Connect with us

Southeast Asia

Infrastructure Drive, Strong Domestic Demand to Sustain Philippine Growth

MD Staff

Published

on

The Philippines’ economic growth is expected to sustain its quick pace in 2018 and 2019 as the government’s infrastructure program is rolled out, says a new Asian Development Bank (ADB) report.

In its new Asian Development Outlook (ADO) 2018, ADB projects Philippine gross domestic product (GDP) growth at 6.8% this year and 6.9% in 2019, up from 6.7% in 2017. Rising domestic demand, remittances, and employment, in addition to infrastructure spending, will drive growth. ADO is ADB’s flagship annual economic publication.

“Along with domestic demand, the government’s infrastructure investments will fuel the country’s growth in the next few years, supported by a sound economic policy setting,” said Kelly Bird, ADB Country Director for the Philippines. “We expect this growth to further lift wage employment numbers, add to household incomes, and benefit more poor families across the archipelago.”

The Philippines remained one of the strongest growing economies in Southeast Asia in 2017. Domestic investment recorded 9% growth last year, moderating from a brisk 23.7% in 2016, although growth in fixed investment in industrial machinery, transport equipment, and public construction remained robust. Household consumption grew by 5.8% in 2017, from 7% in 2016, on the back of higher remittances and employment, with the unemployment rate falling by 1.3 percentage points to 5.3% in January 2018 as 2.4 million jobs were added. Public spending rose by 7.3% last year from 8.4% in 2016.

Consumer price inflation reached 3.2% last year from 1.8% in 2016 due to strong economic growth, higher international fuel prices, and Philippine peso depreciation, but well within the 2% to 4% target by the Bangko Sentral ng Pilipinas—the country’s central bank. The country’s external debt further declined to 23.3% of GDP in 2017, from 24.5% of GDP in 2016.

Moving forward, ADB projects services will continue to drive GDP growth, along with manufacturing and construction industries. The approval of the Tax Reform for Acceleration and Inclusion law in December 2017 will augment tax revenues and provide additional fiscal space for more progressive public spending. The policy reforms are expected to yield additional 90 billion to 144 billion Philippine pesos ($1.73 billion to $2.76 billion) in tax revenue collection in 2018 and 2019, respectively.

With economic growth gaining momentum, inflation is projected to reach 4% in 2018 as global oil and food prices rise, and higher excise taxes on some commodities take effect. In 2019, meanwhile, inflation is expected to marginally decline to 3.9%.

The report notes there are external risks to the Philippines’ growth outlook from heightened volatility in international financial markets and uncertainty about global trade openness, although the country’s strong external payments position would cushion these effects.

A major policy challenge to the country’s growth outlook, according to the report, is managing the rollout of the government’s “Build, Build, Build” infrastructure program, which is expected to raise public infrastructure spending to 7.3% of GDP by 2022 from 4.5% in 2016. The report provides suggestions on ways to enhance government capacity, including strengthening coordination between government agencies and improving technical capacity of staff within these agencies, and fostering stronger partnerships between government agencies, the private sector, and development partners.

Continue Reading
Comments

Southeast Asia

Securing the future prosperity of the Greater Mekong Subregion

Published

on

The Greater Mekong Subregion (GMS) countries have made stunning progress over the past quarter century. Once plagued by poverty, they are now economic success stories.

The GMS Economic Cooperation Program has contributed significantly to this transformation. Since it was established in 1992 as a means to enhance economic relations and promote regional cooperation, its six member countries—Cambodia, the People’s Republic of China, Lao People’s Democratic Republic, Myanmar, Thailand, and Viet Nam—have built a platform for economic cooperation that has mobilized almost $21 billion for high-priority infrastructure projects. Foreign direct investment into the subregion has surged ten-fold and trade between its countries has climbed from $5 billion to over $414 billion.

But the subregion faces challenges to its prosperity. Further reducing poverty, climate change adaptation and mitigation, energy efficiency, food security, and sustainable urbanization remain priorities of the GMS Program. Countries also face new challenges, including growing inequalities, rising levels of cross-border migration, and the potential impact on jobs of the fourth industrial revolution.

