5 Things from Duterte’s 10-point Economic Agenda Businesses Will Be Happy About

By Go EntrePinay 7:40:00 PM Economy & Industry

It had been about two weeks since President Duterte formally took oath last June 30 after scoring a landslide win in the May 16 Philippine national polls. Clearly, it was Duterte’s open battlecry against drug-driven crimes and prevalent government corruption that took him to his gradually slow but sweeping victory in the surveys and elections.

Hand over to new President Rodrigo Duterte
Photo courtesy of NIB-MALACANANG (Malacañang Photo Bureau) via Wikimedia Commons

However from the business-economic side, it appeared that much still remained to be opined about and heard from the new President, who himself admitted to being more of a lawyer than of an economist. But then business reservations seemingly settled down as the former’s economic managers bared the Duterte 10-point economic agenda, as reported by Investvine and listed below, days before June 30 strode in.

· Continuing and maintaining the current macroeconomic policies, including fiscal, monetary and trade policies;

· Instituting 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;

· Increasing 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;

· Accelerating annual infrastructure spending to account for five per cent of the gross domestic product, with public-private partnerships playing a key role;

· Promoting rural and value chain development toward increasing agricultural and rural enterprise productivity and rural tourism;

· Ensuring security of land tenure to encourage investments and address bottlenecks in land management and titling agencies;

· Investing 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;

· Promoting science, technology and the creative arts to enhance innovation and creative capacity towards self-sustaining and inclusive development;

· Improving social protection programmes, including the government’s conditional cash transfer programme, in order to protect the poor against instability and economic shocks; and

· Strengthening the implementation of the Responsible Parenthood and Reproductive Health Law to enable, especially, poor couples to make informed choices on financial and family planning

Overall, the country’s economic blueprint under President Duterte’s helm may be summarized as gearing towards poverty reduction, equitable wealth distribution, disbursed economic development to rural folks, and better investment climate. The fine lines of this 10-point economic agenda may also be translated below to more specific business benefits which business owners, especially the micro, small & medium enterprises (MSMEs), will be happy about. How about you? What will you be most happy about the economy in the next six year-stretch? Read on!

1. Sustained Business Planning Environment

One notable accomplishment of previous Aquino government was fueling the Philippine economy to its so far best performance of an average 6.2% GDP growth that led to the country being lauded as South East Asia’s best economy by the Oxford Business Group. This was attributed to the sound economic policies implemented in the monetary, fiscal, and trade sectors. Deciding to maintain the same macroeconomic framework for the country will keep business plans made by small and big companies within the same environment at smooth sailing and without distortions in timelines. So there’s no wasted time, effort and money even with the change in political regime. Accordingly from a Business World report, Duterte’s economic team foresees Philippine GDP growth buoying up further from 7% to 8% for the period 2018-2022 after government adjustments in the first two years simmer down.

2. Stronger Mass-Consumer Demand

Tax reforms based on progressive income tax scheme and paired with efficient collection system will translate to increased disposable income for a broad stream of the working population. The working class, composed mostly of minimum wage earners, entry-level, and middle-income workers, are currently slapped with a whopping 32% income tax rate. But with possibly higher incomes net of tax and improved conditional cash transfers for the poor, the business sector can expect a more vibrant and stronger mass demand for various goods and services produced in the market.

3. Level Playing Field for MSMEs

Most MSMEs are usually saddled even right during the first step of doing business when applying for business permits due to red tape in the public sector. With minimal funds to work with, MSMEs can’t be competitive alongside huge corporations when faced with sometimes errant business requirements at government agencies. True to this, the World Bank’s ease of doing business ranking for the Philippines is at a low 106^th place. The adoption of the Davao business model, which has a standardized 72 hours processing lead time and reduced number of approving signatories for business permits, will truly be a welcome change for all start-up entrepreneurs.

4. Decongested Metro Manila

With heavy traffic, hard commuting, and environmental pollution, who wouldn’t be relieved of a decongested Metro Manila? Included in Duterte’s economic plans is bringing development to agriculture, rural enterprises, and rural tourism—bottom line of which will spur jobs in the country side and lessen urban migration. This will definitely create a win-win scenario for business owners, not only in the provinces, but in Metro Manila as well.

5. Faster Business Expansion

Aside from improving ease of doing business that will greatly benefit the MSMEs, Duterte is also keen to attract more foreign investments by relaxing foreign ownership restrictions. Currently, industries with limited foreign business access include retail, advertising, pharmaceuticals, shipping, mining, and broadcasting, among others.

In hand with these, the new government also plans for increased infrastructure spending that would be reflected by a higher budget shortfall at 2.5% of GDP from 2.0% previously set by Aquino government. More roads and enhanced public utilities in transportation and communication will certainly make it faster for local and foreign business owners to explore and pursue expansionary plans throughout the Philippines. Consequently, this sits well with the newly placed Duterte administration’s move to spread economic growth to the countryside.

Economy & Industry