The government is looking at advances in digital technology as part of reforms it will put in place to surpass the country’s record-high foreign direct investment (FDI) inflows in 2017 and maintain its newfound status as the world’s best investment destination, Finance Secretary Carlos Dominguez III said.
Alongside tapping digital technology to improve governance, Dominguez said the government will also invest heavily in the country’s human capital by upgrading its health and educational systems and pursue further reforms to improve the ease of doing business in the country.
“We know we have to modernize our institutions of governance to match the rapid pace of our economy,” Dominguez said before members of the Inter-Pacific Bar Association during the group’s 28th annual conference at Shangri-la The Fort Hotel in Taguig City. “We have looked at the possibilities opened up for expanded e-governance and we are enthusiastic about them.”
Dominguez said he and other top government officials were able to explore such possibilities when they attended a lecture series organized by Jack Ma’s Alibaba Group in Hangzhou, China to enable them to gain a wider understanding of the digital technologies that the Philippines can use to improve e-governance and online trade.
“We hope to incorporate as much of these new technologies for the administrative reforms we are undertaking to improve governance.” Dominguez said.
The finance chief likewise said that the government will uphold the rule of law and the sanctity of contracts, which he described as “a keystone of improved business confidence.”
To sustain the country’s high growth rate, Dominguez said the government needs to haul in more FDIs, which will then create meaningful jobs for millions of Filipinos entering the workforce and “enable more Filipinos to participate in the process of wealth creation.”
“This is a country with a large headroom for growth and a talented and eager population ready to meet the challenges of the new global economy. Asia is now the center of gravity of the global economy and the Philippines is now a leading engine of that regional growth,” Dominguez said.
Dominguez pointed out that on top of earning the distinction of being the “No.1 Best Country to Invest In” in a new survey, the Philippines’ FDI inflows also reached an all-time high of $10 billion in 2017, up by 21.4 percent from the year-ago level and almost double the investment rate of 2015, according to data from the Bangko Sentral ng Pilipinas (BSP).
Meanwhile, the Philippines emerged as the top choice in a survey of the “best countries to invest in” conducted by the US News and World Report in partnership with the Wharton School of Business and Y&R’s BAV Group. The survey was conducted among more than 6,000 business decision makers and was based on World Bank data.
“I am certain that our young, skilled workforce is among the reasons we have earned this distinction,” Dominguez said.
He noted that in 2017, the Philippines was ranked as among Asia’s fastest-growing economies alongside China, Vietnam and India, with the country’s economic growth expected to reach 7 percent or better this year on the back of sound policy reforms “and an aggressive infrastructure program that will promote economic inclusion and competitiveness.”
Dominguez said the government has “worked tirelessly at creating a business-friendly political and economic environment” by putting reforms to improve the ease of doing business, which include cutting red tape, eradicating corruption and deploying new information technologies to reduce friction in trade and financial transactions.
Besides these initiatives, the government is also working to reduce restrictions on business ownership by further trimming its Foreign Investments Negative List, modernizing tax incentives for investors to encourage competition, and making revenue policies simpler and more transparent to, among others, ensure business start-ups a level playing field, he added.
Since Jan. 1, the government has been implementing the first package of its Comprehensive Tax Reform Program (CTRP) called the Tax Reform for Acceleration and Inclusion Act (TRAIN), which is now benefiting 99 percent of individual taxpayers by way of lower personal income tax rates and raising additional revenues for the State to help support its P8-trillion “Build, Build, Build, infrastructure program, Dominguez said.
He said the first tranche of the tax reforms alone has led to a remarkably improved collection efficiency for the Bureaus of Internal Revenue (BIR) and of Customs (BOC), which grew their collections by 10.8 percent and 26.5 percent, respectively, in the first two months of the year.
Dominguez said the Duterte administration expects the rest of the CTRP approved by the Congress this year. These tax reform measures include the progressive reduction in corporation income taxes and the modernization of investment incentives, he said.