KEYNOTE SPEECH

Arsenio M. Balisacan, PhD
Secretary, National Economic and Development Authority

Human Capital Review Report Launch
Ascott BGC, Taguig City | June 24, 2024 | 10:05 AM

 

To my good friend, World Bank Country Director Ndiamé Diop,

Our incoming World Bank Country Director Zafer Mustafaoglu,

Singaporean Ambassador Constance See,

To the Human Capital Review Report Team,

Officials and fellow public servants,

My good friend from the Cabinet, Secretary Renato Solidum,

Distinguished representatives and partners from the development sector, civil society, private sector, as well as the academe,

Ladies and gentlemen, a pleasant morning to all of you.

First, I commend the World Bank for coming up with a timely review of the country’s human capital development. On behalf of the National Economic and Development Authority or NEDA, I express our sincerest appreciation for considering our recommendations before finalizing the report.

I congratulate the Team for producing a comprehensive and evidence-based assessment grounded on local, national, and regional data and experiences. Before the Team presents its findings, please allow me to provide some context for the following discussions.

In NEDA, we say, “Sentro ang tao sa plano,” or “People are at the center of our plans.”

Thus, back in 2015, we at NEDA saw the need to identify a fixed point or vision upon which our country could anchor its development strategies to ensure that all of our people’s efforts and initiatives were aligned and led to a clear destination.

NEDA conducted a rigorous exercise to identify the kind of future that Filipinos wanted. After extensive consultations, and Clarissa David here of WB as part of that team, we came up with the AmBisyon Natin 2040, the vision of a firmly rooted, comfortable, and secure life for all Filipinos. Concerning the report that we will hear about today, let me point out that being comfortable and secure means, in part, that Filipinos are free from hunger and poverty, have enough resources for their needs and unexpected expenses while enjoying a healthy work-life balance, and live long and healthy lives with their families and friends. In other words, we want to have decent lives.

Fast forward to 2022: as we began our gradual recovery from the pandemic, the Marcos Administration crafted the Philippine Development Plan (PDP) 2023-2028 in response to present and emerging challenges while recognizing and internalizing the lessons that we learned from our experiences in grappling with the COVID-19 pandemic. Anchored on the AmBisyon, the Plan is a robust roadmap identifying the programs, policies, and legislative priorities to enable fundamental socioeconomic transformation. The PDP outlines strategies for developing and protecting the capabilities of individuals and families, which necessarily involves critical interventions to protect and enhance Filipinos’ human capital to achieve our desired outcomes.

A few months after we launched the PDP, we released the National Innovation Agenda and Strategy Document (NIASD) 2023-2032, our national roadmap for innovation and governance. In formulating the NIASD, we conducted an exercise to identify the opposite of the AmBisyon—and the leader of that framework is here, Usec. Edillon, in other words, the kind of future that we do not want. Thus, we identified three undesirable futures: one fraught with distress and disasters, a future where we are slow to change, and a country where inequality is sharply felt.

As you can see from the slide, many of these unwanted futures directly relate to human capital: a future prone to health risks; a people lacking creativity, critical thinking, and the capacity to innovate; a workforce that is late to adopt technologies in an increasingly complex world; as well as a society suffering from deep poverty and worsening inequality.

Indeed, we are at a critical juncture in our nation’s socioeconomic history, and our actions will determine the future unfolding.

This juncture becomes apparent when we consider the state of our human capital, its implications on the overall economy, and our relative performance across various development indicators.

Recent data show that the Philippines in the report—presently a lower-middle-income economy inching closer to upper-middle-income status—has a total fertility rate (TFR) of 1.9 children in 2022. We see the long-term decline of TFR over the past three decades; though, I should note that it remains to be seen whether the significant drop between 2017 and 2022 is indeed sustained moving forward or whether it was merely a statistical peculiarity due to the circumstances brought about by the pandemic.

In general, however, this downward trend has resulted in a fundamental shift in the age structure of the population. An exciting opportunity thus arises: we are currently in a “demographic shift or sweet spot.”

With a predominantly young population—our median age is about 25—the Philippines is undergoing a demographic transition. Currently, a sizeable 64 percent of our population of over 110 million Filipinos belong to the working-age group of 15 to 64 years old.

This shift has enormous implications for our economic potential. A large, healthy, skilled labor force implies higher demand and productivity in the years and decades ahead. While many analysts have pegged the country’s potential gross domestic product (GDP) growth at about five to six percent, this demographic transition can be a boon to the Philippine economy. For the next two to three decades, we may look at a boost of as much as one percentage point to GDP growth per year. The Philippines thus has the opportunity to grow rapidly and replicate the economic success stories of our East Asian neighbors during their rapid industrialization and development periods.

