28% of Filipino children are poor

Twenty-eight percent of Filipino children  are living in poor families or in the bottom 30% per capita income stratum, according to the 2011 annual poverty indicators’ survey (APIS) of the National Statistics Office (NSO).
 
The survey which covered 51,000 sample households nationwide, revealed that families who fall at the bottom 30% per capita income stratum were considered as poor while those in the upper 70% were classified as non-poor.
 
The top three regions with the highest proportion of children aged 0 to 17 living in poor families were Region IX – Zamboanga Peninsula with 49 percent of its total children aged 0 to 17, Region XII – SOCCSKSARGEN (46%), and Region IVB – MIMAROPA (43%).
 
The National Capital Region had the lowest proportion of children aged 0 to 17 years living in poor families with 4 percent.
 
The survey showed that four in five of children 0 to 17 years old are living with families who had access to a safe source of water supply. Considered as clean and safe source of water were community water supply and protected well.
 
Nine out of 10 children aged 0 to 17 years resided in a housing unit with sanitary toilet. Eighty-four percent of children aged 0 to 17 years resided in a housing unit with electricity.
 
One in every 10 children aged 6 to 17 years were not attending formal school. Among the regions, Autonomous Region in Muslim Mindanao (ARMM) had the highest proportion (16%) of children aged 6 to 17 who were not attending formal school, while NCR had the lowest.
 
Among the reasons cited by children aged 6 to 11 years for not attending school were lack of personal interest (51%), illness or disability (15%), and high cost education.
 
Similarly, lack of personal interest (38%) and high cost of education (33%) were cited by children aged 12 to 17 years old for not attending formal school. In addition, employment or looking for work (13%) ranked as the third leading reason for non-attendance in school.
 
Nine out of 10 children 6 to 17 years old were literate based on the results of the 2008 Functional Literacy, Education and Mass Media Survey (FLEMMS).  Region I – Ilocos had the highest basic literacy rate with 95 percent and Region X – Northern Mindanao had the lowest (83%).
 
Nationwide, 86 percent of the children aged 10 to 17 years old were functionally literate. Among the regions, Region IVA – CALABARZON had the highest functional literacy rate (92%), followed by National Capital Region, Cordillera Administrative Region and Region III – CALABARZON with 90 percent each.
 
Region VIII – Eastern Visayas had the lowest functional literacy rate (70%). In the survey, a person who can read, write and compute based on answers to a set of questions were considered as functional literate.

More government reforms to attract more foreign investments – World Bank

The Philippines could attract more foreign direct investments and generate more quality jobs by implementing a package of reforms to address the issues of corruption, infrastructure services and government regulations.
 
Rogier van den Brink, lead economist at the World Bank Philippines noted that the Philippines is lagging behind in the Asian region in attracting foreign direct investments due to restrictive rules on ownership relative to the other countries in the region.  
 
However, he emphasized that there is a strong international evidence on foreign direct investments in relation to technology transfer, economic growth, employment, exports and governance.
 
To attract more foreign direct investments, Van den Brink recommended a review and reduction in the restrictions imposed in the foreign investment negative list.
 
The government should focus on reforms in sectors where competition, capital, technology and other factors associated with foreign ownership will likely result in lowering input prices and creating more and better jobs. These are in telecommunications, shipping, agribusiness, land and the practice of professions, said Van den Brink.
 
Van den Brink said the government should invest more in education, health, and infrastructure.
 
“The high case scenario calls for spending an additional 2.5 percent of gross domestic product (GDP) on infrastructure and an additional five percent on social services, for a total of 7.5 percent of GDP over the next decade.”
 
He also stressed that higher spending on education would bring the Philippine education closer to international standards, together with higher spending on health that would create a pool of employable Filipinos for foreign companies eyeing to invest in the country.
 
The government should further strengthen the independence, competence and capacity of important regulatory bodies and the justice system, Van den Brink said.
 
