Thoughts on Marcos’ first year
Our assessment of the Marcos administration’s first year in office is based largely on how it has addressed Filipinos’ top three most important and urgent national concerns: 1) controlling inflation, 2) increasing the pay of workers, and 3) creating more jobs.
Here are what we consider the administration’s five most important wins and five critical areas for improvement.
Wins:
Condonation of unpaid amortization and interests on the loans of agrarian reform beneficiaries (ARBs). It will give ARBs wider access to credit which would improve agricultural productivity as they can allocate more of their income toward purchasing agricultural inputs or expanding farming operations. This can also lead to more employment opportunities and overall economic growth in rural areas.
Ratification of the Philippines’ membership in Regional Comprehensive Economic Partnership (RCEP). Currently the world’s largest free trade agreement, the RCEP is expected to eliminate tariff rates for goods like canned tuna, coffee, coconut water, fruit cocktail, fresh papaya, durian, leather goods, bicycles, etc. This will help decrease the prices of these goods in the country.
Issuance of the Public Service Act (PSA) implementing rules and regulations (IRR), which can lead to more job-creating investments. The amended PSA opened various public utility sectors such as telecommunications and transportation to 100 percent foreign equity. The issuance of the IRR will now put the law to effect in attracting key investors. The passage of PSA amendments last year has allowed Starlink, a satellite internet provider, to invest in the country.
Amendments to the IRR of the Renewable Energy (RE) Act of 2008 opened the sector to more foreign investors at 100 percent foreign equity. This will help increase investments in RE projects in the country, create new jobs, and lower the costs of production which would help curb inflation. Recently, the Department of Energy welcomed a $5 billion investment from Copenhagen Infrastructure Partners to harness 2,000 megawatts of offshore wind power.
Unemployment rate for April 2023 reached a four-month low of 4.5 percent and underemployment rate declined to 11.2 percent in March 2023, the lowest since April 2005.Areas for improvement:
Amend warehouse receipts law to allow farmers to sell produce at the best time, earn better income, help decrease post-harvest losses, and give banks and financial institutions more confidence to lend to the sector. To better address supply chain issues, the government must also solve other components (e.g., farm-to-market roads, farming technologies) and reduce the influence of cartels and traders on the prices of agricultural products in the market.
Appoint an agriculture secretary who is directly accountable to the President and can focus on the sector, considering food prices remain high. However, since the President has decided to continue as agriculture secretary, he must focus on food consolidation, supply chain support, lowering production inputs, product diversification, and modernization.
Pass the apprenticeship bill and improve other skills training. The bill proposes a longer training period (from the current maximum of six months to a maximum of two years), which will allow businesses to provide better training while preserving workers’ rights, helping more Filipinos qualify for and get better jobs.
Ensure the economic viability and social desirability of the Maharlika Investment Fund (MIF). MIF’s success hinges largely on the competence and integrity of the fund managers and independent directors of the Maharlika Investment Corp. (MIC) who will be appointed by the President. They should focus on investing in projects that will yield higher financial and social benefits than what Landbank and Development Bank of the Philippines are currently earning from lending to their clients (around 5-7 percent per annum over five years). A higher rate of return could encourage local and foreign investors to invest in the MIF and, therefore, reduce its dependence on state funds for its continued existence. Improve the decision-making process by holding Legislative-Executive Development Advisory Council (Ledac) meetings frequently. President Marcos should not only convene but also preside over Ledac, which is a proven platform to synchronize the efforts of Congress and the executive branch. While the House passed 33 of the 42 priority bills in the Common Legislative Agenda, only around eight are directly related to the top three concerns of Filipinos. And only one has passed the Senate and will become law, which is debt condonation for farmers’ debts. Ledac should intensify its focus on bills that are both important and urgent. An example would be reforming the military and uniformed personnel.
Mr. Marcos won the presidency by a landslide and, understandably, public expectations are high. While there have been some accomplishments, there are still many critical areas of improvement that need to be addressed immediately. Accordingly, our assessment of the administration’s first year is satisfactory.
Our assessment of the government’s performance next year for the government will likely improve if it embarks on a relentless focus on the topmost important and urgent national concerns of Filipinos and, especially, if it continuously utilizes Ledac to consolidate insights and accelerate the passage of pending reforms.
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Gary B. Teves served as finance secretary under the Arroyo administration.
