When I asked Finance Secretary Carlos “Sonny” Dominguez III if he thinks that the Philippines will become a trillion-dollar economy, his answer was an emphatic, “Of course! And not in the distant future.”
Statistics prior to the COVID-19 pandemic show we are closer than we think. In 2018, — the economy of the Philippines was already the 28th largest economy by GDP (Purchasing Power Parity) according to the International Monetary Fund. Under the administration of President Rodrigo Duterte, the Philippines recorded a GDP (PPP) of 956 billion in 2018.
Secretary Dominguez told me that while the Philippines, like other countries in the world, cannot operate in the normal way because of the pandemic, our economy will surge as soon as we are able to defeat the virus.
“I’m glad to have been part of the team of President Duterte that put our country in a good financial position not only to withstand the rigors of this pandemic, but also to be prepared to grow at a faster pace upon the control of the virus,” he said.
In the second quarter of 2021, Philippines’ Gross Domestic Product (GDP) grew by 11.8 percent, the highest since the fourth quarter of 1988. The biggest contributor to the increase was the construction sector, which was pegged at 25.7 percent. It was followed by manufacturing at 22.3 percent and industry and services at 20.8 percent. In other words, the Philippines has ended its recession with the fastest year-on-year growth in 32 years.
In its August 2021 report, the International Monetary Fund predicted the recovery to gain momentum with Real GDP Growth expansion of 5.4 percent in 2021 and 7 percent in 2022.
‘Making the right decision’
People who work with Sec Dominguez would know he is not afraid to make unpopular decisions so long as it benefits the Filipino people in the long term.
“It is only during the time of President Duterte that the government was able to increase sin tax three times, and impose an excise tax on sugary drinks. The President isn’t afraid to do the right thing even at the expense of his political capital,” he said.
He says government programs should be able to increase its citizen’s productivity and ability to create wealth. Taxes are necessary if we want to bring the Philippines from a tiger cub economy to a trillion dollar club member.
Prior to his stint as Secretary of the Department of Finance (DOF) under the Duterte Administration, Secretary Dominguez held a number of notable positions in both public and private sectors spanning over 40 years. He was Secretary of Agriculture and of Environment and Natural Resources during the Presidency of the late Corazon Aquino. He was President of leading Philippine corporations, such as the Philippine Airlines, the Philippine Associate Smelting and Refining Corporation, and the former Bank of the Philippine Islands Agricultural Bank.
Financing the ‘Build Build Build’ projects
As Finance chief, his priority is to see to it that all of the government’s tax reform programs and economic bills are passed. He makes sure to give his 100 percent in every task given to him and he is proud to have been able to build a good team within the DOF and its attached agencies, which allows them to efficiently work towards the achievement of goals.
He also enjoys working with the “Build, Build, Build” team. He explains that the Duterte administration’s most ambitious infrastructure program is not only about building roads, but also making sure these are properly financed and properly monitored, because the worst thing that can happen is to start a project, then put a halt to it halfway through because of lack of funds.
As finance secretary, it is within his purview to ensure that financing for the “Build, Build, Build” projects is in place, and also to see to it that, through the implementing agencies, the projects are done on time, within budget, and properly monitored in every stage of project implementation.
According to Secretary Dominguez, the “Build, Build, Build” is the main strategy of the Duterte administration to reduce poverty because it creates jobs and makes logistics, doing business, and creating value chain much easier. But aside from infrastructure investment, the other strategies of the government to reduce poverty include investing in the human capital, primarily through huge investments in education and providing free college education; as well as sustainable financing plan through tax reforms.
Among the tax reforms implemented by the administration are the Tax Reform for Acceleration and Inclusion (TRAIN) that reduced the personal income taxes for 99 percent of taxpayers, and the more recent Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law, that provides tax relief to businesses with the 10 percent reduction in the corporate income tax (CIT) rates of micro, small and medium enterprises, as well as 5 percent reduction on CIT for bigger corporations.
He credits this to the President’s political will and the ability to see far into the future, that is why the economic team was able to set a good foundation for the country’s growth. He describes President Duterte as very analytical and one who sticks to his principles, especially against people who are violating the law. “It’s very inspiring and uplifting to see a President act strictly in principle and in upholding the law,” Secretary Dominguez said.
Secretary Dominguez realizes that there is still much to be done, but he also stresses that he and the DOF will work as hard as they always do, up to the last minute of this administration. And after that, maybe he can go back to doing the things he enjoys outside of work—shooting, hunting, and spending time with friends and family, especially his six grandchildren.