The Philippines will remain vulnerable to rising poverty and global economic shocks unless it can diversify its exports and expand its manufacturing base, the Asian Development Bank (ADB) said on Wednesday.
ADB President Haruhiko Kuroda said the country's manufacturing sector is dependent on the production of electronics, and diversifying the manufacturing sector will create more jobs and promote inclusive growth.
"Widening the manufacturing base beyond electronics will create much-needed jobs, promote inclusive growth and help reduce the persistent poverty," Kuroda said in a speech delivered at the opening of the bank's 45th Annual Meeting of Governors.
He added that the Philippines also need to diversify its export markets, with emphasis on emerging economies outside of East Asia, to keep it resilient amid global economic downturn.
Kuroda said the Philippines has the potential to become a key production hub in the region. This is mainly due to its educated workforce and rich natural resources, which are among the reasons why interest among foreign investors is growing.
He said developing its industry sector and modernizing services, the Philippine economy will be able to create more jobs for more Filipinos, whether they are low-, medium-, or high-skilled workers.
"By fully exploiting its favorable demographics and strategic location in the heart of Asia, the Philippines can transform its economy to one of sustainable and inclusive growth that benefits all," Kuroda said.
In a separate briefing, Philippine Trade Secretary Gregory Domingo said the government is targeting to raise the share of the manufacturing sector to the country's economy to 20 percent from the existing 14 percent in 10 to 15 years.
Domingo said "it makes sense" to develop the country's industrial base particularly since consumer spending remains as a major growth driver for Philippine economy.
The services sector now account for 54 percent of the country's GDP while agriculture accounts for 32 percent. The manufacturing sector only makes up 14 percent.
Domingo said the government needs to solve the power problem. This will make the Philippines more attractive to prospective investors in the manufacturing sector.
Domingo noted that the Philippines has comparative advantage in ship building and food processing./.