Another ‘lost decade’ possible if multiple crises persist–fdc

THE Philippines could experience another lost decade if the current administration fails to address the impact of multiple crises of food, fuel, and the pandemic amid rising debt, according to the Freedom from Debt Coalition (FDC).

In a presentation at the State of the People Address (SOPA) on Wednesday, FDC President and University of the Philippines Professor Emeritus Rene E. Ofreneo said among the problems of the country now is the rise in commodity prices, notably for rice: to P50 per kilo from P37 per kilo. Inflation, he said, has breached the 6-percent mark due to excise taxes on oil, fuel products, sugar, etc.

On top of the high prices, slow economic growth and the pandemic, the rise in unemployment and poor-quality jobs, as well as worsening poverty which increased to 23.7 percent in the first semester of 2021 are major concerns, Ofreneo stressed.

“The country is facing multiple crises that if left unaddressed, could plunge the country into our own ‘decada perdida,’ a lost decade not unlike that experienced by several Latin American countries in the 1980s when their economies collapsed from the weight of failed policies and unserviceable debt,” FDC said in a statement.

In order to address the crises, FDC recommended that the administration reduce its reliance on foreign investors to boost the economy and increase its own stake in the economy by making human capital investments.

FDC said relying on foreign investments has been a long-time strategy that has not always benefited ordinary Filipinos. Citing data from the Philippine Statistics Authority (PSA), FDC said, total approved investments was only at P8.98 billion or less than half of the P19.5 billion for the same period last year.

The decline in investment pledges came at a time when the Corporate Recovery and Tax Incentives for Enterprises (CREATE) had come into effect. The law aimed to reduce income taxes of companies in a bid to encourage them to increase investments.

Last year, the National Economic and Development Authority (Neda) explained that the law aimed to make the corporate income tax system performance-based, targeted, time-bound, and transparent.

Key provisions of the law include the reduction of the regular CIT (corporate income tax) by 10 percentage points, or from 30 to 20 percent for domestic corporations with a taxable income of P5 million and below, and with total assets of not more than P100 million; and reduce the regular CIT by 5 percentage points, or from 30 to 25 percent, for all other domestic corporations, as well as foreign corporations currently paying the regular rate.