PHILIPPINE business tycoons led by Jaime Zobel de Ayala of the Ayala Group and Tessie Sy-Coson of SM Investments Corp. took part Tuesday night in the second ‘DuterteNomics’ Forum in an apparent show of support for the ambitious infrastructure program of the Duterte administration.
Aside from Zobel and Sy-Coson, the event was also attended by Danel and Sandro Aboitiz of Aboitiz Equity Ventures, Edgar Injap Sia 2nd of Double Dragon Properties Corp., Kevin Tan of Megaworld Corp. and Michael Tan of the Lucio Tan Group.
Finance Secretary Carlos Dominguez 3rd said the government requires an “audacious” economic strategy that would enable the Philippines to catch up with its more vibrant neighbors by 2022 and transform its status into a high-income economy in one generation.
“The Philippine economy, with the decisive leadership of Rodrigo Duterte, is now ready for an economic breakout that will increase the pace of growth, intensify inclusion and reduce poverty,” Dominguez was quoted as saying in a statement released by the Department of Finance on Wednesday.
Dominguez said President Duterte’s economic strategy includes an infrastructure buildup that will entail trillions of pesos in investments necessary to help ensure that the next generation of Filipinos no longer remain “in the same poverty trap we found ourselves in.”
The Duterte administration’s reform agenda focuses on accelerating spending on infrastructure and on human capital by upgrading the country’s educational and health care systems, along with its goal to lower income tax rates to sharpen the Philippines’ global competitiveness, the Cabinet official said.
“Dutertenomics” is President Duterte’s economic strategy to dramatically raise funds—in large part through his proposed Comprehensive Tax Reform Program (CTRP)—and spend big on infrastructure, human capital formation and social protection.
This strategy will enable the government to sustain the Philippines’ growth momentum, attract investments and create jobs, achieve economic inclusion and transform the Philippines into a high middle-income country by 2022, by which time poverty incidence will have been reduced to 14 percent.
If “DuterteNomics” is sustained over the medium term, the Philippines will be a high-income economy in one generation or by 2040, officials said.
Dominguez said the Philippines is also looking forward “to what has been called a ‘demographic sweet spot.’”
“As the populations of some of the more mature economies in Asia begin to age, we are looking forward to the entry of millions of young Filipinos into the workforce. We must invest in them and make them globally competitive. We must prepare the economy to provide meaningful jobs for them or else risk building an alienated and discontented generation,” he said.
Dominguez pointed out that after being saddled with a debt burden and the Asian financial crisis for many years, the country is now enjoying a “Cinderella moment” when it is already highly capable of shifting the source of growth to an “investment-led” one that creates jobs and opens more economic opportunities for Filipinos.
“We have completed our fiscal consolidation. Our credit ratings attest to that. The debt burden is no longer a drag on our economic growth. We can now reshape our economic development so that it is investment-led. This, in turn, will open the door to a truly inclusive economy. An investment-led growth pattern creates jobs and opens more economic opportunities for our people.”
“We are now actively seeking investments not only to rebuild our depleted manufacturing sector but also to capitalize our agriculture to make it more efficient,” he said.
In a separate statement, Budget Secretary Benjamin Diokno emphasized the need to raise additional resources to finance heavy investments on the country’s development priorities, namely public infrastructure and human capital development.
Hence, the deficit has been expanded from 2 to 3 percent of gross domestic product (GDP) for the term of President Duterte, he said.
Diokno said the deficit target was manageable, appropriate, and sustainable given the economy’s declining debt-to-GDP ratio and complementary fiscal reforms that are projected to raise revenue effort.
The government has allocated P847.2 billion for infrastructure in the 2017 budget, equivalent to 5.3 percent of GDP.
Diokno said this would “assuredly increase” in the medium term, such that P8 trillion to P9 trillion would be spent on public infrastructure for the next six years, with infrastructure spending projected to reach 7.4 percent of GDP by 2022.