The debate in the Senate between Senators Cynthia Villar and Raffy Tulfo on whether a land use legislation should be enacted because farmlands are dwindling and being converted to subdivisions and creating a problem of supply of our agricultural food products, particularly rice, brings to fore a critical economic issue.
Villar, whose family is into building subdivisions, countered that they tap selective areas away from the rural areas; where the law does not prohibit building affordable, accessible housing, which is likewise a critical need for the growing metropolis. Businesses are justified to go into growth and expansion, where not disallowed by law, opined Villar. True. Also, local government units can do zoning more effectively according to their needs.
Our areas for rice and corn supply or herd farming, however, at an alarming pace have given way to higher-value land conversions into subdivisions and business centers. Both senators are right, that while big business growth cannot be held back on one hand, on the other, there ought to be sensible laws, national or local, for proper and/or optimization of land use, to balance the needs.
The two senators can explore parochial views of land use. The practical side: take, for instance, the farmer who owns five hectares of rice land, say in Cavite or nearby Bulacan, hardly earning from toiling his farm, would rather sell it to a developer and grab the opportunity to earn good value for his farm, instead of sweating it out from dawn to sunset. In these hard times, why suffer in poverty with your family when you have this chance of a lifetime?
The country is suffering from gross out-of-sync land usage. Farmlands are all over Mindanao and in northern Luzon and the Bicol areas, waiting to be tapped, but lying fallow. That’s where we should be developing farms, not near the expanding metropolis. No significant development has happened in their provincial lairs that’s why our kababayan crowd into Metro Manila, or face starvation. Why then hasn’t the country done this development thrust?
We cannot develop farms and industries because we are not generating enough internal savings within the country to invest and develop our own industries. World Bank 2021 survey said we are 14th among 16 countries in savings rate vis-à-vis gross domestic product (GDP) with 20.22 percent, compared to 29 percent average. Singapore is highest at 44.24 percent of GDP. Not only do we spend more than what we can earn, we borrow to justify our spending habits.
Our need for capital infusion conveniently points to borrowing. But most of our loans have been used for government deficit spending, not infrastructure-building. Our government loans have now reached P13 trillion, doubled in six years, and the economic prospects are quite dim for any more new loans. Foreign investments is the need of the hour.
Foreign direct investors still await implementing policies and guidelines in line with the recent trade liberalization amendments. We have yet to hear any pronouncements on them. We had the Philippine Economic Zone Authority where the law granted several years of special policies for foreign manufacturers; these companies hired many of our workforces and generated huge tax revenues for us. A special corporate tax of 5 percent on gross revenues in lieu of all national taxes was the come-on; it freed them from vexatious revenue examinations and regulations. The 5 percent on gross is not only practical, it is even higher tax than what government can get from the average regular corporate tax filings. Most companies we know end up with net taxable income of 10 percent of revenues; at 25 percent corporate tax, that will bring in taxes for the government of only 2.5 percent of gross!
Foreign investors just need the right environment for ease of doing business like those of Singapore or Vietnam, which is now an industrial manufacturing hub for many foreign companies and is getting much higher foreign direct investments than us. Both countries have special laws that grant lower taxes, protected investments, and allow the repatriation of earnings, and in all, are encouragements for them to stay on.