The Department of Finance made important gains these past few months. Our two main revenue units --- the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) --- dramatically improved collections. This assures adequate revenue flows to support the government’s aggressive pump-priming of the economy.
The Department’s team charged with simplifying procedures and cutting red tape in the bureaucracy delivered good results as well. We are moving at a good pace towards e-government that opens access to citizens, encourages transparency and improves on the ease of doing business. With the help of the latest information technologies, we will soon achieve full interoperability of our agencies.
Of course, our efforts at comprehensively reforming our tax system made important headway this past year. The Tax Reform for Acceleration and Inclusion (TRAIN) law was passed late last year. It is a major step towards a tax system that is simpler, fairer and more efficient. This is a precondition for broadening our tax base and assuring robust and recurrent revenues to support our economic and social programs.
Because of the Department’s exemplary fiscal management, our bond issuances were met enthusiastically by investment funds abroad. When we issued the 10-year dollar-denominated global bonds last January, they were given a tight 37.8 bps over the benchmark US Treasuries. Last month, when we floated the Panda bonds, China’s Lianhe Credit Rating Company rated them AAA. As a result, the bonds fetched a tight spread of only 35 bps over benchmark. The tight spreads indicate confidence in our fiscal and debt management.
Let me express my gratitude to the tax reform team for the great work you have put in. The new excise taxes are now yielding more than the expected revenues. The TRAIN lowered the personal income tax rates for our industrious wage earners and opens the way for building a strong middle class.
There is much work yet to be done. This year, we seek to pass the remaining packages of the tax reform program to ensure a level playing field for business. With that level playing field, we hope to attract the investments we need to provide quality jobs for Filipinos. We want to transform our economic development from being consumption-led to one that is investments-led. That will help solve the riddle of high poverty rates persisting despite high growth rates. The final goal of this administration is to bring down the poverty rate to only 14 percent of the population by 2022.
By the time we complete the tax reform program, we should match the tax effort of the most effective governments in the region. Our government can provide the essentials of rapid growth such as excellent infrastructure and cutting-edge programs that will rapidly improve the quality of our human capital.
For all the gains we have made, I should thank my predecessors for the excellent job they did in maintaining fiscal discipline. I should, in particular, thank former Prime Minister Cesar Virata for setting the tone and leadership style for this Department. We are building on the strong foundations they have set down.
Our efforts have not gone unnoticed. The Asian Development Bank (ADB) described this period in our country’s history as the “Golden Age” of development. Another survey of the investment community described the country as the best place to invest in. Our growth performance the last two years puts us among the fastest growing economies in this rapidly expanding part of the world.
Our achievement so far benefitted from the strong support of our development partners. The flow of official development assistance (ODA) has risen to unprecedented levels. China, Japan and South Korea all expanded their ODA support. This is a vote of confidence in our country’s ability to seize the opportunities of this time and transform our economic landscape.
Happily, every success means more work to be done. We will advance on many fronts. We will substantially improve on the ease of doing business. We will make government more effective through the adoption of new digital technologies. We will seed small businesses to provide a stronger foundation for future growth. We will provide the strategic infrastructure needed to bring all our communities into the mainstream of national wealth creation.
Of course, the Department of Finance will be at the forefront of all these efforts to bring a more effective government to a more hopeful people.
I will be asking even more from you the next year. We are in a moment of great promise for our country. Let us not let the opportunity pass.
We will push the reforms necessary so that what was once derided as the “Sick Man of Asia” will become the region’s economic juggernaut. We are nearly there.
Always remember that what we are doing today will bring a better future for the next generations of Filipinos. It is for them that we build. It is for them that we dare imagine a new future with none of the despair that once haunted this beautiful land.
The foregoing was a speech made by Carlos G. Dominguez, Philippine Secretary of Finance, on the occasion of the 151st anniversary of the Department, last April 24, 2018. Photo: https://gineersnow.com/industries/construction/private-construction-sector-philippines-also-suffers-shortage-labor