NEDA chief Pernia resigns; DOF's tax reform 'poster boy' named replacement

MANILA, Philippines — Socioeconomic Planning Secretary Ernesto Pernia has resigned and Finance Undersecretary Karl Kendrick Chua, who crafted the Duterte government's tax reform program is replacing him, officials said in separate announcements on Friday.

The sudden change in leadership at the National Economic and Development Authority (NEDA), one the government’s top economic agencies, is coming at a crucial time for the economy, heavily battered by the coronavirus disease-2019 (COVID-19) outbreak and the local and national lockdowns imposed to fix it.

In his statement, Pernia, 76, said he is leaving his job nearly four years after due to personal reasons “and partly to differences in development philosophy with a few of my fellow Cabinet members.” He did not go into specifics.

“I leave NEDA knowing that we have initiated and implemented meaningful changes that will help the country overcome these challenging times and on to a higher growth trajectory,” he added.

Malacanang said President Duterte accepted Pernia’s resignation and has put Chua, a former World Bank economist, in his place as acting secretary. 

Pernia was a crucial part of the government’s COVID-19 response. Prior to his resignation, he was leading a sub-group in the interagency task force on emerging infectious diseases, tasked to formulate forward-looking plans, including adjustments that would be made after the Luzon lockdown expires on April 30. 

As IATF member, Pernia had been vocal on supporting a partial opening of the economy, or modifying an all-encompassing lockdown of the Philippines' most populous island, to isolate localities where infections are high, while powering up the rest of Luzon. At one point, he was even quoted as saying that a re-opening of malls is being studied, one that has been a sensitive topic for IATF.

IATF, through Cabinet Secretary Karlo Nograles, had always been hesitant to mention anything conclusive post-April 30, only to say that the decision will be studied and be based on science. On Friday morning, Nograles said key officials would meet later on the day to study IATF’s options after April 30. It was unclear if Pernia still joined the meeting.

Different views

In some instances during his tenure, Pernia had showed a differing view from other officials who typically echoed the Palace. Before the pandemic got everyone preoccupied, Pernia was clear on the possible “adverse effects” if broadcast network ABS-CBN Corp. would not get its franchise renewed by Congress. 

In 2018, when President Duterte was still pushing for federalism, the former NEDA chief said a shift in government will “wreak havoc” in the economy.

In terms of policy, Pernia led the government’s push for the passage of the rice liberalization law in 2018, lifting quantity limits on rice shipments to help ease a high inflation environment. He also crafted Ambisyon Natin, which laid out the long-term development policy in the Philippines, over which government programs are based, until 2040.

‘Poster boy’

Meanwhile, Chua will move from the finance department’s Pasay offices to NEDA in Pasig with his main project as finance undersecretary unfinished. Early 2016, before the Duterte administration even took office, he was personally tapped by Finance Secretary Carlos Dominguez III to join the government and craft the biggest overhaul in the country's tax system since the National Internal Revenue Code was enacted in 1997.

Nearly four years after, only two of the five tax reform bills— one, that reduced personal income taxes and another that slapped higher tobacco levies— had been passed into laws, with the rest stuck in the legislature as the entire government gets distracted with addressing the impact of COVID-19.

There is still no word as to who will replace Chua at the DOF, but now at NEDA, Chua will still have his hands full. Foremost on his new job is to oversee the “Build, Build, Build” infrastructure program, the government’s centerpiece economic policy which has been sidelined by efforts to put the spread of COVID-19 under control.

“In a way quite sudden and unexpected. It’s unfortunate that he resigned,” said George Barcelon, president emeritus of the Philippine Chamber of Commerce and Industry, in a phone interview.

“But I think NEDA is in good hands with Karl. The tax reform, I guess, will still continue but in terms of the infrastructure projects, I think there will be some tweaks that will happen, more of in line with the current critical situation in COVID-19. The groundwork has been laid down by Secretary Pernia,” he added.