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PIDS Updates
Thursday / 4 JUNE 2015
IN FOCUS: FINANCIAL INCLUSION

 

Financial inclusion is crucial for sustained economic growth and poverty reduction. It provides different markets—particularly those that are traditionally unserved and underserved—with access to a wide range of financial resources and services, such as savings, payments, and credit. These financial services not only improve the welfare of the poor and the marginalized but also contribute to the growth of micro, small, and medium enterprises.

Greater financial inclusion contributes to financial stability and economic development. An inclusive financial system is not only pro-growth but also pro-poor, which, along with other interventions, reduces income inequality and poverty.

In the Philippines, majority of the poor are engaged in agriculture and are rural dwellers. Premium subsidies on agricultural insurance have significantly increased from an annual appropriation of less than PHP 200 million in the last five years to PHP 1 billion in 2013 and 2014, as highlighted in a study by PIDS Senior Research Fellow Celia Reyes and co-authors. This intervention aims to raise the productivity of rice farmers through the Philippine Crop Insurance Corporation (PCIC). PCIC expects to receive a budget of about PHP 3 billion for 2015, while the Agrarian Reform Beneficiaries-Agricultural Insurance Program will receive PHP 1 billion, covering rice, corn, high-value commercial crops, and livestock.

Microenterprises comprise the bulk (90%) of the country’s business sector. Many of these enterprises are informal and have limited capitalization. To increase exports and produce more jobs, small and medium enterprises (SMEs) should have easy access to financing and overseas markets. Marife Ballesteros and Sonny Domingo, PIDS senior research fellow and research fellow, respectively, emphasized the vulnerability of SMEs to disasters. Grants can be a good way to provide SMEs with the necessary capital for business continuity, they noted. When given promptly after a disaster, grants can be more effective than emergency employment in supporting the recovery of SMEs.

Furthermore, a policy note by PIDS Research Consultant Lucita Lazo states that many Filipino women engage in business, however small, to provide additional income for the family. Many of them also belong to the lower strata of unpaid family and industrial workers. Those engaged in the informal economy are unserved by formal financial institutions because of the high cost of service delivery and their failure to comply with requirements (e.g., minimum loanable amount, collateral quality, repayment terms, business plan submission, husband’s consent). Women workers are highly vulnerable—in times of illness, disability, work injury, maternity, unemployment, and old age. Lack of access to health protection is a continuing challenge among women. At present, the Philippine social security system covers only 31 percent of the total employed, neglecting the larger part of the workforce that belongs to the informal sector which includes many women workers.

The lack of financial inclusion is also apparent in the health sector. Despite economic growth, the gap between the richest and the poorest Filipino households, in terms of health financing, access to services, and health status, has not improved. Drugs and medicines account for about half of the total medical out-of-pocket expenses of households. Recent efforts to lower the cost of medicines in the country were geared toward price mediation, advocacy campaigns for quality generic drugs, and creation of Botika ng Bayan and Botika ng Barangay.

These challenges faced by the agriculture, labor, and health sectors emphasize the need for more inclusive and reliable financial services. Promoting financial education and literacy especially among the poor and the families of overseas Filipino workers is also a must.

You may access PIDS studies on financial inclusion from the SocioEconomic Research Portal for the Philippines. Simply type “financing,” “financial inclusion,” “agriculture insurance,” “credit subsidy,” “health financing,” “microfinance,” and other relevant keywords in the Search box.

  1. Targeting the Agricultural Poor: The Case of PCIC`s Special Programs
  2. Credit subsidy in Agriculture
  3. Small and Medium Enterprises' (SMEs) Access to Finance: Philippines
  4. Building Philippine SMEs Resilience to Natural Disasters
  5. Improving Access to Affordable Medicines: Looking at Prevailing Prices and Distribution of Village Drugstores in the Philippines
  6. Reconnaissance Study on the Implementation of Case-based Payments
  7. Opportunities for making health financing and services more inclusive in the Philippines
  8. Challenges in the Economic Participation of Women as Entrepreneurs
  9. Promoting women’s participation in the APEC economies: Some recommendations
  10. Assessment of the DSWD SEA-K Strategy

The Philippine Institute for Development Studies (PIDS), lead convenor of the Philippine APEC Study Center Network (PASCN), successfully spearheaded the 2015 APEC Study Centers Consortium (ASCC) Conference held on May 12-13, 2015, in Boracay Island, Philippines. For highlights, visit the ASCCC 2015 WEBSITE.

