The Bangko Sentral ng Pilipinas is concerned about the growing protectionism in many advanced economies, particularly on employment in the services sector, describing it as a threat on investments in the country’s business process outsourcing sector.
Such a stance may reduce overseas employment opportunities for Filipinos, and affect the country’s remittances.
According to BSP Deputy Governor Diwa Guinigundo, governments of some advanced economies, and a few from the Middle East, have been discouraging employers in their countries from outsourcing jobs or from hiring migrant workers.
He said the Philippines, as well as other developing economies affected by protectionist policies on the services sector, should speak up against such policies.
The Philippines has submitted several papers on protectionist policies in the services sector to international bodies, including the Association of Southeast Asian Nations (Asean), Guinigundo said.
“The wave of protectionism seems to be rising,” Guinigundo told reporters. “This is going to affect countries like the Philippines.”
If protectionist policies in the services sector intensify, Guinigundo said, this will significantly affect growth of the Philippines and other developing or emerging economies.
In the case of the Philippines, a significant portion of the estimated $1 billion to $2 billion in foreign direct investments every year is accounted for by investments in the BPO sector.
Also, remittances from Filipinos based abroad, which amounted to about $20 billion last year, helped fuel consumption of at least 10 percent of households in the country.
The Philippines is the fourth biggest recipient of remittances in the world, next to China, India and Mexico.
Guinigundo said protectionist policies would not only harm developing countries, but also employers from those countries that have adopted these policies.
Some firms in the United States, for instance, are able to withstand its sluggish economic performance because they are able to reduce operation costs through outsourcing. Labor costs in the Philippines and other developing countries are much lower than in the advanced economies, he noted.
The adoption of such policies is not the way to move the global economy forward, he added.