The booming construction in Bonifacio Global City Central Business District
Photo file/THEPHILBIZNEWS
By Victoria “NIKE” De Dios
The Philippine Chamber of Commerce and Industry (PCCI) supports the Duterte administration’s game-changing reforms that have propped up the country’s fiscal position ahead of the global crisis triggered by the coronavirus pandemic.
As a result of the country’s strong fiscal position, the government has had sufficient means to ramp up public spending to beef up the domestic healthcare system and provide relief to individuals and sectors hardest hit by the pandemic when strict lockdowns were put in place to save lives and protect communities from COVID-19, Dominguez said.
He said that following the gradual easing of mobility restrictions beginning last June in Metro Manila and other major growth centers, signs of recovery have started to emerge, as reflected in the declining unemployment rate, the continuous slower contraction in the manufacturing sector and improved tax collections.
However, he said, further improvements in the job numbers and other economic indicators will depend in large part on how quarantine measures will be further relaxed by opening up additional modes of public transportation that are safe and compliant with stringent health standards so that more and more people can get back to work.
“We are doing our utmost to prevent the need for further lockdowns and keep the virus at bay so our people can start to move around more freely and more confidently as long as we all comply with the required health behaviors,” Dominguez said in his videotaped message to participants at the opening of the 29th Metro Manila Area Business Conference and Sulong Pilipinas-National Capital Region (NCR) session held online via Zoom on Tuesday afternoon.
The PCCI led by Ambassador Benedicto Yujuico and its chairman emeritus George Barcelon organized both these virtual events in partnership with the Department of Finance (DOF).
“While we continue to fight COVID-19, we have to rebuild our economy,” Dominguez said.
The Finance Secretary said any return to strict quarantine protocols will be more painful for the economy, which contracted 9 percent in the first half of 2020.
Resuming strict lockdowns will mostly hurt Metro Manila, which is one of the hardest-hit areas of the pandemic in terms of health and livelihoods, he said.
Estimates by the National Economic and Development Authority (NEDA) show that for every one month of lockdown in Metro Manila and its adjacent provinces, “these areas lose around P1.5 trillion-worth of sales as only around 32 percent of the economy is effectively open,” Dominguez noted.
Dominguez said the pre-pandemic reforms recommended in past Sulong Pilipinas workshops by the private sector, and which were later on put in place by the government with the support of the PCCI and the rest of the business community, have made the country better prepared now more than ever in meeting the challenges of “black swan” events such as the COVID-19 pandemic, which has put lives and livelihoods at serious risk.
These PCCI-backed reforms include the Tax Reform for Acceleration and Inclusion (TRAIN) Law; the amnesties on the estate taxes and delinquencies; and the increases in “sin” taxes to fund the Universal Health Care (UHC) program, he said.
Dominguez also cited the business community’s support for Sulong that led to the enactment of the National ID System and the Ease of Doing Business (EODB) Act, and the implementation of the fuel marking program and the President’s signature “Build, Build, Build” program.
He said that in this time of crisis when the economy has been set back by the country’s efforts to fight the pandemic, “it is always good to touch base with the business community” as “there is much to learn from those who have skin in the game.”
“While our medical workers braved the frontlines to save lives and treat the infected, you—our entrepreneurs—have been fighting in the trenches to save jobs and bring back our economy to the track of high growth. The country is grateful for your efforts,” Dominguez said.
Dominguez said the country’s strong fiscal and economic status resulting from the reforms supported by PCCI and the rest of the business community enabled the government to quickly access emergency funds for its COVID-19 response efforts, both from the Philippines’ development partners and the commercial markets at easier and longer repayment terms.
He stressed, though, that despite the country’s ability to access funds for its COVID-19 response, there is a need for continued fiscal prudence as it remains uncertain when the pandemic will end.
Dominguez thanked the Congress anew for passing a fiscally responsible Bayanihan To Recover As One Act or Bayanihan 2, and called again on lawmakers to swiftly pass the remaining components of the country’s comprehensive plan to overcome the pandemic-induced crisis.
These include the proposed 2021 national budget; the proposed Financial Institutions’ Strategic Transfer (FIST) Act, which will allow banks to dispose of bad loans and non-performing assets (NPAs) through asset management companies; and the Government Financial Institutions’ Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) bill, which seeks to allow state-run banks to form a special holding company that will infuse equity, with strict conditions, into strategically important companies facing insolvency.
Dominguez said the proposed Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), which will immediately lower the corporate income tax (CIT) rate from 30 to 25 percent once made effectively and will enhance the flexibility and efficiency of the incentives system for businesses, complete the list of priority measures that the Congress needs to swiftly pass to ensure the country’s speedy and strong recovery from the prolonged health emergency that has battered the global economy.
The “Build, Build, Build” program continues to be the centerpiece of the government’s economic recovery plan as investing in sound infrastructure has the largest multiplier effect on the economy, Dominguez said.
Metro Manila stands to benefit from this signature program of the Duterte administration, with several big-ticket infrastructure projects being built in the capital to ease its traffic conditions, generate more employment and business opportunities across sectors, and improve inter-regional connectivity, he said.
These include the country’s most ambitious single infrastructure project, which is the 36-kilometer Metro Manila Subway; the Metro Manila Skyway Stage 3, which is now 83 percent complete and is expected to open by December this year; the 80-percent complete Bonifacio Global City-to-Ortigas Center Road Link Project that will connect Makati City to Pasig City; and Phase 1 of the Southeast Metro Manila Expressway C-6 that will significantly reduce travel time from Bicutan in Taguig to Batasan in Quezon City from about 110 minutes to just 26 minutes.
Dominguez said signs of economic recovery can now be seen following the gradual easing of the lockdowns.
As the government gradually reopened the economy, the unemployment rate in July significantly dropped to 10 percent from a high of 17.7 percent in April, when strict lockdowns were still in place.
The continuous slower contraction in manufacturing production also signals rising economic activities, as reflected in the value of the production index for July with a slower annual decline of 14.8 percent from a high of 41.2 percent in April.
The volume of the production index likewise shrank at a slower rate by 11.9 percent compared to a high of 38.8 percent in April, Dominguez said.
He said tax collections of the Bureaus of Customs (BOC) and of Internal Revenue (BIR) also significantly improved in August, with both agencies exceeding their targets for the month by 33 percent and 46 percent, respectively.
“These are strong indicators that the economy is starting to recover,” Dominguez said.
