Year 2 review: President Marcos’ hits and misses
Our preliminary assessment will be based largely on how the administration has tried to address Filipinos’ top three most important and urgent national concerns: controlling inflation (70 percent), increasing workers’ pay (36 percent), and fighting graft and corruption (26 percent), (Pulse Asia, March 2024).
Wins. Lower inflation rate. At 3.7 percent, the June 2024 inflation rate has decreased from the 5.4 percent recorded a year ago, now falling within the government’s target range of 2-4 percent.
Reducing the tariff on imported rice from 35 percent to 15 percent to make rice more affordable to consumers. Farmers have been reassured of substantial support through subsidies, alleviating their concerns over the reduced tariffs.
Article continues after this advertisementNew appointees, Francisco Tiu Laurel Jr. in the Department of Agriculture (DA) and Sen. Sonny Angara in the Department of Education, both have proven track records in their respective fields. Laurel previously led agricultural and fishery organizations while Angara championed the creation of the Second Congressional Commission on Education, serving as one of its commissioners.
Passage of the Ease of Paying Taxes Law, helping small and large businesses pay their taxes more conveniently, a significant step in curbing corruption and further ease of doing business in the country.
Misses. Failure to amend the Comprehensive Agrarian Reform Law. Farm fragmentations due to the agrarian reform program have resulted in low farm productivity. Increasing the five-hectare limit to 24 hectares will facilitate land consolidation and contribute to more competitive farming.
Article continues after this advertisementAchieving dependable and affordable power. The Philippines continues to have the highest power prices in Asean, next to Singapore. As of 2022, electricity here costs P9.86 per kilowatt-hour, higher than Malaysia’s P1.42/kWh, Vietnam’s P4.42/kWh, and Thailand’s P7.88/kWh.
The apprenticeship bill seeks to extend training periods from the current six months to a maximum of two years, mandating businesses to provide better training which will enable more Filipinos to qualify for and secure better jobs, as a skilled labor force attracts more foreign investors.
The e-governance bill could help curb red tape and improve the ease of doing business by digitizing standard processes like obtaining business permits, licenses, and clearances. This will also help reduce government corruption.
Areas for improvement. The government, with the support of the private sector, should relentlessly tackle inflation on the supply side by:
- Spending DA’s P167.5 billion budget more effectively to enhance productivity through sustained farmer financing and more farm-to-market roads, warehouses, and processing and packaging facilities. Private companies can work with the government on these initiatives to help lower food prices.
- Encouraging more power projects, including coal, which is still considered the cheapest form of power. While clean energy development should remain a priority, coal provides immediate and affordable baseload capacity.
Amendments to the warehouse receipts law should be pursued to help decrease post-harvest losses, enable farmers to sell produce at optimum time, and give banks and financial institutions more confidence to lend to the farmers.
Ramping up investment promotion and diplomatic initiatives. Bangko Sentral ng Pilipinas data shows that direct investment flows since the start of the Marcos administration to April 2024 amounted to only $3.3 billion compared to $19 billion of investment pledges announced by the Department of Trade and Industry (DTI). Philippine ambassadors and DTI attachés must continuously follow up on these pledges, including assisting potential investors in exploring joint ventures with Philippine conglomerates.
The President should convene and preside over the Legislative Executive Development Advisory Council at least once a month, to ensure that priority measures, especially those related to the top 3 most important and urgent national concerns of our countrymen are rigorously monitored and passed swiftly and can also be used to monitor the utilization of the national budget.
Conclusion. Our assessment on the second year of President Marcos’ performance is satisfactory. Achievements were made in terms of attempts to manage inflation, ease tax payments, and appointing key Cabinet leaders. However, more reforms, as stated in the above areas for improvement, need to be done to address Filipinos’ top three most important concerns, especially in managing the supply side of inflation. These will enable the Philippines to achieve upper middle-income status with a per capita GNI of $4,466 to $13,845. Presently, the Philippines is classified as a lower middle-income country with a GNI per capita of $3,950.
Despite some progress being made, the administration still has a long way to go in steering the country toward a more sustainable and inclusive growth. Our recommendations are just a few low-hanging fruits for the Marcos administration’s consideration.
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Gary B. Teves served as finance secretary under the Arroyo administration.
