DAVAO CITY (MindaNews/22 August) – The Philippine economy must grow by 5.1 percent for the second half of the year to realize the 6- to 7-percent increase in gross domestic product (GDP), Finance secretary Carlos G. Dominguez III said Monday.
In a press statement Monday, Dominguez expressed optimism that the country “will most likely hit” the targets by yearend by putting in place some countermeasures that will offset the impact of the Duterte administration’s tax reform plan on cutting personal and corporate income tax rates to improve revenue collection and develop the robust middle class.
Dominguez said they are already preparing the tax reform program for individuals and corporations which will result in more revenues.
He said attaining the GDP target of 7 percent for this year would keep the government growth targets on track for 2016 and next year.
“This is the 70th straight quarter growth since the Asian financial crisis, the 18th straight quarter above five percent, and we’re very happy that this growth has been strong and we foresee that it will continue to be strong through the coming years,” he said.
Dominguez said lowering the corporate income tax rates coupled with relaxing foreign ownership limits by amending the Constitution would attract foreign investments and build capital.
He also discussed earlier plans to implement “higher oil excise duties plus fewer Value Added Tax (VAT) exemptions, rationalizing other fiscal incentives, enhancing collection by revenue-earning agencies, and improving the ease of doing business” in the country.
“We are looking towards increasing the amount of allowed foreign investments in nationalized industries, and we believe that will be a boost to our foreign direct investments,” he said.
The official cited the efforts of the Aquino and Arroyo administrations to sustain the country’s strong macroeconomic fundamentals to boost the country’s economic performance and vowed to sustain it to effectively implement the 10-point socioeconomic agenda.
National Economic Development Authority director general Ernesto Pernia reported last week that the country posted a GDP growth of 7 percent in the second quarter of this year.
This is higher than the 6.8-percent GDP growth recorded in the first quarter, he added.
The second quarter GDP this year surpassed the 5.9-percent growth noted in the same period of 2015.
“Among the major emerging economies – Asian economies – the Philippines likely remains the fastest or second fastest, at least among the growing economies, in the second quarter of 2016, followed by China which grew at 6.7 percent, Vietnam at 5.6 percent, Indonesia at 5.2 percent, Malaysia at 5 percent, and Thailand at 3.5 percent,” Pernia said
The second quarter GDP is well within the 6.1- to 7.2 percent market expectation for the current period, he noted.
Pernia said the growth in the second quarter is boosted by the industry sector with 6.9-percent growth from 6.1 percent during the same period last year, and the services sector, expanding to a growth of 8.4 percent from 6.7 percent.
The biggest GDP growth contributor were the services sector at 4.8 percentage points and industry sector at 2.3 percentage points, but the agriculture sector posted a -0.2 percentage point.
He said the growth improves the country’s probability to attain the revised 2016 Development Budget Coordinating Committees approved projection of 6 to 7 percent by end of the year.
Aside from infrastructure and education investments, Dominguez said the government will also “fully implement the Reproductive Health Law” in a bid to curb the poverty rate from the current 26% to 17% by the end of Duterte’s term by 2022.
He said more support will be poured in the “country’s human resources, to empower poor families to be active contributors in developing the economy” by sustaining the growth momentum through a stimulus program to accelerate spending on infrastructure, human capital, and social protection.” (Antonio L. Colina IV/MindaNews)