Government News Analysis

Addendum to the socio-economic agenda

The broader Philippines’ business community – though not necessarily all of its corporate players –  has given a fulsome endorsement to the economic direction which President Rodrigo Duterte has vowed to put in place to both relieve poverty and promote inward investment.

Under the banner, Sulong Pilipinas (Advance Philippines), business leaders from a number of Chambers of Commerce and trade-promotion groups, from across the country, thrashed out their recommendations over two days in Davao City, showing that they are ready to push forward and lend their combined weight to Duterte’s 10-point economic initiative. Socio-economics for the country and its people

The business groups’ own 10-point economic recommendations, delivered to the government’s economic team at the end of June, prioritise their view of where the country should be heading and, in effect, form a list of possible addendum items to the Duterte blueprint. And at the top of their list is tax reform. Here is what they would like to see:

1. Adoption of a comprehensive tax-reform package, including the reduction of corporate-income tax and personal-income tax. Capital- gains tax rates should be reviewed. Tax systems should be simplified for micro, small and medium enterprises (or, MSMEs). To offset the revenue loss that will result from these reforms, excise tax should be increased by expanding the definition of luxury goods, among others.

2. Implementation of a national ID system for improved targeting of social services. This would prevent double counting and leakage of social benefits. There would also be proper identification of informal settlers.

3. Streamlining of business permits and licenses to improve ease of doing business and to reduce corruption. Automation should be introduced in the process to reduce human intervention. The Philippines’s National Single Window project should be expanded. This will also entail extending validity of various permits and licenses, as well as automatic approval after a certain period of time if the government agency does not act on the approval.

4. Improvement of Internet telecommunication services to be on a par with Asean neighbors. This would entail amendment of Republic Act 7925, the law governing the Philippine telecommunications sector. With the increase of wireless mobile devices, a law should be passed to regulate mobile-device services. Moreover, the business community suggested the removal of the need of telecom players to secure a congressional franchise.

5. Delivery of support systems and services to fishers through financing, incentives, irrigation systems, postharvest facilities, improved farm-to-market roads to develop the potential of agriculture.

6. Implementation of responsible mining, with local value-adding component. It was suggested that the country should gradually eliminate exports of mineral ore to localize value-added processing. This would spur the development of iron and steel, and copper wire and tube industry.

7. National strategy for industries where the country has greatest competitive advantage, specific sectors and areas where workers have a competitive advantage to optimize resources. This would also mean a clustering strategy where specific activity, such as in agri-processing and manufacturing, would be concentrated. There should be a shared-cost mind-set adapted by MSMEs to lower costs, and consolidate requirements of roads and airports in the cluster.

8. Improvement of transport network across the country to improve connectivity. Suggestions include the development of regional airports and Sasa port. On roads and mass transport, recommended as actionable items are the North South railway project, Cebu bus rapid-transit system and Mindanao rail system, among others.

9. Review Conditional-Cash Transfer Program.

10. Remove bottlenecks in infrastructure and respect the sanctity of contracts.