THE GOVERNMENT needs to support the upgrade of services and worker talent, the World Bank (WB) said, noting that global trade in goods will be subdued for quite some time.
“The opportunity for trade is in services because as technology changes, there is more cross-border trade in services… This is particularly important for the Philippines because I think the future of Philippines’ growth is going to be in high-value services,” Andrew D. Mason, acting chief economist for East Asia and Pacific region at the World Bank, said in a media briefing on Monday.
Mr. Mason pointed out that this is the way to go in spurring faster growth, at a time when global trade in goods is expected to ease especially amid trade tensions between the United States and China.
“Global trade growth is slowing but the important thing to highlight here is it’s really slowing in goods and much less in services,” he said.
Philippine merchandise exports contracted by 0.9% as of end-November, marking a sustained decline in outbound shipments of the country’s goods.
Mr. Mason said the government can pour more funds into enhancing basic education and ensuring “digital literacy” among Filipinos in order to make them more agile and armed with skills needed to keep up with technology advancement.
FOREIGN OWNERSHIP CAPS
Other reforms that can be pursued include further easing of foreign ownership limits, which Mr. Mason described as “counterproductive.”
Barriers to developing services also include the lack of competition and “bureaucratic discretion” in licensing standards for businesses.
The World Bank official also noted that opening up more industries beyond business process outsourcing will unlock more opportunities for growth.
Monday also saw members of the Joint Foreign Chambers of the Philippines separately expressing support for a Senate bill amending Republic Act No. 7042, or the Foreign Investments Act of 1991.
The Jan. 24 position paper was signed by James Wilkins, president of the American Chamber of Commerce of the Philippines, Inc.; Guenter Taus, president of the European Chamber of Commerce of the Philippines; Naoto Tago, president of the Japanese Chamber of Commerce and Industry of the Philippines, Inc.; Ho Ik Lee, president of the Korean Chamber of Commerce of the Philippines, Inc.; Julian Payne, president of the Canadian Chamber of Commerce of the Philippines, Inc.; Daniel Alexander, president of the Australia-New Zealand Chamber of Commerce of the Philippines; and Evelyn Ng, president of the Philippine Association of Multinational Companies Regional Headquarters, Inc.
In that position paper, the foreign chambers recommended approval of all proposed RA 7042 amendments contained in Senate Bill No. 2102.
The bill seeks, among others, to reduce the hiring threshold of foreign businesses wanting to set up shop in the Philippines with a minimum $100,000 paid-in capital to 15 direct hires from 50 currently under RA 7042.
It also excludes the practice of professions from the list of sectors and activities in which foreign ownership or participation is either banned or restricted, noting that “[t]he practice of profession is not an investment activity.”
The bill mandates the National Economic and Development Authority (NEDA), Department of Trade and Industry, Board of Investments, and the Securities and Exchange Commission to review the “negative list” yearly and submit a report to Congress. These agencies are also directed to report to Congress investment-related matters requiring legislation.
The bill also requires the government to create a Web portal containing the Philippines’ investment policies that will guide investors on potential areas of investments.
“We recommend the passage of all the amendments sought in SB 2102,” the foreign chambers said in their paper.
“If this bill is enacted by February 2019 when Congress recesses, NEDA could make an important contribution in its first report in April 2019,” they added.
“This report could then lead to reform legislation being passed in the 19th Congress, which we would expect to stimulate new foreign investment, technology transfer, and job creation for the Philippine economy.”
‘DARKENING SKIES’
However, “darkening skies” in the global scene could weigh on the government’s target to achieve upper middle-income status this year.
Mr. Mason said the uncertain global economic environment amid the US-China trade war and rate hikes from the US Federal Reserve may affect such prospects.
“Any trade war, if it lasts long enough, is going to have a negative effect on both local and global growth,” he said.
Socioeconomic Planning Secretary Ernesto M. Pernia, however, said that the government is confident that income per capita will reach just under $4,000 this year, assuming that economic growth will be at least six percent.
The World Bank expects the Philippine economy to grow by 6.5% this year. — Melissa Luz T. Lopez with C. A. Aguinaldo

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