(First of a series on year 1 of President Rodrigo Duterte and his administration. Eds.)

'There's potential frustration coming up,' says SWS pollster Mahar Mangahas

MANILA – President Rodrigo Duterte came to office a year ago with high popularity ratings, but can the firebrand leader keep his promises and maintain his public approval scores for the rest of his 6-year term?

Duterte and his administration remain popular. A Social Weather Stations (SWS) survey last March showed his administration got a net satisfaction score of +66, considered “very good” in the pollster’s scale.

The key to maintaining high net satisfaction ratings is ensuring stable prices of consumer goods and services, SWS President Mahar Mangahas said.

“Inflation is usually the worst subject of all presidents,” Mangahas said in the “Change Has Come?” forum sponsored by the Ateneo School of Government. “It’s not economic growth…It’s stable prices.”

Duterte’s predecessor, Benigno Aquino III, fared well in fighting inflation compared to the past presidents, Mangahas said.

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The Aquino government's ability to contain inflation resulted in more people saying that their quality of life improved.

“The question is whether the new president can maintain the momentum,” Mangahas said. “He’s not starting from scratch; he’s starting from a fast-moving situation, a growing situation.”

Former Ateneo School of Government Dean Tony La Viña agreed, saying the public could overlook other flaws in governance as long as prices of goods are stable.

“Ever since, even [during the presidency of Ferdinand] Marcos, no matter how many atrocities [were committed]… it’s always economic,” he said.

La Viña said Duterte made perhaps the best decision on the economy when he chose Deputy Governor Nestor Espenilla to replace outgoing Bangko Sentral Governor Amando Tetangco Jr. Analysts saw this as a sign of continuity in monetary policy.

“Espenilla [was a] perfect appointment. Everyone says this is the right man,” La Vina said.

However, challenges remain for Duterte's goal to make economic growth inclusive.

TAX REFORM

The House of Representatives passed the President's tax reform package but projected revenues were halved. Interest groups have also opposed the measure, which seeks new duties on diesel and sweetened drinks.

Tax collection, which accounts for 14 percent of gross domestic product, also hasn't kept up with economic growth, said Ateneo de Manila University economics professor Alvin Ang.

“You need to either improve collection or change the way you collect taxes. That is important because the Duterte government wants to put a lot of money in social welfare,” Ang said.

“The challenge is to have the capacity to know if these are the right taxes… When you lower income tax but you charge more in terms of consumer goods, how will that affect prices?” Ang said.

La Viña said the government should brace for a potential backlash if the prices of consumer goods rise as a result of higher taxes.

“People will not get the debate [on the tax reform measure], but if they pay higher prices, they will get mad. It’s as simple as that,” he said.

“If they are able to show the rationale for the tax reform, such as the ‘Build, Build, Build’… I think people will welcome more infrastructure,” he added, referring to the P8-trillion infrastructure push of the Duterte administration.

INFRA PUSH

Rebuilding the country's transportation network is considered the cornerstone of the government’s economic blueprint.

Duterte believes that improving connectivity between urban centers and the countryside, building more roads and making travel easier by creating more transportation hubs, will spur economic growth and
attract more tourists.

Possible corruption and delays because of the government’s decision to adopt the so-called “hybrid” Public-Private Partnership (PPP) approach could slow down the infrastructure program, La Viña said.

Under the hybrid PPP, a portion of the funding will be sourced from Official Development Assistance (ODA), while operations and maintenance will be left to the private sector.

Concerns have been raised about this approach, as this will increase public debt and burden taxpayers.

Some businessmen also believe that ODA-funded infrastructure takes time to finish, and that the private sector can build these projects faster.

“If they are seeing that you are not going to build those trains, those public transportation [systems] on time, you might as well give me a vehicle,” Ang said. “But if you are going to tax the vehicle, this is where tax reform is crucial.”

Violence in Marawi City could hurt the economy since it could turn off tourists. The Tourism industry accounts for 12.7 percent of the work force, Ang said.

Being able to fulfill his promises is important for Duterte if he wants to keep his high popularity ratings, Mangahas said.

He cited a June 2016 survey which showed 63 percent of Filipinos believe Duterte will be keep “most” or “all/nearly all” of his promises, compared to 44 percent of Filipinos who said the same for then-President Aquino in September 2010.