Philippine Congress Leaders Vow to Spur Growth to Tackle Poverty
Philippine congressional leaders from President Benigno Aquino’s political party vowed to push for laws to help create jobs and cut poverty in Asia’s fastest-growing economy.
“We must ensure that the Philippine story is the story of inclusive and sustainable development, and lasting peace,” Franklin Drilon said in a televised speech today in Manila after his election as president of the 24-member Senate. House of Representatives Speaker Feliciano Belmonte, in a separate address, said lawmakers “will craft a legislative agenda that will generate the greatest economic activity.”
Aquino, 53, has overseen an economic resurgence in his three years in office, with first-quarter growth outpacing China, even as he faces pressure to boost jobs and curb corruption in the rest of his six-year term. Aquino, who polls show has the support of more than 70 percent of voters, has used his popularity to pass laws for higher taxes on tobacco and liquor and to provide free contraceptives to the poor.
Drilon said he’ll support bills seeking to trim tax incentives for investments and to relax some foreign-ownership restrictions, while getting a bigger state share of mining income. The lower house will also aim to fast-track infrastructure investments, amend the central bank charter and create a new autonomous zone in Mindanao, he said, speaking ahead of Aquino’s annual state of the nation address today.
“The market will wait for the president’s specific policies on inclusive growth, especially on job generation and improving incomes,” said Emilio Neri, an economist at Bank of the Philippine Islands (BPI) in Manila. “We’ve had a good run and it will be the domestic buyers and their improving economic status who can ensure the sustainability of the growth we’ve seen.”
The $250 billion economy expanded 7.8 percent in the first quarter from the previous year, the fastest among the 17 biggest economies in Asia. The country won its first investment grade ratings this year from Standard & Poor’s and Fitch Ratings Ltd., boosting stocks, bonds and the peso to record levels before a May 22 global market decline caused by speculation the U.S. would consider paring its stimulus.
At the same time the country’s jobless rate climbed to 7.5 percent in April, the highest in three years, according to a report out last month. The incidence of poverty was little changed at 27.9 percent in the first half of 2012 from 28.6 percent in the same period in 2009.
The Philippine Stock Exchange Index rose 0.4 percent at 3 p.m. in Manila and the peso climbed 0.2 percent against the U.S. dollar.
Aquino will ask Congress to approve a 2.268 trillion-peso ($52.4 billion) budget in 2014, or 13 percent higher than this year, Budget Secretary Butch Abad said on July 17. The government will target about 2 trillion pesos in revenue next year to support record infrastructure spending, Abad said.
Tax evasion is an issue that Aquino must address, according to Benjamin Diokno, a professor at the University of the Philippines and a former budget secretary.
“Smuggling is really rampant in customs and it results in lower revenues for the government,” he said. The bureaus of customs, immigration and corrections will be on his radar, Aquino said in an interview on May 8.
“If the president is as successful in passing crucial legislation in the next three years, the better for the politician he will support in the 2016 elections,” Neri said. “Continuity after Aquino’s term is increasingly becoming a concern among investors.”
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