CEBU CITY -- Liberalizing the country’s services sector is actually good for consumers in the long term because it has a spillover effect on other sectors, such as manufacturing, a foreign expert said on Monday.
During a press conference on structural reforms, concerns were raised about the Philippines concentrating too much on services, and putting agriculture and manufacturing on the back burner. Services account for a huge percentage of the national economy.
Opening up the country in the area of services is not actually bad for the Philippines, said Anthony Nightingale, a member of the Asia-Pacific Economic Cooperation (APEC) Business Advisory Council (ABAC) Hong Kong and head of the ABAC delegation to the APEC Structural Reform Ministerial Meeting (SRMM).
He cited the liberalization of the telecommunications industry several years ago, noting it was one of the Philippines’ success stories as it benefited other sectors.
“Some of you may remember what telephone reception or communication used to be like in the country. That was a big, big problem,” he said.
“By just fixing that by introducing competition and opening the market was good for consumers. It was that which created the business process outsourcing industry, that now accounts for some 10 percent of the gross domestic product,” he said, noting the BPO industry has now turned out to be such “a huge provider.”
Nightingale said that although it was good to have a balanced economy to develop such areas as manufacturing, a country could also prosper by concentrating on services, like Hong Kong did.
“But the big point is that if you have efficient and competitive services in areas like logistics, in areas like telecom, power distribution, you can list out a huge number, it actually makes your manufacturing industry more efficient. Those two things are not incompatible, they are, in fact, together,” he said.
Meanwhile, Peter Perfecto of the Philippine Services Coalition attributed the country’s decision to focus more on services to several issues in the manufacturing sector, among them infrastructure and cost of power, which could not be addressed in the medium term.
Perfecto, however, noted a resurgence in manufacturing.
The business sector, he said, just has to continue building on what the administration has been able to put forward as well as strengthen the country’s business groups and joint foreign chambers.
“Aside from that though, there is an overlap of services when it comes to making manufacturing, as well as agriculture, more competitive,” Perfecto said.
“Increasing the performance of services and increasing innovation in services will actually also redound to the benefit of manufacturing and agriculture.”
Member economies of the APEC reached a milestone here on Monday when they agreed to form an Asia-Pacific Services Coalition.
The coalition aims to promote an effective platform for the different sectors to increase dialogue and cooperation, and likewise, share experiences to boost growth.
The services sector accounts for 70 percent of the global GDP and when taken from the perspective of value adding, it contributes to nearly 50 percent of world trade exports. (PNA)
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