SONA 2019: Focus on Economy

Such great economic progress  in last 3 years  

   

Manila Bulletin |Editorial

21 July 2019

When President Duterte delivers his State of the Nation Address (SONA) at a joint session of Congress tomorrow, Monday,  it will mark the start of the second half of his administration.  A great deal is expected  in these next three years , especially in the economic  field. The World Bank  sees the Philippines as the fastest growing economy in the Association  of  Southeast Asian Nations (ASEAN) today. It is now  the  13^th  largest economy in Asia, and  projected  to be the 5^th largest  in Asia and 16^th largest  in the world by 2050.

What could be the most significant economic development  for the country in the coming months and years  is  a joint  oil and gas exploration  with China which is expected to  begin this November, according to Energy Secretary Alfonso  Cusi,  chairman of the National Economic and Development Authority (NEDA).

President  Duterte  signed last May 28 Executive Order No. 80  removing a final roadblock to  an oil exploration, development, and production  agreement between the Philippine Exploration Corp. and the China National Offshore Oil Corp.  The  administration  had earlier signed  its first agreement with an Israeli company in 2018  covering a 416,000-hectare area east of Palawan. The  new agreement  with China covers a 720,000-hectare area in Calamian, west of Palawan. Calamian is one of two regions  near Palawan believed  to have considerable oil  resources;  the other is Reed Bank.

The  oil exploration agreement  is only one  area in  the multi-faceted relations  we have developed with China in the last three years. Our  trade with China, including Hong Kong, reached $417 billion this May, making  it the Philippines’ top trading partner. Philippine banana  exports tripled  in the first quarter of 2019 to $160 million.  Philippine  Online Gaming   Operations (POGO)  earned  P24 billion in taxes.  In 2018,  1.2 million Chinese tourists  boosted  the Philippine economy  by P32 billion;  2 million are expected  by 2020, a potential addition of  P50 billion to the economy.

In our ”Build, Build, Build”infrastructure program, China is involved in a big  way, including two donated bridges across the Pasig River, funding for a P500-million   Metro Manila flood-control project now on its second year,  a  P175-billion South Rail Project,  and  an P18.7-billion Kaliwa Dam to boost Metro Manila’s  water supply.

We may have ongoing  disputes in our conflicting claims to certain islands in the South China Sea, particularly in  the 200-mile  Exclusive Economic Zone we have renamed West Philippine Sea, but  President Duterte appears to have the situation well in hand.  He believes  the political  dispute will eventually be settled; in the meantime, he  is determined to see the Philippines benefit from the many  economic programs  that are underway.

The first half of the Duterte administration ends today  with considerable  economic  growth and progress. We look forward  to the second half which, we expect, will be marked with even more  economic  growth, as the President  spells out his plans for the country in the  next  three years in his State of the Nation Address tomorrow.

PH powerhouse economy

‘PHL growth faster than regional powerhouses’

Rea Cu| Business Mirror

27 June 2019

GROWTH of the Philippine economy will be faster than other regional economic powerhouses under the Duterte administration, the Department of Finance (DOF) said on Wednesday, citing the World Bank (WB) for such projection.

The country’s strong macroeconomic fundamentals provide the basis for the Bank’s expectations that the Philippine economy will grow faster than China and Malaysia, the DOF said in a statement on Wednesday.

Finance Undersecretary Gil S. Beltran said the World Bank based its projections on the Philippines’s solid external stance and “highly domestically driven” economy, which provides it “ample cushion” against external headwinds that are generally foreseen to slow down global growth this year.

“The Philippines is also expected to remain as an attractive destination for foreign direct investments [FDI]. We are pushing for further liberalization of investment ownership in the country,” said Beltran, also the chief economist of the DOF.

According to World Bank forecasts, the Philippines’s gross domestic product (GDP) is expected to grow by 6.4 percent this year, second only to Vietnam’s 6.6 percent, and higher than China’s 6.2 percent, Indonesia’s 5.2 percent and Malaysia’s 4.6 percent.

In 2020 and 2021, the Philippines’s GDP growth of 6.5 percent for both these periods will equal Vietnam’s 6.5 percent, also for both periods, and surpass China’s 6.1 and 6.0 percent, respectively.

