Aquino’s marching order to new NEDA chief

MANILA, Philippines (UPDATED) – Make the country’s economic growth more inclusive. This was the marching order of President Aquino to new Socioeconomic Planning Secretary Arsenio Balisacan.

Baliscan, who is dean of the University of the Philippines School of Economics, was appointed by the President as acting National Economic and Development Authority (NEDA) director-general on May 10 to replace Cayetano Padranga Jr, who resigned due to “health reasons.”

“My marching order is to address the critical constraints that make growth slow, uneven and exclusive to certain sectors of society,” he told reporters in a briefing on Thursday, May 17.

“Certainly, the Philippine economy is growing but we need to make it grow faster and to sustain that high growth for the long term. There is also no question that we need the growth to be more inclusive,” he added.

Known for his expertise in agriculture and poverty research, Balisacan said inclusive growth is necessary to substantially reduce poverty in the country.

Inclusive growth is broad-based or one that is seen across sectors and benefits a large part of the country’s labor force. It is growth that trickles down to the poor.

7-8% growth

If the government would be able to attain and maintain high economic growth, as well as provide basic goods and services to the poor, Balisacan said an annual 2 percentage-point reduction in poverty incidence in the Philippines is possible over the medium term.

Latest data from the National Statistical Coordination Board show the country’s poverty incidence in 2009 was 26.5%, 0.1 percentage point higher than the 26.4% rate recorded in 2006. Balisacan said this was on the back of a historical gross domestic product growth (GDP) of only 4.5%.

He said GDP growth must be brought up to 7-8%, the government’s target under the Philippine Development Plan (PDP), for it to have a significant effect on poverty.

“The 2 percentage points reduction per year [is possible] if we manage to grow near the target of the PDP, and we are able to accelerate the investments in social capital, our interventions in health and education, and the CCT,” the NEDA chief said.

The CCT or Conditional Cash Transfer program is a social safety net measure started during the Arroyo administration that provides cash payments to poor households in exchange for certain conditions such as keeping their children in school.

It is key in helping the Philippines achieve its Millennium Development Goal (MDG) of halving poverty by 2015. At 26.5% poverty rate, Balisacan said the country is 8 years behind in achieving the MDG.

Agriculture, infrastructure

Meanwhile, maintaining high economic growth is not possible without addressing the structural weaknesses of the economy.

“What we are trying to do is to raise that potential growth path of the economy from 4.5 to 7 to 8. We can do that by addressing critical constraints to growth like infrastructure, human capital underdevelopment and so on,” noted Balisacan. “I think we have identified those constraints and I think the programs are laid out there. Our job at NEDA is to ensure that we facilitate the implementation and completion of these programs.”

One weakness, he noted, is neglected agricultural growth and rural development. Balisacan said two out of 3 poor people are in rural areas and are mostly engaged in agriculture.

He said a robust agricultural sector will keep food prices down and put less pressure on increasing wages prematurely. This, in turn, will make the industry more competitive and attract more investments.

“I have always claimed that poverty is a rural phenomenon. Even the urban poverty that you see is simply a reflection of the hardships you see in the rural areas. We have made a mistake in the past of neglecting agriculture, rural development. A big part of that rural development is really agriculture development.”

Another weakness is poor infrastructure. He said the government is now trying to address this through its public-private partnership (PPP) program.

“The essence of the PPP is [because] government resources are very limited, they compete with so many development requirements for education, for health, for infrastructure and so on. If you could get the private sector to help, you save a lot of resources to address your problems with education, with agriculture, with health. The PPP is a modality to fasttrack infrastructure development,” he said.

“As the NEDA director-general, I will push for a quicker implementation of these programs and continuity for me, is very important so I don’t see a departure from the past two years in so far as focused and inclusive growth and poverty reduction is concerned,” he added.

Prior to becoming dean at UP, Balisacan served as head of the Southeast Asian Regional Center for Graduate Study and Research in Agriculture from 2003 to 2009. He was also undersecretary of the Department of Agriculture in 2000, 2001 and 2003. – Rappler.com