Philippines Macroeconomic Updates December 2016
Table of Contents Policy Agenda 3 � Favorable Macroeconomic Trends 7 � Firm Institutional Foundations through Structural Reforms 21 � Infrastructure Development 25 � Sound and Strengthening Government Finances 31 � Strong External Position 42 � Sound Financial System 48 � Economic Outlook 52 � The President and the Economic Team 62 � About the Investor Relations Office 65 � 2
Policy Agenda of the Duterte Administration
Vision for the Philippines By 2022 � Poverty rate reduced from 26.3% in 2015 to 17% by 2022 � Law abiding country � Peace within the country and with neighbors � Achieve high middle income status (USD3,000 to USD4,100 GNI per capita) � Vision for the By 2040* � Philippines Extreme poverty eradicated � Inclusive economic and political institutions offering everyone equal opportunities � Achieve high income status (USD3,000 to USD 12,000 GNI per capita) � President Duterte signed on 11 Oct 2016 Executive Order No. 5 adopting “Ambisyon 2040,” a 25-year long-term � vision to eliminate poverty, as a guide for development planning in the country. Sustain economic growth of at least 7% every year for one generation � Shift the source of growth from consumption to investment � Massively invest in � Health � Infrastructure � Education � Life-long training � Social protection � Research and development � Broad strategies to Tax policy reforms � achieve the vision Lower personal income tax and corporate tax � Index oil excise tax to inflation � Levy tax on sugary and fatty products � Expand the VAT base � Reform property taxes � Economic reforms: secure property rights, enhance competition, improve food security, simplify regulations, and � relax foreign ownership restrictions The National Economic and Development Authority (NEDA) is coordinating the formulation of the Philippine � Development Plan (PDP) for the period 2017-2022. The proposed PDP Framework will be anchored on the country’s long-term vision or the AmbisyonNatin2040 and will translate the President’s 0-10 Socioeconomic Agenda into concrete plans, strategies and programs. 4 *Refer to Vision 2040: http://2040.neda.gov.ph/
10-Point Socioeconomic Agenda of the Duterte Administration Strong mandate from people ensures political capital to advance transformational reforms that will move the economy to even higher growth plane and improve welfare of Filipinos. Action-oriented, results-driven leadership style of the President boosts prospects for a more robust investment climate characterized by common compliance to law and order in a more conducive regulatory environment Economic Agenda Legislative Agenda 1 Proposed FY 2017 Budget of PHP3.35tr � Continue and maintain current macroeconomic policies, including � Shift to a federal system of government � fiscal, monetary, and trade policies. Comprehensive Tax Reform program � Institute progressive tax reform and more effective tax � Reduce in personal and corporate income tax rates � collection, indexing taxes to inflation. Increase excise on all petroleum products & index to inflation � Increase competitiveness and the ease of doing business. This � Levy a tax on sugary products and index to inflation � effort will draw upon successful models used to attract business Adjust sin taxes � to local cities (e.g., Davao), and pursue the relaxation of the � Amendments to loosen the Bank Secrecy Law Constitutional restrictions on foreign ownership, except as � Emergency powers to solve transport and traffic problems regards land ownership, in order to attract foreign direct � The Bangsamoro Basic Law without unconstitutional provisions investment. � Creation of the People’s Broadcasting Corp. to replace PTV-4, with separate Accelerate annual infrastructure spending to account for 5% of � television channels for Muslims and the Lumad GDP, with PPP playing a key role. � Whistleblower Protection Act Promote rural and value chain development toward increasing � � Creation of a Single Department to Handle Overseas Filipino concerns agricultural and rural enterprise productivity and rural tourism. � Universal health insurance through the Philippine Health Insurance Corp Ensure security of land tenure to encourage investments, and � � Amendments to the Anti-Money Laundering law, particularly to make tax evasion address bottlenecks in land management and titling agencies. 2 as a predicate crime to money laundering Invest in human capital development, including health and � � Amendments to the 1996 Passport Law to extend validity of passport education systems, matching of skills and training to meet the 2 � PPP Act demand of businesses and the private sector. Exemptions from the salary standardization law for BIR and BOC personnel 2 � Promote science, technology, and the creative arts to enhance � 3 � Freedom of Information covering the Executive Branch of Government innovation and creative capacity towards self-sustaining, � Budget Reform Act 4 inclusive development. � Streamlining the Government Act 4 Improve social protection programs, including the government’s � � Military and Uniformed Personnel (MUP) Compensation and Pension Reform 4 CCT program, to protect the poor against instability and � Amendments to Anti-Terrorism Law 5 economic shocks. � Amendments to Anti-Cyber Crime Act 5 Strengthen implementation of the Responsible Parenthood and � � Passage of an Act Creating the Department of Housing and Urban Development 5 Reproductive Health Law to enable especially poor couples to � Amendments to the National Defense Act to Revise Reserve Officers’ Training make informed choices on financial and family planning. Corps 5 1 Based on the State of the Nation Address of President Rodrigo Duterte on July 25, � Reinstatement of the death penalty 5 2016 � Freedom of Information Act 5 2 Based on pronouncements of Economic Managers 5 3 On July 24, 2016, President Duterte signed an Executive Order implementing 4 Based on the President’s 2017 Budget Message 5 http://www.rappler.com/nation/146324-list-priority-bills-duterte-administration freedom of information in the Executive Branch
Ample Political Capital to Pursue Difficult Structural Reforms 86% Performance and Trust Ratings Continued Favourable Prospects under the Duterte Administration Performance & Trust Ratings of President Rodrigo R. Duterte President Rodrigo R. Duterte obtained overwhelming margin of more than 6mn vs. his � September 25 – October 1, 2016 / Philippines (in %) closest rival at the May 2016 national elections Most Filipinos are satisfied with his performance in the first 3 months: � Performance and Trust Ratings at 86% based on Sep 2016 Pulse Asia survey � “Very good” net satisfaction and “Excellent” trust ratings based on 3Q Social � Weather Survey (SWS) at 64% and 76%, respectively Based on BSP’s Business Expectations Survey, the confidence index for Q4 2016 while � lower compared to the previous quarter remained positive at 39.8% Optimism of domestic-oriented companies increased at 48.8% in Q4 2016 from � 44.9% a quarter ago on the back of robust domestic demand The percentage of businesses with expansion plans in the industry sector for Q1 � 2017 increased to 31.7% from 28.1% last quarter Consumer sentiment posts highest reading with a positive index for Q3 2016 based on � BSP’s Consumer Expectations Survey. According to respondents, their optimism during the current quarter was due to improvements in the peace and order situation, and availability of more jobs, among others Net trust rating of “Excellent” at +76% Net satisfaction rating of “Very good” at +64% 6 Source: Social Weather Station, Pulse Asia, BSP
Favorable Macroeconomic Trends
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