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Market competition key to better jobs in Philippines

Staff Writer |
Fostering fair market competition in key sectors including electricity, telecommunications, and transport, can improve services and generate higher-paying jobs in the Philippines, accelerating poverty reduction, according to a new World Bank study.

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Data show that the Philippine economy is more concentrated than other economies in the region, with a higher proportion of monopoly, duopoly, and oligopoly markets.

While concentration might naturally result from the market conditions, these structures can be more prone to collusion and abuse of market power – abetted by a plethora of restrictive regulations and other restrictions.

These restrictions include state ownership and involvement in business operations; complex regulatory procedures and administrative burdens on start-ups; as well as barriers to trade and investments, including foreign equity investments.

The study notes how these restrictions constrain the economy and negatively affect millions of Filipino consumers:

- Electricity costs are high, and capacity is limited. This is largely due to the slow implementation of reforms, such as the open access provisions and retail competition, under the Electric Power Industry Reform Act (EPIRA) of 2001. Limitations on foreign direct investments prevent the development of electricity infrastructure.

- The prices of mobile phone services in the Philippines is the highest of all East Asia region, and four times higher than the average price in rich countries.

- Restrictions in transport sectors, particularly cabotage rules and limits to foreign participation, impairs logistics in the Philippines, creating bottlenecks.

- Lack of competition is one of the main reasons why domestic shipping in the Philippines is more expensive than in Malaysia or Indonesia.

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