Our organizing partner from the Philippine Competition Commission Chairman Arsenio Balisacan,
Undersecretary Rose Edillon of National Economic and Development Authority,
Our partners from the governments of Australia and Canada,
Colleagues in government, academe, civil society, and the private sector,
A very warm welcome to this event.
Thank you for joining us today for the launch of the World Bank’s report called Fostering Competition in the Philippines: The Challenge of Restrictive Regulations.
The study aims to identify existing regulatory constraints to competition in key sectors, and in the economy as a whole. It’s an input to the efforts of the National Economic and Development Authority and Philippine Competition Commission at forging a more effective competition policy.
Through the gracious support of the Australian Government through the Australia-World Bank Philippines Trust Fund and the Canadian government, our colleagues from the World Bank competition policy team have gathered evidence from industry statistics to estimate, for the first time, the levels of market concentrations and of regulatory restrictions compared with other countries.
The report investigates how restrictions on market competition, especially constraints that emanate from government itself, has perpetuated or enabled a high level of economic concentration in the country.
This is the challenge: compared to its neighbors in the region, more industries and markets in the Philippines are concentrated.
Industries and sectors which are necessary for faster economic growth, including energy, telecommunication, transport, and shipping, are stymied by limited competition, making key services more expensive than in neighboring countries.
Often when we discuss the importance of competition for business and consumers, we forget to highlight its importance for poverty reduction. Competition is good for productivity and growth, but both of those are not ends in themselves; the end goal is to improve the wellbeing of Filipinos.
With competitive markets, the Philippines can have a more vibrant private sector, one that generates more and better paying jobs. A level playing field opens up markets for entrepreneurs to enter and thrive and provides more opportunities for lifting millions of Filipinos out of poverty.
With better competition, consumers gain more product choices and firms have greater incentives to innovate. More directly, competitive markets drive down prices for consumers, increasing the purchasing power of the poor, allowing them to afford more goods and services such as food, transportation, and utilities.
Ultimately, greater competition in markets will improve the lives of the poor by lowering the prices of their basic needs.
Recently, the Philippines has passed landmark legislation to create a more competitive economy. The Rice Tariffication Act, very recently passed, should lead to a more competitive market in the country’s main agricultural staple, while maintaining safeguards for farmers. The Ease of Doing Business Act, Secured Transactions Act and Corporate Code Amendment, all facilitate the set-up of new corporations and their access to finance, promoting the entry of innovative firms that can challenge incumbent firms in the supply of goods and services.
Our recent report on Growth and Productivity in the Philippines shows that improving market competition through regulatory reforms and simplifying rules for trade and investments are the key drivers in sustaining the higher productivity growth necessary for the country to achieve its Ambisyon 2040 targets of tripling its income per capita and eliminating poverty.
Today’s launch will show that more work needs to be done on the regulatory side. While the PCC has already started work on its own pillar of competition policy through enforcement and merger review, the other pillar of competition policy, reforming anti-competitive regulations needs to be revitalized. The reduction in the country’s PMR score, or the measurement of market restrictive regulations cited in this report, is already among the targets of the Philippine Development Plan of 2017-2022.
Beyond the work by NEDA and the PCC, the challenge of promoting a National Competition Policy in the Philippines is one that must be borne by all government regulators, private sector associations, civil society associations and academic researchers. The World Bank Group is working with a number of agencies, such as the Department of Agriculture, the Department of Trade and Industry, the Maritime Industry Authority in the promotion of reforms that minimize entry barriers, facilitate trade and improve the investment climate of the Philippines.
In service of the country’s Ambisyon 2040 agenda to build a middle-class society free of poverty, the World Bank reiterates its full support for the Philippine competition policy agenda.
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 investment opportunities for all businesses big and small. The Philippines needs an even more competitive and vibrant private sector to generate the types of jobs and economic opportunities that can lift more people out of poverty as fast as the country’s neighbors in the East Asia.
Through the launch of today’s report, we hope to inspire more partnerships across more agencies in promoting better regulations that support the leveling of the country’s economic playing field and ensure that the fruits of growth and prosperity are shared by all.
Thank you and good afternoon!