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EVENTS

17 JUNE 2015
Pulong Saliksikan on Enhancing Access to Financial Services through a More Competitive Financial System
Presenter: Dr. Mario Lamberte
Venue: C.P. Romulo Hall, NEDA sa Makati Bldg., Makati City

28-29 May 2015
2014-2015 East Asian Development Network Annual Meeting
Venue: Makati Diamond Residences, Makati City

26 May 2015
PIDS-UNICEF Seminar on Out-of-School Children (OOSC) in the Philippines
Venue: C.P. Romulo Hall, NEDA sa Makati Bldg., Makati City

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SPECIAL FEATURE

EAST ASIAN DEVELOPMENT NETWORK    

The East Asian Development Network (EADN) is a consortium of research institutes, centers, and think tanks in the developing countries of East Asia that serves as a venue for research policy networking and capacity building. EADN is an active regional network partner of the Global Development Network (GDN) in generating and promoting high-quality and policy-relevant social science research, and sharing knowledge for development.

PIDS President Gilberto Llanto is the Regional Coordinator of EADN while PIDS has served as EADN Secretariat since 2010.

The EADN held its annual forum on May 28 and 29, giving its new batch of research grantees the opportunity to present their research proposals and gather feedback and suggestions from their mentors and EADN country coordinators.

This year’s forum featured proposed research projects on agriculture, migration, human capital formation, finance, trade, and regional cooperation. Since its establishment in 1998, EADN has funded more than 100 individual and regional research projects in the social sciences through research competitions.

Call for Papers: Philippine Journal of Development

The Philippine Institute for Development Studies (PIDS) is inviting submissions to the Philippine Journal of Development (PJD). The PJD is a peer‐reviewed journal published twice a year by PIDS. Now on its 40th year, PJD considers original, unpublished papers on economic development, political economy, public administration, foreign relations, and other fields/topics, which are policy oriented and may or may not explicitly have a bearing on the Philippines. Book reviews are also accepted. The theme or topic of the book should fall within the scope of the articles accepted for publication. The target readers of PJD include researchers, educators, policymakers, and development planners. For guidelines in the preparation of articles, please refer to www.pids.gov.ph/ris/publications /pjd/pjd_guidelines.html. Inquiries and submissions should be forwarded to the Managing Editor at ssiar@mail.pids.gov.ph.

NEW PUBLICATIONS

POLICY NOTES

The World Bank ranks almost 200 countries in terms of their ease of doing business (EoDB) to underscore the importance of a thriving private sector in promoting high and inclusive growth. Its Doing Business Report uses several criteria in scoring and ranking EoDB: starting a business, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency. In the 2015 Report, which is discussed in this Policy Note, Singapore is once again on top, a place that it has maintained since 2007, followed by New Zealand and Hong Kong, both APEC economies. The Philippines registered moderate to impressive gain in its ranking, from 108th to 95th. There is obviously a wide variation in the performance of the APEC member-economies. As the ASEAN Economic Community progresses, and as the Philippines takes a crucial role in this year’s APEC 2015 Summit, comparing the EoDB metrics of the ASEAN countries becomes highly important. With their diverse economic conditions, APEC member-economies that are performing well in EoDB can share their expertise with the ASEAN and other developing country members. Better-performing economies can support lower-ranked ones through the sharing of best practices. Click here for the full article

