Gov’t urged to start 2nd wave of reforms
The Aquino administration should use its newfound political capital after having won control of both houses of Congress to implement a second wave of reforms that would help sustain the country’s economic growth.
The International Monetary Fund (IMF) said that while the administration had succeeded in pushing for key measures, not least of them the passage of higher “sin” taxes, several other vital changes had to be pursued.
Increasing investments in infrastructure should be on top of the government’s list of priorities, according to Shanaka Peiris, IMF resident representative to the Philippines.
At the equivalent of 3 percent of gross domestic product (GDP), he said public spending for infrastructure in the Philippines was still the lowest in the region.
The Aquino administration hopes to increase infrastructure spending to 5 percent of GDP by 2016. The government, however, has been criticized for the slow implementation of big-ticket projects.
Another key reform, Peiris said, should be a legislation that would make the minimum wage levels more “flexible.”
Also, he said the local education system should also be geared toward skills that would make graduates employable in various types of industries.
The government also has to do more work to reduce the cost of doing business in the country—a notorious turnoff for many foreign investors.
The other IMF prescriptions in the past included the relaxation of foreign ownership limits in the Constitution and the rationalization of fiscal incentives for the self-employed.
“These second wave of reforms have to be implemented on top of the country’s improved macroeconomic fundamentals” Peiris said, adding that President Aquino should take advantage of having control over both the House of Representatives and the Senate.