He said that priority reforms should focus on defining the role of regulatory bodies including provisions to limit conflict of interest, ensure some degree of fiscal autonomy and adequate expertise to avoid politicization of decisions and allow them to execute their mandates freely, reduce  discretionary powers of regulators by establishing clear and rule-based procedures and policies, improve transparency of decisions making, and conduct regular regulatory assessments.
 
The government should also encourage the rapid growth of businesses of all sizes, facilitate movement of small firms to the formal sector, reduce opportunities for rent-seeking and corruption with priority reforms in starting, operating, and closing a business; paying taxes and accessing finance, Van de Brink added.

OECD sees robust economic growth of Philppine and Southeast Asian economies

The outlook of the Philippine and Southeast Asian economies remains robust over the medium term, anchored by the steady rise in domestic demand, according to a new report from the OECD Development Centre.
 
Gross domestic product (GDP) growth is projected to moderate gradually but stay resilient over the 2014-2018 period, with an average annual growth of 6.9%, albeit less than the 8.6% registered before the global financial crisis in 2000-2007.
 
The report showed that Indonesia is expected to be the fastest-growing ASEAN‑6 economy with an average annual growth rate of 6.0% in 2014 to 2018, followed by the Philippines with 5.8%.
 
Real GDP growth in Malaysia and Thailand is projected to increase by an annual 5.1% and 4.9% respectively, led by domestic demand, especially in infrastructure investment and private consumption. Singapore’s economy is forecast to grow by 3.3%.
 
Cambodia, Lao PDR, Myanmar and Viet Nam are expected to grow at a robust pace over the medium term. 
 
“The success of emerging Asian economies will hinge on managing several challenges”, said OECD Deputy Secretary General Rintaro Tamaki. 
 
To harness the medium-term growth potential, it is critical that policy makers implement structural policies to reap the benefits of capital flows and foster closer economic co‑operation and integration in the region.”
 
Mario Pezzini, Director of the OECD Development Centre noted that while Southeast Asia has made remarkable economic progress over the past four decades, some of the middle-income developing economies face difficult challenges to sustain their long-term growth and move beyond the middle-income trap. 
 
Pezzini said success would require fundamental changes in economic structure and further development of the modern services sectors.
To grow beyond the middle-income trap, these Emerging Asia countries need to shift away from growth that is driven primarily by factor accumulation, said Pezzini.
“They should rather embrace growth based on productivity increases driven by improvements in the quality of human capital and innovation.”
The report examines policy insights for China, India, Indonesia, Malaysia, the Philippines, Thailand and Viet Nam that come from the development experiences of other advanced Asian economies such as Japan, Korea and Singapore.
While manufacturing will continue to be important, the middle-income countries of the region should also consider further developing their service sectors, especially in finance, information and communications technology, and business services.
According to the OECD Product Market Regulation Indicators (PMR) – widely used as an indicator of the stringency of regulation – China and Indonesia’s services markets are considerably more restricted than those of more advanced Asian economies, notably Japan and Korea, and the most restrictive among the largest developing countries.
The report said that the further development of institutional capacities which help to enhance human capital, foster competition and innovation, and facilitate infrastructure development, also needs to be central to development strategies of the middle-income Emerging Asian countries.
On-going efforts to achieve greater regional integration can have a potentially high payoff in helping the middle-income countries in Emerging Asia to reduce the gap with the higher-income countries

Philippine economy to sustain robust growth

 The World Bank (WB) is expecting the Philippine economy to sustain its growth momentum fueled by consumption and resilient remittances as the smaller economies in the Asean region look more encouraging.
 
