The Duterte administration is now carrying out its aggressive infrastructure modernization program and reform agenda at full throttle to prop up the country’s status as Asia’s new economic powerhouse, Finance Secretary Carlos Dominguez III has said.
Dominguez said at a media forum that the government has been implementing its centerpiece “Build, Build, Build” program, and pushing tax reform plus other business-friendly priority measures and policies with a greater sense of urgency so as not to miss this opportunity on the Duterte watch to sustain and boost the economy’s high growth trajectory for the benefit of all Filipinos.
The “unabashedly ambitious” infrastructure program of the Duterte administration, Dominguez said, is meant to defy this year’s projected global economic slowdown, and pull up the Philippine economy “by its bootstraps,” with economic investments serving as leverage to continue raising domestic demand and further stimulating growth in step with the goal of transforming the Philippines into an upper middle-income economy.
“2019 is the year to complete the policy and tax reforms. 2020 will be the year our people start feeling what it means to be an upper middle-income economy. We will be the growth leader for the region and an inspiring study for the emerging economies. Already, the Philippines is being described as Asia’s new economic powerhouse,” Dominguez said at the Manila Times Business Forum, which was held Wednesday at the Dusit Thani Hotel in Makati City.
Dominguez said that crucial to revving up and sustaining the economy’s growth momentum is the increased revenues from the comprehensive tax reform program (CTRP), which, he hopes lawmakers would also recognize so that the Congress could approve the remaining tax reform packages by yearend.
“This will be the best signal we can send to the investment community and our development partners,” he said.
Among the big-ticket flagship projects expected to be completed this year and in 2020 are the Tarlac-Pangasinan-La Union Expressway, which will reduce travel time between Tarlac City and Rosario, La Union from four hours to just one hour; and the Clark International Airport Expansion Project, which is being undertaken to decongest the Ninoy Aquino International Airport (NAIA), in anticipation of the expected surge in business and tourist activities brought about by increasing public and private investments in Central Luzon.
Dominguez also said the Cavite-Laguna Expressway, which will reduce travel time from the Cavite Expressway (Cavitex) to the South Luzon Expressway (SLEX) from two hours to 45 minutes, is expected to be completed by 2020, along with the Bonifacio Global City-to-Ortigas Center Road Link Project, which will help decongest EDSA and reduce travel time between Bonifacio Global City and the Ortigas Central Business District from one hour to only 12 minutes.
“This infrastructure program is well on its way. We have broken all records in sealing financial support for approved projects. We are confident, as more and more projects become shovel-ready, the immense multiplier effects of infrastructure investments will provide a strong stimulus to our economic expansion,” he said.
Among the other infrastructure projects that will benefit Metro Manila’s commuters are the comprehensive rehabilitation of the MRT-3 system, which is being funded in large part by the Japanese government; and the LRT Line-2 Masinag Extension, which will reduce travel time from Recto in Manila to Masinag in Antipolo City to 40 minutes, compared to the usual travel time of up to three hours along the same route by bus or jeepney, he added.
“By the end of the Duterte administration, spending on infrastructure is expected to be equivalent to 7 percent of GDP (gross domestic product). By then, we would be able to close the country’s infrastructure gap,” Dominguez said.
The Congress has so far passed the first package of the CTRP, which covers the reduction in personal income tax (PIT), donor’s tax and estate tax, and the adjustments in the excise taxes on, among others, fuel, sugar-sweetened beverages (SSBs) and automobiles. The rest of the CTRP packages include reforms in corporate taxation and the rationalization of fiscal incentives.
“Note that this is the first time in our economic history that government is undertaking a tax reform program absent a pressing crisis. Because of this, we have the luxury of thinking through every component of the tax reform program and situate in the context of a rapidly emerging national economy,” Dominguez said.
Dominguez noted, though, that the Congress has passed several reform measures that were pushed by the Duterte administration, in support of the President’s high–and inclusive–growth agenda.
These include the Ease of Doing Business Act, National ID System, Personal Property Security Act, Revised Corporation Code, New Central Bank Act, Universal Health Care Act and, the Rice Tariffication Act.
The law shifting rice trading to a tariff regime, he said, is a “game-changer” because it will promote food security, encourage competition, and directly benefit farmers through the Rice Competitiveness Enhancement Fund (RCEF). And with traders now allowed to import rice so long as they comply with minimal requirements, this new law would be an effective weapon against smuggling, he added.
With the high growth and investment surge resulting from the programs being pursued by the government on the fast track, Dominguez said the economic team has maintained its fighting target of 7 percent growth or better this year, and is also standing by its goal of significantly cutting poverty incidence by the end of the Duterte administration in 2022.
“The promise of high but inclusive economic growth is made even brighter by the expected deceleration of our inflation rate to the very disciplined 2 to 4 percent. This will bring us even closer to our most important target: the reduction of poverty incidence to only 14 percent by 2022 from the rate of 21.6 percent in 2015,” he said.
To support the Duterte administration’s economic strategy, Dominguez said the government is slightly raising the fiscal deficit this year to 3.2 percent of GDP, which will revert to 3 percent in 2020 to 2022.
This slightly higher budget deficit this year will enable the government “to sustain the accelerated pace of investments in both hard infrastructure and the cultivation of our human capital,” he said.