Commentary: 10-point economic agenda right on track

The Duterte administration came out with a 10-point agenda that has clearly drawn economic priorities. This administration’s agenda is devoid of the usual motherhood statements that characterized those of previous governments. Here’s how I view them:

1. Continue and maintain current macroeconomic policies, including fiscal, monetary and trade policies.

Any administration which would take over from a previous one that performed fairly well should adopt a more conservative stance and assume a traditionalist position to avoid creating tensions in the bureaucracy. The economy has been doing and performing well and therefore should be no cause for alarm, at least at this point. Until such time that the new administration has adjusted to its own economic and political milieu, then a new system may be in the offing toward achieving further goals.

2. Introduce progressive tax reform, and more effective tax collection, indexing taxes to inflation.

More than any other policy, a tax reform package should have been given top priority and serious attention. While the tax system has been progressive in scope, tax bracket should have been lowered to provide relief because real income has already depreciated through the years. Existing tax structures, policies and laws were implemented about 20 years ago, when the value of the peso against the US dollar was still P15 to $1 and the minimum wage was approximately P200. Back then, an annual income above P500,000 was exclusive to top executives of companies. It is about time adjustments are made, since average earners now fall under this income category. Moreover, the value of the peso vis-a-vis the US dollar has multiplied by three-folds.

3. 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.

The main hurdle encountered by prospective investors is dominant red tape in agencies directly under the wing of the Department of Trade. Ease of doing business should be strictly implemented if we are to attract foreign investors to our economy. Added to the fact that foreign ownerships on some restricted investments like infant and retail industries should be fully encouraged. Economic protectionism should be relaxed.

4. Accelerating annual infrastructure spending to account for 5 percent of the gross domestic product, with public-private partnerships playing a key role.

To accelerate local growth of the economy, the government should take the lead in spending at least 5 percent of the GDP. Besides infrastructure spending, a greater percentage of local employment can generated from government spending.

5.  Promoting rural and value chain development toward increasing agricultural and rural enterprise productivity and tourism.

Investment spending should be dispersed in the countryside. This is an area not effectively reached by previous administrations. Incentives and subsidies should be in the offing relative to our desire to attract investors to farther provinces. This sits next to the country's objective of encouraging people to settle and go back to hometowns consistent to declog the urban centers and find jobs for unemployed workers outside it.

6. Ensuring security of land tenure to encourage investments and address bottlenecks in land management and titling agencies.

To increase foreign and local investment facilities as contributory to growth, security of land tenure should be given due recourse. Security of tenure should be consistent and land management bottlenecks should be properly addressed as a mechanism to attract investments.

7.  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.

True to his campaign promise, Duterte's marching order before he formally took office was to to give topmost priority to education and health. Investment in human capital should also be high to provide competitiveness in areas of employment and human development. 

8. Promoting science, technology and the creative arts to enhance innovation and creativity toward self-sustaining and inclusive development.

Research on science and technology has always been an overlooked area of development resulting in a shortage of innovation. Unless we take a serious stand in the field of science and technology, the country's workers will remain mediocre alongside their foreign counterparts.

9. Improving social protection programs, including the government’s conditional cash transfer program, in order to protect the poor against instability and economic shocks.

Although social programs are already in place like the Conditional Cash Transfer (CCT), it should provide a mechanism that will gradually make them self-reliant and not dependent on government subsidy. The government is doing them a disservice if they will remain stuck and dependent to government dole outs.

10. 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.

Responsible parenthood program has been in place for decades but nothing significant has come out of this program because of the lack of political will to implement it. With its inclusion as one of the top priorities under Duterte, we should expect a major stride toward trimming down the local population.

Emmanuel J. Lopez, Ph.D. is an associate professor at the University of Santo Tomas and the chair of its Department of Economics. Views reflected in this article are his own. For comments email: [email protected]