Bert Hofman, World Bank Philippine Director, told reporters in his first official visit in the countryside to inspect the WB-funded anti-poverty project dubbed Kalahi-Cidss, that he is "not yet convinced that 7 to 8 percent is going to be future of the Philippines."
"I think some more work is needed to be done," he said, adding the government has to further ease regulations to attract more foreign and domestic investments.
The Philippine government recently announced that the economy grew faster than expected in the fourth, bringing the 2007 growth to a 31-year high of 7.3%.
Hofman said the economic growth last year was spurred by the services sector and remittances from overseas Filipino workers.
In the 19 months to November last year, overseas remittances from Filipino workers topped $1 billion each month, recent data from the Bangko Sentral ng Pilipinas showed.
In the 11 months to November 2007, the BSP reported that $13.1 billion was sent home by Filipino overseas workers, short of $1.2 billion to reach its $14.3 billion full year target. The BSP expects remittances to grow to $15.7 billion this year
Hofman has 15 years of experience in the World Bank, 12 of them in the Asia region. His most recent assignment was in China where he headed a team that provided economic policy advice to the government.
While he lauded the sound macro economic policies of the Philippine government, Hofman noted the investment climate in the country has to undergo significant improvements to draw the interest of investors.
"The government has to work for investment climate to make sure it's easier and more profitable to invest in the country. It should ensure that regulations are not too heavy, that it should not take too long or complex to set up a business," he said.
Hofman also pointed out that salary rates in the country must be competitive and not too expensive, since one of the factors that investors consider in putting up business, especially in the manufacturing sector, is labor cost.
He stressed it is essential that new investments or manufacturing base are created to generate new jobs.
"If you don't invest (on new enterprises), that means that you don't create new jobs," Mr. Hofman said, reiterating that new investments must occur in the country to sustain last year's economic growth.
Hofman said the sound macro economic policies of the Arroyo administration have brought government deficit to almost zero and cut down quite a bit the interest rates, which induced construction work around Metro Manila.
But generally, he said, the Philippines is still lagging behind in infrastructure development compared to many countries in the ASEAN.
Within a month after assuming his new post, Hofman said there are lots of debates that economic growth has not benefited the ordinary people. (MindaNews)