Banks back Duterte dev’t plan
The Philippine banking system will take the cue from the new administration, which had initially looked toward the agriculture sector and espoused inclusive growth.
The incoming Duterte administration said it wanted inclusive growth, looking toward the agriculture and fisheries sector, where a large chunk of the country’s population are situated.
Metropolitan Bank & Trust Co. vice chairman Francisco Sebastian said banks will follow the government direction for growth.
“We agree with the strategic target of 7.5 to eight percent economic growth. We will fall in line with (the new) government’s direction,” Sebastian said at the recent launching of the Philippine Report 2016 by the Oxford Business Group (OBG).
A gross domestic product (GDP) rate of growth at eight percent and beyond creates the ability for government to create more jobs, enterprises and social dimension activities that allows a larger number of the population to realize the benefits of prosperity.
The Bangko Sentral ng Pilipinas (BSP) reported that loans to the agriculture and agrarian reform continued to rise, or from P361 billion in 2014 to P393.6 billion last year.
But it fell short of the threshold mandated under the law, that is, 25 percent of the bank’s loanable portfolio should go the sector versus last year’s 16.8 percent.
Sebastian admitted that the banking system has been underspending but there is a lot of room to increase lending to the embattled sector.
Likewise, he urged the incoming administration to reorganize the various agencies involved in the agriculture and fisheries sector.
Meanwhile, government must increase spending in infrastructure, either through direct spending, incentives for private sector led spending or the cashrich but complicated public-private partnership (PPP) scheme.
“The money is there, the government has to spend. We are credit worthy, we are investment grade, we can spend on our own,” Sebastian said.
If government can stop corruption, it will free up a lot of money for spending on infrastructure, and socially-oriented projects.
In 2008, the Philippines was backwater of Asia. Foreign direct investments (FDIs) or a major source of long-term funds for growth stood between $1 to $2 billion in 2008 versus $25 billion for Indonesia and $15 billion for Vietnam.
“Today, it is in the vicinity of $6 billion. FDIs is the one that will dig to raise buildings. It is a commitment for the long term growth,” Sebastian said.