"Allowing foreign investors to participate in strategic industries, like transport and telecommunications, will increase competition, lower prices, and free up government resources to fund other priorities like education and health."
Based on recent news reports, the government is prepared to suspend the 2019 fuel tax hike to decrease inflationary pressures and help Filipino consumers.
Finance Undersecretary Gil Beltran said that the estimated net loss to government will amount to P27 billion (P41 billion in foregone revenues from the fuel tax hike suspension minus P14 billion in additional VAT collections from higher oil prices). Beltran added that the government is also cutting down on some non-priority expenditures such as travel, renovations, and purchase of motor vehicles.
That’s good news.
Government doesn’t like tax losses. There’ll be less money to spend on the non-productive. Tax savings, on the other hand, are always good for us. There’ll be more money in our pocket to spend on ourselves and the productive. Smaller government leads to economic prosperity.
To further economic prosperity, the Duterte administration should consider a modified policy to encourage more public-private partnerships. They should look into ongoing infrastructure projects, and those to be implemented in 2019, that could be taken over by private companies (we all know they’re better at this), provided it is technically and legally feasible to do so. This modified policy will help sustain the government’s “Build, Build, Build” program without significantly cutting the budget for non-infrastructure programs like education and health.
There are many competent and credible companies that can be tapped to assume some portions of the “Build, Build, Build” program even before the operations and management phase.
Financing, through state funding, or aid, could be channeled instead to missionary areas and major projects that have a high social impact, such as large dams and bridges, while those with commercial potential could be done through public-private partnerships.
The restrictive economic provisions of the 1987 Constitution should also be removed as soon as possible. Congress, acting as a constituent assembly, should try to approve this and have it ratified by the people in the 2019 elections, without having to wait for the entire 1987 Constitution to be amended. The other provisions can be amended starting in the second half of 2019 up to the end of 2021, and later ratified on or before the 2022 elections.
Allowing foreign investors to participate in strategic industries, like transport and telecommunications, will increase competition, lower prices, and free up government resources to fund other priorities like education and health.
Over-reliance on foreign loans will be reduced and help maintain our fiscal deficit at a manageable level of not more than three percent of the nation’s wealth.
More economic freedom will also improve the quality of infrastructure because foreign investors will be allowed to fully invest in areas where they are currently restricted, like airports, seaports, and mass transport systems, and operate them as well.
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Speaking of foreign investors, Core Capital, a Philippine-based venture capital firm, has partnered with Gobi Partners, a top Asian venture capital firm with over $1.1 billion in assets, to launch a $10-million fund dedicated to support seed-stage and pre-Series A companies in the Philippines.
The Gobi-Core Philippine Fund will be co-managed by Core Capital, founded by Carlo Delantar (Forbes 30 Under 30 Asia 2018), Jason Gaisano, and its Managing Partner Ken Ngo. The fund’s initial focus is on B2B e-commerce, platform-as-a-service (PaaS), health tech, and logistics companies, and plans to expand into others sectors including travel, entertainment, and retail tech in the future.
Gobi Partners, led by its Founding Partner Thomas G. Tsao, its managing partner Kay-Mok Ku, and supported by its teams across China, Hong Kong, and Southeast Asia will contribute its proven track record, tested processes, and best practices to provide fund administration, advisory, and investment support to this new partnership.
Speaking on the fund, Tsao said, “We are very excited to make our first foray into the country together with Core Capital. We’ve been consistently amazed by the level of entrepreneurial talent in the Philippines. The same growth patterns that occurred in China and Indonesia are now happening in the Philippines.”
Core Capital Managing Partner Ken Ngo adds, “We believe in the Philippines, and at the same time, we also understand that there’s still so much that we can learn from other countries and venture capitalists. With this partnership with Gobi, we are confident that we can strategically connect local and regional stakeholders. The creation of the Gobi-Core Philippine Fund puts us in a unique position to add value and support founders in the country’s growing startup ecosystem.”
Both Core and Gobi believe that there’s more to this partnership than just the establishment and management of the fund. Now, Philippine-based startups will have access and can also leverage not just on Core’s vast Philippine network and business operating experience but also Gobi’s regional platform to help them scale across China and other Southeast Asian countries.
Founded in 2002, Gobi has invested in many key emerging sectors through its ten funds under management and 200 companies in its portfolio.
Despite its 16-year history, this will be Gobi’s first entry into the Philippines and the newly launched Philippine fund shall act on Core and Gobi’s belief in the favorable timing, the potential of the country’s economy, and the growing purchasing power of our young population.
eric.jurado@gmail.com
