A BRIFER ON THE

MEDIUM TERM
PHILIPPINE
DEVELOPMENT PLAN,
2011-2016
LEDAC Meeting, 28 February 2011

CONTENTS
I. Salient Features of the Medium-Term Philippine
Development Plan (MTPDP), 2011-2016.................3

II. Overview of the Plan formulation Process.........13

I.

SALIENT FEATURES OF THE MEDIUM-TERM PHILIPPINE

DEVELOPMENT PLAN (MTPDP), 2011-2016

A. VISION The MTPDP adopts the vision in the Presidents Social Contract
with the Filipino People:
A country with an organized and widely shared rapid expansion
of our economy through a government dedicated to honing and
mobilizing our peoples skills and energies as well as the
responsible harnessing of our natural resources.
B. MTPDP GOAL Pursuit of inclusive growth. This means
1. A high, sustained and broad-based economic growth of 7-8 percent
each year;
2. Rapid economic expansion that takes into account the countrys large
population, geographical differences, and social complexity;
3. A high economic growth that
a. creates employment and draws the vast majority of the
population into the economic and social mainstream;
b. reduces mass poverty; and
c. allows the pursuit of the other Millennium Development Goals
(MDG).
C. WHY IS INCLUSIVE GROWTH ELUSIVE? - Past economic growth was weak
and the benefits are maldistributed because of the following:
1. INADEQUATE INVESTMENT - Poor investment records explain the lack of
productive opportunities in the country
a. Investment is less than savings, even at very low interest rates.
b. Inadequate infrastructure and the glaring gaps in governance are
among the critical factors for the lagging capital accumulation and
technological progress.

c. An inefficient transport network and unreliable power supply have

been identified as the most significant infrastructure constraints.
d. Weak institutions and governance failures are disincentives to
investment1) The country continues to suffer from a reputation for
bureaucratic inefficiency, excessive red tape, and widespread
corruption. In the 2011 Doing Business ranking, for example, the
Philippines placed 156 out of 183 countries.
2) The rank is also poor in international comparisons of the
enforcement of law and contracts, and competition measures.
3) Difficult and non-transparent bidding and awards rules
discourage private sector participation, promote collusion, and
encourage corruption.
2. OUTPUT GROWTH DOES NOT TRANSLATE TO EMPLOYMENT CREATION a. Unemployment rates have remained high, averaging 10 percent in
19902005 and 7.5 percent in 2006-2010 compared to China,
Malaysia and Thailands 4 percent or below during the same period.
b. Labor market fragmentation, limited information about employment
and skill availability, along with complex labor laws and regulations
resulted on high unemployment and underemployment.
c. The low employment intensity of economic growth affects economic
activity along dual lines, between a large-scale, capital-intensive,
and highly organized sector, and a small-scale, labor-intensive,
informal sector, with a sparse middle section. This stifles firm
growth, and reinforces the concentration of firms in the upper end
of the spectrum.
3. INADEQUATE LEVELS OF HUMAN DEVELOPMENT basic social service
delivery has been inadequate to improve health, nutrition and
educational status, especially among the poor
a. The inadequate delivery of education and health services has put
the poor and vulnerable in increasingly disadvantaged position
resulting in low access to growth opportunities.

b. Poor households in isolated areas remain inaccessible to health

centers and schools, even if services are offered for free or at highly
subsidized rates.
c. The problem of poor access to basic social services is compounded
by big family size among poorer households, thus, reducing
household assets and purchasing power in per capita terms.
d. Most of the population is inadequately protected from shocks to
their already meager human capital. While natural disasters can
affect any population group, it is the poor who tend to be most
vulnerable and least resilient to calamities.
e. With respect to health care, catastrophic illnesses are capable of
wiping out livelihoods, assets, and well-being of the poor and lower
middle classes.
4. LOW GAINS FROM TRADEa. Philippine export performance in terms of share to GDP is not as
vibrant compared to other emerging economies in East Asia.
b. While the Philippines have taken advantage of the dynamic
comparative advantage gains from trade, the tradable and exports
sectors were penalized by the Dutch disease phenomenon
associated with the huge OFW remittance flows, and this has
resulted in de-industrialization.
D. MTPDPS THREE BROAD STRATEGIES TO ATTAIN INCLUSIVE GROWTH- The
following three broad strategies will effectively address poverty. These
are also consistent with the priorities in the Social Contract:
1. HIGH AND SUSTAINED ECONOMIC GROWTH that provides productive
employment opportunities is possible through:
a. Raising the levels of private investment and entrepreneurship,
especially among micro, small and medium enterprises (MSMEs);
b. Encouraging a rapid growth of the industry sector leading to
positive net exports;
c. Maintaining macroeconomic stability, primarily through a healthy
fiscal account;

