Philippines told to invest, bank on ‘young’ labor force

CEBU, Philippines - The International Monetary Fund urged the Philippine government to invest in infrastructure, health and education for its labor force given that the young Filipinos are the greatest advantage of the country's economy.

IMF Resident Representative to the Philippines Shanaka Jayanath Peiris cited the Philippines as among the three "young" countries becoming the labor force of the world in the next 50 years. The other two are Indonesia and India.

"The world is aging... China is aging very fast. [On the part of the Philippines] infrastructure, education and health are very important for its young people," Peiris emphasized.

The IMF official said the Philippines must maximize the potential of its strong labor force by investing in it.

He added the Philippine economy "would do well" if the government continues to invest in its people, which are its greatest strength.

The IMF has kept its trimmed growth forecast for the Philippine economy which is still deemed one of the strongest in Asia.

In the April issue of its World Economic Outlook, IMF kept Philippine growth forecasts at 6 percent this year which, Peiris said, is considered "solid" and 6.2 percent for  2017.

The government had also lowered its growth forecast to 6.8-7.8 percent for 2016 and 6.6-7.6 percent for next year, citing a very challenging external environment as the main factor.

In Southeast Asia, he said Vietnam is the one growing fast, whose economy is driven by foreign direct investment (FDI), something the Philippines lags behind.

The country's low FDI is still due to foreign ownership restrictions aside from poor infrastructure and the cost of doing business here, he said.

Peiris stressed the economy should be more open to foreign capital especially for capital-intensive investments and infrastructure projects.

He cited good infrastructure, regulatory framework and cost of doing business as among the factors that affect the entry of foreign investments.

In addition, he said the Philippine economy will continue to be driven by domestic demand as the services sector continue to expand.

Remittances from overseas Filipino workers and the business process outsourcing sector will continue to support the growth of services.

The country's economic outlook, however, faces increased downside risks, including the slower growth in China, higher global financial volatility, capital outflows and weather-related disruptions.

The IMF official further said the continuation of prudent macroeconomic policies (both monetary and fiscal) and good governance are critical to sustain the country's growth momentum. — (FREEMAN)