(Pleasantries)
Thank you again for this opportunity to address the leading lights of Filipino business.
We do share an interest in seeing more investments drawn to our domestic economy. On the part of this administration, we want to reshape our nation’s development so that it is investments-led. When growth is investments-led, it tends to be more inclusive, more sustainable and more effective in bringing down poverty rates.
Achieving investments-led growth requires a comprehensive strategy. The key to this strategy is to bring up the quality of our infrastructure backbone to match those of our neighbors. We need to invest in training our labor force and in strengthening our human capital. In the comprehensive tax reform package we submitted to Congress, we are seeking to align our income tax rates with those prevailing in the region. Exceedingly high tax rates are a disincentive to investments.
I must add as well that a country’s investment rate is a function of its savings rate. To be an investments-led economy, we need to improve our savings rate. The key to this is the deepening of the country’s capital markets and the broadening of access to the formal business sector. Today, 86% of our people are unbanked. That is not a condition conducive to raising our savings rates.
As we improve on those factors that made our economy unattractive to investments — namely costly energy, poor infra, restrictive economic policies, corruption and uncertainty over contracts — we expect investments to play the driving role in our economic expansion. The administration envisions one trillion pesos a year in infrastructure investments. This alone should help sustain our growth momentum.
In a word, increasing investments in our economy requires an all-rounded strategy. It requires both adept and far-sighted governance as well as a dynamic private sector that is always ready to seize opportunities offered by the market.
Over the next few years, we anticipate substantial investments inflows. This is helped, to a significant extent, by commitments made both by Japan and China to assist us especially in large infra projects. Expect a palpable uptick in business activity over the next few months.
This year, we expect to start big railway projects such as the Clark-Subic Rail, Tutuban-Clark Rail, the 581-km South Line of the North South Railway Project connecting Tutuban, Calamba, Batangas and Bicol. We already began construction of the Panguil Bay Bridge and this year. We will also see the groundbreaking of the Clark International Airport, the Metro Manila Bus Rapid Transit, and three bridges across Pasig River, two of which will be built under Chinese grants. We are also closely working with our Chinese partners to finally start the construction of the Kaliwa Dam and Chico River Dam this year. All these projects mentioned have a total cost of around P326 billion.
After 2017, President Duterte’s administration will start the construction of long span bridges between Bicol and Samar, between Leyte and Surigao and finally make land travel between Luzon, Visayas and Mindanao possible. The construction and rehabilitation of key regional airports will also ease travel among our regions. Projects like the Mindanao Rail, an almost 2000-km railway that will connect key Mindanao cities will be a big boost to the economy of those regions which need it the most. While we plan to invest more outside Mega Manila, we will address the congestion here through projects such as the Mega Manila Subway, almost a dozen more bridges across Pasig River, and the development of Clark Green City to attract businesses and people out of the Mega Manila area.
This is a long list because we have a lot of catching up to do with our neighbors. But you can count on this administration to be aggressive in building these infrastructure.
When I said we will start these projects, we do not mean just bidding out projects, signing contracts, or attending opening ceremonies. In this Administration, “start” means groundbreaking and actual construction. We will no longer tolerate the wishy-washy promises that implementing agencies have been accustomed to making in the past.
The strong support we are getting from our regional partners and our own policy reforms to improve the ease of doing business, we expect a blossoming of opportunities for Filipino businessmen. Acceleration of our infra program will translate into more financing opportunities for our banks, more work for our outstanding construction companies and certainly more business for our insurance companies as well. With the new highways and railways to be built over the next few years, there will be many opportunities for property development.
It is not only the large businesses that will benefit from the multifold opportunities that will open up in the near future. Our closer relationship with China, Japan, South Korea and the ASEAN will translate into rapid tourism growth and bountiful export markets. This will mean stronger demand for processed food, in-person service enterprises, household items and consumer electronics.
The stronger linkages we now forge with our development partners and regional neighbors will provide new drivers for the growth of our domestic economy.
More efficient public spending can only magnify our growth potential. Our businessmen should prepare to be busy.
I have so far given you the larger picture regarding the flow of investments to our economy. The encompassing policy reforms will matter little, of course, unless we undertake administrative reforms that will enable both the private sector and government to be more nimble in these exciting times.
The comprehensive tax reform package we prepared intends to lower tax rates while broadening the tax base. It aims for a tax system that is simpler, fairer and more efficient. The Bureau of Internal Revenue is now undertaking reforms to make things easier for our taxpayers. The process of simplifying procedures is a continuous one. We have, for instance, increased enrollmentof our Large Taxpayers Service to allow more companies to be serviced more closely.
The administrative reforms undertaken at the BIR reflected an improved revenue collectionover the past few months. When the tax reforms come into place, we expect our collections to be truly robust. The collections will help our government pursue its program of building a truly inclusive economy.
By the way, I must give you the apologies of Billy Dulay for not being here but he is busy counting boxes of cigarettes that have fake stamps and also preparing the lawsuits against the erring companies.
At the Bureau of Customs, administrative reforms have likewise improved collection levels. In the last quarter of 2016, the Bureau exceeded its target collection levels. It is a performance we expect to be sustained over the coming years.
The administrative reform program at both the BIR and Customs consciously aim to improve the ease of doing business in our economy as well as to facilitate trade. In both revenue agencies, we are looking to narrow the margin of discretion, improve the speed of processing transactions and ease the flow of goods through our ports.
I have to commend both Commissioner Dulay and Commissioner Faeldon because this last effort we had in catching the illegally-stamp cigarettes was a joint operation of the Customs and the BIR. This is the type of teamwork we like to see.
And as you know, I used to breed hunting dogs. They’re called Rhodesian Ridgebacks, and they hunt always in teams. And I think our department is becoming like a Rhodesian Ridgeback team.
I am well aware that the congestion at the ports imposed heavy costs on our manufacturers, especially those whose competitiveness depends on just-in-time deliveries of both raw materials and finished products. The congestion is both an infrastructure and administrative problem. As we upgrade our port infrastructure, we should also remove unnecessary procedural hindrances to the flow of goods.
In pushing the reforms further, we will be in constant consultation with business groups such as the PCCI.
Just a point of note: PCCI brought to my attention the fact that there are several issuances of the Bureau of Accountancy that make it burdensome to file tax returns by requiring all kinds of papers from the accountants.
We have very strongly gone against them and said we don’t need this, SEC doesn’t need it, BIR doesn’t need it and BOC doesn’t need it. I wonder why the Bureau of Accountancy needs it? So Ms. Baladad, maybe you can tell me why these guys need this thing. These guys are really just creating more paperwork than what’s necessary.
We are building a new attitude among our personnel, one that treats every taxpayer, every importer and exporter as a valued client. We have benefitted immensely from your inputs andwill continue to benefit as we go along.
Please do not hesitate to give us feedback on how we do our work. We are partners in building a progressive economy that benefits all our people.
Again, let me thank you for this opportunity to discuss with you today. If today’s program provides for an open forum, I will be happy to listen to your concerns.
Thank you and good day!
Copyright © 2021 Department of Finance