Dominguez: Goals on inclusive growth ‘on course’
FINANCE Secretary Carlos Dominguez III assured economists and members of the regional financial community that the Philippines remains “on course” towards the government’s medium-term goals of reducing poverty and achieving inclusive growth, driven by stronger investor confidence arising from the rollout of “Build, Build, Build” infrastructure projects and the initial gains from the Comprehensive Tax Reform Program (CTRP).
Notwithstanding the elevated inflation and food supply issues in the first semester, Dominguez said the government’s accelerated pace of policy and infrastructure reforms has kept the Philippines among the region’s fastest-growing economies, boosting investor sentiment as reflected in the surge in foreign direct investments (FDIs) by almost half to US$5.8 billion in the first half of the year.
Dominguez pointed out that the most remarkable aspect of the country’s economic performance this year is its turn into an investment-led growth, following a 27.4-percent jump in capital formation.
He said confidence in fiscal management has been reinforced by the passage into law of the first package of the CTRP, which has led to a 21-percent increase in total revenue collections over the past seven months while putting more money into the pockets of 99 percent of Filipino taxpayers via hefty cuts in their personal income tax (PIT) payments.
The second package of the CTRP, which seeks to lower the corporate income tax rate and rationalize fiscal incentives, has been approved by the House of Representatives.
Other CTRP packages cover reforms in property valuation to make the system more equitable, efficient and transparent, as well as the rationalization of capital income taxation to address the multiple rates and different tax treatments and exemptions on capital income and other financial instruments, Dominguez said.
He added that the adept management of the country’s fiscal affairs has also been recognized both by way of improved credit rating outlooks as well as by the tight spreads given the foreign denominated bonds that had been floated the past few months, particularly the respective “Panda” and “Samurai” bonds in China and Japan.
A new law that will improve the ease of doing business in the country, a national identification system that is being put in place and efforts to liberalize foreign ownership in business to complement other policy reforms are being implemented on the Duterte watch, Dominguez said.
“With these reforms and with the infrastructure program, we expect our economy to create more jobs, improve productivity in all sectors and remove roadblocks to clear the way for more rapid economic expansion,” Dominguez said during the Philippine Economic Briefing (PEB) for economists and business analysts belonging to the regional financial community, which was held Tuesday at the Bangko Sentral ng Pilipinas Complex (BSP) in Manila.
Dominguez said the bigger FDI inflows and the successful bond floats overseas following the implementation of CTRP’s first package, the Tax Reform for Acceleration and Inclusion Act (Train) Law, “dispel concerns that our tax reform is scaring investors away.”
“Our growth performance for the first semester of this year was below expectation, hampered by elevated inflation and supply issues. Like the rest of economies in the world, the Philippines is not exempted from challenges,” Dominguez said.
“We also remain on course towards our goals for the medium term and beyond. These goals are to reduce poverty incidence from 21.6 percent in 2015 to just 14 percent by 2022, to make our growth more inclusive by addressing the infrastructure deficiencies that stymie productivity and to induce more investments to open up more jobs for the next generation of Filipinos,” he added. PR