MANILA – Foreign aid donors yesterday, praised the Philippines for its strong economic growth but warned more investment is needed if growth is to be sustained.

At the same time they warned that despite the growth, poverty was increasing in this country, requiring action on "on several broad, linked fronts."

Donor agencies and government officials wound up a two day conference yesterday at the Clark free trade area, north of Manila, which examined ways to improve the investment climate in the Philippines regarded as one of the most corrupt in Asia.

Bert Hofman, country director for the World Bank and chairman of the meeting, praised the government's 7.3 percent economic growth last year which he credited to the government's fiscal reforms but added more needed to be done.

"Poorer Filipinos must participate in growth and benefit from improved public and private investment and service delivery," he said.

Hofman said sustained growth requires "continued vigilance in macroeconomic and fiscal management.

"It also calls for improvements in the investment climate and ... for putting into place critically needed infrastructure."

The donors all cited the need to improve the country's tax administration to increase revenues and to develop capital markets to mobilize domestic funds.

They also noted that domestic and foreign investment in the Philippines still lagged behind neighboring countries and cited the need for more consistent and transparent policies and laws to encourage investment.

The conference was told the Philippines needed to upgrade its transport, water, waste collection, communications and sanitation infrastructure to attract investment as well as to create jobs.

Measures had to be taken to improve the lot of the poor who make up the bulk of the population, through improved agricultural productivity, diversified income sources, agrarian reform and strengthened property rights, the conference was told.

The agencies also said that alleviating poverty involved the need to address armed conflicts in areas like the southern region of Mindanao where peace talks with Muslim separatist guerrillas have stalled.

The aid donors to the Philippines, including representatives of developed countries and multilateral organizations, hold a meeting every year to monitor the use of aid and plan how to properly allocate future assistance funds more efficiently.*AFP

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