d. Facilitating higher investments in infrastructure particularly in

electricity, transport, and water, irrigation, waste water treatment,
and solid waste management; and
e. Minimizing corruption, ensuring political stability, and enforcing the
rule of law.
2. EQUALIZING THE ACCESS TO DEVELOPMENT OPPORTUNITIES across
geographic areas and across different income and social spectrum will
ensure that economic growth and opportunities translate to poverty
reduction
a. Improve human capabilities through the provision of better
education, primary health care and nutrition, and other basic social
services;
b. Level the playing field by improving access to infrastructure, credit,
land, technology, and other productive inputs;
c. Formulate unbiased but facilitative policies that promote
competition; and
d. Improve delivery of basic social services through improved
governance and stronger institutions.
3. IMPLEMENT EFFECTIVE AND RESPONSIVE SOCIAL SAFETY NETS
a. Assist those who will not be able to catch-up by the character of a
high economic expansion;
b. The deteriorating effects of climate change in the future stress the
need for social safety nets that support and capacitate the
vulnerable sector to emerge out of poverty.

E. MTPDPS KEY STRATEGIES AND PROGRAMS TO ATTAIN INCLUSIVE

GROWTH - Chapters 2-10 of the Plan outline key strategies to attain the
vision of the Social Contract:
1. PRODUCTIVE AND DECENT EMPLOYMENT OPPORTUNITIES
a. Philippine industries improve their ability to be competitive in a
sustainable manner.

b. The provision of vital infrastructure and the expansion of logistics

chains, combined with a reversal change in the governance regime,
is bound to elicit a strong positive response across all classes of
entrepreneurs and financiers.
c. Work arrangement that is mutually agreed upon will be introduced.
(Chapter 3)
d. Indirectly pursue employment creation by supporting economic
activities that utilize the countrys comparative advantage in more
labor-intensive activities, typically involving products and services
that are more competitive in the world market. (Chapter 3)

2. MAINTAIN MACROECONOMIC STABILITY (Chapter 2) - Support the Plans

broad thrusts of employment-generation, massive infrastructure
development, higher governance standards, human development and
human capital formation and direct poverty-relief by maintaining
macroeconomic stability
a. Medium term targets
1) Increasing tax effort to at least 16 percent of GDP
2) Increase non-tax revenues to reach at least 4 percent to as high
as 5 percent of GDP by 2016.
3) Reduce the national government deficit to 2 percent of GDP by
2013 and maintain this level until 2016.
4) Beginning 2013, reduce the consolidated public sector deficit to
1.5 percent of GDP
b. Fiscal policies aims to increase the fiscal space and attain a
sustainable revenue-and-spending path
1) Improve tax administration
2) Rationalize fiscal incentives to will save revenues eliminating
redundant incentives
3) Pass fiscal responsibility law to hasten the fiscal consolidation
process and impose fiscal discipline at all levels of government
4) Adjust the excise tax on alcohol and tobacco products, and
petroleum
5) Maximize the use the so-called PAYGO system as a collection
handle
6) Pursue debt management reforms

c. Monetary sector and external sector policies aim to maintain a

regime of low and stable inflation
1) Continuously enhance macroeconomic surveillance efforts for a
more effective management of risks in monetary policy
formulation.
2) Pursue amendments to the BSP charter to enhance the flexibility
and efficiency of monetary policy.
3) Sustain the improvements in the communication and
transparency practices for a successful inflation targeting.
4) Safeguard central bank independence to ensure greater
credibility in combating inflation.

