The presidency of Rodrigo R. Duterte has always been marred by conflict. From the beginning, it was unceasing, coming as if from all sides, from the disputes brought about by his adamant stance on the war on drugs, to the heated political arguments of his supporters and critics on social media.
The beginning of his second year in office saw the outbreak of the Battle of Marawi, a five-month battle against terrorist groups in Lanao del Sur.
The battle started between Philippine government security forces and militants affiliated with the Islamic State of Iraq and the Levant (ISIL), including the Maute and Abu Sayyaf Salafi jihadist groups on May 23, 2017 and lasted until Oct. 23, becoming the longest urban battle in the modern history of the Philippines.
It came at a time when a wave of terrorism was sweeping the world and forced the president to declare martial law in Mindanao. The Battle of Marawi ended with the deaths of militant leaders Omar Maute and Abu Sayyaf chief Isnilon Hapilon. Martial law is extended in Mindanao to help in Marawi’s rehabilitation.
On another front, the coming of 2018 signified the implementation of Mr. Duterte administration’s plans to overhaul and modernize the Philippines’ tax system. The Tax Reform for Acceleration and Inclusion (TRAIN) law is envisioned to correct a number of deficiencies in the tax system to make it simpler, fairer and more efficient.
The revised tax code did away with the personal income taxes of Filipinos in the lower tax brackets and simplified estate and donor’s taxes, compensating the projected loss of revenue with increased excise taxes on products such as oil, automobiles, and sweetened beverages and expanding the value-added tax base.
By 2022, the government expects TRAIN to reduce the poverty rate from 22% to 14%, lifting an estimated six million Filipinos out of poverty, and to improve the economy enough to achieve an upper-middle income country status. In the long term, by 2040, it seeks to eradicate extreme poverty, create inclusive economic and political institutions and achieve a high-income country status.
“For us to be able to achieve the vision of TRAIN, we need to lead the investment growth of 7% to 10%,” the Department of Finance states on its Web site.
“Over the long term, all these investments require additional funds of around P1 trillion per year in 2016 prices, on top of the current P1.7 trillion. Over the medium term, the government will need to raise some P366 billion per year between 2016 and 2022 (or P2.2 trillion in total).”
Currently, economists and lawmakers are in the midst of challenging Mr. Duterte’s comprehensive tax reform program, inciting a conflict between those who believe tax reform is good for the economy and those who believe it is a burden on the poor.
One of the main goals of TRAIN is to fund the administration’s massive P10.6-trillion infrastructure development plan, which the National Economic and Development Authority believes will generate as much as P31 trillion.
Among these projects are the Metro Manila Subway Project-Phase 1 (P354.9 billion), Malolos-Clark Airport-Clark Green City Railway (P211.4 billion), Philippine National Railways (PNR) Manila-Bicol Line (P175.3 billion), and the PNR Tutuban-Los Baños Line (P124.1 billion).
Titled “Build, Build, Build,” the massive project aims to accelerate development of infrastructure, increase the productive capacity of the economy, create jobs, increase incomes and strengthen the investment climate leading to sustained inclusive growth.
Critics argued that the tax reform, made effective at a time of a worldwide oil price hike, is pushing the prices of consumer goods upward. Inflation rose for a fourth successive month in April, hitting a five-year high of 4.5%, blemishing the Philippines’ reputation as one of Asia’s fastest expanding economies for the past six years.
Two more tax reform packages are in the pipeline, and it remains to be seen whether the effects of rising prices will counteract the positive benefits envisioned by TRAIN.
The outcome will be significant for consumers, as another point of contention with President Duterte’s government is his promises to crack down on illegal forms of contractualizations such as “endo” or “end of contract” arrangements. Dishonest businesses are abusing contract laws to avoid giving contractual employees stable hours and benefits.
President Duterte issued an executive order denouncing this practice, but labor groups criticized it for not making an effort to normalize direct hiring in employer-employee relations, something they have long been clamoring for.
For the President’s part, he admitted his powers are limited. To end all forms of contractualization, he said, Congress needs to amend the Labor Code.
There are some good news for Filipinos, however. Through signing laws such as the Universal Access to Quality Tertiary Education Act and the landmark Mental Health law, which aims to provide accessible and affordable mental health services, the president came through for Filipinos in low-income families.
Interestingly, the main opposition to the Universal Access to Quality Tertiary Education Act, which seeks to provide free tuition for students of 112 state universities and colleges (SUCs), came from President Duterte’s own economic advisors. Budget Secretary Benjamin Diokno claimed that the policy would require funding of P100 billion, a sum which the government could not afford in its current budget. The President apparently disagreed, saying that the benefits outweigh the costs.
Among the other victories of the Duterte administration are the successful extension of the validity of Philippine passports and driver’s licenses, the greenlighting of laws providing free irrigation, free Internet access in public places, as well as the increase of the salaries of the police and military.
President Duterte also put into law the Ease of Doing Business Act, which mandates government offices to process transactions within days and introduces a “zero contact” policy to reduce the likelihood of corruption, similar to his much-alluded anti-red tape practices implemented in Davao City when he was mayor.
In addition, the law seeks to create a one-stop shop for government permits so that businessmen, and even overseas Filipino workers, no longer need to visit separate government offices for separate permits.
Through such laws, and many executive orders like it, President Duterte will conclude his second year in office. Other big-ticket promises, like his push for the adoption of a federal system of government or the long-awaited Bangsamoro Basic Law, are taking more time. But as of now, whether his embattled presidency will be remembered or his victories will be judged truly as victories down the line, no one knows. Only time will tell.