Duterte Seeks Laws to Curb Philippine Inflation, Spread Wealth
(Bloomberg) -- Philippine President Rodrigo Duterte asked lawmakers to pass legislation that will help restrain inflation and spread wealth and power beyond the capital region.
In his annual address to Congress on Monday, Duterte asked both chambers to prioritize removing caps on rice imports to help cut domestic prices by as much as 7 pesos ($0.13) per kilo. The cost of rice, one of the biggest components of the consumer basket, is the highest in three years and continued to increase in July.
The 73-year-old leader also pitched for laws lowering company taxes and changing the constitution that will enable a shift to a federal form of government. Duterte promised to sign in the coming days a law that will expand the autonomous Muslim region and help end four decades of insurgency in his home island of Mindanao.
“The president’s plan to scrap the rice quota and shift to tariff-based importation should help ease inflation by 2019 amid still high oil prices,” said Rachelle Cruz, an analyst at AP Securities Inc. in Manila. Overall, the speech is unlikely to inspire market recovery, she said. The peso, trading near a 12-year low, and stocks are among the worst performers in the region this year.
Duterte pledged that his deadly war against drug pushers and users that has killed thousands will continue to be “relentless” and “chilling." The brash leader also issued a warning against several groups during his speech, among them the rice hoarders and cartels blamed for pushing up prices, the miners which he said were destroying the environment, and officials profiting from state coffers.
Consumer prices rose 5.2 percent in June from a year earlier, the fastest pace in at least five years.
“In the near term, this may boost local markets as government strikes back on inflation,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. in Manila, referring to the president’s address.
Budget Secretary Benjamin Diokno expects Congress to pass the rice reform bill by September. Many Filipinos wanted Duterte to address the issue of rising prices in his speech, according to a Pulse Asia Research Inc. poll.
Higher taxes on fuel and sugary drinks implemented this year shouldn’t be blamed for inflation, Duterte said, rebuffing calls from critics including opposition Senator Bam Aquino to scrap the levies.
The president said he wants to sign the tax package that will lower corporate income taxes by the end of the year. Duterte said his economic team would submit this month to Congress proposals on a tax amnesty, tax increases in mining, alcohol and tobacco and the remaining fiscal packages he wants enacted before his term ends in 2022.
Duterte’s speech, delayed by more than an hour by an upset in the House of Representatives, was the shortest of his three addresses, clocking in 48 minutes or less than half of the 120 minutes a year ago. Members of the House of Representatives elected former President Gloria Arroyo as the new speaker on Monday, replacing Pantaleon Alvarez. Both are allies of Duterte.
Other key points of Duterte’s address are:
- Draft terms for entry of third major player in telecommunications sector at hand
- Friendship with China won’t stop Philippines from asserting South China Sea claims
- He also pitched for laws to end labor-only contracting, put up a fund for coconut farmers, and create a department on disaster management
©2018 Bloomberg L.P.