Economics Problems of the Philippines

Like most other southeast Asian regions, Philippines too has a history of European
colonization. It was a colony of Spain and the USA. The country is now home to multiple
cultures and ethnic groups. It is also looked upon as a perfect example of a 'mixed
economy'. Traditionally, the economy stabilized on the agrarian contributions and the
manufacture of garments, pharmaceutical products, and semiconductors. In the last
decade, electronic exports added to the exports, along with various products obtained
by mining. Though Philippines too suffered in terms of exports, remittances from
overseas Filipino workers, and foreign direct investments, during the 2008 global
economic crisis, there has been steady economic growth in the recent years. However,
there are certain economic problems that cannot be ignored. The following sections list
out some of the economic problems of the Philippines.
Unemployment

In 2012, 10 million Filipinos were either unemployed (three million) or underemployed

(seven million). In October 2013, unemployment rate was 6.5% in comparison to 6.8%
in 2012. According to the Labor Force Survey, the unemployment rate was 6% and
6.6% in October 2014 and January 2015, respectively.
Only one-fourth of the Filipinos that enter the labor force are able to find good jobs in the
country, and the rest of them find jobs overseas, leave the labor force, or end up becoming
unemployed/underemployed. Thus, three-fourth of the workers are unemployed or informally
employed, with lack of opportunities to find good jobs. Though jobs are being generated, there's
a need to generate jobs at a much faster rate, to be able to bring down the unemployment rate.
Many of the unemployed individuals are college graduates. Many wait for job opportunities
abroad, and many families depend on remittances from family members who are staying
abroad.

Poverty

Despite the talk about economic growth, the poverty rates have not changed
significantly since 2006. As per the National Statistical Coordination Board (NSCB),
poverty incidence of the population improved from 26.3 percent in 2009 to 25.2 percent
in 2012.
Even though Philippines is a fast-growing economy, there's been just a minor decline in the
incidence of poverty. Poverty is very much linked to unemployment. Unfortunately, the growth is
restricted to the BPO, retail, and real estate sector, and a large number of Filipinos remain
without jobs. On top of that, natural calamities further push people below the poverty line. Thus,
economic disparity is a common feature. In general, the gains from higher economic growth
have not really trickled down to the poor.

Poor Infrastructure
Infrastructure is one of the biggest challenges. In the Global Competitiveness Report
2014-2015 of the World Economic Forum, Philippines didn't fare well in terms of the
quality of the overall infrastructure. It ranked at number 91 among 144 countries. This
can be attributed to underinvestment in infrastructure.
In order to host global companies, Philippines will have to pay more attention to enhancing the
infrastructure. A well-developed transportation (roads, railroads, ports, and air transport) and
communication system is extremely essential for economic activities. As per the World Bank's
Ease of Doing Business 2015 report, Philippines ranked 95 out of 189 economies. It needs to
improve its ranking in certain categories. It ranked 161 in the category of starting a business,
124 in dealing with construction permits, 108 in registering property, 104 in getting credit, 154 in
protecting minority investors, 127 in paying taxes, and 124 in enforcing contracts. Thus, the
policy makers should take steps to attract global companies or investors.

Heavy Dependence on Remittances

Philippines was the third-highest recipient of migrant remittances in 2013, after India
and China. According to the Philippine Central Bank, remittances from overseas Filipino
workers (OFWs) reached USD 25.1 billion in 2013. It was 7.6% higher than the
remittances from the last year, and accounted for 8.4 % of Philippine gross domestic
product (GDP) in 2013.
The source countries for the remittances included the United States, Saudi Arabia, the United
Kingdom, the United Arab Emirates, Singapore, Canada, and Japan. The country heavily relies
on these funds. Their economic growth can primarily be associated to the remittances from the
overseas Filipino workers, as well as the growth in the Business Process Outsourcing (BPO)
sector. Also, one cannot rule out that the growth is connected to the global economy. In the
event of any crisis, economic growth is bound to suffer. Thus, greater attention has to be paid to
addressing to the internal problems of the economy and enhancing domestic-oriented growth. A
policy of removing structural impediments to growth has to be adopted, with lesser focus on
foreign investors and exporters.

Besides the aforementioned issues, corruption is another aspect that needs to be taken care of.
The current administration needs to prepare an industrialization program that encourages value-
addition manufacturing or services and builds Filipino-owned industries. Being overly dependent
on global economy or remittances from Filipinos living abroad will make the nation vulnerable to
external shocks. Thus, the aim should be to encourage inclusive growth in the country by
creating employment opportunities and reducing poverty.