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Development partners, representatives from civil society and co-workers

in government, good morning. I will be presenting the key strategies
outlined in the countrys Philippine Development Plan for 2011 to 2016.
I will go through first the Philippine economic performance, look at the constraints,
and talk some key program and strategies in the Philippine Development Plan.
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As a background, the countrys economic growth performance has been
moderate and uneven and well below the postwar growth rates of
several high performing Asian economies. With population still
increasing at more than 2 percent per year, real per-capita incomes
have risen only by about 20 percent from 1981 to 2009. In
comparison, per capita income increased four-fold in Malaysia, and five-
fold in Thailand. In addition, absolute mass poverty was basically
eradicated in these countries.
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The persistently weak economic performance means corresponding
high unemployment rates and many Filipinos living below the poverty
line. Moreover, the economic gains have not been broadly shared as
shown by the high inequality ratios.
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Growth, in short was not inclusive, because it failed to create enough
jobs and reduce poverty for the majority of Filipinos.
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Why is inclusive growth elusive? There are deterrents to inclusive
growth.
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First is INADEQUATE INVESTMENT. The Philippines poor investment
record helps explain the lack of productive opportunities in the country.
Investment is less than savings, even at very low interest rates.
<2
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CLICK> Inadequate infrastructure and glaring gaps in governance
are some of the critical factors affecting capital accumulation and
technological progress.
An inefficient transport network and unreliable and costly power supply
have been identified as the most significant infrastructure constraints.
Weak institutions and governance failures hindered investments. The
country continues to suffer from a reputation of having an inefficient
bureaucracy, excessive red tape, and widespread corruption. In the
2011 Doing Business ranking, for example, the Philippines placed 156
out of 183 countries.
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Second is JOBLESS GROWTH. The countrys unemployment rates
have remained high, averaging 10 percent in 19902005 and 7.5
percent in 2006-2010 compared to China, Malaysia and Thailands 4
percent or below during the same period.
Labor market fragmentation, limited information about employment and
skill availability, along with complex labor laws and regulations resulted
in high unemployment and underemployment.
The low employment intensity of economic growth also resulted in
economic activity along dual lines --- between a large-scale, capital-
intensive, and highly organized sector, and a small-scale, labor-
intensive, informal sector, with a sparse middle section. This has stifled
the expansion of firms and reinforced the concentration of firms in the
first group.
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Third is INADEQUATE LEVELS OF HUMAN DEVELOPMENT. Basic
social service delivery to improve health, nutrition and educational
status, especially among the poor, has been inadequate.
The inadequate delivery of education and health services has put the
poor and vulnerable in increasingly disadvantaged position resulting in
low access to growth opportunities.
Poor households in isolated areas remain inaccessible to health centers
and schools, even if services are offered for free or at highly subsidized
rates.
The problem of poor access to basic social services is compounded by
big family size among poorer households, thus, reducing household
assets and purchasing power in per capita terms. Most of the population
is inadequately protected from shocks to their already meager human
capital. While natural disasters can affect any population group, it is the
poor who tend to be most vulnerable and least resilient to calamities.
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Fourth is LOW GAINS FROM TRADE. The Philippine export
performance in terms of share to GDP is not as vibrant compared to
other emerging economies in East Asia.
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Recognizing these constraining factors, the new administrations
envisions a country that has achieved inclusive growth, which is
characterized as high, sustained and broad-based. This is enunciated in
the 16-point agenda of President Aquinos Social Contract with the
Filipino People.
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To achieve inclusive growth, the governments efforts shall focus on
three broad strategies that will effectively address poverty and create
massive employment opportunities.
First is ATTAINING A HIGH AND SUSTAINED ECONOMIC GROWTH
Second is EQUALIZING ACCESS TO DEVELOPMENT
OPPORTUNITIES
And third is IMPLEMENTING EFFECTIVE AND RESPONSIVE SOCIAL
SAFETY NETS
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High and sustained economic growth will provide productive and decent
employment opportunities.
For 2011 to 2016, we are targeting a higher annual growth of 7.0 to 8.0
percent.
At these growth rates and given the right policies, economic gains will
translate into higher per capita income and effectively reduce poverty.
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Second, we will equalize development opportunities across geographic
areas and across different income and social spectrum. This will ensure
that economic growth and opportunities translate to poverty reduction.
This strategy entails:
a) Better education, primary health care and nutrition, and other basic
social services;
b) Levelling the playing field through equal access to infrastructure,
credit, land, technology, and other productive inputs; and
c) Unbiased and facilitative policies that promote competition as the
government improves governance and strengthens institutions.
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And thirdly, responsive social safety nets will catch those who are left
behind by the character of a high sustained growth. Likewise, in
recognizing the devastating effects of climate change in the future,
social safety nets that support and capacitate vulnerable sectors are
necessary to address poverty.
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These broad directions will be fleshed out in the 2011-2016 Philippine
Development Plan, and the Medium-Term Public Investment Program.
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We will implement a more responsive Philippine Development Plan
(PDP) and we look forward to our development partners to continuously
support our priorities by aligning to our development strategies.
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There are ten chapters in the Plan that lay out strategies, policies and programs
to attain inclusive growth within the medium-term. These are the following:
The first one, of course, is the introductory chapter that provides the general
framework.
Chapter 2 is Macroeconomic Policy, which aims to flesh out policies towards
ensuring macroeconomic stability. This requires addressing the narrow fiscal
space and being able to get on a sustainable revenue-and-spending path.
Chapter 3 is on Competitive Industry and Services Sectors. It identifies the
strategies that will raise the levels of investment and entrepreneurship,
especially among micro, small and medium enterprises.
