Press Releases Archived (August 2014)

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A `technology-explicit` development agenda is needed to increase productivity and foster inclusive growth, according to one of the country`s top scientists.

Dr. William Padolina, president of the National Academy of Science and Technology and member of the board of trustees of the Philippine Institute for Development Studies (PIDS), made the call in his keynote address during the annual Symposium and General Assembly of the Philippine APEC Study Center Network (PASCN), the local research network focused on the Asia-Pacific Economic Cooperation (APEC) agenda. PIDS serves as the PASCN secretariat.

Central Luzon State University (CLSU) hosted the symposium and general assembly, the 18th since PASCN`s establishment in 1995, last June 5 at its campus in the Science City of Muoz, Nueva Ecija.

Padolina said science and technology (S and T) would be able to provide tools and methods to make the country productive, adding that `The experience of many countries shows that economic development is not achieved by increased infusion of labor and capital but by improving economic efficiency or productivity.`

S and T should be able to address seven areas: economic efficiency, trade facilitation, investment incentives, food security, human resource development, environmental protection, and disaster and hazard risk management, he said.

`Science and technology competence provides the real base for innovation. It is scientific competence that is vital to keeping diseases out, in containing and eradicating incursions of diseases and in providing a sound basis for product standards development. As in any risk assessment, science and technology obviously have a key role in making sure that standards are appropriate, in making sure they are sound in theory and robust in practice,` Padolina said.

The symposium featured three research studies by PASCN member-institutions as well as studies by CLSU researchers.

Talking about the contribution of the knowledge economy to human development, Dr. Leonardo Lanzona, Jr., director of the Ateneo Center for Economic Research and Development, said there was a need to identify the role of educational institutions in effectively utilizing knowledge creation.

The impact of the knowledge economy manifests through a shift in the production function and an increase in the competitiveness of inputs, he said.

Dr. Jose Ramon Albert, PIDS senior research fellow, discussed the results of the 2009 Pilot Survey of Innovation Activities and said the determinants of innovation included knowledge management, firm size, and firm location. The survey results indicated the need to strengthen the policy framework for innovation, he said.
Gayline Manalang, assistant professor at the Department of Environment and Occupational Health at the University of the Philippines-Manila, presented the PhilSHIFT Project as an example of the use of science for inclusive growth and development. PhilSHIFT studies the role of the circadian or biological clock on Filipinos` physiology, behavior, and mental and physical performance. With 3,500 Filipino profiles so far, PhilSHIFT has noted a difference between the sleep characteristics of Metro Manila and non-urban cities, given the growth of contact centers and business process management.

CLSU professors and researchers Dr. Edgar Orden and Dr. Matilde Melicent Recto presented the state universitys latest research findings on goat-raising and innovation in the community-based carabao dairy industry.

PIDS President Gilberto Llanto, PASCN lead convenor, and PASCN Project Director Dr. Erlinda Medalla led the 18th PASCN General Assembly, kickstarting preparations for next years meeting that will coincide with the country`s hosting of the APEC Summit. Medalla announced that the 2015 PASCN symposium and general assembly will be hosted by Ateneo de Manila University.

In line with the Philippines` hosting of APEC 2015, the PASCN will be the host study center of the APEC Study Centers Consortium Conference in 2015. Boracay Island in Aklan, where the Second Senior Officials` Meeting (SOM 2) and related meetings will be held, is being eyed as the venue of the conference.

You may download materials related to this event here: http://www.pids.gov.ph/index3.php?pr=242

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The ASEAN Economic Integration (AEC) offers immense business opportunities that both the government and the private sector must exploit to fully benefit from its advantages.

This was underscored in a regional forum on the ASEAN Economic Community organized by the National Economic and Development Authority (NEDA) Regional Office 9 with the participation of state think tank Philippine Institute for Development Studies (PIDS) and the Department of Trade and Industry (DTI) regional office in Zamboanga City.