3. COMPETTIVE AND SUSTAINABLE PRODUCTIVE SECTORS

a. Develop a globally-competitive and innovative industry and services
sector (Chapter 3)
1) Provision of better business environment through improved
governance, improved investment promotion areas, and
increased market access;
2) Improvement of productivity and efficiency through the
development of human capital, mutually-agreed upon work
arrangements, focused intervention on areas with high growth
potential and will generate the most number of jobs, firm-level
support to new or potential and existing micro, small and
medium enterprises (MSMEs), and industry clustering; and
3) Foster greater value of money strategy by raising consumer
awareness for quality goods and services, improving the supply
chain to reduce production and distribution costs, and promoting
a national branding or marketing campaign.
b. Competitive, sustainable, and technology-based agriculture and
fishery sector (Chapter 4)
1) Ensure food security and increase the incomes of agriculture and
fishery-based households and enterprises
a) Increase productivity and diversify production base
b) Increase investment and employment across an efficient
value chain
c) Support entrepreneurial endeavors of agrarian reform
beneficiaries
2) Reduce risks inherent to the sector, including climate change
impacts, to reduce damages infrastructure and losses to
agricultural products; and
3) Enhance policy environment and governance
a) Convergence initiative approach to accelerate the completion
of the Comprehensive Agrarian Reform Program Extension
with Reforms (CARPER), rationalize land use policies,
strengthen the system of land property rights among others;

b) Reorient the budget system from a commodity-based system

to a system that is focused on attaining the goals of the
Agriculture and Fisheries Modernization Act (AFMA)

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4. MASSIVE INVESTMENT IN INFRASTRUCTURE (Chapter 5)

a. Create an integrated and coordinated transport network
1) Multimodal logistics/transport system.
2) Access to strategic/major tourism destinations and production
areas
3) Environmentally and sustainable people-oriented transport
4) Improve transport networks in underdeveloped regions and
conflict-affected areas
b. Rehabilitate existing irrigation systems and construct ne small-scale
systems
c. Construct flood management structures in highly vulnerable areas
d. Accelerate energy exploration and development contracts through
the Philippine Energy Contracting Round
e. Universal access to information, communication and technologybased services
f. Ensure equitable access to infrastructure services especially health,
education and housing; sanitation, septage and sewerage facilities
g. Address housing backlog and gaps in basic services, especially the
poor
h. Government to generate funds for infrastructure investment
through better tax collection and more rational budget allocation.
Chapter 2 discusses the supporting fiscal and budgetary reforms for
this.
i. Government to encourage public-private partnership (PPP) scheme
to implement the bulk of its infrastructure program since limited
government funds also support social development and povertyalleviation programs.
5. RELIABLE AND EFFICIENT FINANCING for sustainable and equitable
growth (Chapter 6)
a. A reliable and efficient financing is of primary importance to address
the evolving needs of a diverse public.
b. Effectively mobilizing and intermediating funds within a framework
of inclusive finance requires:
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1) Defining a clear credit policy framework and credit delivery

strategy uphold the highest standards of financial governance
while ensuring that private saving is valued in market terms to
avoid price distortions.
2) Improve access to financial services in underserved and
unserved areas of the country through the use of alternative
products and delivery of financial services, such as
a)
b)
c)
d)

Electronic banking
Microinsurance
Credit Surety Fund Program
Agent banking and use of non-bank financial institutions as
delivery channels

3) Developing an enabling environment for long-term savings

a)
b)
c)
d)

Consolidate the government securities market

Develop auxiliary markets through forwards and cash markets
Establish a reliable capital market infrastructure
Integration of the financial system into the ASEAN region

4) Strengthening the governance framework of the financial system

in line with international standards and best practices
5) Establishing a strong legal framework for financial sector
development.
6. PROMOTING TRANSPARENCY, ACCOUNTABILITY, THE RULE OF LAW,
AND EFFECTIVE AND IMPARTIAL PERFORMANCE OF THE REGULATORY
FUNCTION OF GOVERNMENT - Chapter 7 and across chapters
a. Good governance and strong institutions provide tremendous help
in bringing down the cost and risks of doing business
b. Implement holistic but doable governance reforms such as:
1) Instil transparency and accountability in public transactions use
of Government Integrated Financial Management Information
System, procurement reforms, etc.
2) Curb corruption - Whistleblower Protection Law, Amendment of
the charters of the Commission on Audit (COA) and of the
Commission on Human Rights of the Philippines (CHRP)
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3) Enhance citizens access to information and participation in

