May 12, 2016 – Philippine president-elect Rodrigo Duterte wants to change the constitution to lift restrictive foreign investment laws as part of his plan to boost the economy, a senior aide said today.
He also plans to spend more to address crumbling infrastructure and make it easier to do business overall, Carlos Dominguez, widely tipped to win a cabinet post, told reporters.
“We will ensure the attractiveness of the Philippines to foreign direct investment by addressing the restrictive economic provisions of the constitution,” he added.
Broad goals of Duterte’s economic strategy was unveiled three days after the long-time mayor of the southern city of Davao won a landslide presidential election victory. He is due to be sworn into office on Jun 30.
Despite strong economic growth during President Benigno Aquino’s six-year term, one of Asia’s worst rich-poor divides did not improve and one in four Filipinos still live on US$1.30 a day or even less.
Critics say part of the problem was inadequate investment and job creation, partly due to foreign investment restrictions in the Philippine constitution.
Foreign entities cannot own more than 40 per cent equity in certain businesses, including those requiring franchises granted by parliament, such as aviation and telecommunications.
Some economic sectors are outrightly off limits to foreign investment, including most retail activities, broadcasting, domestic shipping and pharmaceuticals. Foreigners also may not own land though they can enter into long-term leases.
Dominguez said the proposed changes would be done by a constitutional convention to be called by Duterte. However he gave no timetable nor provide specifics.
Dominguez, a wealthy businessman based in Davao, said infrastructure spending would rise to 5.0 per cent of total economic output, compared with a 2.3 per cent average in the past 30 years.
The pledge would addresses monstrous traffic jams, crumbling rail systems and poor telephone and Internet services that, along with his hardline anti-crime position, drove the Duterte election campaign.
Global credit rating outfit Standard and Poor’s warned last month that poor infrastructure could cloud the Philippines’ efforts to raise to US$3,000 the average annual income for every Filipino next year.
Dominguez also said Duterte would make doing business in the country a simpler proposition like in Davao, where licenses “are given in the shortest possible time”.
He said the government will also revise the income tax rate to bring relief to employees earning half a million pesos (about US$10,700) a year or less. These earning that amount or more are taxed 32 per cent.
A cash transfer programme to the poor championed by Aquino would also be expanded, Dominguez said.
About 4.3 million poor households now receive monthly cash grants of up to US$30 to encourage them to keep children in school and help pregnant women receive proper medical care.