MikeLigalig.com

ATTY. CIRIACO “ACOY” S. CALALANG
KABAYAN Party-list Representative

Member, Tourism, Good Government & Public Accountability,
Transportation, Justice, and 12 other committees
Mobile: 0917-729-2437

IMPORT-DEPENDENT SIDE OF PH ECONOMY NEEDS SHOCK ABSORBERS

Amnesty that widens tax base needed for all income classes – Taxation Lawyer-Solon

If peso depreciation is going to be a long-term variable in the Philippine economy, then we need to prepare for it now. Forecasts of both the government officials and private sector analysts point to a P53-P54 to US$1.00.

Overall inflationary impact and direct adverse effects on household budgets will come in the form of higher fuel prices, hikes in the foreign currency adjustment component of utilities bills for foods and beverages with high imported content and packaging, electricity, water services, mobile phone charges, and internet services.

Manufacturing and retail industries depending on imported raw materials and consumer goods will take sustained hits on their operating and financing costs. If these sectors are able to adjust now with import substitution strategies and tactics, there can be significant collective impact that reduces our country’s trade deficits with major trading partners.

SHOCK ABSORBERS

Those are the downsides and for these we need:

(1) shock absorbers at both the macroeconomic and consumer levels;

(2) medium to long term stability of the peso-dollar exchange rate; and

(3) stronger banks, especially in the rural and thrift banking segment.

Department of Finance officials have suggested a tax amnesty. Applied the right way, a tax amnesty can be an effective forex fluctuation shock absorber that will benefit the poor and middle class. In principle, I agree with this, but it must be the kind of tax amnesty that widens the tax base and makes compliance convenient.

The Department of Energy and the Energy Regulatory Commission might want to consider:

(1) encouraging power providers to diversify their foreign currency debt mix;

(2) create tools that can offset forex depreciation; and

(3) establish fuel reserves.

From the Securities and Exchange Commission, we need regulations on proper hedging and leveraging against forex fluctuations.

Both the government and private sector must identify local sources of raw materials and consumer goods which will serve as import substitutes. We should have more of those shared service facilities and equipment the DTI has been deploying. Same with the farm mechanization program, post-harvest, and cold storage warehouses of the Department of Agriculture.

Our malls, department stores, and convenience stores ought to be selling more locally-made products.

Now, for the flipside of the adverse effects of peso depreciation. All sectors and Filipinos earning dollars and other foreign currencies are the direct gainers. These include the OFW families, BPO families, exporters, and the tourism sector.

For them, we need to make their new-found wealth productive and channeled to investments and savings. (END)

Save the link https://tubagbohol.mikeligalig.com



Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=89651.0