Chapter 4 is on Competitive and Sustainable Agriculture and Fisheries. It aims
to raise productivity and incomes in the sector, among others.
Chapter 5 Accelerating Infrastructure Development aims to provide safe,
efficient, adequate, reliable, cost-effective, and sustainable physical
infrastructure. The government will engage in PublicPrivate Partnerships
(PPPs) through more responsive guidelines and policies and attractive terms
for the private sector.
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Chapter 6 - Towards a Dynamic and Resilient Financial System. It
identifies strategies that could properly address the challenges that
continually beset the Philippine financial system.
Chapter 7 is on Good Governance and the Rule of Law. It highlights the
need for effective and honest governance through effective public
service, zero tolerance for graft and corruption, and strong respect for
the law.
Chapter 8 is on Social Development. It primarily aims to improve the
lives of all Filipinos through equitable access to adequate and quality
social services and assets.
Chapter 9, on Peace and Security, proposes strategies for the peace
process and national security.
The final chapter, Chapter 10, is on Conservation, Protection and
Rehabilitation of Environment and Natural Resources towards
Sustainable Development. It proposes policy initiatives for the
environment in the context of emerging issues such as global warming
and climate change.
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Broadly, these chapters are focused on the following key programs and
strategies
First, BOOSTING INDUSTRY COMPETITIVENESS TO GENERATE
MORE EMPLOYMENT.
This strategy aims to improve the ability of Philippine industries to be
competitive in a sustainable manner. The provision of vital infrastructure
and expansion of logistics chains, combined with a reversal change in
the governance regime, is bound to elicit a strong positive response
across all classes of entrepreneurs and financiers.
Work arrangement mutually agreed upon shall also be introduced.
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Employment creation will also be pursued indirectly by supporting
activities that utilize the countrys comparative advantage in more labor-
intensive activities. These activities typically involve products and
services that are more competitive in the world market.
Likewise, exports can be an important means of obtaining technological
know-how. These technological externalities generate positive spillover
effects to other sectors in the economy, which redound to faster
accumulation and innovation, and therefore accelerated growth.
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The second key strategy is to IMPROVE ACCESS TO FINANCING.
A reliable and efficient financing is important to address the evolving
needs of a diverse public.
The government shall prioritize defining a clear credit policy framework
and its corresponding credit delivery strategy.
Public financing programs for MSMEs, cooperatives and others will be
strengthened.
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Wider self-employment opportunities shall be afforded by providing
credit-access to the poor through microcredit provision that is integrated
in a business-service package.
Likewise, savings generation will be facilitated through the use of
alternative products and delivery of financial services in underserved
and unserved areas of the country. These financial services include
electronic banking, micro insurance, implementation of the Credit Surety
Fund Program (CSF), agent banking and use of non-bank financial
institutions as delivery channels.
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Third is MASSIVE INVESTMENT IN PHYSICAL INFRASTRUCTURE.
Investment in infrastructure prioritizes the creation of integrated and
multimodal national transport and logistics system.
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Hindered by a record of perennially large budget deficits, government
shall generate funds for infrastructure investment through better tax
collection and more rational budget allocation hence the fiscal and
budgetary reforms discussed in Chapter 2.
However, government funds may not suffice given its need to
immediately focus on social development and poverty-alleviation . For
this reason, the government relies on the public-private partnership
(PPP) scheme to implement the bulk of its infrastructure program.
Development partners can help to structure bankable projects through
sustainable project development financing and provide support to
improve enabling framework and strengthen government institutions.
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Fourth is TRANSPARENT AND RESPONSIVE GOVERNANCE. The
next two slides show how transparent and responsive governance will
be achieved.
Underpinning inclusive growth are institutions that promote
transparency, accountability, the rule of law, and effective and impartial
performance of the regulatory function of government, as discussed in
Chapter 7 and across all chapters.
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Good governance and strong institutions provide tremendous help in
bringing down the cost and risks of doing business.
We hope there will be sharing of best practices and external services.
We also hope that policy notes on emerging issues will be generated.
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Fifth is to DEVELOP HUMAN RESOURCE THROUGH IMPROVED
SOCIAL SERVICES.
Investment in human capital is key to sustained and broad-based
growth. This entails equitable access to basic social services, strong
social safety nets, and social protection.
Concrete objectives and programs which are basically geared towards
the attainment of the Millennium Development Goals (MDGs) are
spelled out in Chapter 8.
We count on your support for the effective delivery of social services.
We also hope to harness partnerships for the achievement of the
MDGs. Through these partnerships, we look forward to knowledge-
sharing on successful development approaches in other countries
especially in MDG targets where the Philippines is lagging.
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The plans broad thrusts of job generation, massive infrastructure
development, higher governance standards, human development and
human capital formation and direct poverty-relief would not succeed if
complementary strategies do not support and enhance their impact.
These strategies can prosper only in a macroeconomic regime of low
inflation and sustainable fiscal balances as explained in Chapter 2.
As discussed in Chapter 10, ensuring ecological integrity and mitigating
the effects of climate change is essential for success on several fronts.
Natural disasters and calamities can damage physical infrastructure,
endanger human lives and health, and destroy livelihoods, particularly
among the poor and vulnerable. The chapters priority, therefore, is to
devise and adopt measures that mitigate the potential impact of
environmental factors.
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Finally in Chapter 9, the end of armed conflict and the attainment of
lasting peace is vital to breaking the vicious cycle of conflict and
underdevelopment in affected areas that have otherwise huge potential
for social and economic development.
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After the Plan, we will work on the Medium-Term Public Investment
program. This will identify the programs and projects that will implement
the Plan.
Thank you for participating in this forum, and we look forward to your
continuing support for the success of the Plan. Good morning.
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