Eccp at work 06 28 2016 mbc notes 09 sulong pilipinas 2016

SULONG PILIPINAS: HAKBANG TUNGO SA KAUNLARAN 20-21 June 2016 SMX Convention Center Davao, Davao City

The economic team of the Duterte administration, led by incoming Finance Secretary Carlos Dominguez III, in partnership with the Philippine Chamber of Commerce and Industry (PCCI) and the Mindanao Business Council (MinBC), organized and hosted a consultative conference with the Philippine business community last 20-21 June 2016 in Davao City. Dubbed as “Sulong Pilipinas: Hakbang Tungo sa Kaunlaran,” the two-day event includes a forum on the ten-point economic agenda of the Duterte Administration, a business stakeholders workshop, and a town hall meeting with incoming Cabinet members.

A number of MBC trustees and members participated in the consultative process which was attended by roughly 400 entrepreneurs and executives from all over the country, representing various industries and sectors. Present from the incoming administration’s Economic Cluster include Finance Secretary Carlos Dominguez, Transportation Secretary Arturo Tugade, Agriculture Secretary Emmanuel Piñol, Trade Secretary Ramon Lopez, Public Works and Highways Secretary Mark Villar, Education Secretary Leonor Briones, NEDA Director-General Ernesto Pernia, Labor and Employment Secretary Silvestre Bello III, and Science and Technology Secretary Fortunato dela Peña, among others.

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The following are the priorities under the ten-point socioeconomic program of President-elect Rodrigo Duterte: 1. Continue and maintain current macroeconomic policies, including fiscal, monetary, and trade policies.

2. Institute progressive tax reform and more effective tax collection, indexing taxes to inflation.

3. Increase competitiveness and the ease of doing business, and pursue the relaxation of the Constitutional restrictions on foreign ownership, except as regards land ownership, in order to attract foreign direct investment.

4. Accelerate annual infrastructure spending to account for 5% of GDP, with Public-Private Partnerships playing a key role.

5. Promote rural and value chain development toward increasing agricultural and rural enterprise productivity and rural tourism.

6. Ensure security of land tenure to encourage investments, and address bottlenecks in land management and titling agencies.

7. Invest in human capital development, including health and education systems, and match skills and training to meet the demand of businesses and the private sector.

8. Promote science, technology, and the creative arts to enhance innovation and creative capacity towards self-sustaining, inclusive development.

9. Improve social protection programs, including the government’s Conditional Cash Transfer program, to protect the poor against instability and economic shocks.

10. Strengthen implementation of the Responsible Parenthood and Reproductive Health Law to enable especially poor couples to make informed choices on financial and family planning.

Incoming Director-General of the National Economic and Development Authority (NEDA), Dr. Ernesto Pernia, noted that the Philippine economy has been on an upward growth trajectory since 2010, supported by sound macroeconomic policies, a strong monetary condition, and a sound and resilient fiscal position.

These, in turn, resulted in the creation of new and better jobs as well as increased public spending on social services. The incoming NEDA chief, however, notes the stark inequality that plagues the country’s income classes, also seen in unequally developed regions. He cites official 2014 figures on regional share in national GDP where 3 regions (NCR, Region III, and Region IV-A) comprise 63% of national GDP, while the remaining 37% is shared by 15 regions. Achieving inclusive and sustainable growth is therefore the goal of the incoming administration.

Appointed finance chief, Carlos Dominguez III, assures that under the new leadership, the environment will be good for business, where the playing field will be levelled, contracts will be respected, corporate taxes will be lowered, foreign investments will be encouraged, and critical infrastructure will be delivered. He stated, “Over the next six years, we should transform the national economy in ways that will bring not only social peace, but also communities that nurture our people.”

As to how this will be achieved, the incoming secretary urged the business community to work with the government in building “coalitions for reform” that will pursue change that can be felt in every sphere of our countrymen’s social lives. He emphasized that good governance in the public sector has to go with good governance in the private sector.

At the end of the event, the participants were able to identify and agree on the business community’s shared aspirations aligned with the ten-point economic agenda of the Duterte administration. PCCI President George Barcelon and MinBC Chairman Vicente Lao presented the following actionable recommendations before President-elect Rodrigo Duterte for consideration:

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1. Adoption of a comprehensive tax reform package Some of the specific recommendations include: • Reduce of corporate income tax rate, personal income tax rate, and capital gains tax rates • Bring down tax rates to the levels of our ASEAN neighbors or even lower to attract more investors • Simplify the tax system particularly for MSMEs • Reduce the cost of compliance and promoting voluntary compliance to increase tax collection • Fill in the deficit by expanding definition of luxury goods, among others.

