By Chino S. Leyco
Finance Secretary Carlos G. Dominguez III expressed confidence that the Philippines can sustain its current economic growth pace over the medium term amid the Duterte administration’s infrastructure modernization program.
In a statement, Dominguez said the country would sustain its 7 percent Gross Domestic Product (GDP) expansion, noting the government’s P8.4-trillion “Build, Build, Build” infrastructure program will be the key driver of growth over the next few years.
“The 6.5 percent growth for the first semester makes the Philippines the second fastest growing economy in Asia after China. We retain the 7 percent growth rate target for the year, spurred by the investment spending in the infrastructure program,” Dominguez said.
“We believe this growth rate is sustainable well into the medium term,” he added. “Increased investments in modernizing the country’s infrastructure will be the key driver of our growth the next few years.”
“These investments seek to bring up our infrastructure to match those of our most progressive neighbors. By modernizing our infrastructure, we will address congestion in our ports, airports and roads,” the finance chief said.
To maintain fiscal discipline while embarking on the ambitious infrastructure buildup plan, Dominguez said the government is working on the congressional approval of a tax reform package in order to spell a steady revenue stream for its priority programs.
“Investing in infrastructure has the highest multiplier effect on the economy. It creates construction jobs in the short term and manufacturing jobs in the long term. It improves land prices, assists in raising our agricultural productivity and encourages dispersal of our industries into the regions,” Dominguez said.
According to Dominguez, infrastructure is “the key to overcoming the challenges posed by our archipelagic topography, especially uneven regional development and isolated island economies.”
He said the Philippines can no longer postpone infrastructure modernization and increased investments in human capital development, given the changing economic landscape in the ASEAN region, which is swiftly clearing the way toward regionalization.
The Philippines, Dominguez said, has a relatively younger workforce than those of its neighbors in the region, which can be transformed into a “demographic dividend” if the country invests heavily in education, health and other forms of human capital formation.
“The task is made easier by the increased regionalization of the economy. By 2022, we expect a functioning common market for the ASEAN region. By bringing our infra to regional standards, lowering power costs and improving on governance, regionalization should translate into greater trade and more intensive economic exchanges,” Dominguez said.
“The timetable set by the ASEAN Free Trade Area (AFTA) means we can no longer postpone modernization of our infra and postpone the training of our young to be functional in a globalized economy. We can no longer have a deficient bureaucracy and substandard governance,” he added.