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Post from Phnom Penh

The capital city of Cambodia is a sleepy little city whose dusty streets bake in the afternoon heat. It reminds me of some of our provincial cities—not even Cebu, or Davao, but smaller than them. Tuktuks dash around the streets, food stalls and outdoor cafes exude the fragrant smells of local cooking, and from time to time you’ll hear Buddhist chants echoing from ornate Buddhist temples.

Various reminders abound of the country’s dark past. A school called the “CIA First International School,” where I guess you might learn some unorthodox skills. An old hospital complex named after “Cambodia-Soviet Friendship.” And of course a couple of memorials to the “killing fields” of the seventies, according to the hotel’s city guidebook.

All this history doesn’t prepare you for the Sofitel hotel where we’re billeted, an immaculately modern establishment. Or, even less, for the Sukha hotel across the river, a sprawling structure with an enormous lobby and endless hallways, the site of this year’s World Economic Forum gathering on Asean.

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We’re here to cover this event because it will be graced by Duterte’s presence. Although the heads of state in attendance were limited to Indochina—Vietnam, Laos and the host country—he decided to show up as well, mainly as a show of support from this year’s Asean chair for the regional association’s newest members.

It’s interesting to see how much the President has grown into his position over the months. From mayor of a largeish city in Mindanao, to dark-horse winner of the presidency, to emerging regional leader and influence broker being courted by the big powers—it’s been a whirlwind ride, and his first year in office isn’t even done yet.

As he shares the stage with the three Indochinese leaders, his expression is serious. When introduced, he alone stands up, then proffers his trademark little bow. As he gives his talk—the only one to do so in English, of course—out come the audience’s cellphone cameras, flashing away. And when he finishes, a large chunk of the audience drifts out of the hall.

It was him that these early departers came to see. And I don’t think he disappointed, even if he refrained from the colorful language he reserves for local audiences. He rattled off facts and numbers about Asean, a sign his speechwriters were on the ball.

And again he raised the issue of drugs, which is not just our problem but also one for the region, based on the PNP’s latest intelligence about the involvement of three distinct ethnic groups: the Chinese meth manufacturers, the African distributors, and the Mexican-Siniloa cartel.

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At another venue in the hotel, several members of Duterte’s cabinet held forth to the international press in attendance about his newly branded Dutertenomics philosophy of economic governance.

The infrastructure agencies gave a good accounting of themselves and the ambitious projects they’re planning: A pan-Luzon expressway that will cut travel time between La Union and Camarines Sur to twelve hours.

Upgrading Clark airport to become the country’s second premier gateway together with NAIA. Even digging up Manila’s streets to build the country’s first subway system, partnered by a newly aggressive Japan that’s feeling the Chinese breathing down their necks.

One question that wasn’t fully answered, though, came from a German reporter who asked about the effect of all that infrastructure spending on the country’s investment grade ratings.

The short answer: With economic growth spurred by new infrastructure, our debt to GDP ratios are likelier to go down, rather than up. With interest rates low, our peso strengthening, and all the hard currency being earned by our OFWs and BPO, we can borrow, at home, as much as we can in the foreseeable future.

But there’s one caveat to that: We’ve got to reform our tax system in order to raise the additional taxes needed to support all that new leverage.

Tax reform is no longer a matter for the Duterte bright boys. It falls squarely in the laps of our honorable congressmen, with whom the tax reform bill is pending.

Unfortunately, we’re already hearing excuses about how Congress probably won’t be able to pass the law before they break up in May. This in turn is likely to push back tax reforms by up to a year, maybe all the way back to 2019.

And that in turn will delay all that infrastructure spending. Bottom line: A whole year of higher growth that may have to be given up because Congress can’t move as fast as they could and they should.

Will this in fact happen? That will depend on our people, especially our online warriors, and how fast they can click away at their keyboards to let the honorable congressmen know exactly what they think.

 

Readers can write me at [email protected]

Topics: Gary Olivar , Phnom Penh , Cambodia
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