American financial giant JP Morgan said the release of the much-awaited economic agenda of presumptive President Rodrigo Duterte is an encouraging sign for Philippine financial markets.
“We believe that financial markets will welcome the explicit commitment of the incoming administration to keeping the current macro-economic policies, particularly its focus on infrastructure,” it said in a research note published on Friday.
Duterte’s camp earlier announced that they would continue the current macroeconomic policies of the Aquino administration.
Duterte economic adviser former agriculture secretary Carlos Dominguez said the new administration would focus on the following eight economic priorities:
• Improve government revenue collection efforts by implementing progressive reforms in the two major revenue collection agencies, the Bureau of Internal Revenue and the Bureau of Customs;
• Accelerate infrastructure spending by maintaining expenditure ratio of 5 percent of gross domestic product to address bottlenecks in the government’s ability to increase infra spending, including public-private partnership;
• Attract foreign direct investment (FDI) flows by revisiting the economic provisions of the Constitution, particularly the foreign ownership limit, and by adopting the Davao City’s model where ease of doing business is not an issue;
• Modernize the agriculture sector, which includes provisions for better irrigation and a push for agriculture processing technology, among others;
• Address land administration and management by improving the process of land titling and ensure security of land tenure, especially in the rural areas to make them attractive sites for FDI;
• Make tax administration more progressive by updating the income tax brackets and index tax collection to inflation;
• Expand and improve Conditional Cash Transfer program; and
• Strengthen the basic education system particularly in communication, logical thinking, and mathematical skills in the basic and primary education system. It also intends to expand the scholarship program.
In its view, J.P. Morgan said the absence of any drastic shifts in Duterte’s economic agenda is encouraging.
It also lauded Duterte’s focus on grassroots development, noting that inclusive growth has
been a persistent problem of the economy.
“It also helps that the new government is cognizant of the need to maintain fiscal discipline despite its goal of making income tax more progressive,” it said.
The financial giant added that the eight-point economic agenda should assuage concerns about Duterte’s lack of clarity on his economic platform.
To recall, Duterte had been criticized for his lack of economic platform during the campaign period.
“Given the broad pronouncements, the appointment of a capable and experienced cabinet and economic team, and eventually, the ability to execute, are the next milestones to watch for,” J.P. Morgan said.