#MINDANAO
If there is one thing that the current government inherited from the previous administration it is a set of bold policy reforms that can boost countryside growth.
The first is the Tax Reform for Acceleration and Inclusion (TRAIN) Law passed in early 2018. This absolved a good number of salaried Filipinos from paying income taxes. This tax break unleashed their consumptive power, allowing them to buy more goods and avail of services. In turn, this created opportunities for many local businesses, especially the Micro Small and Medium enterprises (MSMEs) in many towns, which supplied the goods and services.
It is clear that increased consumption bears a positive impact on local economic growth. I believe the economic growth figures of recent years already bear the hallmarks of increased local spending.
I imagine how having more money in the pockets of citizens allowed them to buy more food from local producers, spend weekends in local ecotourism villages, or have their shoes fixed in local repair shops. Traveling through many of these places, I see livelihoods created as local consumption is boosted.
The second is the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law passed in 2020 which lowered corporate income taxes for local corporations. This also rationalized incentives for local businesses, with tiered perks for innovative and job-generating investments and longer income tax holidays for areas outside the NCR. As a policy instrument, this law is a game-changer.
What needs to be done is to look at the kind of incentives being set and whether they’re able to translate to new businesses in the countryside. Assessing the impact of this law will make a good dissertation topic.
In particular, I think the CREATE Law can provide incentives for farms to achieve better productivity. At the moment, agriculture is barely giving us 10 percent of GDP, while employing about 10 million Filipinos. It can create more growth and rural wealth if more enterprises are incentivized to grow. As a whole, this will make agribusiness a major economic contributor realizing its capability not only to provide rural jobs for those engaged in it but supply affordable food that can ease inflation for the majority who are our consumers. Imagine how much more these crops can contribute to the economy if grown at larger scales and employing even more people. Perhaps our investment promotion agencies will do well to study the incentives and how well these are availed of by agribusiness enterprises.
Incentivizing agribusiness is particularly good for Mindanao. The island contributes 40 percent of the country’s total agricultural output. This is in great part due to natural endowments, which include a generally typhon-free climate island’s position within global production belts for crops such as cacao and coffee.
This perhaps explains why even by relying on individual farmer skills, carefully selected plant varieties and simple technologies, coffee and cacao producers can reap major international quality awards. If this capability can be scaled up, more commodities can be grown while keeping costs low to allow farmers to earn more. Likewise, having many industries processing the things Mindanao can grow well will create more jobs for Mindanawon engineers and technical specialists yearning to go back home.
In the coming years, it would be interesting to examine how these two major reforms have created more countryside opportunities.