Carlos G. Dominguez
Secretary of Finance
My fellow colleagues in the Cabinet led by Executive Secretary Salvador Medialdea; members of the diplomatic corps; our reliable partners in the business community, development organizations, and the academe; fellow workers in government; and friends from the media here and abroad: Good morning.
The presidency of Rodrigo Roa Duterte will surely rank among the most productive administrations in our history. His term will be remembered as the moment when the country made the turn towards more inclusive growth and prosperity.
With President Duterte’s bold leadership and strong political will, many socio-economic reform measures that languished for decades on the shelves of Congress were finally enacted into law.
The passage of the Ease of Doing Business Act paved the way for improved and efficient delivery of public services. We enacted the Philippine Identification System Act which brings us closer to the goal of achieving e-governance and greater financial inclusion among our people.
As of May 3, a total of 64.8 million individuals nationwide have registered for the national ID. Through this program, the Land Bank of the Philippines has cleared the way for 7.9 million previously unbanked registrants to be part of the formal banking system.
In addition, we fulfilled President Duterte’s promise of establishing a bank dedicated to the needs of Filipinos working abroad. The Overseas Filipino Bank is our first branchless digital-only bank in the country. It now serves overseas Filipinos in 116 countries.
The Rice Tariffication Law was finally achieved after more than thirty years of failed attempts under previous administrations. The law opened up the Philippine rice market and, in turn, lowered the price of our country’s staple food for more than 100 million Filipinos and has kept the rice prices very stable. As a result, rice is no longer the main contributor to our overall inflation rate.
The Rice Tariffication Law ensures that farmers benefit directly by providing at least 10 billion pesos each year for mechanization, high-quality seeds, access to credit, and training.
After many years of intense political debate, it was only during the Duterte administration that the Coco Levy law was finally enacted. This marks a promise fulfilled by the President who, in his 2019 SONA, vowed to return these funds taken arbitrarily from the pockets of Filipinos back to their true owner.
The Duterte administration decisively passed and implemented the most comprehensive tax reform program ever in this country. This provided robust and recurring revenues that helped expand social services and supported our massive economic investments in modern infrastructure.
TRAIN or the Tax Reform for Acceleration and Inclusion Act reduced the personal income taxes for 99 percent of our taxpayers, giving them much-needed relief after 20 years of non-adjustment. Through TRAIN, we have basically given out a 14th-month pay every year to our wage earners.
No past administration increased sin taxes more than once. President Duterte and Congress raised sin taxes three times within his term. This demonstrates what a strong political will can do to protect people from consuming products that have a negative impact on their health. The excise taxes on tobacco and alcohol products improved funding for the Universal Health Care Program, which is another landmark reform of this administration.
All in all, TRAIN and the other enacted packages of the tax reform program enabled the government to raise 575.8 billion pesos in incremental revenues during the first four years of implementation.
In addition to modernizing our tax policies, the Duterte administration aggressively pushed for the full digitalization of the Bureau of Internal Revenue and the Bureau of Customs to enhance tax administration and reduce corruption.
Through bold tax reforms and better tax administration, we were able to raise our revenue effort to a two-decade high and our debt-to-GDP ratio to a historic low.
The international credit rating agencies recognized us by giving us the best credit ratings ever, ranging from BBB plus to a triple A. As a result, we were able to bring down our borrowing costs and raise bond issuances with very tight spreads in the international markets. This high credit rating also spilled over into lower borrowing costs for the private sector and individuals.
Our robust revenue flow and concessional financing allowed us to sustainably fund the Build, Build, Build program, which is one of the lasting legacies of President Duterte. This administration was able to raise infrastructure spending to above 5 percent of GDP, double the level recorded by the previous four administrations.
Under this administration, big-ticket infrastructure projects that were faced with delays for decades were finally implemented, providing quality jobs to over 6.5 million people.
Apart from infrastructure, the Duterte administration also invested heavily in social services to boost human capital development through government programs and by infusing the largest-ever capital to the Land Bank of the Philippines, the Development Bank of the Philippines, and the Philippine Guarantee Corporation.
We provided health care coverage, financing for enterprises and local government units, housing, unconditional cash transfers, quality jobs, free education in state colleges and universities, and free irrigation water.
These game-changing measures and programs made the Philippines one of the economic leaders in the region, growing over 6 percent annually. The same reforms helped us gain the financial strength to weather the worst of the COVID-19 crisis.
When the pandemic struck, the Duterte administration moved quickly to protect Filipino lives. Like the Filipino family, the government did what was needed for the country to survive the pandemic.
The Philippines’ direct response to the COVID-19 crisis so far amounted to 3 trillion pesos, equivalent to 15.6 percent of our GDP. Our social amelioration program assisted 18 million families and the Small Business Wage Subsidy Program kept more than 3 million workers afloat. These emergency subsidies amounted to about 250 billion pesos–the largest social protection program in Philippine history.
Funding our social protection and economic stimulus measures has been a challenge. But the pandemic found us in a strong financial and fiscal position, ready to protect our citizens.
We successfully negotiated funding to procure COVID-19 vaccines for our people, which was primarily sourced from multilateral banks. We were able to bring together the World Bank, the Asian Development Bank, and the Asian Infrastructure Investment Bank under a joint financing arrangement for the purchase of these life-saving doses. This was the first in the Asia-Pacific region and probably in the world.
Despite the increased borrowings to procure vaccines and provide relief to our people while maintaining our economic investments, our debt level remains sustainable. Throughout the crisis, our historic high credit ratings were maintained amidst downgrades among our peers globally. This is a testament to our excellent record of prudent spending and fiscal discipline.
Even as the world has been hit by the pandemic, our game-changing reforms bolstered our country’s ability to recover and rebuild. The enactment of CREATE or the Corporate Recovery and Tax Incentives for Enterprises Act and the amendments to the Retail Trade Liberalization Act, Public Service Act, and Foreign Investments Act will bring in the high-value investments that our country needs to upskill our workforce and further modernize our economy.
As the pandemic subsides, the Philippine economy is now well on its way to rapid recovery. Our strategies in 2021 have culminated in a full-year growth of 5.7 percent, exceeding targets and expectations. The economy even grew by 8.3 percent in the first quarter of 2022, making the country’s expansion the highest in the ASEAN region and among our credit rating peers.
I could go on and on with all of the Duterte administration’s unprecedented economic achievements realized in just six years. But our time is limited.
Let me close by saying that I am extremely proud to have served under this president. Although this was a period challenged by a pandemic, it was also a time that the government firmly demonstrated that it could respond decisively to any emergency.
The next administration will inherit many hard-won reforms. They will assume the office with the basic groundwork for rapid and inclusive growth already in place. President Duterte’s final legacy is a confident and hopeful Filipino people earnestly looking to a future of sustained progress.
At this point, I would like to thank, again, President Duterte and all my colleagues in the Cabinet, and all my colleagues in the Department of Finance and the attached agencies for working together to help make this administration one of the best ever.
Thank you!
-oOo-