Finance Secretary Carlos Dominguez III believes there is much to be optimistic about the country’s economic outlook despite the pandemic as the Duterte administration has been “doing its utmost” to help businesses, especially micro, small and medium enterprises (MSMEs), recover from this protracted global health and economic crises.
“There is much to be optimistic about the outlook of our economy even as we continue to grapple with the pandemic,” Dominguez said Friday at the close of the two-day 29th Metro Manila Business Conference (MMBC).
Our country is “well on its way to a solid rebound,” he told the MMBC participants at the virtual conference. “I am confident that our partnership will be even stronger as the Philippines blazes the path to sustainable and inclusive economic recovery.”
Dominguez pointed out that the government, for one, has infused additional capital into state financial institutions to enable them to provide low-interest loans to MSMEs, and fine-tuned fiscal and monetary policies to encourage banks to lend to pandemic-hit enterprises.
These institutions include the Land Bank of the Philippines (LandBank) and the Development Bank of the Philippines (DBP), which have substantially expanded their lending to small businesses; and the Philippine Guarantee Corp. (PhilGuarantee), which opened a loan guarantee program for MSMEs last December.
The Bangko Sentral ng Pilipinas (BSP), for its part, has allowed the grant of loans to MSMEs as part of the compliance of banks with their reserve requirements to encourage them to extend financing support to these enterprises, he said.
It has also implemented measures to ensure adequate domestic liquidity and sustain the flow of credit, he added.
Dominguez said the Department of Finance (DOF) quickly negotiated financing for the procurement of COVID-19 vaccines and started securing enough doses to be able to meet its goal of inoculating 100 percent of the adult population by yearend to speed up the reopening of the economy.
Moreover, he said, the government is also continuously building up the public health care system and improving on tracking, tracing, and treatment methods to withstand any possible surge in infections, and eventually remove the pandemic as a determinant of how the economy performs.
Dominguez pointed out that even with the ongoing pandemic, the Duterte administration managed to stick to its goal of reforming the tax system to make it simpler, fairer and more efficient as exemplified by the passage of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
This law is the largest economic stimulus program for businesses in the country’s recent history as it lowers the corporate income tax (CIT) rates of MSMEs from 30 percent to 20 percent, while the rest of the corporations pay only 25 percent, he said.
“We vigorously pushed for the approval of CREATE even if it meant foregoing billions of pesos in revenues because we need a strong private sector to sustain our economic recovery,” Dominguez said.
Dominguez noted that publicly listed companies have always cited how CREATE, which gives out almost P100 billion worth of tax relief annually to businesses, have helped them maintain or even increase their profitability and their ability to cope with the pandemic.
Another reform initiated by the Duterte administration was the Tax Reform for Acceleration and Inclusion Act (TRAIN), which reduced the personal income taxes (PIT) for 99 percent of taxpayers, resulting to P100 billion in tax savings every year for Filipino workers.
“Clearly, this administration is pro-business when it comes to fixing our tax system by reducing the tax rates of our workers and corporations. These reforms will bring better business conditions in the near term,” he said.
Dominguez said the Duterte administration also fixed the flawed regulatory framework for the Real Estate Investment Trust (REIT) to enable this financial instrument to flourish in the country after 11 years of deadlock, Dominguez said.
As a result, three property giants were able to successfully list their REITs amidst the pandemic.
He was referring to the separate REIT offerings of Ayala Land Inc. (ALI), DoubleDragon Properties Corp. (DDPC) and Filinvest Land Inc.
He said the REITs will not only propel the growth of the property sector beyond the pandemic, but will also broaden financial inclusion by offering dependable investment opportunities for the average Filipino family.
“In the remaining period of the President’s term, we will rapidly modernize governance; accelerate the rollout of the infrastructure program; and continue with the market-friendly reforms attractive to investments,” Dominguez said.
As for the private sector, Dominguez stressed that for businesses to flourish, they must continue to innovate, reinvent their old business models, and adopt “green” and new digital technologies to maximize the impact of the Duterte administration’s pro-business initiatives.
“Do this not only to cope with the challenges of the pandemic. Do this to prepare your businesses for the new economy that is to come,” Dominguez said.
“I encourage you to adopt new digital technologies and reinvent old business models. Shift to the circular economy. Use more renewables. Reduce waste. Improve sustainability. Be green,” he added.
Dominguez further said that government banks are ready to provide financing for “green” and environment-friendly projects to encourage businesses to be climate-resilient.
More on TaxReform News
Gov’t on track to reduce poverty rate to 14% or lower by 2022—Dominguez →Date Posted: February 16, 2020
The Duterte administration remains fully committed to reduce poverty incidence to just 14 percent or … Continue reading Gov’t on track to reduce poverty rate to 14% or lower by 2022—Dominguez
Dominguez hopeful on passage of CREATE bill before yearend →Date Posted: November 26, 2020
Finance Secretary Carlos Dominguez III has said he “sees light at the end of the … Continue reading Dominguez hopeful on passage of CREATE bill before yearend
Non-passage of new sin taxes to make UHC ‘a third-class’ law →Date Posted: June 2, 2019
The Universal Health Care (UHC) Act will be downgraded from being a first-class law to … Continue reading Non-passage of new sin taxes to make UHC ‘a third-class’ law
Economic managers propose 4 legislative ‘imperatives’ to ensure strong, sustainable, resilient PHL recoveryDate Posted: June 8, 2020
President Duterte’s economic managers are pushing four legislative “imperatives” that include revitalizing the agriculture sector … Continue reading Economic managers propose 4 legislative ‘imperatives’ to ensure strong, sustainable, resilient PHL recovery