Securing gains and fulfilling promises

The Philippines’ 18th Congress opened yesterday accompanied by the pomp and pageantry often defining the President’s State of the Nation Address (SONA), which is the fourth of the current incumbent, the country’s 16th, Rodrigo Duterte.

Halfway through his term, Duterte’s crowning achievement is no longer his war on drugs and crime, a cause that he had infamously pursued with much fervor during his first two years, but rather the now-accelerating P8.4 trillion Build Build Build (BBB) infrastructure program.

If plans carry till his last year, BBB would be – barring any major global economic upheavals – one of the most secure footholds of the country towards sustaining future growth, and a stepping stone towards the much-coveted upper middle income country status.

Duterte’s economic achievement in the first three years does not, however, rest on jumpstarting BBB alone, but also on a number of reforms introduced during the first half of his term.

Foremost would be the first package of the Comprehensive Tax Reform Program (CTRP) that ushered new levies on a number of goods while reducing personal income taxes. The Tax Reform for Acceleration and Inclusion (TRAIN) Law and the additional taxes on tobacco products have secured needed funds for the state coffers to finance a number of new laws that seek to help poor Filipinos.

Notable are initiatives providing for free tuition in state colleges and universities, free irrigation for farmers, free internet access in public places, more feeding programs for public school students, expanded universal health care, free medicines, and increased salaries for soldiers, policemen, jail officers and firemen.

Going on to the fourth year of his term, more work needs to be pursued to sustain the first three years’ accomplishments. Here’s a compiled list that could be taken into consideration.

Securing gains

The implementing rules and regulations of the Ease of Doing Business and Efficient Government Service Delivery Act have been passed, and expectations are high for improved performance at all levels of governance by the business sector when it comes to securing permits or simply paying annual fees.

The Rice Tariffication Act has likewise been passed, which should see prices of rice going down, but not at the expense of our farmers. In reality, the promised reduction of rice prices at retail outlets of P7 per kilo has not happened yet, and neither has the bandied support for rice farmers reached the farms.

As one of the biggest rice-consuming countries in the world, it is to our best interest to strengthen our rice production capability at the quickest possible time.

The 17th Congress also saw the passage of the Universal Health Care Program. This is an expensive exercise by government, but one that should greatly help our countrymen who have ignored health care because of poverty and at the expense of losing productivity.

A third telecommunications company has been chosen, one that is supposed to lead to improved services in the industry that has been dominated by just two players. Reforms are ongoing, and this should bring faster internet speeds at lower costs for consumers.

A delayed budget approval this year has forced government to operate on its previous year’s, albeit lower, appropriation level. This reduced capacity to spend had affected foremost infrastructure spending on the BBB projects. Catch-up plans are being carried out, and hopefully will deliver.

Legislative chokepoint

Several important bills have been re-filed in the 18th Congress that should widen the scope for economic reforms, mainly by encouraging more investments both foreign and local, and introducing tax reforms to plug leakages and restructuring incentives to make them more meaningful.

Business is particularly keen on seeing three bills prioritized for discussion, especially at the Senate. The proposed Public Service Act, the Foreign Investments Act, and the Retail Trade Liberalization Act are all waiting in the wings.

The same goes for a number of tax bills that the Department of Finance needs to complete its tax rationalization initiative. The Tax Reform for Attracting Better and High-Quality Opportunities (TRABAHO) bill should bring down the corporate income tax rates at comparable levels with other ASEAN countries, but may impact negatively on companies operating in export processing zones.

Additional taxes on alcohol products, the reform of the motor vehicle users’ charge, plus the proposed liberalization of sugar importation are also on the DOF’s wish list. These tax initiatives have raised various degrees of concern and opposition by involved stakeholders and have to be considered in succeeding deliberations.

There’s a long list of more business-related bills that need to be looked into, underscoring the need for our legislators to diligently allot time and resources to ensuring that new and amended laws will be able to deliver the desired objectives.

Promises

Two legislative initiatives that have been highlighted by the President and deserve more studies are the proposed Security of Tenure (SOT) law and the move to change the current Philippine Constitution to favor a federal government system over a unitary, centralized one.

Recent enforcement drives by concerned government agencies to go after companies that hire contract workers to temporarily fill in for permanent positions and, thus, skirt Security of Tenure provisions in the labor code have yielded positive results.

The proposed SOT law may be taking measures too far by calling on a total ban on contractual work, which could run counter to existing labor practice in other countries.

The proposed shift to a federal government, on the other hand, should not be rushed given the wide-ranging implications on the government’s existing programs and obligations.

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