May 16, 2019
THE initial results of Monday’s midterm elections show that President Rodrigo Duterte is likely to have more help in pushing for legislative reforms, an analyst said on Wednesday.
“With more lawmakers who are allied [with] the [Duterte] administration winning more [seats] at the Senate (and also at the House of Representatives), the greater the chances of increased support [for] the more timely enactment of [the] national budget, as well as [for] more economic, fiscal and other reform measures that require legislation…[in] the remaining three years of the Duterte administration,” Rizal Commercial Banking Corp. (RCBC) Head of Economics and Industry Research Division Michael Ricafort told The Manila Times.
Initial results of the May 13 polls showed that nine candidates in the Senate race’s “Magic 12” are from the Duterte-backed Hugpong ng Pagbabago (HNP) slate. Bets from administration party Partido ng Demokratikong Pilipino-Lakas ng Bayan (PDP-Laban) also came out on top in a good number of House races.
“Reform measures that require legislation include those that improve [the] economy, business and fiscal management, which structurally increases [or] improves [the] recurring source of revenues of the government, especially through tax [or] fiscal reform measures, as well as eliminating leakages from government expenditures,” Ricafort said.
This would result in “more funds [or] resources available for increased government spending on infrastructure and other social services that are needed for further economic growth and development that is more inclusive over the long run,” he added.
The government is currently pushing for the approval of the Tax Reform for Attracting Better and High-quality Opportunities (Trabaho) bill, which seeks to lower corporate income taxes from 30 percent to 20 percent in 10 years and rationalize fiscal incentives.
According to Ricarfort, other reform measures set to be tackled by the next Congress include higher sin taxes and those seeking capital market reform. These include the simplification of taxes on financial instruments, further enhancements on the Bangko Sentral ng Pilipinas Charter and further easing of restrictions on foreign investments.
“Policies and other reforms that further improve the country’s environment for business, investment and governance (i.e. stronger institutions) will lead to increased confidence of international investors and credit-rating agencies in terms of increased foreign investments in to the Philippines that create more jobs, other business opportunities and faster economic growth,” he said.
“Thus, this highlights the importance of sustaining the relatively faster and stronger pace in passing more reform measures that pass through both the House of Representatives and the Senate, especially if more lawmakers that support the administration, in terms of more timely passage of the national budget and the enactment…of more priority reform measures, win more slots in the midterm elections,” the analyst added.
Also on Tuesday, Fitch Solutions said the elections were widely seen as “a test of Duterte’s popularity and as an opportunity for him to consolidate power by gaining control of the Senate, which had proved an obstacle to his policy plans in the first three years of his presidency.”
“The strong show of support for Duterte will both give him the confidence and ability to push ahead with his reform program. The Senate has proved a sticking point for
Duterte, as seen by the delay [in] the passing of the 2019 budget. Duterte will hope that, with increased support in the Senate, his reforms and fiscal plans will face [fewer] obstacles,” Fitch Solutions said in a report.
“As a result, if Duterte is confirmed to have consolidated power in final results expected to be announced by May 19, we at Fitch Solutions will revise up the ‘policymaking’ subcomponent of our Short-Term Political Risk Index score of 63.1 out of 100 (score closer to 100 indicates lower short-term political risk) for the Philippines,” it added.
Fitch also said it expected the President to begin work [on pushing] through his reforms, most significantly support for his federal governance plans, which would need the backing of Congress and voters.
Duterte is likely to face increased pressure over his relations with China, it added, further noting that he would have to “take a tougher stance with Beijing, potentially forgoing some investment.”
The report also warned that reduced opposition in the Senate lowers the potential for “checks and balances” on the current administration.
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