 As the recovery picks up in the US, Japan and the Eurozone, with growth accelerating in the second quarter of 2013, developing countries in East Asia stand to benefit because of their high trade shares in the economy. But they need to be better prepared for potentially disruptive adjustments.
The WB report expects the Asia-Pacific region is expected to grow at 5.2 percent in 2013 and 5.3 percent in 2014. While domestic demand continues to drive growth, investment growth is moderating in the larger economies of ASEAN including Indonesia, Thailand and Malaysia. 
Developing East Asia is expanding at a slower pace as China shifts from an export-oriented economy and focuses on domestic demand. Growth in larger middle income countries including Indonesia, Malaysia, and Thailand is also softening in light of lower investment, lower global commodity prices and lower than expected growth of exports, says the WB report.
Growth forecast for developing countries in the region is 7.1 percent for 2013, and 7.2 percent for 2014. While this is a slight downward revision from World Bank projections in April 2013, developing East Asia is leading other regions.
“East Asia Pacific continues to be the engine driving the global economy, contributing 40 percent of the world’s GDP growth – more than any other region. With overall global growth accelerating, now is the time for developing economies to make structural and policy reforms to sustain growth, reduce poverty and improve the lives of the poor and vulnerable,”said Axel van Trotsenburg, World Bank East Asia and Pacific regional vice president.
Growth in China is expected to meet the official indicative target of 7.5 percent this year. The short term outlook is improving as industrial production data suggests further strengthening of output in the third quarter of 2013. Growth in 2014 is projected to be 7.7 percent, but risks remain related to the restructuring of China’s economy – a greater than expected slowdown of investment could have an adverse effect on the region, especially on suppliers of capital goods and industrial raw materials to China.
Over the past few months, speculation about the withdrawal of quantitative easing in the US led to stock market sell-offs and currency depreciation, hurting countries with large foreign participation in their financial markets.
“The Federal Reserve’s decision to delay tapering stabilized markets for now, giving countries a second opportunity to take measures to lower risks from future volatility,” said Bert Hofman, World Bank East Asia and Pacific Chief Economist. “Reducing reliance on short term and foreign currency denominated debt, accepting a weaker exchange rate when growth is below potential, and building policy buffers to respond to changing global liquidity conditions are some of the ways that can help countries be prepared.“
The impact of tapering on capital inflows in the region may also be offset by “Abenomics,” Japan’s new strategy to revive growth, which could increase Japanese investment in the region, the report said.
The WB report noted that expansive fiscal and monetary response to the global economic crisis has also built up vulnerabilities in many countries. Authorities need to be ready to respond to a steady increase in interest rates in advanced economies, and redouble their efforts to restore and maintain financial stability.
In the long term, as higher global interest rates are likely to affect investment, accelerating growth and poverty reduction depends critically on advancing structural reforms. Countries need to improve their investment climate and invest more in infrastructure, while making public investment more efficient, said Hofman.
“Firmer global growth prospects can help developing countries pursue reforms enabling them to benefit from the recovery and put their own growth on a more solid footing. Governments need to address fiscal risks and create space to support long-term growth, with measures including reducing energy subsidies as structural reforms that will give people the opportunity to share in the gains of progress hold the key to future growth,” said Hofman.

Evidence-based policies to boost agricultural productivity

The Philippine Institute of Development Studies (PIDS) has underscored the need for evidence-based policies to boost agricultural productivity and help reduce the ranks of the poor.
 
A new PIDS study showed that with tepid output growth over the years, the agricultural sector now accounts for just above a tenth of gross domestic product.
 
About 32 percent of the ranks of the employed work in agriculture, forestry and hunting, and fishing.
 
The study noted that the poor can mostly be found in the rural areas working in these low-skilled, low-productivity, and low-income jobs.
 
PIDS has done extensive work in agricultural policy research, in support of the government’s goal of making growth more inclusive.
 
A recent paper by PIDS Senior Research Fellow Roehlano Briones argues that the agricultural and rural economy should be at the “forefront, rather than periphery, of the country’s strategy for quality employment generation.”
 
This can be achieved, he said, by enabling a structural transformation in agriculture, by shifting to high-value crops, which are more profitable than traditional crops such as rice and corn.
 
Agricultural diversification can increase agricultural productivity and raise farm incomes, enabling farm households to invest in health and education.
 
However, this transformation requires rapid technological change and improved rural infrastructure, which clearly call for increased investments in infrastructure as well as in agricultural research and development (R&D), an area where the Philippines lags behind its neighbors, the study said.
 
