“We are determined to reach 7 to 8 percent GDP growth this year,” said Secretary Ernesto M. Pernia of the National Economic and Development Authority (NEDA). This statement comes following the recent report on the performance of the Philippine economy for full-year 2018. The Philippine economy registered a growth of 6.1 percent in the fourth quarter of 2018, and 6.2 percent for full-year 2018. As the Philippine economy continues to face the challenges of inflation, unemployment and poverty, the NEDA persists on its task of pushing for policies and programs that will lift the Filipino people towards a matatag, maginhawa, at panatag na buhay (a strongly-rooted, comfortable, and secure life).

THE ECONOMIST BEHIND THE AGENCY
Dr. Ernesto del Mar Pernia serves as the Secretary of Socioeconomic Planning, National Economic and Development Authority (NEDA), under the Duterte administration. Dr. Pernia is also Professor Emeritus of Economics at the University of the Philippines, which is an appointment for life.

Prior to heading the NEDA, he was Lead Economist at the Asian Development Bank (ADB). Earlier, Dr. Pernia was with the International Labour Organization as Regional Adviser on population and employment policy for Asia and the Pacific. He was also the President of the Philippine Economic Society and Co-Chair of the Federation of ASEAN Economic Associations.

Dr. Pernia hails from Bohol; after high school he attended the San Carlos Major Seminary in Cebu City, graduating magna cum laude with a bachelor’s degree in Philosophy. He obtained his second bachelor’s degree in Economics from the University of San Carlos. Thereafter, Dr. Pernia earned his PhD degree from the University of California Berkeley on a Ford Foundation scholarship and a Smithsonian Institution dissertation grant.

In an exclusive interview, Secretary Pernia answers 10 of our most pressing questions regarding our country’s economy.

1. How has the current administration changed the Philippine economy?
It isn’t so much about the administration changing the economy. When the Duterte administration assumed office on June 30, 2016, we thought it made sense to build on the gains of the second Aquino administration while working on more economic reforms to further promote growth and reduce inequality.

We appreciate President Duterte’s political will and determination to get things done quickly. For instance, the NEDA Board, under this administration, has already approved a total of 61 big-ticket projects amounting to PhP2.73 trillion. We have also seen many reforms passed recently, such as Tax Reform, the Ease of Doing Business Law, the 11th Foreign Investment Negative List, and the issuance of EOs 12 and 71 that can accelerate the implementation of the Responsible Parenthood and Reproductive Health (RPRH) Law, among others.

The economy has also been growing at a respectable pace. We remain one of the best performing major economies in Asia, growing by 6 percent or higher for 7 consecutive years now, and averaging 6.5 percent in the first 10 quarters of this administration.

Our highest growth rate so far was 6.9 percent in 2016, within our target of 6.57.5 percent. For 2017, it was 6.7 percent. In 2018, it slowed to 6.2 percent mainly because of the high inflation rates during the third and fourth quarters, plus the poor performance of agriculture, exports, and manufacturing.

2. How is inflation expected to ease up this 2019 given that oil prices seem to be on an uptrend?
For 2019 and 2020, we see average inflation to settle within our target range of 2 to 4 percent, barring major adverse shocks.

A number of economic reforms should help reduce and stabilize inflation over the medium term. These include: (1) rice tariffication that will ensure adequate supply and affordable price of rice; (2) accelerated infrastructure development spending that will also raise the country’s productive capacity; and (3) BSP charter amendments that will strengthen monetary policy to fight inflation.

World oil futures prices are on the way down, which should make up for possible OPEC cuts.

3. What are the government’s programs to address the high unemployment rate?
We have reduced the unemployment rate that used to be in the double digits. Now, it’s down to 5.3 percent, according to the latest Labor Force Survey in October last year. Underemployment rate (workers who are employed but they want to work more hours to increase their incomes) used to be 20-25 percent, now it’s down to 13.3 percent, the lowest in over a decade. Besides BPOs (business process outsourcing), our infrastructure investment program, Build Build Build, is also helping employ more of our workers.

Government is working to fast-track strategic measures towards full and inclusive employment. We need to improve social protection programs for workers such as unemployment insurance for displaced workers. Considering our country’s high proportion of educated women, we are also encouraging women to join the workforce through the Telecommuting Act and the full implementation of the Responsible Parenthood and Reproductive Health Law.

