By Cai U. Ordinario & Bernadette D. Nicolas, January 31, 2020; Business Mirror
Manila on Thursday outlined the strategies for hitting its GDP growth target of 6.5 to 7.5 percent this year despite the threat posed by domestic and external risks, such as the novel coronavirus (nCoV), to economic activity.
Following the Economic Development Cluster (EDC) meeting on Thursday, Finance Secretary Carlos G. Dominguez III said economic managers “remain vigilant and well-positioned to address these risks” and that they remain optimistic of the country’s growth prospects this year and beyond.
Aside from nCoV, Dominguez said primary downside risks also include lackluster recovery in trade, protectionist policies and other disruptions to the trade and supply chains, and volatile global oil prices.
Domestic risks could come from the Taal Volcano eruption, the continued presence of African swine fever (ASF) in the country, water supply disruptions, slow implementation of the infrastructure projects and policy uncertainties, such as the delay in the passage of the tax-reform packages.
However, he said the timely passage of the 2020 national budget and extension of the validity of certain portions of the 2019 budget will help the economy weather these headwinds.
To hit the Philippines’s economic targets this year, EDC members said there is a need to accelerate the implementation of the government’s priority projects and to efficiently disburse the budget.
Dominguez said re-skilling the work force in the IT-BPM sector and other labor-intensive manufacturing sectors must be done soon.
The economic managers also want to incorporate digital trade in updating the country’s electronic commerce road map, speed up the entry of a third telecommunications player and adopt a new regulatory framework or approach, as needed, to assess and address issues relating to emerging technologies such as Angkas, Grab and Airbnb.
To attract investments that the Philippines needs to grow faster, Dominguez said the government will fully implement the Ease of Doing Business Act, and undertake a regulatory impact assessment of all existing regulations to ensure that these do not pose additional burdens to the business environment. They will also push for the passage of the Corporate Income Tax and Incentives Rationalization Act bill, as well as amendments to the Foreign Investments Act, Public Service Act and Retail Trade Liberalization Act.
“We likewise need to support the growth of exports by fully implementing the National Single Window/TradeNet System and its integration into the Asean Single Window, and pursuing strategic trade partnerships, maximizing opportunities in bilateral, regional and global integration,” he said.
“Along with these, we need to intensify the marketing, and promotion, of Philippine goods and services, increase market intelligence and identify specific products for which the country could be an alternative manufacturing base, bearing in mind the comparative advantage of our domestic players,” he added.
The government missed its target for 2019 as GDP growth settled at 5.9 percent due to the budget delay as well as the election ban. The figure is lower than the revised growth target of 6 percent to 6.5 percent.
The EDC played down the impact of nCoV on the Philippine economy after health authorities confirmed the country’s first case.
“We’re not going into a recession because of this [coronavirus],” Dominguez told reporters in a press briefing after the EDC meeting.
Socioeconomic Planning Secretary Ernesto M. Pernia said the impact of the virus will only be short term. Pernia also said sectors like tourism would suffer from the decline in the number of Chinese tourists who comprise a significant share in the country’s tourist arrivals and the sector’s revenues.
Data from the Department of Tourism showed China was the Philippines’s second-largest source market for tourists in January to August last year. In August alone, arrivals from China expanded by an annualized rate of 60 percent to 170,903.
“I think it will be short term. It’s likely to be just a short-term effect because, given that…a lot of measures [are] being done to minimize the coronavirus, it shouldn’t be a big drop for it to have an effect on the economy,” Pernia said.
However, Dominguez said nCoV could compound the problems of the Philippines when it comes to food imports, particularly since African swine fever (ASF) has already limited the country’s sources of pork.
“Maybe food imports will go down. In fact, it has already gone down because of the [ASF]. The Department of Agriculture has restricted imports of [pork products]. With the coronavirus, I think it may affect but we’ll see,” the finance chief said.
If there’s a silver lining to the outbreak of the nCoV, it is that the Philippines may save on dollars as Filipinos will limit their travel to China and other countries that have confirmed cases, according to Pernia.
Dominguez disclosed that he had to reconsider his travel to Wuhan, China, for a Philippine roadshow there.
“I think Filipinos will be more careful in going to these countries so…they won’t be spending [dollars],” said Pernia.
He also said some businesses, such as those involved in the sale or manufacture of masks and soap, as well as those selling water, may grow faster this year.