Carlos G. Dominguez
Secretary of Finance
Ambassador Benedicto Yujuico, President of the Philippine Chamber of Commerce and Industry; Organizers of the Metro Manila Business Conference; distinguished guests: Good afternoon.
Thank you for this opportunity to close this year’s Metro Manila Business Conference.
There is much to be optimistic about the outlook of our economy even as we continue to grapple with the pandemic.
The Duterte administration has been doing its utmost to support our local businesses to recover from this difficult episode. We have fine-tuned our fiscal and monetary policies to enable our banks and government financial institutions to assist the pandemic-hit sectors, especially the MSMEs or micro, small and medium enterprises.
The government has infused more capital into the Land Bank of the Philippines and the Development Bank of the Philippines to substantially expand their lending to MSMEs and offer this at lower interest rates. We likewise increased the capital of the Philippine Guarantee Corporation so it can guarantee more loans for MSMEs.
The Bangko Sentral ng Pilipinas, for its part, has implemented measures to ensure adequate domestic liquidity and sustain the flow of credit. In addition, loans granted to MSMEs are now counted as part of the banks’ compliance with their reserve requirements, thereby encouraging more banks to provide financing support to our enterprises.
To accelerate the reopening of the economy, the Department of Finance quickly negotiated financing for the procurement of COVID-19 vaccines and secured doses to inoculate a hundred percent of our adult population by the end of this year.
Our running total of vaccine supply has already reached 52.8 million doses and we have successfully administered 36.2 million vaccine shots as of September 6. A total of 15.3 million Filipinos are now fully vaccinated. We have ordered and arranged the financing for an additional 142 million doses, which we expect the pharmaceutical companies to deliver by the end of this year.
With more reliable vaccine deliveries, we are ready to scale up the inoculation drive. We have already proven that we can quickly administer the shots to our people. In fact, we have managed to administer up to 710,000 vaccine shots in a single day. We are aiming to bring that up to a million a day.
Together with the nationwide vaccination program, the government is continuously building up our public health care system and improving on our tracking, tracing, and treatment methods to withstand any possible surge in infections. The goal here is to take out the pandemic as a determinant of how our economy performs.
Even with the ongoing pandemic, we managed to stick to our goal of reforming the tax system to make it simpler, fairer, and more efficient. We passed the CREATE Act, which makes possible the largest economic stimulus program for enterprises in the this country.
The law provides an immediate 10 percentage point cut in the corporate income tax rates of MSMEs, from 30 percent to 20 percent. The rest of the corporations enjoy a 5-percentage point reduction, from 30 percent to 25 percent. In recent press releases of publicly listed companies, they always mention that CREATE helped them maintain or increase their profitability and their ability to cope with the pandemic.
CREATE gives out almost 100 billion pesos worth of tax relief annually to the corporate sector to sustain employment or use for investments. We vigorously pushed for the approval of CREATE even if it meant foregoing billions in revenues because we need a strong private sector to sustain our economic recovery.
This is the latest reduction in taxes initiated under the Duterte administration. When the TRAIN Law took effect in 2018, we reduced the personal income taxes for 99 percent of our taxpayers. Individuals earning below 250,000 pesos annually are now exempted from paying personal income taxes while the large majority of workers earning above it now receive about a month’s extra take-home pay each year. TRAIN has been giving back to the Filipino workers more than 100 billion pesos in tax savings every year due to the lower personal income tax rate.
Clearly, this administration is pro-business when it comes to fixing our tax system by reducing the tax rates of our workers and corporations. These reforms will bring better business conditions in the near term.
In addition, the Duterte administration has set the stage for the Real Estate Investment Trusts to flourish in the country after eleven years of deadlock. REITs are the ideal tool for raising the billions required to power property development in the country. This is borne out by three previous successful listings of property giants amidst the global health crisis. The REITs will not only propel the growth of the property sector beyond the pandemic, they will also broaden financial inclusion by offering dependable investment opportunities for the average Filipino family.
In the remaining period of the President’s term, we will rapidly modernize governance; accelerate the rollout of the infrastructure program; and continue with the market-friendly reforms attractive to investments.
To maximize the impact of these interventions, I urge our entrepreneurs to continue innovating. Do this not only to cope with the challenges of the pandemic. Do this to prepare your businesses for the new economy that is to come.
I encourage you to adopt new digital technologies and reinvent old business models. Shift to the circular economy. Use more renewables. Reduce waste. Improve sustainability. Be green. Climate change will hit us harder than the pandemic did. We must prepare for the severe weather, droughts, and all other damaging effects caused by climate change. Our businesses must learn to thrive in the face of these conditions. Our government banks are ready to provide financing for green and environment-friendly projects.
We are well on our way to a solid rebound. I am confident that our partnership will be even stronger as the Philippines blazes the path to sustainable and inclusive economic recovery.
Thank you.
-@@@-