Our poverty index used to be around 30 percent in the early 1990s, but has gone down to 21.6 percent in 2015. Our next poverty numbers will come out in March from the PSA’s (Philippine Statistics Authority) Family Incomes and Expenditures Survey, conducted every three years. Our aim is to bring poverty down to 14 percent by the end of this administration. With more jobs created, the economy should grow faster with poverty rate declining as well.

The economy has also been growing at a respectable pace. We remain one of the best performing major economies in Asia, growing by 6 percent or higher for 7 consecutive years now, and averaging 6.5 percent in the first 10 quarters of this administration.

4. How can the manufacturing sector attract more investments, be more competitive and boost exports?
The manufacturing sector has much potential. It can be improved by reducing red tape, seriously implementing the Ease of Doing Business Law. We have liberalized through an EO the Foreign Investment Negative List, reducing more areas or activities reserved only for Filipinos, and opening them up for foreign investments. The remaining restrictions require legislation or constitutional amendment. Three bills are pending in Congress—FIA (Foreign Investments Act), Public Service Act, and the Retail Trade Act.

5. What are the government’s efforts to support the growth of SMEs?
Local investors are doing well, but they can be improved in terms of willingness to invest and areas of investment if we implement the Ease of Doing Business Law and the Anti-Red Tape Act. These would mean less delays in getting permits and licenses. Given improved connection between micro, small and medium enterprises (SMSEs) with larger enterprises, there is better value chain process.

MSMEs are one of the country’s major economic drivers. We are also continuing to work in making Research & Development activities and output accessible to MSMEs to help increase their productivity and competitive advantage.

6. How will the potential slowdown of China’s economy affect trade agreements and investments in the Philippines?
Our trade with China in terms of exports have Our trade with China in terms of exports would be adversely affected, but we can make up for it with other markets. We need to look for other export markets, diversify our products and make them more competitive.

7. How can economic growth be encouraged in other cities so it is not concentrated in Metro Manila and adjacent regions?
The Public Investment Program 2017-2022, which accompanies the Philippine Development Plan, lists over 9,000 projects scattered all over the country. These are national, region-specific, as well as interregional in nature— enhancing the connectivity of regions among themselves and with the mainstream economy.

Major regional centers include Manila, Cebu, Davao, and Cagayan de Oro. We also have Baguio, Pampanga, and Batangas. Davao was not all that prominent before, but now it has become a prime investment and tourist destination because of improvements in infrastructure and facilities, not to mention the popularity of the president.

Government is working to fast-track strategic measures towards full and inclusive employment. We need to improve social protection programs for workers such as unemployment insurance for displaced workers.

8. How will federalism affect the Philippine economy and the different regions of the country?
It’s not a program that should be rushed. It’s better we strengthen the local economies first, and connect them to the mainstream economy dominated by Davao, Cebu, CDO, and Manila. We need to connect these outlying or lagging regions with the major urban centers so that they will prosper. ARMM is the poorest region due to unstable peace and order. That’s why the BARMM should perk up their local economies. Eastern Visayas is lagging because of its vulnerability to weather disturbances. Bicol is also a relatively poor region. To boost these economies, we need to improve infrastructure, tourism, and peace and order in those areas.

9. Tell us about NEDA’s AmBisyon Natin 2040?
AmBisyon Natin 2040 is the result of a NEDAled nationwide survey in 2015 that explored what Filipinos want to have and where they want to be in 25 years. With a long-term vision based on people’s aspirations, we can better craft mediumterm development plans. The study results showed that Filipinos want a life that is stronglyrooted, comfortable, and secure. Filipinos want to enjoy a stable and comfortable lifestyle, have enough for daily needs and unexpected expenses, be able to prepare for their children’s future, have their own home, have the freedom to travel, and be protected by a clean, efficient, and fair government.

10. How is NEDA working towards achieving the Philippine Development Plan (PDP) 2017-2022?
The PDP is crafted every six years, or at the start of every new administration. We review accomplishments every year—by monitoring indicators—and compare economic performance against targets set in the PDP. We call these annual updates Socioeconomic Reports (SERs). The latest we have available is SER 2017, which you may download on the NEDA website. We will be coming up with another SER for 2018 by March. That will compare what has been achieved relative to the targets and objectives for 2018. There will be some hits and misses; we hope far less misses than hits. The NEDA also updates the PDP every three years, which we call the Midterm Update. — MAIELLE MONTAYRE

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