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nLycka Alden J.

Castro
BS Respi
More investment needed to reach affluent society goal -- NEDA
January 16, 2017
THE PHILIPPINES needs to attract more investment from both domestic and foreign sources to
achieve the goal of becoming a high-income economy by 2040. National Economic and
Development Authority (NEDA) Secretary, Ernesto M. Pernia said that total investment levels
need to rise to 30% of gross domestic product (GDP), from the current 24% target for 2022,
before the Philippines can become a high-income economy. This year, the private sector is
expected to bring in investment amounting to 18.6% of GDP, while the government is
programmed to spend 5.4% of GDP this year in public infrastructure, bringing the portfolio to a
24% total investment to GDP ratio. This is a significant improvement from historical lows, but
this level will not be enough to help the country achieve its vision of eradicating poverty and
becoming a high-income economy, where Malaysia is nearly right now, by 2040, Mr. Pernia
was quoted saying in a statement. The government is planning to hike its infrastructure spending
to 7% of GDP by 2022. However, this increase will only contribute so much to Mr. Pernias 30%
target. Asked if the government will attain the 30% target before its term ends, Mr. Pernia did not
respond. The NEDA chief said in the same statement that the tax reform is vital to attaining the
targeted level of infrastructure spending. In order to raise enough revenue to fund the
governments unmatched public spending plan, it needs to implement broad and deep reforms in
tax policy and administration. Without the tax reform, we will not be able to fund the needed
increase in infrastructure spending beginning 2018, said Mr. Pernia. However, according to the
Department of Finance (DoF), the first package of the proposed tax reform program will bring in
P206.8 billion, accounting for only 1% of GDP in its first year. The DoF also said recently that the
infrastructure projects for 2018 will be dependent on the passage of the first tax package, as it will
use funds from the revenue generated by the tax reform. However, the tax reform program still has
a long way to go, with committee level approval pending in the House. Budget Secretary
Benjamin E. Diokno said that the government will raise its total infrastructure budget to P1.898
trillion by 2022, from the P861 billion programmed for this year. These record levels of
spending will align our country with its more vibrant neighbors and put us on track to achieve our
vision of eradicating extreme poverty and transforming our economy into a high-income one by
2040, said Mr. Diokno in the same statement.
Reaction:
This is the aim of the government to improve the country, to reduce the poverty rate and becoming
a high income economy. This is one of the opportunity to help change people lives and to have a
better and good investment.

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