PRESIDENT-elect Rodrigo Duterte must harness his formidable political capital to address structural bottlenecks in the country, including limitations on foreign direct investments, weak regulatory frameworks, widespread corruption and public security threats, a top economist said.
Gilberto Llanto, president of think tank Philippine Institute for Development Studies, said in a June 6 commentary that these were some of the factors that have constrained the Philippines from realizing its full potential.
“[There] is precious political capital that can and should be used to intensify market-friendly economic policy reforms and deal with those critical development constraints. It is time for the ‘tough guy’ president to make some tough policy choices,” Llanto said.
He said Duterte’s eight-point economic agenda was “generally fine” but contained no surprises.
The economist also noted Duterte’s campaign promise to reduce personal and corporate income taxes was “simplistic but popular.” Any proposal to reduce taxes, he said, should be part of a well-studied, comprehensive overhaul of the Philippines’ outdated tax system.
In the meantime, Llanto said the “sterling” economic performance of the country is a feather to outgoing President Aquino’s cap.
“Aquino’s main contribution lies in demonstrating that investor-friendly, market-enhancing economic policies and improvements in the governance framework lead to higher growth. The shedding of the Philippines’ reputation as the ‘sick man of Asia’ can largely be credited to his administration of the economy,” Llanto said.
However, Llanto noted deep-seated problems of poverty and high levels of income inequality remained.