ACCORDING to estimates from the Asian Development Bank (ADB), the Philippines’ gross domestic product (GDP) rate is projected to rise to 6% in 2024, higher than the 5.6% recorded in 2023.
The GDP rate or total value of goods produced within a designated period, is a crucial benchmark for the government.
A higher growth rate in GDP indicates a stronger economy.
Conversely, a negative GDP rate signifies a recession or a downturn in the business cycle, indicating a weak economy.
However, according to Pavit Ramachandran, the country director of ADB in the Philippines, the problem lies in the implementation of government policies.
“I think it’s not the lack of laws or regulations in the Philippines—it got very robust. I think the implementation can be improved,” said Pavit Ramachandran, Country Director for the Philippines, ADB.
To achieve the 6% GDP growth rate, the Philippine government needs to strategize.
Ramachandran suggests that investment flaws need to be addressed, particularly in infrastructure and logistics, which continue to hinder the manufacturing sector and deter investments in the public sector.
“Fixed investment flaws are maybe quite behind. Infrastructure and logistics gaps continue to hinder the manufacturing sector. But also, a deterrent to bringing investments in the public sector,” said Ramachandran.
“A more robust financial system is going to be essential. So, deepening of the financial markets including at the LGU Level. So, access to pension funds. More competition to the financial sector,” he added.
ADB has been providing loans to the government to support infrastructure development in the Philippines, including the Duterte administration’s Build-Build-Build program and the Marcos administration’s Build-Better-More program.
These large-scale projects bring jobs and contribute to economic growth.
ADB suggests that the government resolve long-standing right-of-way issues to avoid delays in projects.
“The right of way issues that directly converge with the land acquisition and land issues is extremely important. Again, there’s I think no quick fix to this. But you also want to do it in a way that enables some of these infrastructure projects to proceed at ease,” Ramachandran also added.
The Malolos-Clark Railway Project (MCRP) and the South Commuter Railway Project (SCRP) are just a few of the big-ticket projects currently funded by ADB.
They also address red tape issues, especially in business permit applications.
The government has established the Anti-Red Tape Authority (ARTA) to address this problem.
“A lot of it boils down to the ease of doing business. You know, when you talk to the private sector that is the hurdle that needs to be surmounted. Its directives, the amounts of permits or clearances. The amount of navigation that needs to be done through the system, that’s challenging,” stressed Ramachandran.
In conclusion, ADB hopes that these challenges will be addressed.
The Philippines aims to catch up with other countries in infrastructure development, including reducing electricity costs.
“I think, one of the main reasons why investors are a bit reluctant in investing in the Philippines is the infrastructure—the infrastructure gap. So that is quite important to address,” said Cristina Lozano, Principal Country Specialist, ADB Philippines.
“Energy cost for instance is very high. And that’s why improving the energy sector, improving the infrastructure in energy and telecommunications transport as well will be critical,” she also added.