One of the Millennium Development Goals is to achieve universal primary education. For the Philippines, there is good news to achieving this target. A bigger proportion of primary-aged children have been going to primary school since 2008, which suggests that the incidence of out-of-school children (OOSC) has declined dramatically for primary school-aged children. Three interrelated factors can be largely attributed to decreasing OOSC in the country. First is the passage and full implementation of mandatory kindergarten and the K-12 Law, which aims to enhance the basic education system through key reforms in the curricula and addition of two years and kindergarten to basic education. Second is the increasing budget that the Department of Education has obtained from the national government. And third is the expansion of the government’s conditional cash transfer program, the Pantawid Pamilyang Pilipino Program, that requires families under the program to send their children to school. These three broad programs changed the way basic education is implemented in the country, and have helped bring the country closer to its goal of universal education. Click here for the full article

 

DISCUSSION PAPERS

With overlapping, multiple free trade agreements (FTAs), such as the case of the Association of Southeast Asian Nations (ASEAN) and the various ASEAN+1 FTAs, complications that run counter to the economic integration objectives of the East Asian region could arise. Forging the Regional Comprehensive Economic Partnership (RCEP) among ASEAN and its FTA partners is a next logical step. How facilitative the rules of origin (ROO) provisions are could prove crucial in maximizing the potential benefits. This paper revisits the nature of ROOs in ASEAN and the various ASEAN+1 FTAs to examine the surrounding constraints and issues, as well as to provide recommendations on the beneficial set of ROOs for the RCEP and serve as inputs for policymakers and negotiators. Click here for the full article

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PRESS RELEASES

image'2015 IS LOOKING GOOD' - GOVERNMENT AND PRIVATE SECTOR AGREE AT ECONOMIC SEMINAR

The Philippines can expect a lot of positive growth for the next 24 months. State think tank Philippine Institute for Development Studies (PIDS) OIC-Vice President Dr. Adoracion Navarro and Philippine Stock Exchange (PSE) President and Chief Executive Officer Hans Sicat came to this optimistic conclusion at the PIDS Philippine Business and Economic Outlook seminar held on May 19 in Makati City. Both agreed, however, that the risk of overlooking important opportunities remains if both the government and the private sector fail to address the challenges and issues hindering a truly inclusive growth.

Sicat said the PSE is anticipating a "robust" 24 months ahead, in terms of infrastructure build, consumer spending, and in particular, the financial sector. READ MORE

imageAPEC URGED TO ENHANCE SUPPLY CHAIN CONNECTIVITY TO BOOST CROSS-BORDER TRADE

Policy researchers at the APEC Study Centers Consortium (ASCC) Conference 2015 held on May 12-13 in Boracay Island deliberated on the importance of enhancing trade and investment patterns and supply chain connectivity to fully reap the benefits of global value chains.

The conference was part of the Second Senior Officials Meeting (SOM2) and Related Meetings of APEC 2015. It was organized by state think tank Philippine Institute for Development Studies and the Philippine APEC Study Center Network in collaboration with the Ateneo de Manila University and the Asian Development Bank Institute. READ MORE

imageCREDIT RATING SYSTEM MAY DECREASE BANKS' AVERSION TO SMALL BUSINESS LENDING

Access to finance is the lifeline of small and medium enterprises (SMEs). Majority of Asian economies, however, have bank-dominated financial systems that are cautious to lend to SMEs despite their contribution as source of more than two-thirds of jobs in the Asia-Pacific Economic Cooperation (APEC) region.

This challenge confronting SMEs was underscored by policy researchers present at the APEC Study Centers Consortium (ASCC) Conference 2015 held on May 12-13 in Boracay Island. Organized by state think tank Philippine Institute for Development Studies and the Philippine APEC Study Center Network, in collaboration with the Ateneo de Manila University and the Asian Development Bank Institute, the conference was part of the Second Senior Officials Meeting (SOM2) and Related Meetings of APEC 2015. READ MORE

imageAUSTRALIA'S MODEL OF DISASTER FUNDING USEFUL FOR DISASTER-PRONE APEC COUNTRIES

The increasing frequency and intensity of natural disasters could seriously hamper the efforts of economies gearing up for higher and sustained growth. Policy researchers who attended the APEC Study Centers Consortium Conference 2015 held on May 12-13 in Boracay Island underscored that it is time for governments to have provision for disaster funding.

