THE GOVERNMENT needs to liberalize agriculture and address learning poverty to catch up with its regional neighbors, panelists told the Makati Business Club on Wednesday.
“We have to focus on agriculture and human capital. The two areas that I think we have not done much,” Ayala Corp. Managing Director Karl Kendrick T. Chua said in presentation.
Mr. Chua, a former National Economic and Development Authority director general, said the government’s priority reforms should include the human capital value chain.
He said like Vietnam, the Philippines has to fix agriculture first before moving up the value chain.
“Before I left government, we were proposing corn and livestock liberalization. So not only do we do it for rice, we do it for corn. Corn is important to keep the livestock, poultry, and the rest of the protein sector affordable,” he said.
He also proposed to liberalize the food market and deploy the Rice Tariffication Law to lower food prices and help farmers.
The Rice Tariffication Law, which took effect in 2019, allowed private traders to bring in rice shipments without restriction, though they had to pay import tariffs. Farmers groups have contended that the law unleashed the flood of rice imports that are eroding farmer livelihoods.
Mr. Chua said the Philippines needs new growth drivers and expressed doubt about whether reliance on business process outsourcing (BPO) and remittance can be sustained.
“For 25 years, we have relied on BPO and remittance to fuel growth, and because of its massive size, P4.5 trillion as of last year, it really fuels a lot of growth. But we cannot rely on that because remittance and BPO are growing at no more than 5%,” he said.
The economy is largely driven by household consumption fueled by remittances from overseas Filipino workers.
Mr. Chua noted that artificial intelligence is not the biggest threat to business process outsourcing, but rather the lack of skills and educated workers, a result of decades of neglect of the education system.
Shortcomings in healthcare also hinder many students’ educations, he said.
Mr. Chua said the demographic sweet spot is best harnessed by focusing on tourism, manufacturing, and technology.
“Because we have a demographic dividend, we should use that to fuel the next wave of growth. I propose that we focus on three kinds of tourism. Regular and leisure tourism needs a lot of catching up, but hold strong potential,” he said, adding that the Philippines needs to position itself as a health tourism destination.
Mr. Chua added that once agriculture is reformed, the goal should be to shift about 9 million workers out of farming into manufacturing, rather than services.
World Bank Philippine Lead Economist Gonzalo Varela said that alongside the human capital reforms from agriculture, health, education sectors, cited by Mr. Chua, the country, must also work to reduce learning poverty.
“You need to ensure that your population shows better indicators in terms of learning poverty,” he said.
“These are big challenges that are going to affect the ability of Filipinos to take advantage of technological change as a force for inclusive growth.”
Mr. Varela said job creation in the region and in the Philippines has been a key driver in reducing poverty, which has fallen, though vulnerabilities remain.
Many people are “one shock away, one typhoon away from falling back into poverty,” he said.
“This is a challenge that is increasingly a problem given automation and AI disruptions. There are many jobs that the youth aspires to that are at higher risk of displacement by AI, and that is a challenge,” he said. — Aubrey Rose A. Inosante