Speeches & Transcripts

Summary Report on the 2013 Philippines Development Forum (PDF)

February 6, 2013

Motoo Konishi Philippines Development Forum Davao City, Philippines

As Prepared for Delivery

Summary Report on the 2013 PDF
by the Co-Chairperson, Mr. Motoo Konishi
Country Director, Philippines, World Bank

YOUR EXCELLENCY, President Benigno Simeon Aquino
Mr. Chairman, Honorable Secretary Cesar V. Purisima
Distinguished Guests

Mr. President, it is my honor to be tasked by Chairman Purisima to share with you the highlights of the 2013 Philippines Development Forum.

We have spent one and a half days focused on a reform agenda for inclusive growth. Over many decades, economic growth did not benefit the majority of the population, did not create decent jobs for all, and did not lift lagging regions out of poverty.  We believe this is the reason why inclusive growth is at the core of your Social Contract with the Filipino people. 

We have heard from many stakeholders—from business, from academe, from government, from civil society, and from development partners. A striking story emerges out of these discussions. It is remarkably similar across a wide range of stakeholders. This is how it goes.

The Philippines is no longer the sick man of East Asia, but the rising tiger. There is macroeconomic stability, and the fiscal situation of the government is sound and improving. The fight against corruption is being waged with determination, and it is paying off. Transparency is improving everywhere in government.

As a result, there is consensus that this government’s commitment to good governance is for real. 

As a result, there is a breakthrough in the peace negotiations in Mindanao.

As a result, there is confidence in the prospects for this country.

As a result, there is an upsurge in economic growth, even at a time that the world economic trends are not helping.

Indeed, your administration has demonstrated that good governance is good economics. As illustrated by Professor Cielito Habito, the Philippine economy passes the PiTiK test with flying colors.  For the benefit of my international partners, I was informed that Pitik is a test to check the ripeness of a watermelon.  But in this case, it means, Presyo – Prices; Trabaho – Jobs; and Kita – Income. 

The objective of putting the country irreversibly onto a path of inclusive growth—growth that creates jobs and reduces poverty—is within reach. We have noted the hard fought battles over key reforms. We have seen the improvements in the budget—better prioritization, better execution, better monitoring, and more transparency. We welcome the scaling up of expenditures on health, education and social protection. We are seeing infrastructure spending going up and becoming more strategic and more efficient.

Now is the time to accelerate and sustain the reform agenda. These reforms are well known. They have been studied, written about and reflected on for a long time. The surprise of a forum like this is that there are no surprises in the substance of the reform agenda. We are all convinced that the reforms can be more strongly implemented if we move with sharper focus, greater selectivity and as you have always said, a firmer drive for results for many more Filipinos.

We think that the time is right to create coalitions for reform—coalitions drawn from the private sector, labor, NGOs, civil society, academe and us, the development partners. Coalitions to deliver the peace dividend to the people who suffered from the conflict in Mindanao. Not only will those coalitions help you implement the reforms, they will also ensure that they will become irreversible and lock in good governance. Then, a legacy will be left: that good governance is good politics.

" The Philippines is no longer the sick man of East Asia, but the rising tiger. There is macroeconomic stability, and the fiscal situation of the government is sound and improving. The fight against corruption is being waged with determination, and it is paying off. Transparency is improving everywhere in government.  "

Motoo Konishi

World Bank Country Director for the Philippines

We have discussed the key reforms at this forum aligned with your five Cabinet clusters. We will share with you the full list of policy recommendations. But here is a preview of the more salient points.

First, from the Economic Development Cluster. Now that we have made strides in expanding the productive capacity of the economy, we can work towards making it more inclusive, by ensuring that more and better quality jobs are created. In 2012, about 10 million Filipinos were unemployed or under-employed. Then, every year, more than 1 million people will enter the job market every year. This creates the challenge of providing good jobs to 14.6 million people in 2016. Given the opportunities to benefit from the rebalancing that is taking place in the region, in particular in China, there is a need to meet this challenge with a heightened sense of urgency.

In the next three years, there is a need to continue to improve the environment for the private sector to generate jobs, especially in agriculture and tourism. The cost of doing business can be reduced through simplification and streamlining of business regulation and processes (such as national single window, business entry and licensing). There is a need to urgently remove barriers to entry for private businesses, especially in the areas of inter-island shipping, which would help ease the pressure on food prices. In that regard, now that you have achieved increased palay production, there is a need to look at crops in which the Philippines has comparative advantage. Support for agriculture and tourism is particularly important for job creation, because they have strong forward and backward linkages. To further support this agenda, critical laws such as the National Land Use Code, the Competition Policy Law and the Cabotage Law need to be enacted or revisited. All of these would have country wide impacts, but more so in Mindanao, which is recognized as the food basket of the country and where inclusive growth would make the greatest difference in people's lives.