PIDS Senior Research Fellow Erlinda Medalla stressed the need to do more to take advantage of the opportunities from AEC.

The AEC does not only reduce tariffs but also promote trade facilitation. It commits the country to implement reforms on customs modernizations and establishment of a national single window and an ASEAN Single Window, she said.

"National single window is a single submission and accelerated processing of applications of licenses, permits, and other authorizations required prior to undertaking a trade transaction, while the ASEAN Single Window is a regional initiative that integrates the national single windows of ASEAN countries," Medalla said.

Medalla has been pushing for the implementation of a national single window to speed up data processing and cargo clearance procedures. "This would have positive impact on the cost of doing business, not just for large industries, but more importantly for micro, small, and medium enterprises."

She added that the country needs to step up in educating and informing the public about the benefits of the coming integration. "There is a need for greater information and education campaign to help small and medium enterprises get linked to the supply chain and receive support from all sectors. An agro-industry roadmap would also be a great help," she said.

DTI Assistant Secretary for Industry Development and Trade Policy Perry Rodolfo said that in 2010, duties for 98.63 percent of Philippine products are already at zero percent. As of 2010, all duties have been eliminated for agricultural and industrial products except for live swine, live chicken, meat of swine, meat of chicken, cassava, sweet potatoes, maize, rice, and sugar, he said.

Senen Perlada, Director of Export Marketing Bureau of DTI, said vast trading opportunities will come with the integration. "We should not limit our markets only to 100 million Filipinos considering that ASEAN has a combined GDP of USD 2.4 trillion as of 2013. About 67 million households in the ASEAN are now part of the consuming class," he said.

Perlada cited as an example a firm in General Santos City that shifted from exporting tuna to frozen smoked salmon. The firm imports zero-tariff salmon from New Zealand and then processes it for export to free trade agreement (FTA) partners.

Another example is Universal Robina's C2 Green Tea. C2 is now one of the largest in the Vietnamese bottled green tea market, Perlada said.

"We should also take advantage of the Halal market," he added. There is an advantage in food, logistics, and banking, he said.

"The Philippines has to engage in free trade agreements to maintain its competitiveness and promote cross-border complementation." Perlada emphasized that it is necessary to maximize the benefits made available by FTAs to our exporters.

Improving the quality of infrastructure in the Philippines was also a key topic in the forum. According to PIDS Senior Research Fellow Adoracion Navarro, the Philippines is the third lowest in overall quality of infrastructure in the ASEAN region based on the Global Competitiveness Report 2013-2014.

Critical investments in airport infrastructure facilities and air navigation system are needed to address congestion in airport terminals, Navarro said. "NAIA 1 served 7.5 million passengers in 2012, but its capacity is only 5.5 million passengers." She emphasized that it is necessary to boost infrastructure spending to five percent of GDP by 2016.

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A competition policy for the rice and passenger transport sector is needed to encourage innovation and prevent cartels.

This was stressed in a national reference group meeting organized by state think tank Philippine Institute for Development Studies (PIDS) with the Consumer Unity and Trust Society (CUTS) International based in Jaipur, India, and the Action for Economic Reforms (AER) and attended by various sector leaders.

PIDS Senior Research Fellow and Competition Reforms in Key Markets for Enhancing Social and Economic Welfare in Developing Countries (CREW) Project Director Dr. Roehlano Briones stressed that a more flexible policy toward rice imports should be adopted.

There is a competitive market structure for domestic rice production and marketing, but rice import quota which is decided solely by the National Food Authority through the National Food Authority Council could facilitate a cartel-like behavior, Briones said. "NFA manages to stabilize retail prices, but keeps domestic prices high by means of an import monopoly."

Briones cited a study by Beulah de la Pena that a few big players in the rice industry are allowed to import a minimum of 2,000 metric tons and a maximum of 5,000 metric tons of rice under the current importation quota distribution. The study suggests that small players should be allowed to import 10- or 20-ton container load of rice to prevent rice supply monopoly by a few big players.

