Finance Secretary Carlos Dominguez III said the agenda of this year’s 51st annual meeting of the Asian Development Bank (ADB) will focus on programs that the institution will carry out in the next 50 years to further reduce poverty and attain inclusive growth in communities left behind in Asia’s economic boom.
Dominguez, this year’s chairman of the ADB Board of Governors, said the Bank has been extremely successful in improving living standards across the Asia-Pacific, but now has to contend with new problems arising from the region’s economic resurgence.
The 2018 agenda, Dominguez said, will take off from last year’s annual meeting in Yokohoma, Japan, where the Board of Governors committed to strengthen efforts to develop infrastructure, make growth more inclusive, and collectively strengthen the region’s resilience amid growing global economic uncertainties.
“As you know in the last 50 years the ADB has been very successful in improving the standard of living among its members. However, when you have successes like that you create new situations that have to be addressed,” said Dominguez. “Unlike in the ocean when the tide rises, all boats rise. Unfortunately, in economies, that doesn’t happen all the time. There are some communities that are not as progressive and vital as other sectors.”
He said the annual meeting this May will center on discussions “on how the ADB can improve inclusive growth that will also contribute to lessening social tensions, as well as (improving) peace and order.”
The Philippines will host the 51st Annual Meeting of the ADB Board of Governors in Manila on May 316 this year with the theme “Linking People and Economies for Inclusive Development.” Manila has been the home of ADB’s main headquarters for more than half a century now.
In his remarks closing the ADB’s 50th Annual Meeting in Yokohama last year, Dominguez said the institution must “begin a process of reinvention” so that its programs could be realigned to meet new global realities.
These new realities, he said, include the shifting of the balance of economic power to Asia, the rising economic nationalism and hostility to globalization in the US and Europe, and the emergence of new multilateral lending institutions such as the Asian Infrastructure Investment Bank (AIIB).
When the ADB holds its annual meeting in Manila this year, Dominguez said he expects it to help “rethink” Asia’s strategies for growth.
“The economic balance of power has shifted. Asia is now expected to lead global growth. We cannot be content to simply track the development experience of the West,” Dominguez said.
The member-economies of the ADB should also be prepared for the harm to be inflicted by emerging protectionist and anti-globalization policies in the US and Europe, Dominguez said.
For Dominguez, the ADB needs to “revisit the modalities of its intervention in order to remain relevant and effective,” as it works alongside new institutions like the AIIB.
“The development needs of our region are changing. The Bank must respond appropriately,” Dominguez said.
As for the Philippines, the key elements of its inclusive growth strategy are a “massive infrastructure program to bring us up to par with the region and a comprehensive tax reform package that will support robust economic investments in the country’s future,” Dominguez said.
“The first element is indispensable. For decades, the country lagged behind its neighbors in economic investments as we grappled with a debt overhang. We have to close the infra gap to achieve investment-led growth and evolve a truly inclusive economy,” Dominguez said.
He said the second element, which is the tax reform program, “is unavoidable.”
“To meet the challenge of a larger and younger labor force, we need to fund social spending in education and public health. We need to bring down our income tax rate close to the regional average to make our economy more attractive to investments,” he noted.
The Duterte administration has partly achieved this goal, when the President signed into law last Dec. 19 the Tax Reform for Acceleration and Inclusion Act (TRAIN), which for the first time ever slashed personal income tax rates for individual taxpayers while raising additional revenues through several revenue-enhancing measures.
The Department of Finance is readying other tax reform packages to further make the existing tax system fairer, simpler, more efficient and on the par with those of other countries in the region.
Dominguez said that as with other emerging archipelagic economies, the Philippines needs to address the “unevenness” in the economic development of its regions.
A case in point, he said, is that Metro Manila’s gross regional domestic production grew 12 times the rate of the country’s poorest region—the Autonomous Region in Muslim Mindanao.
Dominguez said the ADB will continue to play a key role in helping the Philippines correct such inequalities and in “building an economy that is much kinder to its people” as it thanked the Bank for the support that it has extended to our country over the years.