By Kenneth Christiane L. Basilio, Reporter

THE INCOMING 20^th Congress should prioritize legislation that would boost economic growth and enforce fiscal discipline to curb rising debt, while laying the foundation for long-term economic stability, economists and business groups said.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said lawmakers should focus on measures that would drive productivity-led growth, improve tax revenue, and reduce wasteful spending.

“[The] focus should be on easing business through digital infrastructure laws, revenue reforms for fiscal sustainability, middle-skills and workforce development, climate-resilient infrastructure, trade facilitation and industrial upgrading,” he said in a Viber message.

“All of these are aimed towards enhancing competitiveness and economic resilience,” he added. 

Malacañang releases a list of priority bills to help fast-track legislative action on measures viewed as critical to national development, as mandated under Republic Act No. 7640.

Out of the 64 priority bills for the 19^th Congress, only 33 have been enacted into law, based on the accomplishment list on the Legislative-Executive Development Advisory Council’s website.

Priority bills that failed to hurdle the 19^th Congress include a measure that sought to reform the military pension system, which economic managers earlier warned is currently unsustainable and could trigger a “fiscal collapse.” It passed the House of Representatives on third reading but was left pending on second reading in the Senate.

A proposed shift to a cash budgeting system, which would restrict appropriations to a single fiscal year, also failed to secure congressional approval. The measure aimed to streamline government spending by ensuring funds were allocated and utilized within a defined timeframe, but it languished in the House’s appropriations and Senate’s finance committees since it was filed more than two years ago.

The 20^th Congress, the last under the Marcos administration, is set to convene on July 28.

Measures to be prioritized in the next Congress should include economic reforms aimed at bringing the country’s debt levels back within internationally accepted thresholds, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Philippines’ debt as a share of the gross domestic product (GDP) rose to 62% at the end of the first quarter, the highest in two decades. It is slightly higher than the 60% threshold considered manageable by multilateral lenders for developing economies.

The government seeks to bring the ratio down to 60.4% by end-2025, and to 56.9% by 2028.

The National Government’s (NG) ballooning budget deficit is also a concern. In the first four months of the year, the budget deficit widened by 79% to P411.5 billion from the P229.9-billion gap a year ago amid faster government spending.

“The government’s deficit is quite worrisome,” Philippine Chamber of Commerce and Industry Chairman George T. Barcelon said in a phone call. “There should be a program to cut down on unnecessary expenses.”

He said Congress should eliminate bloated appropriations in the annual budget, including the purchase of overpriced goods and “pork barrel” projects disguised as financial aid programs.

The NG’s deficit ceiling for 2025 is capped at P1.54 trillion or 5.3% of GDP.

Jose Enrique “Sonny” A. Africa, executive director at think tank IBON Foundation, said there should also be a shift towards “progressive” taxes, such as higher income duties on large corporations and a wealth tax.

“The 20^th Congress should make decisive shifts towards progressive taxation with wealth taxes, higher income taxes on large corporations and rich families, and windfall land value taxes while reducing consumption taxes that disproportionately burden the poor,” he said in a Viber message.

A House bill seeking to impose a 1-3% tax on people with a net value of taxable assets exceeding P1 billion failed to gain traction in the chamber. There was no counterpart proposal in the Senate.

Finance Secretary Ralph G. Recto said last year he is not in favor of taxing the wealthy, citing that such a measure could be “counterproductive.”

However, Mr. Barcelon said Congress should not make changes to the corporate income tax rates. “If you touch those, you will hear foreign investors saying you’re changing the rules every so often.”

In 2021, the Philippines lowered the corporate income tax rate to 25% from 30% under a law aimed at improving investment competitiveness.

“I would not be in favor of an increase in income tax on companies,” British Chamber of Commerce of the Philippines (BCCP) Executive Director Chris Nelson said in a phone call, citing that the government should instead focus on attracting foreign investments.

High electricity and logistics costs also dampen the Philippines’ appeal to foreign investors, Mr. Barcelon said, urging policymakers to tackle long-standing structural issues in the energy and transportation sectors.

Mr. Africa said the government should pursue “real” reforms in the energy sector, including increased state control, to lower high electricity costs.

The next Congress should review the implementation of existing laws designed to enhance the country’s appeal to foreign investors, Mr. Barcelon said.

The BCCP supported the call for the monitoring of the implementation of investment-related laws.

“[It’s] critically important that the implementing rules and regulations are clear and obviously support the bill itself,” Mr. Nelson said.

Philippine business groups and foreign chambers are finalizing a joint list of priority reforms, which they plan to unveil ahead of President Ferdinand R. Marcos, Jr.’s State of the Nation Address in late-July, American Chamber of Commerce of the Philippines Executive Director Ebb Hinchliffe said in a Viber message.

The legislative agenda should also include measures facilitating technology transfers and upgrading the country’s cybersecurity capabilities.

The next Congress must prioritize legislation requiring foreign companies operating in the country to transfer technology and collaborate with local companies to spur domestic industry growth, Mr. Africa said.

“Too many liberalization laws sought to reinforce foreign investor privilege rather than strengthen Filipino industry or public enterprises,” said Mr. Africa.

A bill pushing for a review of foreign investments into the country should also be prioritized, he added.

“They can study current global foreign investment trends and, for instance, legislate strategic reviews of foreign investment where these are screened for their contribution to Filipino industrialization and even any national security risks,” he said.

Mr. Nelson said lawmakers must prioritize a cybersecurity bill in the next Congress. “This is a key issue across economies in the world.”

The Philippines’ weak cybersecurity systems have led to national security vulnerabilities and economic losses, with incidents ranging from foreign actors allegedly breaching the President’s office and stealing sensitive documents to more than 80% of businesses facing cyberattacks last year.

Congress should also look at prioritizing a measure mandating digital payment platforms for government and business transactions and amending the bank secrecy law, said Mr. Hinchliffe.