By JOHN TRIA
In a week’s time, a much-awaited State of the Nation Address will again be heard from the president whose stay in office will pass the midpoint of a six-year term.
In the run up to this important milestone, we take a hard look at our economy that has been a bright spot for us.
Consistently averaging higher than 6% over the last three years, the Philippine economy has weathered political noise, a short-lived spike in inflation, and even external headwinds such as the US-China Trade war to remain robust while instituting essential reforms that aim to make the growth more sustainable in the near future.
Tax reforms, “build, build, build” and other measures such as the Ease of Doing Business Law have cemented government’s resolve to invest in our economy and people, while gaining the ability to manage external debt by improving revenue collection.
These reforms and good numbers resulted in strong investor interest, with higher Foreign Direct Investments $20 billion in the last two years) than the $5 B of the last administration. Improving Debt to GDP ratios and BBB+ credit ratings (better than Indonesia) show how well we can pay debts, and that this capacity is increasing. Even the 7.1 million tourists in 2018 is a figure we had never reached before. These record numbers indicate that government’s efforts, through the economic team, are paying off.
But has the growth gone beyond the traditional, Manila-based middle class? The main criticism of the previous government is that whatever growth achieved then had little effect on unemployment figures and remained concentrated in the Greater Manila. New numbers may show that the growth is being distributed, becoming broader.
For the majority of Filipinos, the results of these economic gains are clear — record low underemployment (15.6%) and unemployment (5.2%) (PSA), our lowest poverty rate in history at 21%, lowest self-rated poverty at 38% (SWS).
True enough, for those asking, our per capita Gross Domestic Product, or the value of the economy for each Filipino is now at P3,102, breaching the $3,000 a-year level for the first time in history in 2018, nearing that of Indonesia, and remaining well above Vietnam’s. (World Bank website)
A look at regional growth data will show that Mindanao’s growth has accelerated consistently at around 7% in 2017 and 2018, higher than the country’s. Some regions like Davao, Socksargen, and ARMM in Mindanao boast even better growth numbers, with unemployment numbers in the first two regions better than the country’s.
They tell us that growth is broadening, and spreading. Can we expect even better numbers in the future? Perhaps.
With the resounding victory in the midterm elections, the perception of a strong and stable government pushing the reform process attracts investors, enabling positive responses from the global financial community. Little wonder why in recent investment and business conferences, even in Mindanao, attendance from expats is increasing.
The recent Davao Investment Conference and the upcoming South Cotabato Investment Conference in Koronadal show that foreign business interest in Mindanao, long regarded as a no- go place for investments, seems to be more attractive. Davao’s had about 200 foreign businesspeople attending; the Koronadal event has five foreign countries participating.
The question to be answered now is how these gains can be sustained and broadened. The recent pre-SONA consultative activities recommended the improvement of our human capital and the implementation of the various reforms already instituted or legislated in the last three years.
Looks like the Duterte administration has institutionalized many of the reforms it sought to achieve within the first three years. Getting them implemented will now be up to the rest of the government, and the vigilant public.
Proper taxes for everyone, including POGOs
Sustaining growth will depend on how well revenue is generated and thus, how tax laws are implemented. In light of articles saying that Pagcor Chair Andrea Domingo hoped that that Philippine Offshore Gaming Operations (POGOs) and their mostly foreign workers should not be “overtaxed,” we hope her agency will help fully uphold and implement the tax laws on POGOs and their workers.
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