TOKYO -- Finance Secretary Carlos Dominguez III has cited the “robust and mutually beneficial relationship” between Manila and Tokyo for the past six decades as he thanked Japan for its continued support for the Philippines’ economic development on the watch of Japanese Prime Minister Shinzo Abe, who has pledged a 1-trillion yen (9 billion USD) investment and development aid package to the country.
Dominguez said the Philippines’ planned first subway line, made feasible and possible through Japanese financing and technical support will be “a great monument to the friendship” between the two countries.
As the Duterte administration pursues its ambitious program to modernize infrastructure and accelerate inclusive growth, Dominguez told potential Japanese investors at a briefing here on the Philippine economy that the Philippine government was looking forward to increased investment flows from Japanese companies.
“We are impressed with the commitment to excellence that imbues your corporate culture. We hope to benefit from the transfers of technology that invariably tracks investment flows,” he said in noting that Japan has been a major source of industrial investments in the Philippines.
“We look forward to an even stronger partnership with the Japanese people,” said Dominguez at the Philippine Economic Briefing held at Conrad Hotel Tokyo, Japan.
On the part of the Duterte government, Dominguez said, “We commit to further improve the ease of doing business, respect the sanctity of contracts, and promote a more conducive climate for investments.”
He pointed out that Manila’s accelerated spending beginning in this year’s second quarter illustrates mot only the Duterte government’s greater absorptive capacity but also its strong political resolve to embark on an unprecedented investment program anchored on higher public spending on infrastructure and social services that is designed to spell economic inclusion for all Filipinos.
Dominguez said the Philippine government is working with its Congress on tax policy and administration reforms to ensure a steady revenue stream that would enable it to carry out this capital-intensive high-growth program while maintaining fiscal discipline.
“The fiscal discipline we maintained over the past few years enabled the country to achieve investment grade credit ratings. Those ratings enable us to borrow at significantly lower rates. We intend to continue deserving those credit ratings,” Dominguez said.
He said the Philippine economy has become “an engine of growth” in Asia, with its second quarter GDP expanding by 6.5 percent, which is well on track in meeting the full-year target growth rate of 6.5 to 7.5 percent.
“The strong growth our economy exhibits could not be possible without strong partnerships with our friends in the region,” Dominguez said, citing the generous assistance that Japan has extended to the Philippines to support its economic development.
An even more significant development is that GDP growth was led by the industry sector at 7.3 percent, and agriculture at 6.3 percent, which is a “departure from the earlier pattern where growth was led by the services sector,” Dominguez said.
OFW remittances, meanwhile, accounted for about a 10th of the GDP and the country’s high domestic consumption demand, while government spending sped up by 7.1 percent year-on-year during the second quarter.
“We are also expecting more investments coming in as we modernize our infrastructure and reform our economic policies to spur business activity,” Dominguez said.
“Investment-led growth will make our domestic economy more inclusive and create quality jobs for our people,” which would, in turn, help bring down poverty incidence from the current 21 percent to 14 percent by 2022, he noted.
Dominguez said a low-interest environment encouraged a property development boom and increased business activity, while pulling down the country’s public debt to “more than manageable levels.”
“Over the coming years, we expect that benign interest environment to persist,” he said.
Despite the increased spending on infrastructure and social services, Dominguez told the Japanese business community that the Philippines expects inflation to hover between 2 percent and 4 percent through the medium term.
On the Duterte watch, public sector deficit will be limited to 3 percent of GDP and a 80-20 ratio on loans in favor of domestic borrowings will be a matter of policy to lessen foreign exchange risks, he said.
“Over the past few years, our GDP grew faster than our debt accumulation. Prudence dictates that we strive to maintain this trend. Fiscal stability is key to the sustainability of our economic expansion. We are further modernizing our capital markets to enable the consolidation of capital to support long-term growth,” Dominguez said.
Dominguez also cited the government’s continuing efforts to improve the ease of doing business by cutting red tape, curtailing corrupt practices and limiting its negative list for foreign investments, and training the country’s young and talented workforce to be more globally competitive, as among the factors that would keep the economy on its high-growth path and haul in more long-term investments.
Earlier at the 3rd Philippines-Japan High-Level Meeting of the Joint Committee on Infrastructure Development and Economic Cooperation held here, officials of the two countries agreed to further streamline their respective approval processes and introduce new measures to put in the fast lane the implementation of big-ticket infrastructure projects presented by Manila to Tokyo for possible financing, in line with their mutually approved “Fast and Sure” principle.
Dominguez also reported during the session that “significant milestones” have been reached in the processing of the jointly agreed project list between the two countries.
In their meeting, both panels agreed to speed up their respective project approval processes and come up with additional measures “for more efficient decision making, and swift execution such as in project preparation and formulation, due diligence, procurement process and project implementation including land acquisition and resettlement,” Dominguez said.
The officials from the two countries also continued their discussions on the candidate flagship infra projects, as well as the other jointly agreed pipeline projects, after which “both sides reaffirmed to continue holding expert-level consultations to address issues concerning railway projects to ensure their smooth implementation,” including the planned first phase of the Metro Manila Subway and the South Commuter Line of the Philippine National Railways. (DOF-PR)
