What The Philippine Economy Will Be Like Under Our New President4 min read
Financial experts weigh in on what’s in store for us onceÂ Rodrigo Duterte officially sits as the new President of the country.
On Tuesday, the Philippine peso saw its biggest jump in six weeks, as the Philippine 2016 presidential elections cap off with a landslide win for presumptive President Rodrigo Duterte.
After dropping to as much as 1.8 percent in April, Bloomberg reports that the peso rose to P46.77 per dollar, or 0.7 percent, on May 10.
Stocks also jumped 2.6 percentâ€”its highest since January 27 of this yearâ€”after a two-day drop.
Experts say investors have started to ease down after weeks of anxiety and uncertainty about the longtime presidential frontrunnerâ€™s economic policies.
With only a few days to go before he gets proclaimed as the 16th President of the Philippines, Rodrigo Duterte and his camp have started forming a â€œtransition committeeâ€ to make way for a smooth turnoverÂ of government.
Businessman and former cabinet secretary under Corazon Aquino and Fidel Ramos, Carlos Dominguez, who is poised to headÂ Duterte’s finance team, has told inÂ a press conferenceÂ that the President-elect will focus on reducing corruption in the revenue-collection agencies.
DominguezÂ also outlined the new administration’s eight-point economic plan as thus:
- Continue and maintain the macroeconomic policies currently in place.
- Speed upÂ infrastructure spending by addressing major bottlenecks in the public-private partnership (PPP) program. This can be done byÂ setting aside 5% of the countryâ€™s gross domestic product forÂ infrastructure spending.
- Ensure attractiveness of the Philippines to foreign-direct investments by addressing restrictive economic provisions in the Constitution and our laws for more ease of doing business in the country.
- Pursue a genuine agricultural development strategy by providing support services to the small farmers. This aims to increase their productivity, improve their access to the market, and forge partnership with agribusiness firms.
- Address the bottlenecks in our land administration and management system.
- Provide scholarships for tertiary education, and strengthen our basic education system, with increased focus on mathematics, communication skills, and logical thinking.
- Improve the income tax system to make it progressive. According to Dominguez, the current tax system needs to be adjusted to inflation rates.
- Expand and improve implementation of the conditional cash transfer (CCT) program.
What else can we expect of the countryâ€™s economy under the new administration? Letâ€™s hear it from financial experts.
Focus on trade, tourism, and investments
â€œI believe a Rodrigo Duterte presidency will boost the Philippine economy,â€ real estate broker, journalist, and Kamuning Bakery CafÃ© owner Wilson Lee Flores told eCompareMo. â€œFirst, he is expected to push rural countryside development in different parts of the archipelago and most especially his long-neglected yet resource-rich Mindanao in southern Philippines.â€
He added that the country will attract more investors and tourists â€œif he succeeds in his peace and order plans, because local and foreign investors as well as tourists want personal safety.â€
Flores also notes that Duterteâ€™s plans of poverty reduction and increasing domestic consumption with more inclusive economic growth, coupled with an increase in health care and other basic social services, will help correct the imbalance of the past years. These, according to Flores, werenâ€™t properly addressed despite the high economic growth we saw in the past years.
â€œThe Philippines can benefit from hopefully more trade, tourism, and investments from world’s No. 2 biggest economy [China] and reduce tensions in Spratlys,â€ Flores added.
â€œDuterte may also help repair and normalize the ancient friendship ties of the Philippines with our neighbor without forsaking Philippine sovereignty in disputed territories. This normalization of ties will help the Philippines compete with our Asean and Asian neighbors in riding the China economic wave via the AIIB infrastructure loans, with more trade and more tourism.â€
“Aside from providing the right environment for business and industry to function, it would be good for him to signal what he prioritizes on the economic front,â€ Philippine Stock Exchange president Hans B. Sicat told GMA News. â€œHeâ€™s mentioned reviewing restrictive constitutional provisions, broadening the tax base, and making the government less bureaucratic. These are strong signals.â€
Inclusive economic growth
Professor Emmanuel Lopez, chair of the economics department at UST Faculty of Arts and Letters, told The Philippine Star that the business community will stabilize â€œafter the smoke of the battle has clearedâ€ and once Duterte names his economic managers.
He added that Duterte will pursue the economic policies of the previous administration for about a year, with changes coming gradually. â€œOf course, there has to be a transition [period], especially after six years,â€ Professor Lopez told the Star.
If Duterte keeps his promise to suppress crime within three to six months, Lopez said the country â€œmight even convince investors to come in.â€
He also stressed that our new president should focus on making economic growth inclusive, and that he should be able to make the GDP growth felt by the lower and middle classes. â€œIt should go down to the grass roots,â€ Lopez said.
Former Wall Street stockbroker and economist Mike Oyson (@OysonMike) said on Twitter that Duterteâ€™s key policies should include the following: a) Federalism leading to regional development and opening up of economy; b) Infrastructure; c) Tax reform. He says the President should also â€œadd industrialization to address weakness in net exports,â€ and â€œcut out red tape to improve investment climate.â€
Vista Land & Lifescapes CEO Manny Villar also believes so. In an article on Rappler, he said federalism is good forÂ property developers as it pushes forÂ developments in areas outside of Metro Manila.Â â€“eCompareMo.com