What is needed for more inclusive development is better infrastructure. Infrastructure spending by government needs to increase from 2.6 percent to 5 percent of the GDP by 2016. A coherent and efficient intermodal transport roadmap with backbone links to growth areas needs to be adopted through close coordination of line agencies (DOTC and DPWH). And, for Mindanao, there is a need to augment the stimulus funds for infrastructure development (power, roads, and ports) to reap the dividends of peace and stability.

To sustainably finance this and other planned increases in public spending, we have heard from discussions that there is a need to pass the fiscal incentives bill. Rationalizing fiscal incentives will also go a long way to leveling the playing field and providing support to truly strategic, job-creating, economic activities.

Second, from the Human Development and Poverty Reduction Cluster. Expanding the access and improving the quality of the flagship programs in health, education and social protection -- including the conditional cash transfer program -- is essential for the inclusive growth agenda. This requires rigorously monitoring and evaluating the impact of these programs. In turn, this requires credible, frequent and disaggregated data. There is also a need for the government’s programs to be increasingly integrated and achieve convergence at the national, regional, and local levels. A particular focus is needed for disadvantaged groups, including out-of-school youth, indigenous peoples, persons with disabilities, and drop-outs. Finally, in the interest of better jobs, public-private partnerships can be strengthened to better address the skills mismatch, re-aligning the curriculum to better meet labor market needs.

Third, from Justice and Peace Cluster. The key challenge that was loudly articulated is to re-establish trust in the justice system. This can be achieved by addressing outdated laws, clearing the large backlogs in court cases, decongesting jails, and removing inefficiency and corruption. Recommendations to address these challenges focused on strengthening information systems and linking budget to performance for state institutions, based on clearly defined targets. At the same time there is a need to improve economic justice and support community-based traditional systems of justice that handle the vast majority of disputes at the community level. Problems with traditional justice mechanisms at the barangay level were also identified, particularly for groups marginalized from local power structures, including women and children. There needs to be a better interface between state and non-state justice institutions. This will be of particular importance in Mindanao and the Bangsamoro, where traditional systems remain the predominant forum for dispute resolution. Support for the Shari'a justice system was also identified as an important priority in the context of the Framework Agreement on the Bangsamoro.

Fourth cluster, Climate Change Adaptation and Mitigation. Climate change and disaster risks are issues critical to sustainable development and national security issue. The Government has developed a comprehensive, innovative and much welcome climate change and disaster reform agenda. This compares well to world standards. In the next 3 and a half years, Government's challenge is to complete the reforms, address bottlenecks, and speed up implementation.

This will require convergence of government agencies, local government units and development partners; fast tracking the consolidation of vulnerability and risk assessments; continuing to improve disaster risk management; and mobilizing effectively the needed resources in technology, capacity and financing. In Mindanao, the government could consider adopting an ecosystem based -- "reef to ridge"-- approach.

Five, Good Governance and Anti-Corruption. While the government has made significant gains in the areas of public financial management, procurement and anti-corruption reforms, much remains to be done to ensure the sustainability of the reform momentum. There is a need to further strengthen the links between government’s planning, budgeting and performance management systems to ensure that citizens feel the immediate and direct benefits of good governance. The bureaucracy’s capacity to more meaningfully engage with citizens, civil society, business, and other stakeholders in open, transparent and accountable manner needs to be strengthened. At the same time, reform stakeholders also face capacity and resource constraints in effectively engaging both national and local government processes. The Governance and Anti-Corruption Cluster recommended three broad areas for action in helping sustain reforms: build and empower constituencies for reform that will demand for and support good governance; strengthen monitoring and evaluation mechanisms, especially those related to public financial management and performance management systems; and give special attention to governance reform and institution building efforts in Mindanao within the framework of the President’s Social Contract, taking into consideration its development, humanitarian and peace building context.

In conclusion, let me say again what I said yesterday. Paraphrasing Martin Luther King, Mr. President, we are with you as you bend the arc of history of this country. The challenges you face have been the same challenges for many decades. But if we all continue in accelerating the existing reform agenda, with a renewed sense of urgency, then this government will leave an irreversible and lasting legacy. The legacy of inclusive growth.

Maraming salamat po. Mabuhay ang Pilipinas!


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