governance - Freedom of Information Bill, National AntiCorruption Plan of Action (NACPA), transparent process in the
selection of appointees
4) Enhance role of local government units
7. INVESTMENT IN HUMAN CAPITAL is key to sustained and broad-based
growth (Chapter 8)
a. Ensure equitable access to basic social services
b. Strengthening social safety nets and social protection against
shocks
c. Rationalize the number and work for a finer delineation of roles of
higher-education institutions to create a critical mass of scientists,
engineers, and other technical personnel needed to allow the
country to climb the value-added ladder in sectors where it
possesses global competitive potential
d. Attain the Millennium Development Goals (MDGs), particularly those
addressing the development of human resources
8. END ARM CONFLICT AND ATTAIN LASTING PEACE AND ENSURE
NATIONAL SECURITY (Chapter 9)
a. Bring all armed conflict to a permanent and peaceful closure to
break the vicious cycle of conflict and underdevelopment in affected
areas that have otherwise huge potential for social and economic
development:
1) Negotiated political settlement of all armed conflicts
2) Implement the Payapa at Masaganang Pamayanan (PAMANA)
Program a focused development program in conflict-affected
areas (218 municipalities in 43 provinces) aimed at
a) Reducing poverty and vulnerability;
b) Improving governance, and
c) Empowering communities and strengthen their capacity to
address issues of conflict and peace through activities that
promote social cohesion

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b. Protect the Filipino National Communitys welfares, way of life,

institutions, territorial integrity and sovereignty
9. CONSERVE, PROTECT AND REHABILITATE THE ENVIRONMENT AND
NATURAL RESOURCES (Chapter 10)
a. Improved conservation, protection and rehabilitation of the natural
resources
1)
2)
3)
4)
5)
6)

Sustainably manage forests and watersheds;

Improve protection and conservation of biodiversity;
Enhance coastal and marine resources management;
Improve land administration and management;
Manage a more equitable utilization of mineral resources; and
Develop and implement environment-friendly enterprise and
livelihood opportunities.

b. Improve environmental quality for a cleaner and healthier

environment
1) Reduce air pollution in Metro Manila and other major urban
centers;
2) Reduce water pollution in major rivers and other water bodies;
3) Reduce wastes generated and improve waste disposal; and
4) Establish a healthier and livable urban environment.
c. Enhance resilience of natural systems and improve adaptive
capacities of human communities to cope with environmental
hazards including climate-related risks
1) Strengthen institutional capacities of national and local
governments for climate change adaptation and disaster risk
reduction and management;
2) Enhance the resilience of natural systems; and
3) Improve adaptive capacities of communities.

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II.

OVERVIEW OF THE PLAN FORMULATION PROCESS

A. The formulation of the Medium Term Philippine Development Plan (MTPDP)

and the Medium-Term Philippine Investment Program (MTPIP), 2011-2016
is guided by Memorandum Circular (MC) No. 3, which was issued by the
President on September 2, 2010. Salient features of the MC No. 3 are as
follows:
1. MTPDP and MTPIP to be jointly formulated by the executive and
legislative branches, with NEDA as coordinator;
2. MTPDP and MTPIP preparation will be a participative process,
consulting various sectors of society;
3. Regional government offices/agencies to input their development
concerns, taking into account regional development plans;
4. LGUs plans to be consistent with regional development strategies,
physical framework, and local needs; and
5. MTPDP to be submitted to the NEDA Board and the LEDAC by February
2011 (per Memorandum Circular No. 10)
B. NEDA issued the planning guidelines which created the following
committees:
1. Plan Steering Committee (PSC) Chaired by the Secretary of the Socioeconomic planning, with the Chairs of the Cabinet clusters on the
Economy, Social and Political Security as members. The PSC is incharge of the overall planning process with the NEDA as secretariat.
The PSC formed a visioning group a small group of experts that
provides guidance on the priorities and direction to attain the vision of
the Social Contract, and on how to position the Philippines in the
ASEAN community by 2015. The group is composed of NEDA DirectorGeneral Cayetano Paderanga, Jr., former Prime Minister Cesar Virata,
former NEDA Director-General Gerardo Sicat, Dr. Emmanuel De Dios,
Dr. Sixto K. Roxas, and Mr. Jimmy Ayala.
2. Planning Committees (PCs) Composed of government agencies,
private sector, members of the legislative, and civil society groups
tasked to draft the Plan chapters. Through the PCs, inputs were also
generated from other stakeholders that were not part of any planning
committee and/or planning sub-committee.
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C. Upon completion of the first draft of the MTPDP 2011-2016 document, the
following consultations were conducted to generate comments and
additional inputs to the draft chapters:
1. Multi-stakeholder regional consultations were conducted on January 4-6
and 12, 2011. Stakeholders from the Autonomous Region in Muslim
Mindanao joined the consultations in Zamboanga City and Cagayan de
Oro City.
2. Multi-stakeholder consultation for the National Capital Region was
conducted on January 14, 2011.
3. Consultation meeting with representatives of the civil society
organizations (CSOs) on January 25, 2011 and another meeting is
scheduled on March 2011.

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