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Saturday, March 27, 2004
Low savings mean less investment, jobs: BSP official
A GOVERNMENT official has lamented the low savings rate of Filipinos, saying it is hampering investment, which would provide the citizens with much-needed jobs and possibly put a lid on insurgency.
“Just 18 percent of family income is saved. The other 82 percent is spent,” said Dr. Vicente Valdepeñas Jr., member of the Monetary Board, the policy-making body of the Bangko Sentral ng Pilipinas.
Investment funds are taken from money set aside in banks and other financial institutions.
He said while it was true that the Philippine economy had been growing, this had not necessarily translated into more jobs for the people.
“To do away with joblessness requires that growth in net investment matches the growth in the rate of output (gross domestic product),” he said.
But investment, as measured by capital formation as a percentage of gross domestic product (GDP), has been declining since 2001.
During the Sun.Star Economic Forum 2004 earlier this month at Waterfront Cebu City Hotel, Valdepeñas said that in the first quarter of 2001, the rate of capital formation to GDP was 22.8 percent in the first quarter of 2001.
This slid to 21 percent the following year, and then to 20.9 percent in the first quarter of last year.
This had a negative effect on jobs, he said.
From 1997 to 2002, every 2.7 percent drop in the investment rate raised the rate of unemployment by one percent.
The National Statistics Office recently reported that the unemployment rate in January rose to 11 percent from 10.6 percent a year earlier, which means 3.9 million people in the country are unemployed.
Valdepeñas said the biggest percentage of joblessness was in the 15-24 years old age bracket, where the jobless rate was 45 percent.
He warned: “What is keeping the ranks of the NPA (communist New People’s Army) around since 1969? Jobless growth.”
Dr. Josef Yap, research fellow at the Philippine Institute for Development Studies, agreed on the need to revive domestic investment.
In a separate forum, he said that in 2002, only Indonesia had a lower investment rate than the Philippines among its immediate neighbors.
While the Philippines had an investment rate of 19.3 percent to the GDP, Malaysia had 23.6 percent; Thailand 23.9 percent, and Korea, 26 percent.
Indonesia’s 15.7 percent was “consistent with the outflow of foreign investment.” CTL
(March 27, 2004 issue)
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