The Market Monitor Minding the Nation's Business
The economy will sustain its robust growth next year, despite forecasts of continued headwinds in global trade, and will remain a “bright spot” in Asia, Sergio R. Ortiz Luis Jr., president of the Philippine Exporters Confederation Inc. (Philexport), said.
Sharing the views of international economists that Philippine “domestic drivers can sustain economic expansion despite external shocks,” Ortiz-Luis also said that despite a decline in the country’s exports, the confederation retains a bright outlook for the country.
But to ensure sustained growth, Ortiz-Luis said the government and the private sector must continue to take steps together to boost the economy, foremost of which is to help micro, small and medium enterprises (MSMEs) to increase competitiveness, especially by providing them access to trade finance.
The economy has a number of advantages going for it, he said, including its being relatively insulated from global upheavals, compared to other more open economies in Asia and the Association of Southeast Asian Nations. In addition, he said, the country has “strong fundamentals” and derives “a larger percent of growth” from domestic consumption.
Philippine exports fell by 10.8 percent in October 2015, the seventh straight month of decline owing to continued sluggish external demand, according to the Philippine Statistics Authority.
But this was an improvement from the double-digit drop of 24.7 percent in September, following the slight improvement in the global manufacturing industry.
Ortiz-Luis said there was a need to widen financing options for MSMEs. Specifically, he said the government must allocate P20 billion in loans for MSMEs to directly tap “without going through the usual collateral requirements, interest-rate issues, strict repayment period and long documentation processes, among others things.”
Ortiz-Luis also called for a “pro-MSME agenda” that would mainstream MSMEs into the global supply chain and address the barriers they face in international trade.
MSMEs account for 99.6 percent of total establishments in the country, contributing some 61.2 percent of the country’s total employment, and 35.7 percent of total value added.
“These efforts should be complemented by domestic reforms and measures “to help smoothen the way to sustainable, competitive exports amidst challenges,” he said.
Some of these include developing the necessary infrastructure, transportation and communications facilities to unclog roads and other bottlenecks, plugging the loopholes in the supply chain, and promoting innovation and productivity.
Ortiz-Luis also stressed the importance of public-private cooperation in the successful takeoff of programs on mitigating climate change, saying this would help “build more resilient communities and industries.”