Finance Secretary Benjamin E. Diokno asked the private sector to support the Marcos administration’s economic plan anchored in bringing the Philippines at par with its high-flying Southeast Asian neighbors.
At the 48th Philippine Business Conference and Expo on Wednesday, Oct. 19, Diokno highlighted the resilience and agility of the business sector in keeping the economy afloat amid the prolonged Covid-19 pandemic.
Diokno said the private sector’s resilience enabled the government adapt to the demands of a more digital world as well as introduced reforms that greatly improved its tax system and overall ease of doing business.
For this reason, Diokno said “We see a bright economic future for the Philippines.”
The economy grew by 7.8 percent in the first semester, suggesting that the government’s full-year target growth of 6.5 percent to 7.5 percent is very much doable, the finance chief said.
Investor confidence is also picking up, Diokno said, citing that foreign direct investment inflows reached the highest-ever last year at $12.4 billion.
“We successfully sustained this trend through this year. For the first half of 2022, FDI inflows amounted to 4.6 billion US dollars. This is 3.1 percent higher than last year’s level,” he said.
“Our strong FDI performance indicates growing confidence from foreign investors in our long-term economic prospects,” he added.
Moreover, the Philippine labor market continued to record positive gains. The employment rate stood at a healthy 94.7 percent in August 2022, higher than the 91.9 percent employment rate recorded in the same period last year.
In addition, the labor force participation rate stood at 66.1 percent, much higher than the 63.6 recorded in the same period last year. This means more workers are encouraged to join the labor force even as the level of economic activity normalizes.
“We are revving up the engines of growth, and we expect to do even better in the coming years,” Diokno said.
“But while our economic outlook is bright, we remain vigilant about emerging global risks,” he pointed out.
In particular, Diokno said inflation remains elevated among both emerging and developed countries, while high global commodity prices and the broad strengthening of the US dollar have continued to contribute to global uncertainties.
“But the Marcos administration is not sitting idly by. We have laid out a comprehensive eight-point socioeconomic agenda to address these immediate challenges head on and chart a clear path to high growth,” he said.
In the near term, the Marcos administration vowed to address the impact of inflation on vulnerable sectors, reduce economic scarring from the pandemic, and ensure sound macroeconomic fundamentals.
Over the medium term, the goal is to create more jobs – not just any other jobs, but quality jobs and green jobs, Diokno said. “We will achieve this goal through higher investments in productivity-enhancing sectors.”
The quality of life of all Filipinos is paramount to the Marcos administration’s agenda, as it aims to bring down poverty incidence to nine percent by 2028 and propel the country to upper middle-income status by 2024.
To ensure that we have ample fiscal space while remaining supportive of growth, our recovery strategy will rest on the key pillars of fiscal prudence and extensive public investment in infrastructure modernization, digital transformation, and human capital development.
On fiscal prudence, the Department of Finance is leading the implementation of the country’s first-ever Medium-Term Fiscal Framework that aims to reduce the fiscal deficit, promote fiscal sustainability, and enable robust economic growth.
To show commitment to the continuity of significant policy reforms, Dikno said the Marcos administration will also pursue the remaining tax reform packages of the previous administration.
First, the Real Property Valuation and Assessment Reform Bill, and second, the Passive Income and Financial Intermediaries Taxation Bill.
“We will sustain our massive infrastructure investments equivalent to five to six percent of our GDP annually. Its high multiplier effects to the economy will enable us to join the ranks of our high-flying ASEAN neighbors,” Diokno said.
“I call on our partners in the business sector to support the Marcos administration’s ambitious plan for the economic resurgence of the Philippines,” the DOF chief said.
“Your continued engagement in policy making, as you have done in previous years, will help us sharpen our policy toolkit and ensure that the Philippine business environment remains competitive and in tune with market realities,” he concluded.