The recent economic report of the World Bank specifically on the condition and the future of the Philippines contains issues and developments that should concern and worry jurists and law scholars, not only politicians and economists, as we all strive to seek and achieve concrete reforms in "accessibility to justice" and "judicial reforms", in general.
Let me share its findings and recommendations:
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MANILA, Philippines—The World Bank said the Philippines, after having significantly improved its macroeconomic fundamentals since being on the brink of a fiscal crisis in 2004, should now keenly address structural problems that have been preventing economic growth from translating into poverty reduction.
In its latest quarterly report on the Philippines, the World Bank said the country should work on graduating from merely achieving and sustaining macroeconomic stability to affording most Filipinos prosperity.
“The government has done a really good job in achieving macroeconomic stability. But there are structural impediments that have to be addressed … to achieve a more inclusive growth and to reduce poverty at a faster pace,” Karl Kendrick Chua, World Bank’s country economist for the Philippines, said on Monday, in a press conference on the details of the report.
The structural impediments to poverty reduction in the Philippines, according to Chua, include unpredictability of regulations; the absence of a level playing field for businesses in terms of taxation; high cost of electricity; high cost of and tedious processes involved in starting a business; limited access to financing for micro, small and medium enterprises; and limited access to education and skills training.
On the issue of taxation, Chua said the government has been advised to rationalize the tax system by withdrawing the fiscal incentives enjoyed by some enterprises on one hand, and then reducing the 30-percent income tax rate to align it with the much lower rates imposed in other countries.
He said a level playing field in taxation would draw in new businesses.
On the issue of processes in starting up a business, the World Bank economist said the Philippines’ procedures have been much more tedious than those in other emerging economies, making the country unable to better compete in terms of attracting job-generating foreign investments.
Rogier van den Brink, lead economist of the World Bank, said that although the Philippines has been enjoying favorable macroeconomic fundamentals – including low inflation, sustained economic growth, declining debt burden, a stable banking sector, and comfortable level of foreign exchange reserves – the structural problems make it difficult for poor people to uplift their situation.
“[Poor] Filipinos still have difficulty accumulating wealth. For instance, it is difficult for people in the rural areas to get land and for [micro and small enterprises] to access to credit,” Van den Brink said in the same press conference.
“The bottlenecks have to be removed,” he added.
The World Bank is keeping its growth projection for the Philippines at 4.2 percent for this year and 5 percent for next year, saying such rates are decent and comparable with other emerging markets.
Nonetheless, it said, poverty has persisted as a serious challenge for the Philippines.
Latest statistics showed that despite a continually growing economy, the number of poor Filipinos stood at 26.5 percent of the Philippine population in 2009, up from 26.4 percent in 2006 and 24.4 percent in 2003.
Chua added that the government must address the lack of access to credit if the country were to see a significant decline in poverty incidence.
The World Bank has stressed the importance of making loans available to the micro-enterprises sector, which is believed to be a medium, through which poor people can improve their plight.
Chua said the country’s banking system has been awash in cash, and should help in efforts to reduce poverty by extending more loans tailor-fit for the poor. Problems related to credit access involve the high value of collateral required by banks and interest rates that micro-enterprises cannot afford to pay.
“Policies to ensure affordable access to finance for micro and small enterprises are needed to spur job creation,” the World Bank said in the report.
The World Bank added that investments in skills training would give the poor the chance to improve their ability to get better-quality and thus higher-paying jobs.
“Moving to higher value-added production would require improvements in the supply and quality of skills,” the World Bank said.
The World Bank said that, in particular, the government should invest more in strengthening the capacity of the Technical Education and Skills Development Authority so that it could better achieve its mandate of helping increase employment through skills training.
The bank also cited the need for the government to partner with the private sector in the area of improving the quality of graduates. Such a partnership is believed to help narrow the gap between what employers need and what the skills of graduates are.
The bank likewise cited the importance of ensuring the successful implementation of the K-12 program, which has been seen to significantly help improve competitiveness of the country’s labor force.
The World Bank said the K-12 program, which would extend the length of primary and secondary education from 10 to 12 years and which would require kindergarten education, would make the Philippines’ educational system comparable to global standards. Such a system is also believed to help high school graduates qualify for decent employment even without a college degree.
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