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BSP’s Diokno backs legislated path to economic liberalization

THE opening of the economy to foreign investment will be more easily accomplished via legislation rather than the government’s preferred method of constitutional change, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said.

“The first best option is for Congress to relax the restrictive provisions in the 1987 Constitution, given the political economy. I’m thinking of opening up the economy — education, media, ownership restrictions, etc. This does not appear to be feasible less than a year before the next election,” Mr. Diokno said in a Viber message.

“(I) think what is feasible are some bills pending in Congress — public service act, foreign investments act, retail trade reform act,” he added.

In the House, the resolution to revise the economic provisions of the constitution passed on final reading earlier this month.

Senators have said they are unlikely to prioritize the approval of a resolution to ease foreign ownership limits in the 1987 Constitution.

Congress is adjourned until the State of the Nation Address on July 26. It will be the last to be delivered by President Rodrigo R. Duterte in his six-year term.

Mr. Diokno said pushing to relax the “restrictive provisions” in the Constitution is “absolutely” to be relegated for “after the presidential election next year.”

ING Bank NV-Manila Senior Economist Nicholas Antonio T. Mapa said measures to spur the economy in the near and medium term should be priorities to effect an economic recovery.

“A two-pronged approach of pushing for both short-term stimulus to jump-start economic activity while also pursuing important structural reforms that will enhance economic growth once the Philippines is back on its feet would be an optimal strategy,” Mr. Mapa said in an e-mail.

The proposed P401-billion Bayanihan III stimulus package was approved on third reading by the House. The measure, which if passed will be the largest stimulus package so far, remains pending at the committee level in the Senate.

Mr. Mapa noted that the Corporate Recovery and Tax Incentives for Enterprises Law which reduces corporate income tax immediately to 25% from 30% is a welcome development that will improve the country’s competitiveness over the medium term.

“However, such reforms tend to take time before the benefits manifest and tend to take hold during times of economic expansion. They can be viewed as enhancers to medium-term growth prospects but do considerably less in terms of resuscitating an economy in recession,” he said. — Luz Wendy T. Noble  

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