Next week, the Apec Business Advisory Council (Abac) will be meeting in Papua New Guinea, and Abac-Philippines will be there. The Abac Meeting, the fourth this year, comes ahead of the Apec (Asia-Pacific Economic Cooperation) CEO Summit and Apec Economic Leaders Meeting, which are all scheduled from Nov. 12-18.
People occasionally ask what the relevance of Apec is to the Philippines. Apec’s 21 member-economies represent 38 percent of the world’s population but 60 percent of global gross domestic product (GDP), 53 percent of foreign direct investment (FDI) flows, and 47 percent of world trade in goods and services.
More importantly, our 20 partners in Apec account for 84 percent of Philippine trade, 64 percent of FDI, and 83 percent of our tourists. Many economies in Apec are our major economic partners. Even from the point of view of overseas employment, Apec economies are the work destinations and source of OFW remittances of 57 percent of our global deployments and remittances.
For these reasons, it is important for us to get deeply engaged in Apec discussions on both the government and private sector sides. Our long-term interest in creating more businesses, generating more jobs, and pushing for more inclusive growth are consistent and aligned with much of the discussion which takes place in Apec and Abac. In this regard, we’ve selected four key areas to focus on:
Growing globally competitive MSMEs. Over 99 percent of businesses in the Philippines are MSMEs (micro, small and medium enterprises). They account for almost two-thirds of jobs, one-third of GDP and one-quarter of exports. Our goal is to increase the employment, productivity and trade numbers of MSMEs. In order to do this, we need to help MSMEs gain access to supply chains with larger companies. In becoming part of these supply chains, MSMEs will gain access to more stable markets and improve their standards, quality and technology, which, in turn, should enable best-performing MSMEs to grow in both size and employment.
We also need to improve access to credit for our MSMEs, and encourage and enable more MSMEs to get into e-commerce markets.
Economic growth through infrastructure. The Philippines has embarked on an ambitious “Build, build, build” infrastructure program. From 2016 to 2022, the country will allocate up to P8 trillion and 7 percent of GDP to this building program. This will provide much-needed facilities such as roads, ports, airports, mass transit, bridges and other vital physical infrastructure to connect our economy’s many islands.
One new source of funds we are exploring is Islamic infrastructure investments. We are hopeful that large pools of Islamic infrastructure funds can be made available to finance projects in the Philippines.
Digital innovation and the future economy. Digital innovation will be the foundation of future economic growth across the world. Economies which are unable to adapt to technological change and innovation will fall behind those that are quick to adapt. For the Philippines, we will need to catch up on several fronts. The first area to look at is education. While we have now moved into a K-to-12 environment, the next challenge is to look at the curriculum, teaching methods and long-term, out-of-classroom learning. The second area to fix is our vocational, technical and nondegree, short-course programs. Since we anticipate that jobs in the future will need a new set of skills, we will need to address mechanisms for providing learning environments for those skills.
Globally competitive services. Philippine services are already a globally-competitive industry, at least across some sectors. We are studying five industries which have great potential for creating even more jobs, investments and exports for the country (e.g., BPO, construction and engineering, maritime, tourism and creative industries). Their continued success will depend in part on such factors as training, upskilling, open trade-in-services policies, and the mobility of people and professionals.
All these items are on the table as we head to Port Moresby to meet the Apec economic leaders next week.
Guillermo M. Luz (firstname.lastname@example.org) is the former cochair of the National Competitiveness Council and a member (alternate) of Abac Philippines.
Business Matters is a project of the Makati Business Club.
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