ASEAN KEY DESTINATIONS
New Philippine gov’t plans growth with big overhaul
PHILIPPINE President-elect Rodrigo Duterte’s new economic team the day before yesterday promised sweeping changes to boost infrastructure, fix traffic woes, improve investment frameworks and maintain the country’s robust economic growth.
Duterte won the country’s May 9 presidential election but his victory has raised doubts about how the crime-busting former mayor with a background in law plans to manage one of Asia’s fastest-growing economies.
Though the Philippines under outgoing President Benigno Aquino has seen annual growth of more than six per cent on average, the economy is still fraught with outdated infrastructure, graft and protectionism, which Duterte’s technocrats have pledged to tackle.
“Contracts will be respected, good governance will be delivered, corporate taxes will be lowered,” incoming Finance Secretary Carlos Dominguez told a business forum in Davao, where Duterte has been mayor for more than 20 years.
“The negative list for investments will be relaxed as far as constitutionally possible, infrastructure will be built and the ease of doing business will be improved.”
The Philippines posted annual economic growth of 6.9 per cent in the first quarter, its fastest pace in nearly three years, on strong domestic demand and investments, giving a boost to Duterte’s plans to accelerate infrastructure spending.
“Our economy can move to a higher growth plane. To achieve that, we need a bolder pump-priming plan that would initially involve allowing more headroom for deficit spending,” Dominguez said.
Incoming Economic Planning Secretary Ernesto Pernia said the domestic economy could grow 6.5 per cent this year, below the 6.8-7.8 per cent target due to “adjustment pains.”
But an improved security situation may spur investments and boost growth to 7-8 per cent before Duterte’s term ends, he said.
Duterte begins a six-year term on June 30 and has promised to go hard against crime and corruption and improve basic government services. Duterte’s pick for budget secretary, Benjamin Diokno, said the target for infrastructure spending would be equivalent to six per cent of gross domestic product, or about one trillion pesos (US$21.6 billion), from this year’s goal of five per cent.
To create more jobs and ensure growth was felt in rural areas, the government would ramp up infrastructure spending outside Manila and would boost revenues by reviewing tax incentives to offset shortfalls from a lowering of income tax.
The government would welcome unsolicited proposals for infrastructure projects, while ensuring counter offers were made to ensure fairness.
The new Transportation Secretary Arthur Tugade said Duterte would seek emergency powers from Congress for two years to tackle Manila’s notorious traffic gridlock, citing an estimated 2.4 billion pesos of lost business each day due to street snarl-ups in the Philippines.
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