Philippines armed forces to quell conflict, keep Dutertenomics on track, finance secretary says

An armed conflict in Marawi City has not spread, and has not derailed the government’s ambitious infrastructure and social programme, said Philippine Secretary of Finance Carlos Dominguez III.

PUBLISHED : Thursday, 15 June, 2017, 7:32am
UPDATED : Thursday, 06 July, 2017, 11:40pm

The Philippines’ security forces will take military action over the next few weeks to eliminate the threat of armed militants in the nation’s southernmost province to maintain peace and stability, and keep President Rodrigo Duterte’s US$167 billion infrastructure programme on track, the country's finance secretary said on Wednesday.

Duterte last month placed the whole of Mindanao, the country’s second-largest island, under martial law after members of the radical extremist faction known as the Maute group attacked Marawi City, the capital of Lanao del Sur province.

The conflict “has been contained in certain areas” and “has not spread” while martial law is in place, Philippine Secretary of Finance Carlos Dominguez III told the South China Morning Post, as the country sought to assure global investors that the situation was under control.

“The imposition of martial law can last for only 60 days” and can only be extended by explicit authorisation from the Philippine Congress, Dominguez said. “The conflict is not expected to be a continuing disruption.”

The Philippines' ambitious package of economic and social initiatives, dubbed “Dutertenomics”, remains intact, with none of the major projects planned for Mindanao being delayed, he said.

He pointed out that the Philippines intends to finance 80 per cent of those projects from domestic sources and 20 per cent from foreign investors.

“Our economic strategy aims to liberate our people from poverty,” he said. “We want to bring our rate of poverty down to 14 per cent by 2022 from the current rate of about 22 per cent.”

Recently, the Philippines congress passed the first tranche of a comprehensive tax reform package, which Dominguez hopes will be approved by the country’s Senate and passed into law by the end of the year.

The new tax regime is expected to help provide the core funding for the country’s infrastructure projects.

In October last year, the Philippines forged two sets of investment agreements in Beijing when Duterte met with Chinese president Xi Jinping.

“The first set [of agreements] was with Chinese private sector investors, involving deals worth around US$15 billion,” Dominguez said. “Some of those deals have come to fruition, while some will be implemented down the road.”

He credited the Bank of China for being the first mainland financial institution to step up and offer credit lines for the Duterte administration’s ambitious infrastructure initiatives.

“Since then, other financial institutions have fallen in line with their own credit line offerings,” he said.

The other set of agreements signed in October involved government pledges to the Philippines, which totalled US$9 billion.

The largest of the big-ticket projects discussed with China is the US$4 billion upgrade of the 550-kilometre railway between Manila and the Bicol region, located in the southern part of the main island of Luzon.

Dominguez said the other rail project that has been proposed to Beijing for funding is a cargo rail system between Subic Bay, about 100 kilometres northwest of Manila, and Clark Air Base, which is 64 km northwest of Manila.

Clark Air Base is being groomed to become a major manufacturing hub in the Philippines, while a new international cargo port will be built in Subic.

Dominguez said a China-funded project for bridges over the Pasig River, which runs through the heart of Manila, is expected to start in the third quarter, while a dam and irrigation projects as well as the Subic-Clark railway can be completed within the six-year term of the Duterte administration.