ECONOMIC managers on Friday, Aug. 11, 2023, highlighted the vast economic potential of the Visayas and its crucial role in helping the economy grow amid a challenging business environment that now includes the slowdown in the US and China economies.
Speaking at the Philippine Economic Briefing (PEB) attended by various regional stakeholders, Finance Secretary Benjamin Diokno pointed out that the Visayas played a major role in helping the economy withstand economic difficulties.
In 2022, Western Visayas grew the fastest among the 17 regions in the country at 9.3 percent. Central Visayas also achieved an impressive 7.6 percent growth, while Eastern Visayas expanded by 6.8 percent.
“Clearly, this part of the country is brimming with immense economic energy. The administration of President Ferdinand Marcos Jr. recognizes this and is fully prepared to support its growth and development in the next five years,” said Diokno in his keynote speech.
He cited Cebu, and the Visayas as a whole, as home to some of the best education institutions, specializing in fields such as the natural sciences, engineering, medicine and information technology.
The government is currently prioritizing the implementation of 194 high-impact Infrastructure Flagship Projects, 65 of which are located in Visayas with an indicative total cost of P1.7 trillion.
Some of these projects are the Cebu Public Transport Modernization Project, the Metro Cebu Expressway, the Panay-Guimaras-Negros Inter-Island Link Bridge, the Samar Pacific Coastal Road Project, and the New Dumaguete Airport Development Project.
Second quarter slowdown
Diokno assured the audience that the Philippines’ 2023 growth target of six to seven percent remains doable amid the slowdown of the economy in the second quarter to 4.3 percent from the 6.4 percent expansion in the first quarter.
“While our expansion was moderate relative to previous quarters, it remains robust. Growth for the first half of the year was driven by historic employment levels, a strong rebound in tourism, increased investment registration activities, and the return of face-to-face classes.
“While government spending decreased by 7.1 percent due to the absence of election-related spending in the first half of the year, we expect government expenditure to pick up in the next quarters,” Diokno said.
To achieve the growth targets, Diokno said the government will need to expedite the implementation of government programs and projects, provide fiscal stimulus to increase the productive capacities of the public and private sectors and address the adverse impact of recent typhoons.
“The economic team is closely monitoring domestic and external developments and stands ready to make policy adjustments to ensure that we attain our medium-term growth targets,” he said.
The finance chief also assured stakeholders that the Philippines will weather the impact of the slowdown in the US and China economies.
“The whole world is slowing down, and I don’t think we will be heavily affected because we are not like other countries that are dependent on exports, although it will have some effect because we are a consumption-driven economy. But we have a strong infrastructure program. So as long as we continue these construction activities, we will weather the looming recession,” he said.
Beefing up infrastructure
During the first panel discussion, Diokno said with the Medium-Term Fiscal Framework (MTFF), the government aims to reduce the country’s debt-to-gross domestic product (GDP) ratio from 62 percent to 50 percent by the end of the President’s term.
With this, he emphasized the importance of continuing the momentum of rapid infrastructure development, started by the previous administration, to be able to maintain infrastructure spending at five to six percent of GDP.
“For the last 50 years, we were only spending two percent of our GDP on infrastructure. That’s why we suffer in comparison with our Association of Southeast Asian Nations neighbors,” he said.
GDP is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.
The Finance chief also underscored the role of the Maharlika Investment Fund (MIF) to serve as an additional boost to finance infrastructure.
Currently, around 55 percent of the 194 Infrastructure Flagship Projects will be funded through official development assistance; about five to 10 percent by National Government; and around 30 percent through public-private partnerships.
He said the MIF will free up fiscal space in the national budget for more social projects such as health centers and schools.
The law establishing the sovereign wealth fund was signed on July 18, 2023. Diokno said the MIF’s implementing rules and regulations will be released by the middle or end of August this year, earlier than the 90-day requirement of the law.
Jointly organized by the Bangko Sentral ng Pilipinas and the DOF, the PEB in Cebu was attended by more than 600 members of the business and financial communities, industry associations, local government units, non-government organizations, academe and media.
National Economic and Development Authority Undersecretary Joseph Capuno also presented the Central Visayas Regional Development Plan 2023-2028, which targets to achieve a gross regional domestic product growth rate of 6.8 to 8.5 percent and lower poverty incidence to 10.5 percent by 2028 while BSP Deputy Gov. Francisco Dakila Jr. underscored the vital role of rural banks in countryside development.
Business community reaction
Melanie Ng, regional governor of the Philippine Chamber of Commerce and Industry-Central Visayas, shared the business community’s policy recommendations to boost productivity and competitiveness.
Among these are the provision of incentives and benefits with fewer requirements, improvement in connectivity, reduction in the cost of water and energy, simplified business processes, and affordable cost of doing business.
“When investors come, they look at our competitive edge, they look at our advantages. When they leave, it’s because we’ve lost our edge. So we have to work together to get it back––private sector and government,” Ng said.
Cebu Chamber of Commerce and Industry president Charles Kenneth Co lauded the government for hosting the PEB in Cebu as it strengthens public and private sector dialogue.
He cited the entry to the Philippines of Swedish furniture retailer IKEA, which opened its largest branch in the world in Pasay, as evidence of how the government’s game-changing reforms have allowed investors to set up shop in the country.