‘Removing restricting regulations to help PH’
Credit to Author: ANNA LEAH E. GONZALES| Date: Mon, 04 Mar 2019 16:17:06 +0000
REMOVING restrictive regulations and unequal and discretionary application of policies could improve productivity and add at least 0.2 percentage points to the Philippines’ gross domestic product annually, a World Bank economist said on Monday.
In a briefing during the launch of the “Fostering Competition in the Philippines: The Challenge of Restrictive Regulations” report, economist Graciela Miralles Murciego said “[t]hat estimation takes into account what would be the impact of reforms only covering the services sector.”
“All those reforms that pertain to those sectors” — energy, transportation, telecommunications and professional services — “that have more significance and effects in the economy, is critical because they are going to have an impact for firms to be more competitive across markets and even in international market,” she added.
Completed last year, the report noted that Philippine markets are relatively concentrated, saying that in the country, there was a higher proportion of monopoly, duopoly and oligopoly markets.
These structures, it also said, can be more prone to collusion and abuse of market power, supported by excessive regulations and restrictions.
Among the restrictions cited include the high cost and limited capacity of electricity; limitations on foreign direct investments, which prevent the development of electricity infrastructure; high prices of mobile-phone services; limited foreign participation in the transportation sector; and lack of competition in domestic shipping.
“The Philippines needs a more competitive and vibrant private sector to generate the kind of economic opportunities that can help lift more people out of poverty,” Murciego said.
“The government of the Philippines has adopted key reforms to foster competition and limit state participation in sectors where private participation is typically possible economically viable,” she added.
She also said, however, that slow implementation continues to hinder “the potential benefits of these reforms to consumers,” which result in high prices and limited choices for consumers.
To address these issues, the report recommended ways to reduce regulatory restrictions.
These include tackling restrictive regulations in infrastricture and professional services to create more competitive conditions; eliminating restrictions on foreign and domestic investors in sectors where these create an uneven playing field; and minimizing the scope of controlled prices to create the right incentives for firms.
The report also urged the government to streamline administrative procedures for businesses to facilitate market entry and competition.
“Ensuring that government policies and regulations do not create barriers to entry or distort the playing field is necessary to enhance private participation and unlock more investments opportunities for all businesses big and small,” World Bank Country Director for Brunei Darussalam, Malaysia, the Philippines and Thailand Mara Warwick said in the statement.
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