Quantitative restrictions on imports to support the country's rice self-sufficiency objective must be repealed, Briones said.

"If quantitative restrictions were eliminated and rice imports were allowed to freely come in the country, total rice imports would have reached 3.68 million metric tons," Briones said. "Such high level of imports would have brought down the retail price of rice to PHP21.43 per kilogram and PHP19.39 per kilogram at the wholesale level."

Last year, the retail price of rice shot up to PHP36.28 in December from PHP32.37 in June, he said. "It is equivalent to a 12-percent increase in just six months."

Meanwhile, PIDS Research Consultant Debbie Gundaya revealed the market inefficiency in the bus transport sector.

"Market inefficiency manifests in too many operators and buses resulting in traffic congestion," she said. There are 1,122 bus operators and 12,595 buses in Manila routes, she said.

Moreover, Gundaya described that the bus transport sector market operates under a highly complicated regime where regulation and enforcement is shared by several agencies resulting in implementation failures and regulatory capture.

There is an operation of illegal or 'colorum' buses in Manila routes, Gundaya said. "Proliferation of 'kabit' system where a bus operator enters the market through an arrangement with an operator with an established franchise is also present."

In reaction to the consultant's recommendation to consolidate bus operations in Metro Manila, PIDS Senior Research Fellow Dr. Adoracion Navarro recommended that competitively tendered service contracts or concessions for defined routes be explored.

Moreover, International transport expert Rene Santiago suggested that contracted trips made on predefined routes and headways should be the basis to pool the revenues and pay bus operators.

The meeting is part of the activities of the three-year project of PIDS, CUTS, and AER on Competition Reforms in Key Markets for Enhancing Social and Economic Welfare in Developing Countries or CREW. The project aims to assess the level of competition in the rice and passenger transport sectors to generate broad-based support, especially from policymakers, for competition reforms.

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The Philippine services sector needs an articulated and comprehensive national strategy to maximize its potentials as a growth engine for the economy.

In the National Workshop on Services organized by state think tank Philippine Institute for Development Studies (PIDS) and the Department of Foreign Affairs (DFA), experts and stakeholders from the private and public sectors underscored the need for a more focused national strategy for services.

The Philippines can be a hub for services trade in Asia Pacific because of its pool of skilled, semiskilled, and low-skilled workers, PIDS Research Consultant Dr. Ramonette Serafica said. "The estimated 10.4 million Filipinos abroad are a natural market for Philippine services," she added.

According to Serafica, the country can tap opportunities in maritime, outsourcing, franchising, medical, and educational services. "The Philippines can be a home to world-class brands with the internationalization of Philippine franchise brands," she said.

There is a need, however, to boost government support such as in strengthening Philippine participation in international shows, trade missions, and business matching sessions, she said. Alegria "Bing" Sibal-Limjoco, vice-chairman of the Philippine Franchise Association, lamented: "In last year's Philippine participation in international franchise held in Singapore, the country had only a booth while other ASEAN countries had pavilions."

For Doris Magsaysay-Ho, president and CEO of A. Magsaysay, Inc., the country's high-quality talent pool is a competitive services proposition for the global maritime industry. "Knowledge of the maritime field using experienced people offers opportunity to develop business outsourcing services for shipping companies, insurance companies, and others," she said.

The Philippine Information Technology - Business Processing Management (IT-BPM) industry, meanwhile, is not only competitive in voice services, said Ana Maria Bongato, executive director for talent development at the IT Business Process Association of the Philippines (IBPAP). A wide range of services such as IT application, engineering, animation, data analytics, and other business process services are offered by the Philippines, she said.

The Philippine IT-BPM industry is ranked second as a global outsourcing destination and is the country's largest private sector job creator with 900,000 jobs created last year, said Bongato.

Former health secretary Dr. Jaime Galvez-Tan said the country can be an international and medical retirement zone. "The country can be retirement havens for Northeast Asians, OFWs, and expats," Galvez-Tan said. "We can offer spa tourism, alternative, and Filipino traditional medicine to them," he said.

