Reviving the Economy is a Daunting Task. Here is the Government's Battle Plan
ILLUSTRATOR Roland Mae Tanglao
During the presidential address to the nation on May 12, finance secretary Sonny Dominguez bared a four-point battle plan on how to restart the economy amid the COVID-19 pandemic. He started by giving an overview of the country’s economic fundamentals.
“The Economist ranks the Philippines number six in the world out of 66 countries in terms of economic resiliency,” said Dominguez. “We are also the best in Southeast Asia in terms of fiscal strength. The assessment shows that the country continues to enjoy the confidence of the international community, which goes a long way in boosting our recovery efforts.”
According to Dominguez, the Philippines enjoys a healthy debt-to-GDP ratio at 39.6 percent and has a credit rating of BBB+, the highest in our country’s history, which allows the Philippines to borrow more cheaply and from a broader range of sources. He also noted the strong revenue flows thanks to various tax reforms implemented.
But in spite of these, there is the daunting task of reviving the economy, which has receded for the first time in 22 years.
The following is Dominguez’s proposed battle plan to revive the Philippine economy, summarized in four points.
1| Restart and accelerate the Build, Build, Build Program.
Dominguez put prime emphasis on infrastructure development as the fastest way to grow the economy.
“Infrastructure remains to be the best driver of economic growth because it has the best multiplier effect in terms of employment and shared prosperity,” said Dominguez.
“After we are confident that we are in control of the death rate and infection, we should restart and accelerate the Build, Build, Build program subject to compliance of minimum health standards.”
2| Hire displaced workers as contact tracers.
According to Dominguez, the country temporarily lost around 1.5 million jobs because of COVID-19. He proposed to hire displaced workers or those who temporarily lost their income as contact tracers. He also said that one contact tracer takes a whole day to work on one case.
“We should also hire contact tracers en masse to boost our efforts to stop transmission and defeat COVID-19. We need to hire enough contact tracers to match the numbers we expect that will come with more testing.”
3| Pass the Comprehensive Tax Reform Program.
To attract investors who want to relocate from other countries and are in search of resilient, high-growth potential economies like the Philippines, Dominguez proposed the passage of the package two of the Comprehensive Tax Reform Program, which he said should include flexible tax and non-tax incentives to attract specific companies we want to invest in the country.
4| Stimulate consumer demand.
“The real problem is that people are not buying things because their incomes have gone down,” said Dominguez. “We must provide them the means of buying things. Because if they don’t buy things, it’s useless to help the companies.”
To stimulate demand, Dominguez proposed promoting the manufacturing of products that have strong and inelastic demand such as those in food production.
“Inelastic demand means people will buy it regardless of what your income is or what the price of the good is, and that is food. We must push food production and food logistics. We must be able to get the food here cheap; we must be able to store the food so it will last. We have to stimulate demand, and that’s through Build, Build, Build, and pushing for food production. ”