Moreover, GMS countries have agreed to significant commitments under the Sustainable Development Goals and the Paris Agreement on climate change.

There are also emerging opportunities for the region, including incorporating new technologies in various sectors such as education, agriculture, health, and finance. GMS countries are situated at the crossroads of South and Southeast Asia, and hence they can benefit from the increased momentum for growth in South Asia.

As GMS leaders gather this week in Ha Noi to chart the future of the program, it’s a good time to consider how a new generation of initiatives can ensure the GMS Program remains relevant and responsive to the subregion’s needs.

The Ha Noi Action Plan and the GMS Regional Investment Framework 2022, both proposed for adoption at the Summit, provide a platform for countries to strengthen their cooperation through continuous innovation. These two documents will have a sharpened focus on the GMS Program’s strategic goals of enhancing connectivity, competitiveness, and community in the subregion.

Connectivity, the first objective, has been dramatically improved. More than 10,000 kilometers of new or upgraded roads and 3,000 kilometers of transmission and distribution lines have been added under the program. These transport networks have been transformed into an interconnected network of transnational economic corridors, building on 25 years of work to extend the benefits of growth to remote areas. The Ha Noi Action Plan calls for the continued expansion of these economic corridors to boost connectivity both between and within countries.

The subregion’s competitiveness is improving through ongoing efforts to facilitate transport and trade flows, enhance agriculture exports, and promote the GMS as a single tourism destination after receiving a record 60 million visitors in 2016. Looking ahead, it will be important to continue cutting red tape and to remove remaining barriers to transport and trade.

Finally, communities are being strengthened through cross-border initiatives to control the spread of communicable diseases, expand educational opportunities, protect the subregion’s rich biodiversity, and mitigate the impacts of climate change.

GMS countries have identified a new pipeline of 227 projects worth about $66 billion under the GMS Regional Investment Framework 2018–2022. These projects will expand economic prosperity by developing cross-border transport and energy infrastructure.

ADB, which has been the program’s secretariat since its inception, expects to provide $7 billion over the next 5 years for a range of projects supporting transport, tourism, energy, climate change mitigation and adaptation, agribusiness value chains, and urban development. This builds on more than $8 billion in financing provided by ADB so far under the program.

To deliver these projects and make headway on other priorities such as infectious disease control and environmental preservation, strong partnerships are vital. The GMS Program depends on the collaboration of many stakeholders, including local administrations and communities, development partners, academia, and the media.

The GMS will benefit from strengthened partnerships with other regional and global cooperation platforms, leading to new opportunities for future development.

Partnerships with the private sector will also be increasingly important, and it is gratifying to see them deepening through the GMS Business Council, the Mekong Business Initiative, the e-Commerce Platform, GMS tourism and agriculture forums, and the recent Finance Sector and Trade Finance Conference.

I am optimistic that the subregion will meet its challenges and capitalize on emerging opportunities. By working together, GMS countries can deliver rapid, sustainable, and inclusive growth for another 25 years and beyond. ADB will continue to be an important and trusted partner in that endeavor.

Continue Reading

Southeast Asia

Vietnam continues to reduce poverty

MD Staff

Published

on

Poverty in Vietnam continues to fall, particularly amongst ethnic minorities, who saw their rate of poverty decline significantly by 13 percentage points, the largest decline in the past decade, says a new World Bank report.

According to Climbing the Ladder: Poverty Reduction and Shared Prosperity in Vietnam, released today by the World Bank, improving income from highland agriculture can help Vietnam further reduce poverty, which has fallen by almost 4 percentage points since 2014, to 9.8 percent in 2016. Ethnic minorities – many of them living in highland areas – account for 72 percent of Vietnam’s poor, and encouraging them to grow more profitable industrial crops may improve their earnings.

“Vietnam has achieved tremendous results in reducing poverty and improving the quality of life for millions. The decline in poverty amongst ethnic minorities is encouraging, and more focused efforts on improving their incomes can further broaden their opportunities and reduce persistent inequalities,” said Ousmane Dione, World Bank Country Director for Vietnam. “The aspirations of those with less opportunities cannot be ignored.”

