MANILA, Philippines – The Philippines can take advantage of boosting the economy’s services sector as it leads the world’s largest economic gathering in 19 years, the National Economic and Development Authority (NEDA) said.
Services sector now accounts for 56.7% of the economy’s gross domestic product (GDP), making it the largest contributor to growth figures in the fourth quarter of 2014 released on Thursday, January 29.
“Yet, there are still underlying potentials that must be tapped and developed,” said Emmanuel Esguerra, NEDA deputy director-general.
NEDA is host to 4 events at the Asia-Pacific Economic Cooperation (APEC) Senior Officials Meeting between January 31 to February 7 at the Clark Freeport Zone in Pampanga.
Esguerra said the country’s chairmanship at the APEC makes it very strategic since it would open more opportunities for local small and medium enterprises (SMEs) to find their way to global value chains (GVC).
“In fact, among APEC economies, the Philippines has the highest GVC participation in electrical and optical equipment,” he said.
The services sector grew by 6% in the fourth quarter of 2014, the same growth for the 2014 full-year average.
Currently, the services industry employs 1.052 million Filipinos and by 2016, the BPO sector targets to achieve 1.3 million full-time employees and $25 billion in revenues, NEDA reported.
But experts are wary of a non-inclusive growth, and said more work needs to be done.
On Thursday, January 29, economists advised that high growth in the services sector, particularly in business process outsourcing (BPO), telecommunications, and real estate do not have strong linkages in the economy, because these are concentrated in Regions III (Central Luzon), IV (Southern Tagalog), and the National Capital Region (NCR).
The growth was criticized since it highlighted an imbalance between private and government spending.
“The government failed to perk up the economy in the area where it could have done the most,” former Budget chief Bejamin Diokno said in a text message.
In December 2014, Trade Secretary Gregory Domingo distinguished a separate kind of SME which still operate as cottage industries, or “smaller business people who have one, two, 3, or 5-person type of operations.”
“Some of them produce very good quality products. They are mainly in food processing. They are also in handicrafts. They are also in furniture and also in the production of smaller items. And these are the ones that really need the most help,” Domingo said.
As the chairmanship returns to the Philippines for the first time in 19 years, the Philippines hopes to enhance initiatives it has built on last year’s APEC summit which took place in China.
This year, the gathering focuses on the integration of SMEs to global value chains, said Esguerra. – Rappler.com