2009年-世界发展银行全球_The_Philippines___Toward_a_Better_Investment_Climate_for_Growth_and_Productivity_67页_29mb

Summary: Towards a Better Investment Climate for Growth and Productivity

Core Content

This report, prepared by the World Bank Group and the Asian Development Bank (ADB), evaluates the investment climate in the Philippines and identifies key challenges that have hindered sustained economic growth and productivity. It outlines the need for institutional and fiscal reforms to improve the business environment, attract private investments, and support long-term development.

Main Viewpoints

1. Growth and Institutional Weaknesses

• The Philippines has experienced relatively low economic growth compared to its East Asian neighbors, despite significant reforms since the 1980s.
• Growth in GDP per worker has been stagnant, averaging only 1% annually, far below the 4.4% average in other East Asian economies.
• The low growth is attributed to weaknesses in institutional quality and fiscal conditions, which have limited the effectiveness of reforms.

2. Fiscal Challenges

• The country has a high public debt-to-GDP ratio, around 100%, and large fiscal deficits that have increased borrowing costs and reduced fiscal space.
• Fiscal deficits have led to crowding out private investment and higher sovereign risk, resulting in increased country risk premiums and downgrades by major rating agencies.
• The government has attempted to address these issues by increasing VAT, repealing tax exemptions, and adjusting petroleum excise.

3. Investment Climate Survey Findings

• A survey of over 700 firms identified macroeconomic instability and corruption as the two biggest impediments to a favorable investment climate.
• Infrastructure, contract enforcement, and crime/security costs were also significant concerns.
• Small firms face disproportionately higher costs due to unreliable infrastructure and regulatory uncertainty.

4. Institutional and Governance Weaknesses

• The Philippines suffers from a weak and ineffective bureaucracy, low political accountability, and a patron-client political system that encourages corruption.
• The lack of meritocracy in appointments and the high costs of political campaigns have contributed to the vulnerability of the political system to capture and inefficiency.

5. Infrastructure and Financial Sector Needs

• The infrastructure backlog is substantial, and the investment to GDP ratio needs to increase significantly to support growth.
• The financial sector is underdeveloped, with a vulnerable banking system and an underdeveloped corporate bond market.
• Reforms in the electricity sector are critical to improving the investment climate and reducing the burden on the government budget.

6. Key Recommendations

• Implement a time-bound fiscal adjustment program to restore confidence and reduce deficits.
• Strengthen governance and public institutions to improve the rule of law and reduce corruption.
• Reform the regulatory and contracting regime to enhance the efficiency of infrastructure and financial services.
• Modernize land titling and registration systems, and improve the secured lending and bankruptcy regime.
• Develop a more robust corporate bond market and ensure independence and effectiveness of financial sector regulators.

Key Information

• GDP Growth (1961-2003): 3.8% annually.
• Labor Force Growth (1961-2003): 2.8% annually, tripling over the period.
• GDP per worker growth: Only 1% annually, far below regional averages.
• Investment to GDP ratio (2004): 19.9%, aiming to reach 27.7% by 2010.
• Poverty reduction target: From 26% in 2004 to 19.8% by 2010.
• Country Risk Premiums: Philippines has 200-300 basis points higher than China, Malaysia, and Thailand.
• Tax Revenue/GDP ratio (2004): 12.3%, down from 17% in 1997.
• Public Debt/GDP ratio: ~100%.
• National Government Interest Obligations (2004): 37% of revenue.
• Investment Climate Survey (ICS): Highlights the importance of infrastructure, contract enforcement, and corruption in shaping the business environment.

Conclusion

The report emphasizes that while the Philippines has the potential for high growth and productivity, its current investment climate is constrained by persistent fiscal and institutional weaknesses. Addressing these issues is critical for attracting private investment, improving public services, and achieving the ambitious targets outlined in the Medium Term Development Plan (MTDP) for 2005-2010. The success of these reforms will depend on effective implementation, political will, and the ability to create a transparent, accountable, and stable environment for business and investment.