Outlining recent trends and patterns of poverty in Vietnam, the report proposes solutions for that untapped agriculture potential in highland areas where the poor are concentrated. Land use and cropping decisions, for example, contribute more to agriculture income differences between households. Low-income families in highland areas use their land to grow basic crops such as rice or maize instead of raising more profitable crops such as coffee, black pepper, or rubber.

Improving access to credit may help highland farmers make the necessary investments for higher-earning agricultural production. Strengthening earning capacity can help narrow inequalities between groups.  The average per capita consumption of ethnic minorities, for example, remains less than 45 percent of the Kinh and Hoa. Moreover, the poor faces a widening gap in terms of access to upper secondary education and improved water and sanitation.

At the same time, the report recognizes that 70 percent of Vietnam’s population is now classified as economically secure, including the 13 percent who are now part of the global middle-class. These income classes are growing rapidly, rising by over 20 percentage points between 2010 and 2017. An average of 1.5 million Vietnamese joined the global middle class each year since 2014, confirming that households continue to climb the economic ladder after escaping poverty. The rise of the consumer class changes society’s aspirations and the focus of the poverty and shared prosperity agenda shifts from combatting extreme poverty to effecting broad improvements in the quality of life and supporting the further expansion of the middle class. Rapid job creation and an ongoing transition to wage employment are driving gains in poverty reduction and shared prosperity.

The report suggests several areas of strategic priorities to further reduce poverty and promote shared prosperity, including:

  • Boosting labor productivity and investing in infrastructure to sustain job creation and wage growth without losing competitiveness.
  • Implementing education reforms designed to equalize opportunities and develop workforce skills.
  • Spurring agriculture structural transformation through changing farmland use patterns, strengthening land user rights, and improving skills of the poor farmers.

While reducing inequality remains a challenge, the report notes that the number of individuals vulnerable to falling back into poverty declined to only 2 percent between 2014 and 2016. In contrast, the period saw the middle class expanding by more than 3 million people.

One of the prioritized areas under the new World Bank Group Country Partnership Framework with Vietnam for the period from FY18 – FY22 is inclusive growth, with a specific objective for the “economic integration of the poor and vulnerable groups” under which the Bank will provide support for targeted interventions to expand economic opportunities for people in lagging areas.

Continue Reading

Southeast Asia

Thai universities must look beyond ranking

Rattana Lao

Published

on

National University of Singapore

Bangkok – The recent 2018 Asia University Rankings published by the Times Higher Education (THE) magazine is calling attention for the state of Thai higher education.

Unlike its Asian neighbors, Thai universities are falling behind.

The National University of Singapore maintained its number one status for the third consecutive year due to its continuous improvement in teaching and research environments, greater citation impact and higher amounts of industrial income, said Ellie Bothwell of the Times Higher Education.

This year, the numbers of universities being ranked increased from 300 to 350 universities. Japanese universities are amongst the most qualified universities in Asia with 89 universities made it to the list. 63 universities from China are included in the top 350.

The picture looks worrisome for Thailand. Only ten universities made it. However, none of them was ranked in the top 50. The best performing university from Thailand was Mahidol– with ranking of 97th place, same as that in 2017, while the oldest higher education establishment, Chulalongkorn University, is only 167th place amongst 350 institutions.

Should we be concerned about this?

Yes, and no.

Given that ranking has been taken as a face value that it equates the overall quality of higher education, the poor performance sends a negative signal. It is a setback for Thailand’s aspiration to become the regional hub of education in Southeast Asia. How can we be a regional center when the best of our universities are far behind that of Singapore and Malaysia?

This is also bad for internationalization process. The low performance is discouraging for potential research partners and foreign students to come to Thailand. It lowers Thailand’s attractiveness and competitiveness.

While the results are not promising, what is worse is how they are used and interpreted by policymakers and the media to create, what professor Gita Steiner-Khamsi of Teachers College, Columbia University called “a scandalization effect”. That means, results from international league tables haven been used as external forces to generate reforms pressure at the local level.

