AS regards your editorial entitled “Three things Filipinos need from economic managers” (Manila Times, January 30, 2017), please allow us to point out that our economic managers are not—in your words—“feeding its people with false hopes and promises” in embarking on President Duterte’s inclusive-growth agenda to reduce the poverty incidence from 22 percent to 13-14 percent over the next six years and transform the country into an upper middle-income [economy]by 2022.
This agenda might be ambitious but is actually doable, given the rare alignment of positive economic indicators, a popular and decisive political leadership, and an unequalled investment strategy anchored on higher spending on 1) infrastructure and human capital to create jobs, improve living standards and sharpen the country’s global competitiveness; and 2) social protection to bring the poor and other vulnerable sectors into the mainstream of growth.
For such massive investments to take place, our economic managers are banking on the timely congressional approval of the first package of the Comprehensive Tax Reform Program (CTRP)—as contained in House Bill No. 4774 authored by Quirino Rep. Dakila Carl Cua—that is meant to make our tax system simpler and fairer for all Filipinos as well as capable of generating sufficient revenues to bankroll this high and inclusive-growth agenda.
Thus, certain critics of tax reforms, and not our economic managers, are actually the ones peddling false hopes and expectations among our people in claiming that the Duterte government could carry out its ambitious growth strategy by simply improving the tax collection efficiency of the Bureaus of Internal Revenue (BIR) and Customs (BOC) and minus new taxes or adjustments in existing ones as proposed under the CTRP.
Tax administration reforms are underway—and more are coming—at the BIR and BOC as part of the CTRP. We agree with the critics that improving collection efficiency and plugging leakages would indeed beef up collections, but the higher combined take from the BIR and BOC from such reforms would never be enough to keep the investment program going as envisioned by our economic managers, given that an estimated P8 trillion to P9 trillion is needed for infrastructure development alone between now and 2022.
True, the past administration had managed to implement an infra buildup sans a tax reform plan similar to the CTRP. But such has proven inadequate to close the infrastructure gap that has for decades dulled the country’s competitiveness in the region as a haven for foreign direct investments (FDIs). This explains why FDI inflows here have remained minuscule relative to those in other Southeast Asian economies like Singapore, Indonesia, Malaysia and Thailand, despite our country’s investment-grade ratings and status as Asia’s new economic star in recent years.
Contrary to your editorial’s view, the government’s massive investment strategy is a sustainable recipe for long-term development—and our economic managers could help President Duterte make it happen if we, as a people, were to support the CTRP en toto.
There is no time to waste, in light of the rare alignment of positive economic indicators—a high growth streak, record international reserves, a more manageable debt service, low inflation and low interest rates, a liquid banking sector, and a demographic hump in young Filipinos entering the labor force who could be primed for global competition, among others–along with a highly popular and decisive political leadership that has its heart in the right place.
As has been pointed out by Finance Secretary Carlos Dominguez, we should seize the moment so the Philippines could break free from decades of moderate growth and finally catch up with—and soon outpace—our more vibrant neighbors.
Again, the ambitious agenda is doable. With adequate funding support from the CTRP for this growth strategy, we could free at least six million Filipinos from poverty in six years’ time and turn the Philippines into an upper middle-income economy by 2022 by raising our per capita gross national income from $3,550 in2015 to $4,900 (or close to where Thailand is right now) by the end of the Duterte presidency in 2022.
According to your editorial, our economic managers must do these three things for our people: 1) “Deliver, 2) Deliver and 3) Deliver.”
They can achieve these three imperatives, but only if we, as a people, will let them do the following: 1) Invest (in infra), 2) Invest (in human capital) and 3) Invest (in social protection).
Paola Sherina Alvarez
Assistant Secretary and Spokesperson
Department of Finance