Philippines’ Duterte distracted by drugs

When Rodrigo Duterte was elected president of the Philippines last May, he promised a war on drugs. His crackdown “has seen more than 7,000 drug suspects killed by police, vigilantes and rivals (the three categories overlap)”, says The Economist. It has overshadowed his tenure so far, which is a pity: there are other policies he heralded that could improve the economic outlook.

A tax-reform bill before the legislature proposes lowering the top personal income-tax rate from 32% to 25% and raising the tax-free income threshold while increasing indirect taxation. A second would trim corporation tax from 30% to 25%.

These measures should lower the incentive to dodge taxes, raise cash, and entice foreign investment. The money is supposed to be put towards infrastructure, on which the Philippines spent a mere 2% of GDP in the 1980s and 1990s. Duterte plans to raise this figure to 5%-7%.

However, the worry now is that he has become so distracted by his drug war – he now plans to reinstate the death penalty – that he won’t get round to crucial reforms. Investors will be keeping a wary eye on him this year.

Merryn

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