We often hear of “vital reforms” that the Duterte administration was able to achieve in the first three years. Many, however, seem to lose track of them or may not be able to grasp their significance.
These reforms include the National ID System, Ease of Doing Business (EODB), and Universal Health Care (UHC) the free state University tuition, and institutionalizing the 4Ps (Pantawid Pamilyang Pilipino Program). These are some of the major socio economic reforms government was able to legislate.
These are called game changing since they changed the way government will and should spend for important services.
Free healthcare and state education are vital services that all citizens will now have access to. These are important items that will strenghten the base of our human capital since a healthy and productively able population is what a growing economy needs to keep growth high
Being enshrined as law rather than mere executive order gives them the right to demand the services, and negates the need for them to spend anything to obtain them, even after the end of the term of the President.
Successive governments will need to obtain amendments to the law through congress to overturn these reforms.
To finance these important expenditures we have vital fiscal reforms on taxation and spending such as the the Tax Reform for Acceleration and Inclusion (TRAIN) Law, Estate Tax Amnesty, Tobacco Tax Reform, Rice Liberalization, all of which which aim to generate revenues from taxes and tarriffs meant to finance vital programs such as Universal health care and spend for the competitiveness of out rice sector, that loses to Vietnam in terms of cost.
These game-changing fiscal reforms led to a credit rating upgrade from Standard and Poor’s. The upgrade, from ‘BBB’ to ‘BBB+’, is a strong vote of confidence in the Duterte administration’s reform agenda, since its ability to fund its programs evidenced by the tax reform measures. The higher the ability to collect taxes, the less dependent we will be on foreign loans, the better our credit rating.
Higher consumer spending
All this, while allowing more money in the pockets of a greater number, allowing them to spend and boost the economy. In particular, the removal of income taxes from almost 98% of all wage earners is therefore, stimulus by itself.
In a volatile global economic context where a recession is imminent due to the US China trade war, the ability of a local economy to spend will be an important factor to ensure continuous growth. Many of our neighbors already report lower growth in the first half of 2019.
Nonetheless, the truth is that we are already feeling these reforms via lower inflation, unemployment and underemployment and poverty levels. The numbers are there for us to see.
What we hope for is that moving forward, the positive spending and low inflation numbers will continue despite the headwinds.
This means that goods and services ought to remain cheap while our spending power grows. This shows that our economy is progressing and that we are getting its benefits.
In particular, we need to see agriculture grow at a faster pace. This will allow cheaper food and lower inflation and poverty numbers further since lower costs for consuners and better income for farmers.
Likewise, government spending needs to ramp up if we are to remain growing at a 6% pace. All the public infrastruture projects have spurred private sector developments.
In Davao alone we will be creating three new townships that can generate thousands of new jobs.
All these considered, we will need to maintain the hope that these reforms will be fully implemented and expanded by the current government, and by those that will succeed it.
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