Also, trade in educational services can make an important contribution in enhancing Philippine higher education, said Prof. Tereso Tullao Jr. of De La Salle University. It can lead to harmonization of academic standards and open avenues for regional cooperation in higher education, he said.

Tullao called for higher standards in educational services, noting the small number of accredited programs and lack of faculty qualifications of Philippine higher education institutions (HEIs). "Only 21.5 percent of the more than 2,200 HEIs have some form of accreditation and a miniscule 12.7 percent of around 130,000 faculty members have doctoral degrees," he said.

To harness services trade, former PIDS president Dr. Josef Yap stressed the need to have an institutional framework to address cross-cutting issues in services trade such as smuggling, transportation and logistics, skills mismatch, and power.

"There is a need to create an institutional setting to coordinate policies required to develop the country's services capacity through infrastructure development, skills upgrade, support policies and incentives," Yap said.

Moreover, the national vision or strategy on promoting the service sector should be anchored on a higher order objective which is the pursuit of inclusive growth for the country, said NEDA deputy director-general Emmanuel Esguerra.

In relation to this, PIDS President Gilberto Llanto said there is a need for a deeper understanding of the services sector for effective policy measures considering that the sector contributes significantly to the economy. "Philippine growth is driven by an expanding services sector which accounts for 57 percent of total GDP," Llanto noted.

It is thus important to guide the direction of the services sector since it contributes positively to the country's development and job generation agenda, said Laura del Rosario, Foreign Affairs undersecretary for international economic relations.

At the close of the workshop, del Rosario announced the revival of the Philippine Services Coalition, a multi-stakeholder group to be led by the private sector that will campaign for reforms to boost the services sector. The coalition will soon meet to map out its strategic initiatives, she said.

The National Workshop on Services was held in preparation for the Philippines' chairmanship of the Asia-Pacific Economic Cooperation (APEC) forum next year, del Rosario said.

The workshop brought together local and international experts and other stakeholders to discuss opportunities in services trade. The output of the workshop will serve as an input toward a comprehensive strategy on services.

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The Philippines has vast potentials to be the heart of services trade in Asia Pacific.

A study authored by Dr. Ramonette Serafica, research consultant of state think tank Philippine Institute for Development Studies (PIDS), underscores the vast opportunities left untapped in the services sector.

The services sector has significantly contributed to the Philippine economy in increasing employment, investment, and revenue generation. It represents 44.15 percent in gross exports in terms of service value added, Serafica said. "However, there are still vast opportunities left untapped to fully exploit its role in the economy."

The country's strong information technology-business process outsourcing industry places the country in a comparative advantage as a net exporter of services, Serafica said.

"The main source of the country's comparative advantage is its pool of skilled, semiskilled, and low-skilled workers," Serafica said. Moreover, technological changes in information and communication technology and the business models of multinational companies that are leaned toward outsourcing and offshoring of services have leveraged the country's human capital.

Serafica added that the Philippines has a strong potential to become a major hub in ship repair because of its strong labor force. Other plus factors are its geographical location which is ideal as a logistics hub for cargo and its deep seashores that make the country suitable as a ship repair hub.

The growing numbers of overseas Filipinos across the globe, more than 10 million to date, are a natural market for Philippine services, Serafica added.

Despite the country's decades of experience as a supplier of labor, there should be a comprehensive services export initiative to help facilitate the overseas expansion of other services, Serafica said. There should be "an umbrella program dedicated to services exports that would help create the Philippines as a valuable brand in services trade."

Serafica noted that based on the World Bank's services trade restrictiveness index (STRI), the Philippines has "one of the most restrictive policy environments for services." STRI is a gauge of a country's degree of discriminatory restrictions in financial services, telecommunications, retail, transport, and professional services. "Among the sectors included in the index, it is in professional services where the extent of restrictiveness [of the Philippines]is highest," Serafica said. In addition to restrictive policies, anticompetitive business practices also exist, she noted.

