MANILA, Philippines?Renewed investor confidence in the country and less red tape can help push economic growth rate up to 8 percent next year, Socioeconomic Planning Secretary Cayetano Paderanga Jr. said Wednesday.
?We will work on what we need to do in order to obtain a growth rate ... somewhere around seven to eight percent by 2011,? Paderanga said.
Paderanga told reporters that streamlined business procedures and more transparent investment measures could help bring in the money needed to speed up growth.
?We feel that with some of the changes [the new administration will pursue], especially in government procedures and infrastructure, there will be increase in investment opportunities,? he said at a press briefing.
This year?s economic growth is expected to exceed the target of 5-6 percent.
The economy has grown an average of about 4.4 percent over the past 10 years, and analysts have said the country needs to maintain growth at 7 percent to substantially cut poverty.
Paderanga said a top priority was to make the Philippines more attractive for investors and multilateral agencies, and this would be done by eradicating corruption and cutting red tape.
?We are hoping that with the new administration, we can get more credibility so that domestic and also foreign investors will start looking at our country,? he said.
In his State of the Nation Address on Monday, President Benigno Aquino III said he wanted to develop public-private partnerships where private capital would help finance big projects such as a new rail line through the main island of Luzon.
Mr. Aquino said private investment was desperately needed because the Arroyo administration had bled the nation?s coffers nearly dry through misrule and corruption.
Paderanga, also the director general of the National Economic and Development Authority (NEDA), said that one of the main thrusts of the Aquino administration would be the improvement of infrastructure.
He said infrastructure needed in business process outsourcing, tourism and agriculture would be given priority.
Electricity, transport, water
The administration will invest in infrastructure related to electricity, transport, water, irrigation and solid waste management, Paderanga said.
?We hope this might lead to a higher secular growth rate,? the NEDA chief said. Secular growth refers to expansion of the economy without the government taking extraordinary measures.
?We also hope that by next year, [such] changes that we would be making would start to have an effect,? he said.
Fragile global recovery
But this will depend on the external environment, Paderanga said. ?The global economic recovery is still fragile and we have to watch that.?
In a prepared statement, Paderanga said the administration would gear up for sustained economic growth by providing an enabling environment for private sector investment through a stable macroeconomic environment.
Analysts agreed that the Philippines could achieve economic growth of up to 8 percent, particularly after a surprisingly strong growth of 7.3 percent in the first quarter.
?We have sufficient domestic savings and, if foreign investment comes in, that will provide the additional booster,? said Victor Abola, economics professor at the Manila-based University of Asia and the Pacific.
Jose Vistan of AB Capital Securities agreed the growth targets could be met, but only if investor confidence improved.
?We need a lot of capital. It will take a lot of hard work. We have to prove ourselves first as an ideal investor destination,? he told Agence France Presse.
Arroyo?s strong legacy
Abola and Vistan also said that, despite Mr. Aquino?s criticisms of former President Gloria Macapagal-Arroyo, she had left him strong economic fundamentals to build upon.
?Gloria Arroyo has been demonized by the media but ... the reality is that we are in the best position economically (since the 1980s),? Abola said.
Even Paderanga acknowledged that the country?s savings and investment rates were rising thanks to stable inflation and interest rates, providing a crucial platform for increasing growth.
NEDA assistant director Myrna Asuncion said there was a good chance that growth in April-June may be higher than the 7.3 percent recorded in the first quarter.
?Most of the indicators in the second quarter are higher than in the first quarter,? Asuncion said in an interview. ?Indicators such as automotive sales and exports are up, inflation is within target and the banking sector remains strong.?
She said government economic managers already considered the 5-6 percent target for this year ?quite conservative.?
?Some estimates are higher [than that range], but we would have to wait for second-quarter numbers before we could revise the full-year target,? Asuncion added.
She said growth in the second quarter was ?leaning toward the high end of the target,? with indications of higher consumption because of the May elections.
The government is expected to announce economic growth data late in August.
?Definitely, second semester growth would be lower than 7 percent because you don?t have the effect of election spending,? Asuncion said. With reports from Agence France-Presse and Reuters