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Business

The Duterte presidency’s enduring economic achievements

CROSSROADS (Toward Philippine Economic and Social Progress) - Gerardo P. Sicat - The Philippine Star

The most enduring achievements of President Duterte as he leaves office on June 30 are his economic achievements.

It is too soon to write about legacy. But we can talk of enduring achievements as he turns over the national safe-keeping to his successor, president-elect Ferdinand “Bongbong” Marcos Jr.

Initial main agenda. The six years of the country under the Duterte leadership was marked by unorthodox leadership. He was focused on his main agenda: to improve peace and order. He traveled to the nooks and corners of the nation to emphasize his concern for these problems like a busy town mayor.

His language was coarse, earthy, local, and sometimes unpresidential. His leadership style when he wanted something done was assertive and strong-armed. This unique style was the source of his charismatic appeal to the masses. It is also one that invited international attention, sometimes unwelcome.

The most important aspect of his concern on peace and order was the drug problem. He considered it a national scourge, a source of criminality that should be eliminated.

He took special care to emphasize that drug addiction destroys the person, and eventually the family. If he did not solve the nation’s drug problem, he argued, it would eventually destroy the nation. As a mayor of Davao, his achievements on this front was what gained him national attention.

His second strong focus was to conclude a peace agreement with the leaders of the NPA rebellion. He went the length of appointing some sympathizers to their cause in the Cabinet and freeing captured leaders to participate in the negotiation table. Sadly, these efforts failed because the rebels set impossible demands.

His other big ambition was to end the Mindanao Muslim insurgency by implementing the national consensus to create the Bangsamoro autonomous region. Even though this institution is now legally in place, it did not stop the serious shoot-out in Marawi against other Muslim separatist groups.

President Duterte spent a great deal of his attention to deal with these issues related to peace and order. Yet it seems that full completion of these bothersome issues will have to be passed on to the succeeding generations of leaders to solve them.

Economic achievements. At the start of his presidency, his weakest preparation for leadership was in regard to the economy. He seldom commented on economic issues during the campaign because he hardly understood the subject.

His limited command of the subject was made most manifest in his major speeches to the nation. They lacked articulation of important economic reforms that the nation needed. In the presidential campaign, the closest that he came to cover this important subject was that he would bring substantial change in the nation.

In self-deprecation before his audience, he often admitted that in school he was a poorly motivated student, just with a grade of 75.

Yet, as he leaves the presidency, his strongest contributions to nation-building will be in the area of economic development, which he put on a much stronger footing.

To make this possible, he appointed able men to run the major departments of government that dealt with economic issues, and he supported them in their work. (I put my kudos for their work, especially to Secretaries Sonny Dominguez of Finance, Benjamin Diokno of Budget and later at the central bank, and to Ernesto Pernia and later Karl Kendrick Chua at NEDA.)

The economic reforms under President Duterte are strongest in relation to tax and fiscal reforms to support the government’s spending program. This was undertaken in two stages and was for the most part completed as planned by the end of the presidential term.

The first part of the program was to reform the personal income tax and sales taxation. This came under the TRAIN (Tax Reform for Acceleration and Inclusion) program. This was most important in raising the overall tax capacity. This was achieved by the second year of the term and was most helpful in raising the revenue needs of the Duterte’s government early on.

The objective was to make the tax take more responsive to changes in economic activity, so that revenues rise with the GDP. A major feature of this change was to align it with the tax systems of modern states, including those in emerging East Asian economies.

The increase in revenues strengthened the government’s economic development programs by funding many government services. Such services included targeted subsidies to sectors of the economy to help especially the poor – like education, health services, and special anti-poverty programs.

The reform of the corporate tax was the second part of the tax reform. This was the CREATE (Corporate Recovery and Tax Incentives for Enterprises) reform, which was passed into law by the fifth year of the presidential term.

The tax reforms under the Duterte administration are the most comprehensive reform of the country’s investment incentives in decades. The resulting tax incentives to promote investments are performance-based and are unified by a single system of fiscal review and assessment.

The other reforms on the economy deals with the passage of legislation that liberalized restrictive provisions to encourage more foreign direct investments. Three major reforms that addressed these issues were just in the nick of time before the end of Duterte’s presidency.

Build Build Build. The most visible program of the economic achievements of President Duterte will be remembered by the resurgence of the infrastructure building investment program.

He empowered his economic and sector agencies to speed up and enlarge the number of important infrastructure investment programs under the government’s public investment program. He was decisive in approving the start of major projects in transportation (expressways, railways, ports and airports), in energy, and in telecommunications to reduce the bottlenecks in development.

The result of his efforts is that the nation’s confidence in the future of the economy has brightened considerably.

I discussed these economic reforms more fully in my Crossroads column of Feb. 9, 2022, under the title “The next president will inherit significant economic reforms.”

 

 

For archives of previous Crossroads essays, go to: Philstar.com. Visit this site for more information, feedback and commentary: http://econ.upd.edu.ph/gpsicat/

RODRIGO ROA DUTERTE

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