Philippines economy seen sustaining 7% growth

MANILA, Philippines — The Department of Finance (DOF) expects a seven percent growth for the economy over the medium term, driven by the government’s massive infrastructure program.

In a statement, Finance Secretary Carlos Dominguez said the administration is retaining a seven-percent growth target for 2017, on the back of higher investments spurred by the Build Build Build program.

He also expressed optimism this growth rate could be sustained over the medium term.

“The 6.5 percent growth for the first semester makes the Philippines the second fastest growing economy in Asia after China. We retain the seven percent growth rate target for the year, spurred by the investment spending in the infrastructure program. We believe this growth rate is sustainable well into the medium term,” Dominguez said.

According to Dominguez, the Duterte administration’s infrastructure program would be a key driver of economic growth over the next few years.

The finance chief said the program is expected to boost investments to seven percent of the projected gross domestic product, higher than the average growth in the Association of Southeast Asian Nations (ASEAN).

“These investments seek to bring up our infrastructure to match those of our most progressive neighbors. By modernizing our infrastructure, we will address congestion in our ports, airports and roads,” he said.

Dominguez said investing in infrastructure leads to the “highest multiplier effect” on the economy, as it creates construction jobs in the short term and manufacturing jobs in the long term. It also improves land prices, enhances agricultural productivity and encourages expansion of industries into the regions.

He said the Philippines can no longer postpone infrastructure modernization, as well as human capital development, given the changing economic landscape of the ASEAN region toward regionalization.

 “The timetable set by the ASEAN Free Trade Area (AFTA) means we can no longer postpone modernization of our infra and postpone the training of our young to be functional in a globalized economy. We can no longer have a deficient bureaucracy and substandard governance,” Dominguez said.

The Duterte administration is planning to embark on a massive infrastructure program, which will initially be funded by official development assistance, and later by budgetary outlays and various forms of public-private partnerships.

 “We are looking to invest over P8.4 trillion in six years in new infrastructure to include better irrigation networks and more farm-to-market roads. We trust the private sector will bring in the investments in agribusiness and manufacturing to make the modern logistics system worthwhile,” Dominguez said.

To maintain fiscal discipline while undertaking the infrastructure plan, Dominguez said the government is working on the Congressional approval of the Tax Reform for Acceleration and Inclusion (TRAIN) Act which would provide a steady revenue stream for its priority programs.

He said the TRAIN Act, which contains the first package of the Comprehensive Tax Reform Program, would bring in an additional P134 billion in revenue in the first year of its implementation.