2. Implementation of a national I.D. system for improved targeting of social services.

3. Automating and streamlining of business permits and licensing systems Some specific recommendations: • Improve the ease of doing business agenda • Automate and streamlining of business permits and licensing processes • Reduce bottlenecks in land titling • Eliminate windows of corruption • Expand the Single Window concept • Extend the validity of various permits and licenses 4. Improvement of internet and telecommunication services Some specific recommendations: • Amend the existing telecommunications law (RA 7925) • Consider passing a law to regulate the delivery of services • Remove the need for congressional franchises and the requisite for 300,000 landlines for companies to be granted international gateway licenses • Promote internet cooperatives to ensure access in far-flung areas • Invest in submarine cables and rent this out to the telecommunications companies 5. Delivery of support services to farmers and fishermen (i.e. incentives, tech, irrigation, post harvest facilities, farm-to-market roads, logistics and credit) Some specific recommendations: • Adopt value chain developments for rural-based enterprises • Provide a support system to the agriculture sector through financing and government guarantees to farmer loans and micro-insurance • Institute IT solutions to link farmers to buyers and best practices • Improve logistics and the integration of the supply chain such as farm-to-market roads 6. Implementing responsible mining with local value added such as processing and limiting raw material export Some specific recommendations: • Gradually eliminate the export of mineral ore to grow value-added processing • Move higher up the value chain by developing the iron and steel industry 7. Developing and implementing a national strategy for industries where the country has the greatest advantages and preparing local workforce for these industries Some specific recommendations: • Pursue a National Strategy and Development Plan to identify areas where Philippines has the greatest advantages both domestically and globally

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• Identify specific sectors of competitive advantage to optimize the value and production of land, resources and people in a sustainable way • Remove silos to have an all-of-government approach with strategic partnerships with private sector • Develop within specific regional clusters where we have competitive advantages to lower logistics and transportation costs, reduce energy cost, and pursue economies of scale • Adopt a shared cost mindset to lower infrastructure cost by consolidating requirements for roads, housing and ports into clusters 8. Improvement of transport network across the country to improve connectivity Some specific recommendations: • Speedily implement infrastructure projects across the country • Develop a national strategy for utilizing airports outside Manila, such as Clark airport, and utilize Batangas and Subic seaports to decongest Manila ports • Develop regional airports and the Sasa port - Specific projects highlighted are the North-South railway project , C-6 projects and the Cebu bus rapid transit project, and Mindanao railway 9. Review Conditional cash transfer (CCT) program Some specific recommendations: • Review the CCT program as this promotes dependency in government and considering long-term interventions • Enhance social protection initiatives by including livelihood projects, provision of supplemental feeding in schools, support MSMEs for capitalization, capacity-building, R&D, equipment and marketing promotion 10. Addressing bottlenecks in infrastructure and respecting the sanctity of contracts Some specific recommendations: • Promote synergy between local and national government and implementing institutions • Address Right-of-Way issues including the issue of informal settlers • Assure that the existing and future infrastructure contracts will be honored President-elect Duterte welcomed these recommendations and assured the business community that these will be reviewed by his Cabinet members. Noting the twin-forces affecting the country today, insurgencies and criminality, he stressed the importance of law and order in ensuring that progress in governance and communities are attained. He committed to fighting graft and corruption, criminality, and terrorism. In addition, President-elect Duterte committed to pursuing land reform, promoting responsible mining, and addressing abuses reported in the Bureau of Internal Revenue and the Bureau of Customs.

“Sulong Pilipinas: Hakbang Tungo sa Kaunlaran” was organized by the incoming economic team of the Duterte Administration, in strategic partnership with the Philippine Chamber of Commerce and the Mindanao Business Council. This consultative conference engaged the Philippine business community in discussing socioeconomic development priorities and formulating plans and programs that will accelerate inclusive, economic growth. This effort is anchored on the long-term Filipino 2040 vision and the next medium-term Philippine Development Planning cycle, and is envisaged to be a yearly event.

The Makati Business Club was represented by Co-Vice Chairman Jaime Augusto Zobel de Ayala, Trustees Doris Magsaysay-Ho, Corazon dela Paz-Bernardo, and Guillermo Luchangco, and MBC Executive Director Peter Perfecto.

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