Serafica suggested that a government policy on innovation and human resource development (HRD) be implemented to further create an environment conducive to improving competitiveness.She cited a World Bank report where many countries both developed and developing are using innovation as the foundation of competitive industries from agriculture to services. This innovation involves the use of new technologies and practices as well as HRD policies that will ensure a high-quality labor force and a favorable labor market performance.

For more information, you may download the full study at http://dirp3.pids.gov.ph/webportal/CDN/PUBLICATIONS/pidspn1407.pdf.

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Recovery in the European Union (EU) will boost the Philippine economy given strong trade and investment relations between the two.

In a recent forum organized by state think tank Philippine Institute for Development Studies (PIDS), Prof. Lino Briguglio of the Department of Economics, University of Malta, noted that "economic conditions in the EU are likely to have an effect on the Philippine economy, given that the EU is an important trade partner and a major FDI (foreign direct investment) contributor."

The Philippines enjoys a trade surplus with the EU, he said. Total EU FDI stock reached just under EUR8 billion in 2011, making the bloc the largest investment partner of the Philippines. EU FDI accounted for about 30percentof the Philippines' FDI stock, Briguglio said.

Briguglio, who is also director of the Small States Network for Economic Development of his university, noted how the Philippines was able to absorb the shocks that arose from the Eurozone crisis, as evidenced by its solid economic growth rates and its relatively low debt ratio.

"The most important item of export from the Philippines to the EU are electronics, but other manufacturers and agricultural products are increasing their share (including coconut oil, fruits, and fish)," the economist said. "Services exports to the EU are dominated by transportation, travel services and IT services. The services trade between the Philippines and the EU fluctuates and shows no tendency for surplus or deficit," he added.

Other major EU- Philippines economic growth factors can be attributed to tourism and remittances from overseas Filipinos in EU countries.

"It is not easy to exactly determine the effect of conditions in the EU on the Philippine economy, because there are many factors involved, including the Philippine banks' balance sheets and their exposure to the Eurozone, which do not seem to have posed major problems," Briguglio said.

He noted that debt-to-GDP ratios of countries in the Association of Southeast Asian Nations (ASEAN) were not too high, making these countries more resilient. "The ASEAN as a whole is the EU's third largest trading partner outside Europe (after the US and China) with more than EUR206 billion of trade in goods and services in 2011," Briguglio said.

The largest investor in the ASEAN countries is the EU, with around EUR10 billion invested annually on average during the 2000-2012 period.

Briguglio noted with a stark observation how developing countries like the Philippines were able to stave off the effects of the European crisis: "The lesson here is that countries that used to teach developing countries how to behave, themselves misbehaved," Briguglio said.

The forum was the third Pulong Saliksikan seminar of Briguglio at PIDS. The seminar series aims to give an opportunity to PIDS researchers and visiting experts to present their papers and research findings.

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Blaming rice cartels for price manipulation cannot be considered a definitive explanation of last year's rice price hike. Sharp drop in imports is a more logical and evidence-based explanation, according to a study by state think tank Philippine Institute for Development Studies (PIDS).

Written by Dr. Roehlano Briones, PIDS Senior Research Fellow, and Ivory Myka Galang, PIDS Research Analyst, the paper cited the inadequacy of supply starting in mid-2013 due to the reduction in imports as the main cause of the rice price spike.

The retail price of rice shot up to PHP36.28 in December 2013 from PHP32.37 in June 2013 - 12-percent increase in just six months.

The ability of rice traders to influence the market price of rice is negligible according to the study. Citing a 2014 rapid appraisal conducted by Beulah dela Pena, "strong competition prevails at all levels of the rice supply chain. Farmers can freely choose their buyer among a number of buying stations and agents present in their community."

The study noted that rice imports dropped by 638,000 tons in 2013 due to the Department of Agriculture's Food Staples Sufficiency Program (FSSP). The program aims for 100-percent rice self-sufficiency in 2013 by raising domestic production and curbing imports.

