WALA LANG
The State of the Nation (SONA) delivered by President Ferdinand R. Marcos Jr. last week is the roadmap of the journey we are beginning.
The mission is clear: (a) for GDP (goods and services produced, net of imports) to grow by 6.5 percent to 8.0 percent each year from 2023 until 2028; (b) to create enough jobs so as to provide employment and income to an increasing population; (c) to reduce the gap between rich and poor, such as to reduce poverty incidence to nine percent from last year’s 23.7 percent; (d) to raise per capita income to $4,256 from the estimated $3,858 in 2020; and (e) to keep the inflation rate at between 2.0 percent and 4.0 percent per annum starting in 2024.
Foreign and domestic investment is needed to make the mission possible. Investors will come with assurance of a reasonable return on investment. That will be possible with policy refinements and with energy, transport, communication, and other infrastructure. Public debt was already about 58.1 percent of GDP in 2021 and with the objective of keeping it below 60 percent, the necessary capital expenditure has to come from taxes and other government revenue and from changes in budgetary priorities.
The economic team appointed by the President is top rate and no doubt working on economic models to devise alternative scenarios that will attain the objectives of economic growth and income distribution while keeping inflation and Balance of Payments under control. Prevailing economic, social, and political institutions and practices complicate matters. Decisions are needed on the extent, combination, and timing of action on fiscal policy (taxes, tariff, public expenditure, debt) and monetary policy (money supply, interest rates) as well as regulatory measures (energy and utility rates), legislation, administrative processes, and any number of possible ways and means that can be marshalled to attain the ambitious goals.
The first hundred days of any administration are critical. They color public perception of leadership quality and the level of confidence in their directives. The new administration inherits challenges from both internal and external sources: rising energy cost and the depreciating peso and the consequent inflation. Increases in transport and food cost affect the daily life of millions. As if these were not enough, there is also the specter of supply shortage considering our dependence on food imports, climate change, and the war in Ukraine. Already affected are harvests and shipment schedules—never mind the price—of certain item like flour. There is also the possibility of a domino effect of oil price increases on cost of living and minimum wage, doubling back to production cost and price levels.
The President has emphasized the need for reviving deteriorated and abandoned railway systems and improving public transport particularly in Metro Manila and Cebu. Implemented quickly, these would have great positive impact.
The prime growth generators identified by the President are agriculture, tourism, and OFWs.
With hope, we can produce by 2028 enough rice, sugar, poultry, and smaller livestock to reduce our dependence on imports. The President has identified the need for financing, farm-to-market roads, and support for farm inputs and agricultural research. He has ordered the condonation of unpaid agrarian debt. Other measures require time and a lot of hard decisions and tradeoffs. It is clear that progress in agriculture needs mechanization, the return of brains, brawn, and entrepreneurship to the rural areas, of young people from the enticements of BPOs and overseas work. Agriculture has to be profitable; farmers have to earn enough to maintain a respectable standard of living. Enough land has to remain permanently agricultural. All these involve hard decisions and political will to ensure that our laws on agrarian reform and land conversion do not frustrate agricultural objectives.
Attracting investments in manufacturing also involves tradeoffs and hard decisions, as well as energy, transport, communication, and other infrastructure needs. Tax incentives and ecozones would help attract foreign investment but will mean foregone revenue. It is also no secret that certain labor law provisions discourage investors and indeed discourage employment in favor of capital-intensive processes.
The President mentioned the need to reduce red tape and for faster action on OFW documentation and related matters. He cited the need to increase tax and customs collections, highlighting the revenue potential of online business.
Indeed, significant economies and greater efficiency would be achieved by a review of government processes. Streamlining procedures, regulations, forms, reducing the number of initials and signatures, limiting documentary submissions and clearances, would do wonders not only in savings and in reducing opportunities for graft and corruption, but also in making it easier to do business.
The number of government departments, bureaus, offices, commissions, centers, staff, chartered agencies, GOCCs has multiplied. In many cases, inefficiency in one agency is solved by creating another agency. Government reorganization was P.D. No. 1 under Martial Law. A reprise would mean not only reduced expense but also a more efficient government that attends to national requirements and individual needs more expeditiously.
Planning horizons are understandably three years for local officials and six years for national officials. This leads to projects that can be completed and/or benefit people only during the officials’ term of office. Floods and landslides are solved by building concrete canals and retaining walls or drainage systems, not planting trees whose loss caused the disasters in the first place. Lack of water is solved by digging wells and not by building dams. Tax money is spent on a basketball court that makes a barangay happy rather than a public market that can serve a larger area. The list goes on.
Like any leader, a President needs to motivate, plan, organize, and control if his or her campaign promises are to be fulfilled. President Marcos’ decisions in these first weeks and the roadmap he presents in the SONA are encouraging first steps of a 2,191-day journey.
Let us all work together so that on June 30, 2028, we can stand with President Ferdinand R. Marcos Jr. when he declares, “Mission accomplished.”
Comments are cordially invited, addressed to [email protected].