Economic Accomplishments
By the time this column sees print, we will already know the early results of the May 9 elections and the front-runners in the presidential, vice-presidential and senatorial races based on the automated tabulation of votes. While it may take a few more days to have the complete list of the new set of elected government officials, it is time to look back and note the momentous steps taken under the administration of President Rodrigo Duterte.
It is nearly impossible to count all the accomplishments of the government over the past six years, but allow me to enumerate some of them, which I think should serve as a challenge for our next leaders to emulate.
Let me limit the list to economic feats that the government recorded in six years and which enabled our people to survive the pandemic and emerge stronger. One of them is the massive infrastructure development under the “Build, Build, Build” campaign spearheaded by the Department of Public Works and Highways and the Department of Transportation.
Infrastructure spending accounted for over 5 percent of the gross domestic product under the Duterte administration, or double the level in previous administrations. The spending generated thousands of jobs, linked islands and markets and made life more convenient for many Filipinos. More projects are about to be completed, and we will have better mass transit systems, expressways and airports that will facilitate the flow of goods and the movement of people. These projects will also be for the benefit of the next generations.
Many civilizations are often judged based on the imposing structures they built and which lasted for generations. Infrastructure projects are legacies that our children and grandchildren will continue to appreciate in the years to come.
Another major feat that the government achieved is the most comprehensive tax reforms ever implemented in the country. The Comprehensive Tax Reform Program and its several packages overhauled the tax system to exempt poor workers from paying income taxes, reduce the corporate income tax rate to make the local business environment more competitive, raise the excise taxes on “sin” products and streamline the fiscal incentives granted to investors. These tax reforms allowed the Philippines to keep its investment-grade credit ratings despite the challenges of the pandemic and other external shocks. Fitch Ratings, for one, said the fiscal and monetary policy response, strong infrastructure spending and resilient remittances and exports are boosting the Philippine economic recovery.
Fitch expects the gross domestic product of the Philippines to expand 6.9 percent in 2022 and 7.0 percent in 2023, which are impressive growth numbers by any measure.
Equally important is the government’s resolve to maintain price stability in the form of the inflation target. The government works together with the Bangko Sentral ng Pilipinas to keep inflation within the target band of 2 percent to 4 percent, which is typical for a fast-growing economy. Surprisingly, we were able to maintain an average inflation of 3.4 percent in the first quarter, even as other countries, including the advanced economies, reported much faster inflation in the face of oil supply shocks and supply chain challenges that resulted in excessive global commodity prices.
While we registered faster inflation in 2020 and 2021 because of tight pork and rice supply in the local market, the government quickly adjusted by allowing imports to mitigate the impact of high prices and stabilize the situation without harming local farmers and livestock growers.
Inflation is one of the most important economic indicators that have a direct impact on poverty and hunger, and it is fortunate that we have government leaders who appreciate this dynamic. The passage of the Rice Tariffication Act shows the government is willing to risk an unpopular move for the sake of the majority of our people.
Then, there is the most meaningful economic reform in decades—fully opening the economy to foreign capital to create jobs, facilitate technology transfer and maintain a balance of payments surplus, with the help of remittances and business process outsourcing receipts.
The enactment of game-changing reforms such as the Ease of Doing Business Act and the amendments to the Retail Trade Liberalization Act, Public Services Act and Foreign Investments Act will hopefully elevate the Philippines to an investment hub in the likes of Thailand, Malaysia, Singapore or Vietnam. It is important to note that our more wealthy East Asian neighbors such as Japan, Korea and China became industrial giants when they opened to foreign capital and technical know-how. We are getting around $10 billion in foreign direct investments every year, but I believe we can increase that multiple times if we make the business environment more conducive to both local and foreign companies.
If manufacturing grows at a robust pace, the rest of the economy will follow, including retail, construction, real estate, transportation and services. The money will continue to circulate until every sector benefits from it. The last but certainly not the least of the government’s accomplishments is the effective response to the pandemic that involves massive vaccination and the enforcement of health protocols, such as the mandatory wearing of face masks outdoors, which continues to this day.
We now have a more manageable health situation, as active Covid-19 cases settled below 5,000 in the first week of May ahead of the elections. I just hope that the numbers would not see any drastic spike soon despite the hectic activities during the political campaign period.
Speaking of the elections, I hope our next leaders will sustain the remarkable economic achievements and reforms under the Duterte administration for the sake of the current and future generations of Filipinos. Governance is all about laying the foundation of the future and providing hope for the next generations.
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