MANILA — Finance Secretary Carlos Dominguez III said the 10-point socioeconomic agenda of the Duterte administration aims not only to combat generational poverty but also to sustain high growth by, among others, sharpening the country’s global competitiveness to entice more investors to do business here.
This is why the new government has jumpstarted over the past three months, said Dominguez, a vast array of initiatives to improve the ease of doing business in the country and reverse the sharp decline in the Philippines’ ranking in the World Economic Forum (WEF)’s global competitiveness list in the last year of the former Aquino presidency.
“Alongside reducing the poverty incidence by 9 percentage points over the next six years, the new government has given top priority to sharpening the Philippines’ global competitiveness, precisely to improve the ease of doing business here and turn our country into a magnet for investments on the Duterte watch,” Dominguez said.
Dominguez pointed out that hitting the ground running, President Duterte has, “as soon as he assumed office, put in place his 10-point socioeconomic agenda that already addresses these concerns raised by the international business community in the annual global competitiveness report of the WEF.”
Finance Undersecretary Gil Beltran noted that the Philippines slipped in the WEF competitiveness index partly as a result of its low ranking in infrastructure, which incurred a massive backlog during the Aquino administration
Beltran also pointed out that this year’s WEF assessment for its global competitiveness list was conducted prior to the May 2016 elections or long before President Duterte took over following his landslide victory at the polls.
“The increased spending in infrastructure, which will account for 5 percent of GDP under the Duterte presidency, will be a significant factor in boosting the country’s ranking in the WEF index, Beltran said.
“The Duterte administration aims to reverse the decline in the Philippines’ WEF competitiveness rating that happened in the final year of the former Aquino presidency, resulting primarily from the business community’s nagging concerns over their perceived bureaucratic inefficiencies, poor infrastructure, official corruption and tax issues,” he added.
Dominguez and Beltran were reacting to the sharp fall in the Philippines’ ranking from No. 47 in 2015 to No. 57 this year in the WEF’s Global Competitiveness Report, which is an annual WEF assessment of factors affecting productivity and growth in 138 countries.
In this year’s competitiveness report, WEF said the Top 5 most problematic factors for doing business in the Philippines have to do with the inefficient bureaucracy, inadequate supply of infrastructure, corruption, tax rates, and tax regulations.
Dominguez pointed out that the very first directive by the President in his State-of-the-Nation Address last July was for all government agencies to cut red tape as a way to speed up the processing of permits and other official documents in the bureaucracy, delays of which have been a perennial complaint of individuals and businesses in previous administrations.
At the DOF, for instance, Dominguez has named Beltran as the head of a newly formed anti-red tape committee mandated to fast-track the processing of official papers not only at the department but in attached agencies as well like the Bureaus of Customs (BOC) and of International Revenue (BIR).
To close the infrastructure backlog, he said the Duterte administration has decided to relax deficit spending from 2 percent of the Gross Domestic Product (GDP) in the past Aquino in government to 3 percent of GDP from hereon, to help Malacañang accelerate spending on its three pro-poor and growth-friendly priorities of public infrastructure, human capital development, and social protection for the most vulnerable sectors of society.
Stamping out official corruption is likewise one of the top priorities of President Duterte, who has, among others, green-lighted the long-pending Freedom of Information (FOI) measure as one way to better check shenanigans and “keep government officials on their toes.”
As for the concerns over tax rates and tax regulations, Dominguez said the DOF is crafting a Tax Reform Roadmap for Acceleration and Inclusion, which the government wants the Congress to pass soon enough, to clear the way to long-needed reforms in tax policy and administration for the benefit of both individual and corporate taxpayers.
In fact, he said, the DOF submitted last Sept. 26 to the House of Representatives ways and means committee the tax reform plan’s first package, which is topped by cuts in personal income taxes (PIT) via the adoption of a modified gross system that will exempt a sizeable number of low-income Filipinos from paying income taxes altogether.
To offset foregone revenues from the proposed PIT reductions, he said that Package One includes such measures as broadening the now-narrow Value Added Tax (VAT) base, adjusting excise taxes on petroleum products, and restructuring the tax on automobiles, with the exception of trucks, cargo vans, jeepneys, jeep substitutes and special purpose vehicles.
Package Two, which the DOF will soon submit to the Congress, includes proposed reductions in the Corporate Income Tax (CIT), in order to address the concerns of businesses that have long griped about the Philippines having among the highest corporate tax rates in Asia.
This comprehensive tax reform plan will help the government raise enough revenues to fund its three priority programs that are meant to keep the economy on its high growth path, said Dominguez, to improve the living standards, particularly of poor and low-income Filipinos, and to better attract foreign direct investments that generate jobs. PNA-northboundasia.com