Philippine President Benigno Aquino backed a “fiscal responsibility” bill to narrow the budget deficit and touted privately funded roads and railways as a way to free funds for social services.
The bill will prohibit new spending that’s not supported by revenue, Aquino said in his first state of the nation address before Congress in Manila. Investors have offered to build a highway from Manila to the northeast and to lease two Navy properties for $100 million, he said.
“However much we lack to pay for our needs, I’m still encouraged because many are showing renewed interest and confidence in the Philippines,” Aquino said. “This will be the solution: public-private partnerships. The many talks on these will bear good fruit. Once these public-private partnerships are in place, we can fund social services.”
Aquino, who took office June 30, needs to tap investors as the budget deficit heads for a projected record 325 billion pesos ($7 billion) this year, or 3.9 percent of gross domestic product. He’s targeting 2 percent by 2013 while boosting spending on education, health care, tourism and security and sticking to a pledge not to raise taxes.
“Boosting public investments in infrastructure is one of the most important items and you’re going to need the tax base to do that,” said Edwin Gutierrez, who manages about $5 billion of emerging market debt at Aberdeen Asset Management Plc in London. “That’s what condemns the Philippines to growth that is lower than the rest of Asia. The private sector can help” build infrastructure.
Aside from the “fiscal responsibility” bill, Aquino said he also supported an antitrust law to help small businesses flourish.
On the administrative front, Aquino said he’d encourage investment by cutting the time for registering a business to 15 minutes from multiple visits of up to eight hours. He’ll cut required documents to six from thirty and the application form to one page from eight.
Aquino delivered the speech at the opening of the legislative year. The Senate elected as its leader Juan Ponce Enrile, an ally of former President Joseph Estrada, the No. 2 candidate in the May presidential election. Aquino’s ally Francis Pangilinan quit the race yesterday.
Aquino, who beat Estrada by 16 percentage points, “clearly had a popular mandate,” Gutierrez said. Still, he needs to build support for when “horse trading” ensues. “He does have to make inroads against these entrenched interests.”