MANILA – Allies of President Rodrigo Duterte are poised to bag most of the vacant senatorial seats and London-based Capital Economics says this may do little to stop the slide towards autocracy and may ultimately be a negative for long-term prospects of the Philippines.
In its Emerging Asia Economics Update report released to reporters, Capital Economics said that with over 90 percent of the votes counted in partial and unofficial results, it looks as though all 12 senatorial seats will be won by either administration allies or supporters.
“The strong performance by Duterte’s supporters in the midterm elections should lead to further progress on pushing through economic reforms,” the report read.
“However, the results will do little to stop the country’s slide towards autocracy, and bode poorly for the country’s long-term prospects,” it elaborated.
According to the latest partial and unofficial results, no member of the opposition was able to enter the “Magic 12” as of 10:05 a.m. on May 16.
The closest, outgoing Sen. Benigno “Bam” Aquino IV, was trailing behind at 14 with 14,006 million votes, compared with reelectionist Senator Nancy Binay at 12th rank with 14,358 million votes.
“The result gives Duterte a majority in the in 24-seat Senate, and should make it easier for the President to push through legislation,” said Capital Economics.
“The Duterte administration has so far introduced a number of useful economic reforms, and we expect this to continue,” it elaborated.
Among the expected reforms to be tackled by the next Congress is the second package of the government’s planned tax reform program, the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) bill.
The bill, which seeks to lower corporate income taxes and rationalize fiscal incentives, is pending before Congress.
The measure also plans to lower the corporate tax rate – the current at 30 percent and said to be one among the highest in the region – to 20% by 2029.
“Reducing the complexity of the tax system and lowering the tax rate should, all else equal, provide a boost to investment,” said Capital Economics.
The outsourcing industry, however, earlier said the planned rationalization of tax incentives could be detrimental to the sector.
In the same report, Capital Economics flagged that with the results of the midterm results, this is likely to further “embolden” Duterte.
“Duterte’s increasingly autocratic tendencies, including his willingness to undermine political institutions and attack his opponents, have caused foreign investors to take fright,” it said.
“Duterte now has a good chance of being able to garnet the three-quarters majority support in the Senate which he needs to change the constitution,” added the report.
Duterte has long been pushing for the shift to federalism, but surveys have found that 67 percent of Filipinos do not support Charter change, and 62 percent are against a federal system of government.
“Duterte is trying to decentralize power across the country, a move we think would cause inequality across the country to widen even further,” said Capital Economics.
“The change also risks concentrating even more power in the hands of the country’s self-interested political elites,” it added.
Fitch Solutions also said that the latest partial and unofficial results of the midterm polls, should this be realized in the official count, could drag the Philippines’ Long-Term Political Risk Index score in the long-term. (GMA News)
