Wednesday, September 05, 2007 Editorials:Barriers to economic growth
A recent report released by the World Bank on the state of the economy of Asia-Pacific Economic Cooperation (Apec) member countries noted that bribes and other bad practices stunted the growth of Apec economies by about “a quarter to 50 percent.”
It said that companies operating in the Apec region “badly need more transparent and predictable rules to reduce the uncertainty of trading.”
The World Bank added that while the Apec economies generally had a good record in reducing regular trade barriers such as tariffs, they however called for more focus on so-called “hidden” barriers and what the report referred to as “unofficial payments,” an apt euphemism for bribes.
The worrisome part of the report is not how the bad practices hinder economic growth but how they affect our war against poverty.
Bad practices
Had the Philippine economy been able to move smoothly without any hindrance from so-called bad practices, trade could have expanded “by 25 percent” and acquired a comfortable share of the estimated “$148 billion in lost economic activity in the Apec region.”
It has long been rumored that potential investors in the Philippines have shied off and turned to China and other countries not only because of stringent investment rules but also because of the bad practices of our investment officials in asking for under-the-table payments for their cooperation in facilitating negotiations regarding investment.
Barriers
Such barriers as complicated rules and excessive restrictions offer opportunities to key officials to demand “unofficial payment” for their assistance in facilitating the placement of the investment.
“In many economies, the flow of goods and services remain hindered by complicated customs regulations, insufficient use of modern technology in customs, lack of handling and transportation infrastructure…”
The report pointed out that “restrictions on investment were greater in lower income Apec countries” which include the Philippines.
Transparency
“Excessive regulations, unclear property rights, poor legal systems and inadequate competition laws” are restrictions that our country may have or not have at the moment, but they are perceived as part of the barriers that have slowed down the economy.
The net significance of the World Bank report is that if such need for transparency is addressed, and the were scaled down, if not eliminated, then the investment environment in the region would brighten.
