‘UMIC’ STILL POSSIBLE IF PHL INVESTS IN HUMAN CAPITAL

DESPITE the pandemic wreaking havoc on the economy last year, the National Economic and Development Authority (Neda) says the country’s dream of attaining upper middle-income status is alive. In a statement, Socioeconomic Planning Secretary Karl Kendrick T. Chua said attaining upper middle-income status remains possible through innovation in agriculture and human capital investments.

“We continue to persevere to achieve our 2040 vision where no one is poor and everyone is living in a more comfortable middle-class society. The Philippines has great potential, but to sustain our next level of development, we have to innovate and further improve the way we do things,” said Chua.

For the Philippines to have sustained structural transformation to upper middle-income status, Chua said it is no longer enough for the country to be an assembler of products and user of ideas from other countries.

Chua said the Philippines should gradually shift to a new framework where the ideas are coming from within the country and contributed by local human resources.

While the country has “advanced strongly in macro-fiscal policy,” Chua said it was time the country focus on microeconomics and pursue “foundational reforms” in agriculture and human capital development.

“Innovation should not skip these two sectors. There is a temptation to jump to high skill manufacturing and services, but we cannot sustain our growth without strengthening agriculture and human capital. If skipped, it would just create a divide where only a few benefit from the latest research and technology,” Chua said.

“The key challenge now is proper and strategic implementation. In Neda, we have to determine where we have the highest comparative advantage and allocate resources to support these sectors,” he said.

In agriculture, Chua said the government passed the Rice Tariffication Law and is removing the remaining tariff and non-tariff barriers that reduce food security. These will bring down food prices for consumers.

The government has passed laws to further develop our human capital, such as the Universal Health Care act, the Philippine Identification System or National ID law, and the Enhanced Basic Education or K-12 act.

The government has also enacted the Philippine Innovation Act, Innovative Startup Act, Philippine Space Act, and the Balik Scientist program to encourage more innovation.

Moreover, the newly-passed Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act also provides more performance-based tax incentives with high priority on research and development.