Approval of Create, Fist and Guide sought

President Duterte’s chief economic manager on Wednesday expressed gratitude to the two chambers of Congress for approving the “fiscally responsible” P165.5-billion Bayanihan to Recover as One Act or “Bayanihan 2,” the stimulus package that will partly finance COVID-19 response for the rest of the year.

“With the World Health Organization (WHO) itself saying this global health emergency is not likely to go away anytime soon, our fight against COVID-19 is far from over and we need to keep our deficit within a manageable level in order to sustain a drawn-out battle with the pandemic,” Finance Secretary Carlos Dominguez III said in a statement, referring to the plan to keep the 2020 budget deficit at 9 percent of gross domestic product (GDP) or at the median of the Philippines’ Asean and emerging-market peers.

“Bayanihan 2 will allow the Duterte administration to keep its health initiatives on front and center of the national COVID-19 response, with funding for contact tracing, streamlined systems for registering viral testing kits and testing centers, and various forms of support for our medical workers spelled out in this sequel to Republic Act No. 11469 or the Bayanihan to Heal as One Act,” Dominguez said.

With Bayanihan 2 already passed by both the Lower House and the Senate, it was now only pending President Duterte’s signature.

“Under Bayanihan 2, the infusion of capital in our government financial institutions (GFIS), particularly Land Bank of the Philippines and Development Bank of the Philippines, will have large multiplier effects on the economy. These interventions are cost-effective for the taxpayer, with every peso generating around 10 times its value in credit, especially for our micro, small, and medium enterprises,” the Finance chief said.

“It’s only fair to the Filipino taxpayers that we leave the lending to the experts, the GFIS. During these challenging times, we will need every bit of economic benefit we can get for every peso of taxpayer money. The GFIS have the expertise and experience to get it done,” he added.

Moving forward, Dominguez said “Congress can now move on to considering the other legislative proposals designed to achieve an early and strong recovery for the domestic economy battered by the pandemic” —specifically, the pending corporate recovery and tax incentives for enterprises (Create), the financial institutions’ strategic transfer (Fist), and the government financial institutions unified initiatives to distressed enterprises for economic recovery (Guide) bills.

“President Duterte has made [it] clear that he needs the timely passage of Create, Fist, and Guide as part of the government’s economic recovery plan. As Bayanihan 2 has already been resolved, we will continue to work with the Senate and the House to get these imperatives passed in a fiscally responsible manner.” Dominguez said.

“The Duterte administration will continue to work with the Congress on our economic priority bills. We seek to lower the corporate income tax rate through Create; mitigate the threat of nonperforming assets to our banking system through Fist; and support, but subject to strict conditions, strategically important companies facing insolvency through Guide,” Dominguez added.

Separately, five other Cabinet secretaries in-charge of implementing the ambitious “Build, Build, Build” infrastructure program have expressed their support for the Create bill.

“Create is the first-ever revenue-eroding tax reform package proposed by the Department of Finance to Congress. The amendments introduced under this [bill] will make it the largest fiscal stimulus program for enterprises in the country’s history. The immediate reduction of the corporate income tax rate from 30 percent to 25 percent by July of this year will secure more resources for the private sector enabling them to continue operations and keep their employees.

Over the next few years, this will also invigorate them to reinvest in their business and provide employment,” read the statement jointly signed by Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua, Budget Secretary Wendel E. Avisado, Presidential adviser for flagship programs and projects Secretary Vivencio B. Dizon, Public Works Secretary Mark A. Villar, and Transportation Secretary Arthur P. Tugade.

“While the government lays the foundations for inclusive economic growth by linking less developed areas to the mainstream economy through the ‘Build, Build, Build’ program, Create will encourage businesses to do their part by investing in those areas and creating opportunities for Filipinos. Together, Create and ‘Build, Build, Build’ will bring even more development and growth to the countryside,” they said.