger,
even if the FDI inflows is combined with the $1.3
billion the Philippines received as official development
assistance (ODA) last year.
Wood
said the Philippines can only lift long-term growth rate
if the State can “give workers a reason to stay.”
There is
a need, he stressed, ‘to raise employment-generating
growth doing that and to reduce poverty.”
Wood
also prescribed improving political stability and
governance and addressing corruption.
“To
improve the fiscal situation, the Philippines needs to
enable more spending on education, health,
infrastructure and development.”
However,
economist and lawyer Nepomuceno Malaluan of the
nonprofit Action for Economic Reforms said the State and
the market have failed society’s expectations.
“Recent
events have shown us the market has not been behaving
effectively while government interventions proved to be
largely failing; think corruption, low-earning GOCCs,
and white elephants,” Malaluan said in a forum that AER
organized on Wednesday.
Wood
said the Philippines’s growth area may be in mining,
tourism, retail, and the business process outsourcing
industries. Except for mining, the last three sectors
are in the service-providing industry.
With its
large population, the Philippines is considered a net
exporter of labor, currently estimated to be eight
million in 190 countries. |