Note, however, that this is only possible, as pointed out by Ndiamé earlier, if we get our acts right by making the right policy choices and investing heavily in human capital, especially in the early years of our people’s lives. These efforts to strengthen human capital will complement our initiatives to accelerate our infrastructure drive and create an enabling policy environment for productivity-enhancing investments and innovation toward sustaining rapid and inclusive economic growth.

In this regard, we have much to do. Indeed, we have seen progress, but not as fast as one would hope if one compares us to our more dynamic neighbors.

For example, we have generally lagged behind immunization rates and have been bested in this metric by Vietnam, Thailand, and Malaysia. These economies are some of our fiercest competitors for potential investors looking to the consumer-rich and dynamic ASEAN region for opportunities to set up shop or expand their businesses.

Examining national historical trends, we also find that stunting and wasting remain significant challenges. This highlights the urgency of focusing our attention on solving these problems lest we compromise the ability of our children—the embodiment of our nation’s potential—to become productive, competitive, and innovative citizens in the future.

Just recently, as you’re all aware, a report from the OECD showing comparative data on students’ creative thinking performance was released. The 2022 Programme for International Student Assessment (PISA) included questions related to student’s creative thinking, which is defined as the student’s ability to generate, evaluate, and improve ideas to produce original and effective solutions. Filipino students scored lower than our ASEAN neighbors, such as Indonesia, Thailand, and Malaysia, though all these economies I mentioned scored lower than the OECD average.

I do not cite these statistics to dampen our spirits but to motivate the urgency with which we must act. The good news is that the government is already implementing programs supporting human capital development at all stages of life. In addition, we are working hard to improve their effectiveness at achieving the desired outcomes. Let me cite a few examples among those you see on the screen.

To boost health and nutrition, the Tutok Kainan Dietary Supplementation Program, one of the programs supporting the First 1000 Days of the Child, provides integrated health and nutrition services for nutritionally at-risk pregnant women and children below two years old. As of April 2024, 125,566 pregnant women and children under two years old have benefitted from the program.

To decrease the incidence of involuntary hunger and food insecurity, the Department of Social Welfare and Development launched the Walang Gutom 2027: Food Stamp Program (FSP), financed by the UN World Food Programme and the Asian Development Bank (ADB), which provides food credits worth PHP 3,000 to needy families. A pilot implementation began last July 2023. As of March 2024, the program has 2,285 registered beneficiaries from various areas of the country. We hope to roll out this program before the end of the year.

Furthermore, the government has institutionalized the Pantawid Pamilyang Pilipino Program Act (4Ps) as a national poverty reduction strategy and human capital investment program with assistance from the World Bank and the ADB. As of December 31, 2023, the program has covered more than 4 million active household beneficiaries in the country. We are enhancing the program by converting 4Ps cash cards to basic deposit accounts, adjusting the cash grant amounts to account for inflation, and introducing the First 1000 days grant. To enhance the targeting mechanism for the 4Ps, we will utilize the game-changing Digital National ID to enhance the impact of our interventions while lowering their implementation costs.

On the legislative front, we are championing several bills that promote human capital development, particularly for education and lifelong learning for Filipino workers at various stages of their lives. As we push for these legislative measures, we hope for your support in ensuring that the design of these programs is improved to enhance their effectiveness.

One is the Academic Recovery and Accessible Learning Program, which seeks to establish a national learning intervention program to help learners catch up with the required standard of their respective grade levels while accelerating the recovery of the learning losses incurred during the pandemic. Second, the Enterprise-based Education and Training Act seeks to improve workforce competitiveness through upskilling and reskilling. Finally, the Expanded Government Assistance to Students and Teachers in Private Education or E-GASTPE Act seeks to expand government assistance to the kindergarten and elementary levels.

Like any investment, human capital development requires sustained, strategic, and coordinated efforts to bear fruit. There is no time to waste, for the consequences of our actions (or inactions) will run deep. As the report rightly points out, there is only a limited window on which the country can—and must—capitalize if it wishes to play to its strengths at this point in its development trajectory. While it is true that the Philippines has missed several opportunities to accelerate progress throughout its economic history, I genuinely believe that it is equally valid that the Philippine economy has never been more ready to take off and realize its immense potential.

Let us remember that investing in people is our cornerstone in realizing our shared vision—our desired future—of a matatag, maginhawa, at panatag na buhay for all Filipinos.

Again, I extend my congratulations to the Review Team and my thanks to the World Bank for this critical report. I look forward to the discussions ahead of us; and thank you so much, Ndiamé, for your support. You will remain to be a good friend to the Filipino people beyond your four years of working in Manila.

Thank you, and good day to all.

 

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