But the increase in rice domestic production in 2013 has not been enough to reduce imports, the study noted. "While palay production did hit 18.44 million tons in 2013, up from 18.03 million tons, the increment of 439,000 tons was not enough to counter the effects of the reduction in rice imports."

The country failed to take advantage of cheap rice available in the world market because of import reduction, the study said. This led to a shortage of the rice supply, which raised the market price of rice. For example, in November 2013, the domestic price of rice per kilogram was PHP33.55, 28 percent higher than the world price of PHP18.63 per kilo.

The NFA could have abated the price spike had it offset the deficit from its buffer stock. This would have been possible if the stock was not limited, yet the total NFA stock in June 2013 was already low to begin with. The NFA is also facing intense pressures to reduce its liabilities and subsidy. "The buy high and sell low business model of NFA has placed intense pressure on its finances which amounted to $4.39 billion in total liabilities."

"A permanent solution is to repeal the QR (quantitative restriction) policy on imports to support the rice self-sufficiency objective," the study said. Rice self-sufficiency should be pursued with more cost-effective support mechanisms to rice producers such as research and development and new rice farming technologies.

Moreover, reforming the NFA is recommended, the study said. "It should focus on regulatory duties and management of the domestic food security stock and not on rice marketing and importation."

If you want to read the full study, you may download this link: http://dirp3.pids.gov.ph/webportal/CDN/PUBLICATIONS/pidspn1408.pdf

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Various digital data by-products from electronic devices, social media, search engines, sensors, and tracking devices (including climate sensors and global positioning systems or GPS) - also known as Big Data - have developmental uses.

A paper by Dr. Jose Ramon Albert, senior research fellow of state think tank Philippine Institute for Development Studies (PIDS), stressed that Big Data can complement traditional data sources in relation to the government's national development plans and disaster-risk management goals.

Albert cited how Big Data served as a useful source in tracking flu incidence. "In 2008, Google established a near-real-time flu tracker called Google Flu Trends that monitored Google searches on the flu," he said. "It was reported that flu incidence estimate from Google correlates strongly with the official statistics released by the US Centers for Disease Control and Prevention (CDC)."

Inasmuch as the country is frequently hit by natural disasters, with an annual average frequency of 19 to 20 tropical cyclones, Albert highlighted the use of Big Data in disaster risk management. The Philippine government's flagship project called Nationwide Operational Assessment of Hazards (NOAH) has helped national and local governments to become more prepared for disasters, he said.

"The high-velocity and high-volume data through Project NOAH have helped national and local governments to become more prepared to disasters," Albert said. "In 2011, Typhoon Sendong led to 676 deaths in Cagayan de Oro City, but a year later, when Project NOAH was already in place, there was only one associated death reported in the aftermath of Typhoon Pablo."

However, there are issues that need to be examined in the use of Big Data. Issues on privacy, security, intellectual property, accessibility for development purposes, and accountability have to be addressed to prevent the misuse of Big Data, Albert said.

"Much of Big Data includes personal data with precise, geo-location-based information. We are well aware that e-commerce sites are watching our shopping preferences; search engines are examining our browsing habits; social media sites are inspecting our personal data, including our social relationships and what we share; and mobile service providers are collecting data on who we talk or send text messages to and possibly what we say to them," Albert said.

He added that legal protocols and institutional arrangements should be identified to access Big Data holdings for development purposes. "Current efforts are being initiated by Senator Bam Aquino toward the establishment of a Big Data center in the Philippines," he said. "If it will be similar to Jakarta's Pulse Lab, a public-private partnership scheme for its establishment is required."

Moreover, investments on capacity building is critical to train Big Data users to identify useful and quality information given that information that can be harnessed from Big Data is increasing by 2.5 quintillion bytes per day, Albert said.

If you want to read the full study, you may download this link: http://www.pids.gov.ph/policynotes.php