MANILA -- President Rodrigo Duterte needs to detail his plans to swiftly implement economic reforms in his fourth State of the Nation Address (SONA) on Monday, as financial markets look to his final three years in office.
Riding on record-high popularity ratings and victory for his allies in the May midterm elections, Duterte is embarking on an P8-trillion infrastructure program, sweeping tax reforms and cutting red tape to make business easier.
"What's the plan for the next 3 years? Now with a fresh mandate from the last elections, what measures will they certify urgent so the Congress can act and pass it," BDO Unibank chief investment strategist Jonathan Ravelas said.
The President will address the nation as the peso soared to 18-month highs and as inflation cooled, giving the Bangko Sentral ng Pilipinas scope to lower borrowing costs.
"It all starts with having improved infrastructure as this increases efficiency and boosts productivity," ING Bank senior economist Nicholas Mapa told ABS-CBN News.
"Possible reforms in foreign ownership, the aforementioned TRAIN 2, liberalization of retail trade and the like will go a long way in attracting foreign capital," Mapa said.
Mapa was referring to the second tranche of tax reforms targeting corporate duties that also seeks to update fiscal incentives. The measure is pending in Congress. The first tranche, which took effect in January 2018, lowered personal income tax rates and raised levies on fuel and sugar-sweetened drinks.
Implementing rules and regulations on the Ease of Doing Business Law were released recently, something that businessmen are closely watching, said Employers Confederation of the Philippines (ECOP) president Sergio Ortiz-Luis.
"The Ease of Doing Business, I hope that he can emphasize that during the SONA, the purpose of that law and to advise that they are serious about implementing it," he said.
Charter change may be needed even after Duterte recently updated the so-called "negative list" of industries where foreign investments are allowed, said Leechiu Property Consultants CEO David Leechiu.
"Charter change is going to release new economic potential for the Philippines because we expect charter change to make it easier for foreigners to invest in the Philippines," Leechiu told ANC.
Asked about Duterte's ability to push for charter change, Leechiu said: "If anybody can, he can because no other president in the Philippines has enjoyed this level of political capital or even in the world. Even in the third year, halfway through the terms. So if anybody can, he can."
Liberalizing the country’s “restrictive” foreign investment policies can help the Philippines compete with its Asian neighbors, Anvil Business Club chairman Wilson Lee Flores told ABS-CBN News.
“I urge our politicians in the Senate and House of Representatives to please study our competitor ASEAN and Asian neighbors' foreign investment laws, so we that can liberalize our Philippine constitution's restrictive foreign investment policies, which have limited the inflow of FDIs (foreign direct investments) in the past 4 decades,” Flores said.
Viable solutions to problems such as traffic should also be presented, ECOP's Ortiz-Luis said, instead of just promises of cutting down travel time from Cubao to Makati to just 5 minutes.
Congestion in Metro Manila can also be addressed by “decentralizing” economic activities and the distribution of opportunities to other key cities in the country, Flores said.
It’s also time for the administration to look into vague shipping and mining laws, and to focus on agriculture and the small and medium entrepreneurs (SMEs) that are left behind compared to the country’s Asian peers, Ortiz-Luis said.
Flores added that supporting the SME community needs “galvanized” political mandate which can only come from the President himself.
“Personally, I have high hopes for President Duterte to galvanize his tremendous and unprecedented political mandate…for more comprehensive, bold, sweeping socio-economic reforms to make our Philippine truly globally competitive economically, to make our economic growth faster, sustainable and inclusive,” Flores said.
Aside from highlighting his war on drugs, Duterte also urged Congress to pass a legislation to once and for all end contractualization during his SONA last year. It was certified urgent in September 2018.
Duterte, however, has not signed the Security of Tenure bill until "minor details" are ironed out, Labor Secretary Silvestre Bello III told DZMM radio.
-- with a report from Michelle Ong, ABS-CBN News