The Indonesian economy is projected to expand 5.3 percent for 2020 and 2021, while Malaysia will maintain its growth at 4.6 percent in both these years.

Based on an economic research published by Standard & Poor’s (S&P) Global Ratings for June entitled Apac Monthly Snapshots: Trade Wars and Currency Corners, the country’s GDP is seen to settle between 6 percent and 6.5 percent this year.

“We continue to expect GDP growth to come in at the low end of the 6 percent to 6.5 percent range in 2019, with a likely resumption of the infrastructure build in the second half of the year to bring the fiscal impulse for the year to around neutral after being negative in the first half of the year. We also expect BSP [Bangko Sentral ng Pilipinas] to maintain its easing bias this year, supporting growth, as inflation will likely stay benign especially compared to last year’s spike,” the economic research said.

Beltran noted that the country’s debt-to-GDP ratio also continued its downward trajectory on the Duterte watch despite its ambitious infrastructure buildup under its “Build, Build, Build” (BBB) program, with national government debt in relation to GDP at 42.1 percent in 2017, and falling further to 41.9 percent in 2018.

“Moreover, the Philippines has implemented monetary and nonmonetary policies to keep inflation manageable and bring it back to the government’s target range of 2 to 4 percent this year. Perceived overheating risks have abated, driven by government measures and policies,” Beltran said.

Fitch Ratings has also maintained its “BBB” with a stable outlook for the Philippines as of May this year, while Moody’s also affirmed its Baa2 with a stable outlook as of November 2018.

PH in Proactive Tax Reform

WB lauds Philippines for ‘proactive’ tax reform

Mary Grace Padin 

The Philippine Star 

June 9, 2019 

MANILA, Philippines — A top World Bank official has lauded the Duterte administration for implementing a “proactive and forward-looking” tax reform program, which is seen to raise enough funding for the government’s infrastructure and social program and help sustain economic growth, the Department of Finance (DOF) said.



World Bank director of macroeconomics, trade and investment Lalita Moorty cited the Philippines’ accomplishments on the economic front, especially in implementing a tax reform program to enable the government to aggressively increase its investments on infrastructure and social services.

The DOF quoted Moorty, who said it was “quite a change” to see a country implementing a tax reform proactively, unlike some countries who only push for these reforms when they are in the middle of a fiscal crisis.

“It is actually quite a change to see a country that is taking a very forward-looking approach to reforms.The Philippines is posting really fast growth rates, about three times of what we see in Europe and Central Asia. I think this is a good time to do these tax reforms. It is a good time and you have seized it. That is quite impressive,” said Moorty during the Philippine Day Forum held in Washington DC last April 11.

According to the DOF, Moorty also commended the Philippine government’s sound fiscal policies as shown by its declining debt-to-gross domestic product (GDP) ratio amid sustained rapid growth and increased public spending.

“When I think about comparing the Philippines to other parts of the world, it has managed to do so much and grow so much while bringing its public debt-to-GDP ratios down. It’s very impressive that it went from over 50 percent to around 40 percent in a decade. That’s quite impressive, in contrast to other countries where we’re seeing a rise in the public debt-to-GDP ratio,” Moorty said.

 “All in all, I think this is such a strong and wonderful start when I look at the Philippines in comparison to other countries in the world and I do hope that this continues to progress and accelerate in the near future,” she said.

Finance Secretary Carlos Dominguez said actual disbursements for infrastructure and capital outlays reached P1.64 trillion in the first 10 quarters of the Duterte administration, outpacing the P1.57 trillion investments made by the previous administration in all of its six years.

 He said economic expansion averaged 6.5 percent in the same first 10 quarters.

The country’s debt-to-GDP ratio, meanwhile, continued its downward trend to 41.9 percent last year from 68.5 percent in 2005, and is expected to further decrease to 38.6 percent by 2022, Dominguez said.

Dominguez said the national government’s revenues rose by 15 percent to P2.85 trillion in 2018, while tax revenues grew 14 percent to P2.57 trillion.

This translated into a tax effort of 14.7 percent last year, which is now the highest the government has ever achieved in the past 20 years.

Revenues from the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the first package under the Duterte administration’s comprehensive tax reform program, reached P68.4 billion in 2018, higher than the full-year target of P63.3 billion.