Despite posting brisk economic growth in the past 10 years, the Asian Development Bank (ADB) issued a warning that the Philippines would remain vulnerable to rising poverty and global economic shocks if it failed to diversify its exports and expand its manufacturing base.
In his speech at the opening of the Philippine Corporate and Investment (PCI) Pavilion, ADB President Haruhiko Kuroda said the country needs to “diversify its economic base” and revive its ailing manufacturing.
The PCI Pavilion is one of the events highlighting the Philippine hosting of the meeting.
Kuroda said the country’s manufacturing production is still concentrated on electronics, partly semiconductors. Diversifying its manufacturing production will create more jobs and promote inclusive growth.
“Currently, the bulk of export-oriented manufacturing production is highly concentrated on electronics, particularly semiconductors. Widening the manufacturing base beyond these products will create much-needed jobs, promote inclusive growth and help reduce the persistent poverty. Stronger manufacturing with diversified export markets, with emphasis on emerging economies outside of East Asia, will also help further strengthen the resilience of Philippines’s economy to global economic downturns,” Kuroda said.
Kuroda said the Philippines has the potential to become a key production hub in the region. This is mainly due to its educated work force and rich natural resources, which are among the reasons why interest among foreign investors is growing.
He also said if the Philippines developed its industry sector and modernized services, its economy would be able to create more jobs for more Filipinos, whether they are low-, medium-, or high-skilled workers.
“By fully exploiting its favorable demographics and strategic location in the heart of Asia, the Philippines can transform its economy to one of sustainable and inclusive growth that benefits all,” Kuroda said.
Meanwhile, civil-society organizations (CSOs) attended yesterday’s opening of the 45th Annual Meeting of the ADB to call for a review of two of its biggest projects in the Philippines whose impact is being questioned.
In a statement, Ibon, together with fellow members from aid networks Reality of Aid and AidWatch Philippines, asked the ADB to make a thorough assessment of the impact of the Electric Power Industry Reform Act (Epira) and the Conditional Cash-Transfer (CCT) Program, which it promoted, designed and funded.
Ibon said the Epira, which the ADB financed and also required as a “policy conditionality” to the government, has made power rates in the Philippines the most expensive in Asia. The Epira has also bred serious energy insecurity, resulting in dire cases such as the rotating brownouts in Mindanao, it said.
The group also said ADB should look into the impact of the CCT program, which has a $400-million loan from the ADB. The program, criticized as mainly a dole-out, was approved and funded despite lack of comprehensive evidence on its real impact on poverty alleviation.
“While [we] welcome efforts of the ADB to improve its Accountability Mechanism Policy, it should also create a mechanism to review the impact of the policy reforms that the ADB supports, such as the power sector privatization and so-called social protection,” Ibon said.
Ibon added that ADB should have a democratic system that allows independent assessment and recommendations to be considered in its decision-making—such as in whether new loans for ongoing projects will be approved or if current funding should be suspended because of its negative impact.
The group said the least ADB can do right now is to provide a credible, democratic system that will allow CSOs to engage and challenge the ADB on the impact of its projects and policy reforms.
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