Economy expected to perform strongly
MANILA — The Philippine government expects a “steady and strong” economic performance next year, with the maiden roll-out of Tax Reform for Acceleration and Inclusion Act seen to boost public spending and increase government revenue.
The bicameral conference committee on Wednesday ratified the final version of TRAIN bill, which seeks to hike the takehome pay of workers but offset projected foregone revenues by raising excise levies on fuel, vehicles, among others.
President Rodrigo Duterte is scheduled to sign both TRAIN and the 2018 national budget on December 19, according to Budget Secretary Benjamin Diokno.
In a media interview on Thursday, Socioeconomic Planning Secretary Ernesto Pernia said the implementation of TRAIN coupled with sanguine macroeconomic fundamentals would help prop up the economy in the coming year.
“In terms of policy, we expect the implementation of TRAIN, to boost revenue-to-GDP ratio, fund government’s infrastructure program, and increase the spending capacity of the average working Filipino,” Pernia said.
“We also expect to spend more on infrastructure development to help improve regional connectivity and ease the cost of doing business in the country,” he added.
“Inflation keep (sic) within target, and trade continues to grow. Underemployment rate also declined to its lowest level in 10 years.”
TRAIN is the first package of the Duterte administration's Comprehensive Tax Reform Program, which aims to raise the bulk of the needed funds for its ambitious infrastructure program.
In 2017 alone, the inter-agency NEDA board approved 20 project proposals, which include 14 new projects and six changes in ongoing projects, Pernia said.
Counting last year’s approvals, the 2017 figure brings the total number of projects given a green light for implementation to 36, most of them to be funded internally or through Official Development Assistance.
In terms of ODA, Pernia said Japan remains as the Philippines’ largest development partner, accounting for 36 percent of total ODA investments.
“Apart from Japan, we have had fruitful bilateral talks with China, Korea, Germany, Austria, and Italy, and Israel, on various development projects in line with our priorities,” he said.
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The country’s gross domestic product — or the value of all finished goods and services produced in the country — registered a solid 6.9 percent growth rate in the third quarter of 2017.
The figure puts the economy on track to meet the government's 6.5-7.5 percent full-year target.
The Philippines’ third quarter GDP was higher than the upwardly revised 6.7 percent logged in the second quarter and above the 6.5-6.7 percent estimate by market analysts, although slower than the 7.1 percent recorded in the same period last year.
Being one of the fastestgrowing economies in Asia, the Philippines had bagged rosy economic growth forecasts this year despite political noise generated by President Rodrigo Duterte’s controversial rhetoric.
Manila-based Asian Development Bank raised its 2017 and 2018 economic growth forecasts for the Philippines.
In a supplement to its Asian Development Outlook published on Wednesday, the multilateral lending institution said it expects the Philippines to clock a 6.7 percent GDP growth this year from the previous estimate of 6.5 percent.
ADB also raised its 2018 GDP forecast for the country to 6.8 percent from 6.7 percent.
Meanwhile, Fitch Ratings upgraded the Philippines’ credit rating from the minimum investment grade of “BBB-” to “BBB,” citing the country’s sustained economic expansion, the tax reform plan and bold infrastructure program under the Duterte administration.
“There is no evidence so far that incidents of violence associated with the administration’s campaign against the illegal drug trade have undermined investor confidence,” the rating agency said.
In the same press conference on Thursday, Pernia said the improvement in the country’s credit rating would “boost investor confidence—which, of course, remains already strong.”
To attract more investors, Pernia said the NEDA board will take up on its next meeting the approved recommendations on the 11th Regular Foreign Investment Negative List.
“The revised list covers easing foreign investment restrictions on contracts for construction and repair of projects, practice of professions, telcos, teaching at higher education levels, retail trade enterprises, and domestic market enterprises,” he said.