Thailand is no exception. Since Asia Week published the first Asian universities ranking in 1997, Thai politicians, policymakers and the media have used the international results to create reform pressure. A decade long of higher education policy analysis confirmed that boosting the ranking seems to be the only policy goal for most Thai policymakers.

But ranking is not everything.

Mrs. Ruangrat Wongpramote, Assistant Secretary General of the Education Council poignantly said: “ranking helps us to mirror the reality. It is a good tool for us to know where we are standing in comparison with others. But it does not tell us everything. There are more pressing issues in Thai higher education.”

These issues include quality of the students, quality curriculum and quality teaching.

Firstly, Thailand has to shift its focus from quantity students to quality students.

For the past 100 years, the system has done well in terms of access. There were only five universities in the first 50 years of Thai higher education and all of them were established in Bangkok Metropolitan area. Now the official record reported that there are 151 universities across the country – with 81 public universities and 75 universities in most of provinces. The expansion has made it available for more than 2 million enrollments.

While the massification provides more equitable educational opportunities for students, the mismatch between skills and jobs requirement, low quality of English proficiency and lack of critical thinking are amongst key issues that need to be seriously addressed.

Secondly, Thai curriculum needs to be upgraded. The Office of Higher Education Commission has implemented Thailand Qualification Framework or TQF with the hope of improving and standardizing Thai curriculum. However, what the government has had in mind is counter-productive to improvement of the curriculum.

TQF is academics worst nightmare. It requires academics to fill in lengthy lesson plans, detailed description of their syllabus and anticipated unimaginable outcomes. The rubrics are demanding and micro-managing. Instead of improving curriculum, academics report they cut and pasted, worst, lied just to complete the form.

This policy takes away precious class preparation time for nonsensical administrative things.

A more efficient and collegial way of improving the curriculum is needed.

Thirdly, quality teaching must be improved. Large classrooms are not in and of themselves problematic. But ones that are passive, top-down and lecture-based are outdated. Lecturers must work harder than regurgitating the texts to students. Classrooms need to be conducive space for learning where conceptual debates, analytical discussion and constructive dialogues are promoted. In the era where students can google to get basic facts, university students must be pushed harder to think critically. Students must learn to ask difficult questions and come up with creative answers.

A bad ranking is a good wake up call. But what we will do about it is what matters most.

Continue Reading

Latest

Economy3 hours ago

Circular economy: More recycling of household waste, less landfilling

EU Parliament backs ambitious recycling targets, under legislation on waste and the circular economy, adopted on Wednesday. Improving waste management...

Middle East4 hours ago

How the Guardian newspaper fulfills George Orwell’s prediction of ‘Newspeak’

On Sunday April 15th, Britain’s Guardian bannered “OPCW inspectors set to investigate site of Douma chemical attack” and pretended that...

Diplomacy5 hours ago

The evolution of the concept of diplomacy

Transformation in diplomacy, like the transformation of other international scenes of international relations, has not stopped at a specific point,...

South Asia6 hours ago

The Not-So-Missing Case of Indian Innovation and Entrepreneurship

Hitendra Singh and Gauri Noolkar-Oak* Recently, an article published in Modern Diplomacy caught our attention. The author has cited Mr....

Economy7 hours ago

Greece can turn its education system into a source of inclusive and sustainable growth

With a qualified and well-engaged teacher workforce, motivated 15-year-old students with a strong sense of school belonging, and one of...

Energy7 hours ago

Report: Powerful New Policy Options to Scale Up Renewables

A new report by the International Renewable Energy Agency (IRENA), the International Energy Agency (IEA), and the Renewable Energy Policy...

Newsdesk10 hours ago

UN Environment designates Chinese idol Wang Junkai as National Goodwill Ambassador

Singer and Actor Wang Junkai, or Karry Wang, best known for his leading role in the box office blockbuster film...

Newsletter

Trending

Copyright © 2018 Modern Diplomacy