Socioeconomic Planning Secretary Ernesto Pernia on Thursday called for the fast-tracking of infrastructure projects and passage of investment-oriented laws after the economy expanded at a slower pace of 5.5 percent in the second quarter.
In a press briefing, Pernia attributed the weak economic performance in April to June to the continuing effect of the delay in the passage of the 2019 budget, coupled with the ban on public works and other spending leading up to the May elections.
For the full year, Pernia, also Director-General of the National Economic and Development Authority (NEDA), sees the country’s gross domestic product (GDP) settling at 6 to 6.5 percent, well within the government’s 6 to 7 percent target for the year.
The growth rate averaged 5.5 percent in the first semester.
“I think there’s room for really doubling down or redoubling efforts to spend on public infrastructure as you know, the multiplier effect of government spending especially on infrastructure is pretty high,” he said.
For the remainder of the year, Pernia noted that the government must speed up the implementation of infrastructure projects under the “Build, Build, Build” program, as only 11 of 38 NEDA Board-approved project proposals out of the 75 infrastructure flagship projects are in the construction phase.
“To ensure sustained construction activity, expediting the approval of permits and requirements for construction-related projects is important for agencies to attain target disbursements. This early, we need to consider extending the validity of the 2019 budget,” he added.
The NEDA chief also called for the timely passage of the national budget for fiscal year 2020 so as not to derail next year’s economic growth.
“This is crucial to the delivery of the government’s promises such as the completion of the ‘Build, Build, Build’ program and the full implementation of the country’s social development programs, such as the free tertiary education, the universal health care, and the expanded conditional cash transfer, among others,” he said.
“And I guess, the private sector has also to cooperate, the private sector has to respond in terms of participating in projects and never be discouraged in terms of the long process that usually takes for government, on our part, to process, especially obligated PPP (public-private partnership) projects,” he added.
NEDA Undersecretary Rosemarie Edillon noted that based on their estimates, economic growth would have been 1 percentage point higher for the first and second quarters if the country spent according to program.
Pernia is also optimistic that other sectors, such as tourism and agriculture, will contribute to better growth performance in the second half of the year.
He also urged the legislative branch to immediately pass reforms that are needed to make the economy more attractive and competitive internationally.
These include the Public Service Act, the Foreign Investment Act, the Retail Trade Liberalization Act, and the Tax Reform for Attracting Better and High-Quality Opportunities or Trabaho bill, among others, he added.
Edillon said moderate to slow and stable inflation, and “good” monetary policy environment” can provide a boost to the country’s economic growth in the second half of the year.
“What really needs to happen is to remove the policy uncertainty and I think that one will already give a boost for private investors,” she said in an interview.
The NEDA official further said the passage of the Trabaho bill seeks to encourage more investments, while the amendments to the Public Service Act aims to improve the efficiency of the logistics, transport, telecommunication and tourism sectors.
“The executive version of the Trabaho bill, because we don’t know yet what will come, will actually bring down corporate income tax rate and that will make our tax system, the corporate system, more competitive versus our Asean neighbors. That is a big thing as well,” Edillon added.
Meanwhile, the Philippine Statistics Authority reported that services had the fastest growth with 7.1 percent in the second quarter; followed by industry with 3.7 percent; and agriculture, hunting, forestry and fishing with 0.6 percent.
In terms of contribution to the 5.5-percent GDP growth during the period, services shared 4.2 percent; industry, 1.3 percent; and agriculture, 0.04 percent. PNA