WISHES FOR THE ECONOMY IN 2018

Happy New Year, dear readers!

We start 2018 on a positive note: My wishes for the economy in January 2017 were largely realized. ( To read my wishes last year, please visit http:// bit.ly/ 2017wishes). 1Passage of Package 1 of TRAIN. Check, after a hard slog. 2Appointment of a qualified, credible governor for the Bangko Sentral ng Pilipinas, preferably an insider. Check, and with an excellent outcome. 3Efforts to change the Constitution and shift to federalism would be pursued responsibly, giving time for deeper study, informed debates, and awareness activities. The third, however, is a work in progress. Hopefully, future efforts to pursue extra- constitutionally ( via a “revolutionary government” initiative or similar railroad variations) have been shelved for good. (See FEF Press Statement on Talks for a Revolutionary Government: http:// bit. ly/ FEFRev ) Allow me now to share our wishes for 2018, as posted on Global Source Partners, a subscriberbased network of independent analysts ( globalsourcepartners. com). My colleague Christine Tang and I are its Philippine advisors.

Here are my three wishes for the economy in 2018: 1MUCH MORE ACTIVITY UNDER BUILD-BUILD-BUILD. The government’s massive P8.1trillion medium-term infrastructure program has been likened to a battleship that will be hard to stop once it has gathered momentum. The passage of the Tax Reform for Acceleration and Inclusion (TRAIN) Act puts some P80 to P90 billion in new money in the hands of government in 2018 that people expect will largely be used for upgrading and expanding the country’s networks of water, power, road, rail and air/seaports. Government is targeting to increase its investments in infrastructure from 5.4% in 2017 to 7.3% of GDP by 2022, to help ease supply bottlenecks and allow the economy to scale a higher growth path.

However, despite assurances from the Department of Budget and Management of improving disbursement rates overall, the 50% disbursement ratio as of November 2017 of the Department of Transportation leaves much room for improvement. 2 PASSAGE OF PACKAGE 2 OF THE DUTERTE ADMINISTRATION’S COMPREHENSIVE TAX REFORM PROGRAM. Package 2 seeks to lower the corporate income tax rate (CIT), currently at 30% and higher than