FDI inflows, infra spending to support economic growth — DOF

MANILA, Philippines — Higher investments and strong public spending on the back of the Duterte administration’s Build Build Build program will help the economy recover its growth momentum despite economic headwinds facing the country, according to the Department of Finance (DOF).

Finance Secretary Carlos Dominguez has assured the public that despite the economic headwinds brought about by the elevated inflation rate, the strong dollar and spike in global oil prices, the Philippines remains primed to regain its growth momentum on the back of the surge in foreign direct investments and sustained spending.

“We remain among the strongest economies in Asia. We are poised to recover our growth momentum, aided by investments in modernizing our infrastructure and strong inflows of foreign direct investments,” Dominguez said.

Dominguez said the government is “determined to push through with its strategy for economic growth” regardless of short-term challenges and headwinds.

He cited Mindanao, which has started to get its fair share of big-ticket infrastructure projects under the leadership of President Duterte.

Among these strategic infrastructure projects is the Mindanao Railway Project, the first railway system in the region which will link major cities.

Also in the pipeline for implementation in Mindanao is the construction of new power plants, which Dominguez said would remove hindrance to industrial investments and job-creating enterprises; and an extensive road and bridge network in northwestern Mindanao to improve the region’s agriculture and industries.

The finance chief, however, pointed out that the “government can only improve the conditions for doing business. It is for the private sector to take advantage of all the opportunities opened by economic investments made by government.”

He said the Build Build Build  program would not have been possible without the fiscal space created by many years of adept public finance management.

Dominguez said this fiscal space was widened even more with the passage of the first package of reforms under the Duterte administration’s comprehensive tax reform program (CTRP). 

“Those reforms boosted revenues and empowered our government to push ahead with the infrastructure program,” Dominguez said.

He said the remaining tax reform packages, which include reforms in corporate taxation and modernization of the fiscal incentives regime, are expected to encourage more investments and ensure a level playing field for enterprises.

The economy grew by 6.1 percent in the third quarter, slower than the revised second quarter figure of 6.2 percent.

According to the latest data from the Department of Budget and Management (DBM), the national government’s spending on infrastructure as of end-August surged by 49.8 percent to P505.6 billion from the P337.6 billion recorded in the same period last year.

This helped boost government disbursements, which grew by 23 percent to P2.19 trillion from January to August, compared to the P1.78 trillion registered the same eight-month period in 2017.

Meanwhile, FDI inflows in the first eight months climbed 31 percent to $7.42 billion from $5.66 billion in the same period last year.

This was despite the 41-percent drop in FDI inflows for the month of August alone, reaching $752 million compared to $1.28 billion in the same month a year ago.