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Financial markets welcome Duterte's 8-pt. economic agenda – J.P. Morgan

The macroeconomic policy spelled out by presumptive President-elect Davao City Mayor Rodrigo Duterte is amenable to the global financial community, according to financial service firm J.P. Morgan.

"We believe that financial markets will welcome the explicit commitment of the incoming administration in keeping the current macroeconomic policies, particularly its focus on infrastructure," J.P said in a statement late Thursday.

The statement was released by Bangko Sentral ng Pilipinas' Media Relations Office on Friday.

The J.P. Morgan's view was composed after Carlos Dominguez, a member of Duterte's transition committee, announced the economic agenda of the incoming administration on Thursday.

Dominguez emphasized that the Duterte administration will continue President Benigno Aquino III's macro-economic policies and speed up the incumbent administration's flagship public-private partnership infrastructure program.

"He's retaining a lot from the previous administration, so this will be great for continuity," said Nicholas Mapa, economist at Bank of the Philippine Islands, told Reuters news service.

"If Duterte can implement where the previous administration struggled, this will definitely instill confidence in the economy," Mapa added.
J.P. Morgan listed Duterte's eight broad economic points:

  • Improve government revenue collection efforts The Duterte administration will reform the Bureau of Internal Revenue and Bureau of Customs to reduce corruption and ultimately bolster the tax effort.
  • Accelerate infrastructure spending The next administration will maintain the  spending ratio of 5 percent of the gross domestic product.
  • Attract FDI flows The new administration will ease the foreign ownership limit, adopt Davao City’s model on ease of doing business, and reduce criminality and improve security for people and business.
  • Modernize agriculture sector This includes provision of better irrigation, push for agriculture processing technology, among others.
  • Address land administration and management The new government will improve the process of land titling and ensure land security tenure, especially in the rural areas to make them attractive sites for foreign direct investment.
  • Make tax administration more progressive This includes update the income tax brackets and index tax collection to inflation.
  • Expand and improve the conditional cash transfer program Duterte will expand and improve the CCT program and  index it to inflation.
  • Strengthen basic education system The new government will strengthen the training in communication, logical thinking, and mathematical skills in the basic and primary education system. It will also expand the scholarship program.

"We think this should assuage concerns about Duterte’s lack of clarity on his economic platform.

"However, given the broad pronouncements, the appointment of a capable and experienced Cabinet and economic team, and eventually, the ability to execute, are the next milestones to watch for," J.P. Morgan noted.

J.P. Morgan is a global financial services provider that caters to multinational corporations, governments, and institutions across 100 countries. – Ted Cordero/VDS, GMA News