By Rea Cu, Businessmirror, Feb 12, 2017
Protectionist policies will weaken the country’s business- process outsourcing (BPO) sector should US President Donald J. Trump push through with his plans to implement trade reforms, according to the Department of Finance (DOF).
Finance Secretary Carlos G. Dominguez III said protectionist policies will dampen trade and have an adverse impact on call centers. The BPO sector is regarded as the Philippines’s second-highest dollar earner.
“The President is due to visit Russia this year, and that should further encourage stronger trade and investment ties and open new markets. All these gains should more than offset whatever protectionist policies the Trump administration might decide to institute,” Dominguez said in a forum in Davao City.
He said the initial dividend from foreign-policy rebalancing activities done by the Duterte administration—especially from the talks with China and Japan, which provided loans and grants to the country worth P1 trillion—will help the Philippines weather external shocks. This includes factors arising from possible protectionist policies that may be rolled out by Trump.
“The only uncertainty on the horizon is the direction the Trump administration will take the US economy. Many fear sharp rise in protectionism should Trump translate his rhetoric to actual trade policies. The rise in protectionism should sharpen the chances of populist parties in winning key European elections happening this year,” Dominguez added.
The DOF chief added that, as one of Asia’s fastest-growing economies, the Philippines is poised to attract more private investments, especially with an inflation rate that has remained benign and an investment-grade credit rating that has kept the cost of money low.
Under the Duterte administration, the government will be spending big on infrastructure, social protection, education, health and skills training in order to prime the country’s youth for the challenges of a globally competitive job environment.
The current government plans to generate more jobs to cater to the expansion of the young work force of the country, which was explained to be an advantage for the Philippines.
“Investment-led growth creates meaningful employment. It draws us to our advantages, such as a young labor force capable of learning and doing new things. Our population is nearing a demographic ‘sweet spot’ where millions of young Filipinos will be joining the work force,” he said.
To collect enough revenues needed for government spending on public investments program, it must institute reforms not only in tax administration but also in tax policy, which is why it is pushing for the approval of the Comprehensive Tax Reform Program in Congress.