By Leslie Gatpolintan/PNA
MANILA — The Philippines needs to remove regulatory obstacles to competition on key services sectors and adopt policies to improve productivity which are keys to boosting the country’s economic growth, according to a new World Bank (WB) study released on Monday.
“Reforms only on services sectors –energy, professional services, transportation and telecommunications– could lead to an additional growth of US$ 0.6 billion in sectors that use those services intensively, which is equivalent to an increase in the annual GDP (gross domestic product) growth rate of 0.2 percentage points,” WB Group senior economist Graciela Miralles Murciego said in a press briefing.
The multilateral lender said that while the electricity sector has undergone significant changes in recent years following the entry into force of a new regulatory framework, the implementation of key reforms is still pending.
The Electric Power Industry Reform Act (EPIRA) of 2011 fully restructured the legal and institutional framework of the sector.
However, there are concerns regarding the speed of implementing the reforms mandated by EPIRA, notably on the need for compliance of the Energy Regulatory Commission (ERC) with the implementation of open access provisions and competition in retail, as well as the separation between the different market segments, it added.
In the telecommunications sector, the WB study cited National Telecommunication Commission’s (NTC) lack of regulatory power to foster competitive market conditions.
“Limited regulatory capacity of the NTC has prevented important pro-competition reforms, such as allowing for number portability unbundling of the local loop. Ownership is highly concentrated between two companies, which is largely due to FDI (foreign direct investments) restrictions,” it said.
The WB also noted that restrictions in transport sectors also “appear to impair logistics in the Philippines compared to peers”.
It further said professional services providers in the Philippines also face restrictions, such as burdensome accreditation requirements, that may limit their incentives to offer the highest quality at competitive prices.
Murciego stressed that undertaking reforms in one particular sector will have an economic impact, but the best framework that supports competition policy reform across the economy can provide more benefits.
“The impact of further pro-competition reform will be much more,” she said.
Murciego pointed out that tackling restrictive regulations in infrastructure and professional services can create more competitive conditions, which will have positive effects on other sectors of the economy.
“…Reforms on infrastructure (and) professional services is critical because they are going to have an impact for firms to be more competitive across markets and more competitive even in the national markets,” she said.
Meantime, Philippine Competition Commission (PCC) Chairman Arsenio Balisacan said “sustaining our growth through the reform of many highly distortive government policies will be the country’s key policy challenge in the coming years.”
Balisacan said the PCC, together with the National Economic and Development Authority (NEDA), is finalizing the National Competition Policy (NCP), an Executive Order containing a comprehensive framework that steers regulations and administrative procedures to promote free and fair market competition.
He said the NCP has three fundamental pillars, which include the effective enforcement of the Philippine Competition Act, the enactment of pro-competitive government regulations and issuance, and the internalization of the principle of competitive neutrality.
“When the NCP is executed, all government agencies will effectively be directed by no less than the President (Rodrigo Duterte) to assess and remedy competition-related issues,” he added.
