Solve PH brain drain problem to boost growth – UK think tank

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Solve PH brain drain problem to boost growth – UK think tank


Even if remittances buoy the economy, most of the productivity gains accrue to developed countries where Filipinos work

MANILA, Philippines – Despite optimism about the country’s economic potential, with an estimated Gross Domestic Product (GDP) growth of 6.2% this year, the Philippines still has to confront the brain drain issue that deprives the labor pool much of its greatest talent, the Institute of Chartered Accountants in England and Wales (ICAEW) said in its latest Economic Insight report.

Even if remittances buoy the Philippine economy, most of the productivity gains are enjoyed by developed economies where Filipino migrants work, ICAEW noted.

“This has been a problem for a while now, with the country having lost an estimated 10% of its population to work abroad, including many highly-qualified professionals,” ICAEW said.

But while the country cannot compete with the higher wages offered in the Singapore or US, the Philippines could follow in the footsteps of other Asian countries which have successfully reversed similar brain drain challenges and seen immigrants returning in large numbers, ICAEW said.

For China and India, immigrants are willing to return to their home countries despite wage cuts, so long as they are confident that their sector of expertise exists, according to ICAEW Southeast Asia Regional Director Mark Billington.

Billington suggested that the Philippine government should make sure that the country’s high-tech industrial centers are integrated into relevant international networks.

“This means that people can return to their home nation without fearing that their career progression will suffer,” he said.

The Association of Southeast Asian Nations (ASEAN) governments have already implemented a variety of strategies to raise their national output to cope with global challenges, said Charles Davis, ICAEW economic adviser and Center for Economics and Business Research (Cebr) director. Cebr produced the report and is ICAEW’s partner and economic forecaster.

“These mainly lie in raising labor productivity, or increasing the size of the labor force,” Davis said.

Investing in talent

ICAEW also noted that good infrastructure is also vital in attracting immigrants to return to their home countries.

“Good infrastructure allows clusters of new industries to develop, which is crucial to maximize the potential of sectors of the workforce that are already highly-educated and qualified, and encourages entrepreneurship,” the report said.

Other incentives, such as providing grants to the right new businesses, will also help, ICAEW added.

ICAEW also noted that strong public finances have also enabled the Philippines to place a new focus on infrastructure investments in 2015, citing the Philippines’ Public-Private Partnership (PPP) Center’s approval of projects worth $24.5 billion, the report added.

In other parts of ASEAN, ICAEW noted that the recent collapse in global oil prices resulted in cancellations of mining projects in commodity-rich and oil-exporting nations like Indonesia and Malaysia. But this allowed ASEAN governments to channel fuel subsidies to other areas of investment, like improving education and infrastructure, and now is an opportune time to pursue them.

With the exception of Singapore, workforces in ASEAN are predominantly unskilled and greater emphasis on higher education is required as a tier of more highly-skilled jobs is created.

Long-term planning and investment now is crucial to ASEAN’s ability to improve future performance and prepare itself for deceleration and a shift to domestic consumption-led growth in the coming years.

“The region’s response now must involve developing the skills that can replace commodities as sources of export earnings,” ICAEW said.

The Economic Insight report provides its 144,000 members with a current snapshot of the region’s economic performance. It undertakes a quarterly review of Southeast Asian economies, with a focus on Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.

Here is a video summary of the report.


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