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Anti-public efforts

Critics of the Tax Reform for Acceleration and Inclusion (Train) Act should look at the wider scope of maintaining the country’s economic momentum rather than their parochial motivations in their plan to challenge the law before the Supreme Court.
Of course, the main aim is to shoot down the most significant legislative victory to date of President Duterte that is key to his economic agenda of a massive infrastructure buildup to attain an inclusive development path.
Economists and economic managers are confident that with the spike in infrastructure spending, the economy will maintain its position as one of the fastest-growing economies in Asia with growth being sustained in the coming years up to the end of Rody’s term in 2022.
The Train will reduce personal income tax payments mainly for the majority of working Filipinos who earn P20,000 or less a month, raise government revenues through adjustment in taxes mostly on non-essential commodities, and reduce exemptions in the sales tax.
Rody’s economic managers are banking on the Train to provide funding for massive projects worth nearly P2 trillion or more a year to put the country on equal footing in terms of infrastructure with its Asian neighbors.
The timing for the growth surge can’t come at a more auspicious time since the country is in what experts term as a demographic sweetspot where majority of the population reaches working age.
While most of the countries in Asia are saddled with an ageing population, the Philippines has an average population age of less than 30 years old, indicating an abundance of labor.
The economy had also emerged from the boom and bust cycle where strong growth is recorded only during election years.
Socioeconomic Planning Secretary and National Economic and Development Authority (NEDA) Director-General Ernesto Pernia said last year’s economic growth was “very good, spectacular” considering it was a post-election year.
“If you look at post-election years in 2015 and then 2011, the growth rates were really low. In that context, it (this year’s growth) is a very good performance. We expect it to be sustainable,” he said.
University of Asia and the Pacific (UA&P) economist Dr. Victor Abola said the government’s “Build, Build, Build” plan is “credible” as spending on infrastructure surged more than three times from P175.4 billion in 2011 to P847.2 billion in 2017.
The administration of Rody plans to spend P1.898 trillion for infrastructure by 2022, bringing the infrastructure spending as a percentage of GDP ratio to 7.4 percent.
Budget Secretary Ben Diokno who is the architect of the infrastructure buildup since prior to his posting he was a critic of chronic underspending under the term of Noynoy said that infrastructure spending had surged 44.8 percent in November.
“The statistics on government disbursements only bolster our thrust for efficient and effective public service delivery,” Diokno said.
Infrastructure disbursements reached P43.8 billion during the month, registering a 44.8 percent year-on-year increase while disbursements reached P252.1 billion, or a 10.4 percent increase.
National government disbursements from January to November 2017 totaled P2.494 trillion, up by 10.1 percent from a year ago.
“We have actively sought to limit underspending, defined as the deviation of program from actual disbursements, and expect to see even better results with the full-year 2017 disbursement report,” he said.
The strategy of bridging the infrastructure gap is also reaping approval from multilateral agencies.
The Asian Development Bank (ADB) upgraded its GDP growth forecasts for the Philippines this and next year on the surge of the government’s infrastructure program.
It raised economic growth forecasts from 6.5 percent to 6.7 percent for 2017, and from 6.7 percent to 6.8 percent for 2018.
It expects the country to remain the fastest growing economy in Southeast Asia.
The Organization for Economic Cooperation and Development’s Economic Outlook report for Southeast Asia, China and India, also projected the Philippine GDP growing 6.6 percent this year and averaging 6.4 percent from 2018 to 2022, about 50 basis points higher than 2011 to 2015.
It expects the Philippines to remain the fastest growing economy in the Association of Southeast Asian Nations-5 (Asean) this year and through 2022, supported by the government’s infrastructure push and robust domestic private spending.
The Train is essential to keep growth literally on track and efforts to derail it only goes against the common welfare.

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