Reforms needed for agri, fisheries sector

 

 

By Rose de la Cruz

 

Disturbed by the slow growth of the agriculture and fisheries sectors, the National Economic and Development Authority cited the urgency for a comprehensive study and “deep” reforms to ensure their growth could keep pace with demand, so as not to cause aberrations in inflation, in the years to come.

 

In a recent press conference, Socioeconomic Planning Secretary Ernesto Pernia said palay and corn, for instance, grew by 4.6 and 4.7 percent respectively, coming from a high base. Yet the consumer price for these items keeps rising. This calls for a comprehensive study, he stressed.

 

The fisheries sub-sector also calls for closer study. Indeed, for inclusive and sustained growth to happen, the agriculture and fisheries sector needs extensive and deep reforms, Pernia stated.

 

On the demand side, the upbeat performance in public construction, government consumption, and capital formation indicates that our reform efforts are bearing fruit and infrastructure development is accelerating, as planned.

 

Pernia said that while the economy grew in the first quarter by 6.8 percent, the 10th consecutive quarter of expansion, real GDP growth could have been well within the target of 7 top 8 percent if not for the inflation upticks between the first quarter of 2017 and 2018.

 

So, inflation is the spoiler, that is why we really need to focus on inflation especially because it is the number one concern expressed by Filipinos in surveys, by SWS or Pulse Asia, he said.

 

Despite improving labor market conditions, private consumption eased somewhat to 5.6 percent due to rising inflation, which is a major factor, and interest rates, and weaker consumer confidence.  

 

External demand also weakened significantly. Growth in exports of goods eased to 2.9 percent, after consistent growth averaging 21.1 percent in 2017. Net exports therefore worsened during the quarter. This is something we need to keep an eye on.

 

Manufacturing

 

On the supply side of the economy, the 7.9 percent growth in industry was backed by the manufacturing and construction sub-sectors’ continuing growths at higher rates of expansion. Again, this indicates that our Build! Build! Build! program is gaining ground.

 

The services sector also grew by 7 percent but agriculture growth weakened to 1.5 percent, after bouncing back from El Nino last year. The fishing subsector further declined by 3.7 percent, its fourth consecutive quarter of decline.

 

But even as we face challenges, we remain hopeful that at least the lower end of the full year GDP growth target range of 7-8 percent is doable. Domestic demand is expected to increase in view of the recently approved tax reform package, which is deemed to boost income and consumption of tax payers.  However, we need to boost investor and consumer confidence to sustain this growth.

 

 

Temporary TRAIN effects

 

For consumers, he said, government needs to address sources of rising inflation, even if the uptick brought by the temporary effects of TRAIN (or the Tax Reform for Acceleration and Inclusion) are expected to gradually ease this year. In the short term, we need to hasten mitigating measures such as the Unconditional Cash Transfer to the poorest 50 percent of households, plus the Pantawid-Pasada subsidy for jeepney drivers.

 

The more enduring solutions will require structural reforms. We continue to pressure Congress to amend Republic Act 8178 or the Agricultural Tariffication Act. The lifting of Quantitative Restrictions or QRs on rice should be pursued in earnest, as it will reduce the retail price of rice by as much as P4 – 7 per kilo. This will increase the purchasing power of low-income households, aside from bringing down inflation.

 

The National Food Authority also must be restructured to rid it of its import monopoly and trading functions, so that it can focus on buffer stocking to meet emergencies. This reform is necessary for NFA to focus on its function of maintaining a national buffer stock for food security, and to refrain from rice trading to avoid distorting the market.

 

But government must address the rising prices of fresh fish, meat, and vegetables. As demand continues to increase with a growing population and expanding economy, reducing food inflation is necessary to increase people’s purchasing power.

 

To ease price pressures in agriculture (i.e. fresh fish, meat and vegetables), we need to promote productivity-enhancing measures. The sector needs efficient postharvest processes, transport and logistic networks. The sector must also have increased access to innovative technologies and credit programs, particularly crop insurance, which could improve resiliency of farmers and fisherfolk from weather disturbances, he emphasized.

 

Ease of doing business

 

For investors, efforts to reduce the cost of doing business and to ease or lift restrictions on foreign direct investment will be very important. Easing restrictions in public utilities, retail trade, telecoms, and public procurement are of high priority.

 

The BuildBuildBuild program will continue its momentum in providing more opportunities to our country, such as investments, job creation, connectivity, and dependable delivery of public services. To ensure that our capacity for growth is sufficient, we must make sure that our labor force has the requisite skills and competencies to meet the growing demand, particularly for higher level skills, including skills required by disruptive technologies.

 

Overseas Filipino Workers who are coming back home will be happy to know that we are expecting an annual average jobs creation of at least 1.1 million from the mega infrastructure initiative. The Department of Labor and Employment and the Technical Education and Skills Development Authority are providing training to ensure that manpower would get the skills fitted for these jobs.

 

emains one of the best performing economies in the region, next only to Vietnam’s 7.4 percent growth, same as China, and higher than Indonesia’s 5.1 percent.

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