STRUCTURAL issues, particularly with regard to manufacturing and labor, have to be addressed if the Philippines is to prosper, an investment banker said on Tuesday.
Speaking at a Manila Times business forum, Stephen CuUnjieng said that among others, the Philippines was saddled with inexpensive and inadequate infrastructure, a lack of manufacturing and long-term planning, and a population growth that has outstripped other economies.
The lack of planning is evident in expensive and inadequate infrastructure projects implemented in response to a “deficit” instead of being “anticipatory.”
“We have nearly nothing in manufacturing,” CuUnjieng claimed. “What happens when you have a manufacturing deficit? You become trade-driven, you become very susceptible to imported inflation.”
The latter is also a consequence of reliance on the private sector to do the heavy lifting, he added.
To illustrate the country’s lack of manufacturing, CuUnjieng noted that the Philippines, with a population of 117 million, had a peak power demand of just 16,000 megawatts (MW). Vietnam’s peak power demand, in contrast, is 60,000 MW with a population of just 66 million.
As for population, the Philippines saw this grow by 635 percent from 1950 to 2023 while neighbors like Thailand, China and Japan posted rates of just 352 percent, 262 percent and 46 percent, respectively.
Per capita gross domestic product, meanwhile, expanded by just 12.7 times for the Philippines from 1960 to 2022, while that for China and Thailand, respectively, surged by 153.4 and 81 times.
The rise in population has also led to less land that can be used for manufacturing, with 391 Filipinos per square kilometer compared to China’s 149, Thailand’s 140 and Vietnam’s 299.
“In a high population country, industrialization has been the only mode to prosperity and full employment,” CuUnjieng said in his presentation.
He also called the country’s so-called demographic dividend advantage as ‘bullshit,’ noting that the government continues to encourage working overseas.
“The government is just romanticizing the country’s ‘young and skilled’ population. Because if it is such a good thing, why do we have to export so much of our people?” CuUnjieng asked.
“Our skills are there, but they are not the level of our neighbor,” he added.
To address the structural issues, CuUnjieng proposed starting with manufacturing, “where we have a need and advantage in supply chain and input issues: agriculture, mining and tourism, infrastructure and renewable energy.”
The skill sets and productivity of workers also have to be improved.
“Stop thinking for the short term because short term is an excuse for ‘I don’t want to do hard work that is required over the long term,'” CuUnjieng said.
