Strong local retail sector to cushion crisis impact

CEBU, Philippines - A strong local retail industry is one of the good defenses of the country against the global economic challenges, according to an economist.

Economist Benjamin Diokno, professor of the School of Economics of the University of the Philippines, said the government must strengthen the country’s retail industry to cushion the impact of the crisis on the local economy.

“(We need this now,) especially that exporting now is more difficult than ever. In fact, governments of other countries are looking inward due the difficulties abroad,” he told The Freeman on the sidelines of the 4th Cebu regional retail conference of the Philippine Retailing Association (PRA) held at the Cebu International Parklane Hotel last Tuesday.

Diokno said that this and more internal concerns, specifically the financial state of the government, are the challenges facing the administration of the newly-elected President of the Philippines, President Benigno “Noynoy” Aquino III.

He said that the new administration should focus on opportunities in the domestic economy.

“The domestic trade is a big market. Exporters and retailers should start looking at the domestic market because the global market is now becoming much harsher. The country’s population of 92 million is such a big market to tap,” Diokno added.

He also said the new government will have to address the very high budget deficit of P298.5 billion, which is 3.9 percent of the gross domestic product, left by the Arroyo administration and grow the economy at the same time.

“The new administration is faced on how to grow the economy at least by seven percent in the next six years. This (conservative projection) growth is the only way that the government can make a dent on the country’s (high) poverty level,” Diokno said.

In order to strengthen the country’s local industry, President Aquino’s government must be strong in implementing ways to improve governance and maintain peace and order to attract investments as well as reduce the cost of doing business in the country and establish a competitive exchange rate to discourage importation.

The former chief of the Department of Budget and Management also told the participants to the conference that President Noynoy Aquino should increase spending for education, health, social protection, agriculture and physical infrastructure such as highways that link rural communities to urban centers, mass transit systems in urban areas, energy, water, irrigation facilities and rehabilitation of Metro Manila.