“But it is not enough to just hike state expenditures in agriculture, which have in fact grown in recent years. Faulty design and execution of programs are partly to blame for the disappointing performance of the agricultural sector,” the study noted.
 
PIDS has recommended to veer away from input subsidies and similar production support and focus on public goods with evidence of impact, such as roads, airports, electrification, regulatory services, and R&D for technological change and agricultural modernization

Philippines to sustain economic growth

The World Bank (WB) is expecting the Philippine economy to sustain its growth momentum fueled by consumption and resilient remittances as the smaller economies in the Asean region look more encouraging.
 
In its latest East Asia Pacific Economic Update, the World Bank noted that Cambodia would benefit from the expansion in garment exports and tourism. As the recovery picks up in the US, Japan and the Eurozone, with growth accelerating in the second quarter of 2013, developing countries in East Asia stand to benefit because of their high trade shares in the economy. But they need to be better prepared for potentially disruptive adjustments.
 
The WB report expects the Asia-Pacific region is expected to grow at 5.2 percent in 2013 and 5.3 percent in 2014. While domestic demand continues to drive growth, investment growth is moderating in the larger economies of ASEAN including Indonesia, Thailand and Malaysia. 
 
Developing East Asia is expanding at a slower pace as China shifts from an export-oriented economy and focuses on domestic demand. Growth in larger middle income countries including Indonesia, Malaysia, and Thailand is also softening in light of lower investment, lower global commodity prices and lower than expected growth of exports, says the WB report.
 
Growth forecast for developing countries in the region is 7.1 percent for 2013, and 7.2 percent for 2014. While this is a slight downward revision from World Bank projections in April 2013, developing East Asia is leading other regions.
 
“East Asia Pacific continues to be the engine driving the global economy, contributing 40 percent of the world’s GDP growth – more than any other region. With overall global growth accelerating, now is the time for developing economies to make structural and policy reforms to sustain growth, reduce poverty and improve the lives of the poor and vulnerable,”said Axel van Trotsenburg, World Bank East Asia and Pacific regional vice president.
 
Growth in China is expected to meet the official indicative target of 7.5 percent this year. The short term outlook is improving as industrial production data suggests further strengthening of output in the third quarter of 2013. Growth in 2014 is projected to be 7.7 percent, but risks remain related to the restructuring of China’s economy – a greater than expected slowdown of investment could have an adverse effect on the region, especially on suppliers of capital goods and industrial raw materials to China.
 
Over the past few months, speculation about the withdrawal of quantitative easing in the US led to stock market sell-offs and currency depreciation, hurting countries with large foreign participation in their financial markets.
 
“The Federal Reserve’s decision to delay tapering stabilized markets for now, giving countries a second opportunity to take measures to lower risks from future volatility,” said Bert Hofman, World Bank East Asia and Pacific Chief Economist. “Reducing reliance on short term and foreign currency denominated debt, accepting a weaker exchange rate when growth is below potential, and building policy buffers to respond to changing global liquidity conditions are some of the ways that can help countries be prepared.“
 
The impact of tapering on capital inflows in the region may also be offset by “Abenomics,” Japan’s new strategy to revive growth, which could increase Japanese investment in the region, the report said.
 
The WB report noted that expansive fiscal and monetary response to the global economic crisis has also built up vulnerabilities in many countries. Authorities need to be ready to respond to a steady increase in interest rates in advanced economies, and redouble their efforts to restore and maintain financial stability.
 
In the long term, as higher global interest rates are likely to affect investment, accelerating growth and poverty reduction depends critically on advancing structural reforms. Countries need to improve their investment climate and invest more in infrastructure, while making public investment more efficient, said Hofman.
 
“Firmer global growth prospects can help developing countries pursue reforms enabling them to benefit from the recovery and put their own growth on a more solid footing. Governments need to address fiscal risks and create space to support long-term growth, with measures including reducing energy subsidies as structural reforms that will give people the opportunity to share in the gains of progress hold the key to future growth,” said Hofman.