Saturday, February 23, 2008 WB exec doubts gov't can sustain economic growth
LAKE SEBU, South Cotabato -- The government needs to further ease regulations to attract more foreign and domestic investments if the nation wants to sustain its economic momentum, the country's top World Bank (WB) official said at the weekend.
Recently, the government announced the economy grew faster than expected in the fourth quarter, taking full-year 2007 growth to a 31-year high of 7.3 percent.
"To my taste, there was a bit too little investments in this country," Bert Hofman, new WB Philippine country director, told reporters here in his first official visit in the countryside to inspect a WB funded anti-poverty project dubbed Kalahi-Cidss.
"I'm not yet convinced that seven to eight percent is going to be future of the Philippines. I think some more works are needed to be done," he added.
Hofman said the economic growth in 2007 was spurred by the services sector and remittances from overseas Filipino workers (OFWs).
In the 19 months to November last year, overseas remittances from OFWs topped $1 billion each month, recent data from the Bangko Sentral ng Pilipinas (BSP) showed.
In the 11 months to November 2007, the BSP reported $13.1 billion was sent home by OFWs, short of $1.2 billion to reach its $14.3 billion full year target. The BSP expects remittances to grow to $15.7 billion this year.
Hofman has 15 years of experience in the WB, 12 of which have been in the Asia region. His most recent assignment was in China where he headed a team that provided economic policy advice to the government.
While he lauded the sound macro economic policies of the government, Hofman noted the investment climate in the country has to undergo significant improvements to draw the interest of investors.
"The government has to work for investment climate to make sure it's easier and more profitable to invest in the country. It should ensure that regulations are not too heavy, that it should not take too long or complex to set up a business," he said.
Hofman also pointed out that salary rates in the country must be competitive and not be too expensive, since one of the factors that investors consider in putting up business, especially in the manufacturing sector, is the labor cost.
The WB executive stressed it is essential that new investments or manufacturing base is created to generate new jobs that could create sustainable income over the long run.
"If you don't invest [on new enterprises], that means that you don't create new jobs," Hofman said, reiterating that new investments must occur in the country to sustain last year's economic growth.
According to him, the sound macro economic policies of Arroyo administration has brought government deficit to almost zero and cut down quite a bit the interest rates, which induced construction works around Metro Manila.
Generally, he pointed out that the Philippines is still lagging behind in infrastructure development compared to many countries in the Asean region, urging the government to further work on this field to lure more investors.
Barely a month in the Philippines, Hofman said there are lots of debates that the economic growth has not benefited the ordinary people.
