DAVAO CITY—The country’s top business leaders met with the incoming economic managers of President-elect Rodrigo Duterte Monday to generate recommendations for the new administration’s 10-point socio-economic agenda laid out here in Davao.
The new 10-point agenda will center on Duterte’s commitment to keep the sound fiscal, monetary and trade policies put in place by previous administrations, while advocating tax reforms, accelerated infrastructure development, better support services for farmers, and a reduction in crime to attract foreign investments.
“The policy of the new government is to reduce tax evasion and smuggling, and [to lower] tax rates. We want to execute projects in countryside and create jobs there. These goals are not single goals but they are a whole program,” incoming socio-economic planning secretary Ernesto Pernia said in a media briefing.
Among the targets are:
• Continue and maintain macroeconomic policies, including fiscal, monetary and trade policies.
• Institute progressive tax reform and more effective tax collection while indexing taxes to inflation, in line with the plan to submit to Congress a tax reform package by September;
• Increase competitiveness and the ease of doing business, drawing upon successful models used to attract business to local cities such as Davao, as well as pursuing the relaxation of the constitutional restrictions on foreign ownership, except with regards land ownership, in order to attract foreign direct investments;
• Accelerate annual infrastructure spending to account for 5 percent of the gross domestic product, with public-private partnerships playing a key role;
• Promote rural and value chain development toward increasing agricultural and rural enterprise productivity and rural tourism;
• Ensure security of land tenure to encourage investments and address bottlenecks in land management and titling agencies;
• Invest in human capital development, including health and education systems, as well as matching skills and training to meet the demands of businesses and the private sector;
• Promote science, technology and the creative arts to enhance innovation and creative capacity towards self-sustaining and inclusive development;
• Improve social protection programs, including the government’s conditional cash transfer program, in order to protect the poor against instability and economic shocks; and
• Strengthen the implementation of the Responsible Parenthood and Reproductive Health Law to enable, especially, poor couples to make informed choices on financial and family planning.
Most of the incoming Cabinet were present during the first day of talks, including executive secretary Salvador Medialdea, presidential spokesperson Ernesto Abella, trade secretary-designate Ramon Lopez, public works secretary-designate Mark Villar, budget secretary Ben Diokno, Pernia, finance secretary-designate Carlos Dominguez, agriculture secretary-designate Emmanuel Piñol, tourism secretary-designate Wanda Tulfo-Teo, interior secretary-designate Mike Sueno and presidential legal adviser-designate Salvador Panelo.
The two-day conference will run until June 21 where members of the business community are expected to synthesize recommendations from the business community to be presented to Duterte.
In an earlier interview, Duterte defended his economic agenda from criticism that it’s similar to what the Aquino administration advanced and lacked elements of socialism, which he supported during the campaign.
Dominguez on Monday said the tax reform program would likely push for income tax exemptions for those who earn up to P1 million a year, similar to the recommendation of Finance officials of the outgoing administration under their Comprehensive Tax Reform Program.
Finance Secretary Cesar Purisima earlier presented the CTRP to Duterte’s economic team.
“The new administration will definitely review the tax system, initially to update the income tax brackets and eventually to lower corporate and individual tax rates,” Dominguez said.
The rationalization of fiscal incentives and the indexing of the excise tax of fuels to inflation were also part of his proposals.
“We wish to see our workers having more disposable income to do as they wish. Our corporate tax rates will be adjusted to be competitive with the rest of the region to make our economy more competitive for investments,” Dominguez added.
While he earlier said that he will not push for the expansion of the value-added tax from 12 percent to 14 percent, Dominguez included the expansion of VAT in his proposal to the business community.
“We hope to broaden the tax base even more to compensate for lower rates,” Dominguez said.
“There are some suggestions for raising the VAT rates to offset reduction of individual and corporate tax levels. We submit this matter for your consideration and suggestions,” he told the business leaders.
Dominguez said the new administration would likely resort to borrowing to ensure sustainability.
“While we might seek financing to secure economic opportunities for our people, we must also manage the national debt so that it does not become a drag on our growth,” he said.
“The public mandate is clear. We want a society that multiplies opportunities for its citizens. We want a community that is caring. We want a leadership that looks after the vulnerable,” he added.
“The macroeconomic numbers are, as you very well see, very good. We expect to sustain the economy’s robust growth well into the medium term.”