THE International Monetary Fund (IMF) said the Philippine government should restart investments in the country to enable the economy to recover to pre-pandemic growth.
Yongzheng Yang, IMF resident representative to the Philippines, said the local economy may lose output permanently due to the impact of the Covid-19 pandemic but it can return to pre-pandemic growth rates, during a webinar conducted by the IMF and the Philippine Economic Society on Friday.
"The key aim here is to rekindle investment return to pre-pandemic, high-level growth. To do that, the key thing is to maintain the momentum of reform and a steadfast implementation of the reform," he stressed.
Yang stated the government must implement the ease of doing business and the Corporate Recovery and Tax Incentives for Enterprises (Create) Act properly.
Republic Act 11032, or the "Ease of Doing Business and Efficient Government Service Delivery Act," was signed into law on May 28, 2018 with the goal of streamlining government services' current systems and procedures.
Meanwhile, Create was signed into law on March 26 and reduces business income taxes immediately. The legislation also modernizes fiscal incentives by making them performance-based, targeted, time-bound and transparent.
"Second is to continue to ease restrictions [on foreign direct investments (FDI)]... as you probably know this has been a long-standing issue in terms of how to make the Philippines a more attractive place for investment," the IMF official added.
The reforms to the Public Service Act, the FDI Act and the Retail Trade Liberalization Act, he emphasized, are major legislative measures that will be very crucial in attracting job-creating FDIs in the future.
"The third element is the need to continue to improve connectivity," Yang added, noting that connectivity encompasses both physical and digital infrastructures.
Despite the country's gains in physical infrastructure through the Build, Build, Build initiative, Yang said the pandemic has highlighted the country's digital weaknesses since giving cash aid to the vulnerable population has been delayed by a lack of digitalization and internet connectivity.
He went on to say that the National ID was something that needs to be emphasized because it is so closely tied to digitization.
The country's public service delivery system, particularly in the education system, must also be strengthened.
Finally, he noted the importance of continuing to promote climate change adaptation, which has a significant impact on the Philippines.
"The country has now put out a lot of measures to deal with the issue, both in terms of adaptation, but also in terms of mitigation and developing a comprehensive strategy to promote investment in renewable energy. The increase in energy efficiency will also help the mitigation effort."
"And these, if implemented in totality, will reinforce each other and help to lift growth potential, but also make growth more inclusive and growing," Yang explained.