Economic Policy Monitor 2014: Effective Regulations for Sustainable Growth

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This fifth issue of the PIDS Economic Policy Monitor (EPM) highlights the importance of regulatory coherence and quality to realize rapid, sustainable, and inclusive growth. For the Philippines to take advantage of increased trade and investment under the ASEAN integration, there is a need to address the factors that continue to bring down its competitiveness and that undermine efforts to achieve greater social inclusiveness. Regulatory burdens are one of those factors. They restrain competition, productivity, and innovation. The EPM 2014 starts with the analysis in Chapter 1 of the Philippines` performance in 2014 and the outlook for 2015 and beyond in the face of continued global and regional developments. The Philippines continued on a high-growth path in 2014, averaging 6.1 percent, which was achieved despite a number of challenges, including a lower level of government spending due to the low absorptive capacity of government agencies. The outlook for the country in 2015 remains positive, with a growth forecast of 6.8 percent. The global prospect is also optimistic and the forecast is a growth rate of 3.5 percent. Long-term growth is a function of productivity, thus it is imperative to sustain investments in infrastructure, connectivity, and human capital. Chapter 2 discusses some of these investments that are apparent in a number of policy developments in 2014. They include, to name a few, the extension of the age coverage of the Pantawid Pamilyang Pilipino Program to include 15- to 18-year-old children, the use of the so-called "education deflator" to regulate tuition fee increases, and the enactment of Republic Act 10641 that allows the full entry of foreign banks in the country.Chapter 3, the theme chapter, examines the case for developing a sound and efficient regulatory management system (RMS) for the country. An RMS is the best step toward reducing regulatory burdens and improving the quality of regulations. The Philippines has a system that contains some of the basic elements of an RMS, but these do not represent a coherent and coordinated system nor are these elements regularly undertaken. The government has taken steps to fill the gaps in the system, but this is not enough. A commitment to reforms despite changes in political leadership and a mindset for continual improvement and innovation are a must.