Repeated disasters constrain public finances and contribute to the cycle of poverty in affected communities. A disaster-prone country like the Philippines has an average of 20 typhoons each year; five of these are likely to be devastating. The Philippine government has estimated that for the past 30 years, direct losses alone from natural disasters account for an average annual loss of 0.7 percent of gross domestic product, which can be mostly attributed to typhoon losses and damages. Located in unsafe urban settlements, the poor suffer the most. Disaster funding is therefore crucial for both poverty alleviation and sustained economic development. READ MORE

imageAPEC RESEARCHERS OFFER STRATEGIES TO ACCELERATE PLANS FOR A FREE TRADE AREA

Discussions of possible pathways to the Free Trade Area of the Asia-Pacific (FTAAP) were one of the highlights of the recently concluded APEC Study Centers Consortium Conference 2015 held on May 12-13 in Boracay Island.

In promoting and advancing regional economic integration, APEC seeks to create a community that is more economically integrated, where goods, services, and people move seamlessly across borders, and a dynamic business environment is further enabled. This is what APEC is hoping to achieve with the FTAAP. READ MORE

imageSMES VULNERABLE TO DISASTERS; COOPERATION FOR SUPPLY CHAIN RESILIENCE IN APEC PUSHED

Enhancing the capacity of small and medium enterprises (SMEs) to resist, absorb, and recover from the effects of natural disasters in a timely and efficient manner is key to achieving inclusive growth in the APEC region.

SMEs are considered engines of growth and employment in the APEC region. Over 97 percent of businesses in APEC are SMEs, providing jobs to more than half of the workers in the Asia-Pacific region. However, APEC member-countries are prone to intense natural disasters. APEC's 21 member-economies, which account for 52 percent of the earth’s surface and 59 percent of the world’s population, experience over 70 percent of global natural disasters. READ MORE

imageVALUE OF RESEARCH IN ADDRESSING APEC CHALLENGES HIGHLIGHTED IN CONFERENCE OPENING SESSION

BORACAY ISLAND--"Research plays a crucial role in raising awareness and facilitating discussions of important Asia-Pacific Economic Cooperation (APEC)-related issues and processes to help support the vision and goals of APEC."

In his keynote address at the opening of the 2015 APEC Study Centers Consortium (ASCC) Conference in Boracay Island on May 12, Deputy Director-General Rolando G. Tungpalan of the National Economic and Development Authority noted that the APEC study centers have been instrumental in fostering regional cooperation among tertiary and research institutes in the APEC region through the promotion of increased academic collaboration on key regional economic challenges. READ MORE

DATABASE UPDATES

Exchange Rate

The average peso-dollar exchange rate slightly went down to 44.4136 in April, from 44.4457 in March. However, this figure is still lower than that for the same period last year (44.6420). It shows that the peso had become relatively stronger compared to the US dollar.

Source: Bangko Sentral ng Pilipinas

VIEW TABLE for time-series data on monthly average peso-dollar exchange rate.

Headline Inflation

The year-on-year headline inflation rate continued to go down to 2.2 percent in April, from 2.4 percent in March. As noted in the press release of the PSA-NSO, the decline was still due to decreases in the indices of housing, water, electricity, gas and other fuels, as well as of transport and communication. Annual increases in indices of food and non-alcoholic beverages, clothing and footwear, health, and restaurant and miscellaneous goods and services also eased. Meanwhile, the core inflation rate slightly declined to 2.5 percent in April, from 2.7 percent in March.

Source: Philippine Statistics Authority - National Statistics Office

VIEW TABLE for time-series data on year-on-year inflation rate.

Philippine Stock Exchange Index

The Philippine Stock Exchange Index (PSEi) ended at 7,714.82 for the month of April. This is lower compared to last March`s 7,940.49.

Source: Philippine Stock Exchange

VIEW TABLE for time-series data on Philippine Stock Exchange Index.

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