A year of policies, priorities and opportunities
On July 24, 2023, President Ferdinand Marcos Jr. is set to deliver his second State of the Nation Address (SONA). More than an annual tradition and a constitutional obligation, the SONA is an important event where the chief executive proposes the legislative priorities to Congress.
For his first SONA, PBBM stated that the economy is one of his priority areas. This made sense considering the challenges at the start of his term: recovering from the economic impact of COVID-19, highest inflation rate in 14 years, dealing with the effects of the Ukraine-Russia conflict, food and energy security issues, dwindling foreign reserves and inheriting a P12.8-trillion debt from the past administration. Now that we’re awaiting the second SONA, let’s review some of the top policies, priorities and opportunities generated from the administration’s first year.
Setting the direction
Early on, the administration identified the following as its economic goals: sustain the rapid expansion of gross domestic product (GDP) seen in 2022, generate high quality jobs, and meaningfully reduce poverty.
To achieve these goals, a stellar team of economic managers was assembled to help craft the necessary policies. This was an impressive first move as we saw the appointments of technocrats who have held key leadership positions and served previous administrations.
In a span of six months from the first SONA, the Philippine Development Plan (PDP) 2023-2028 was approved, serving as the blueprint for the administration’s socio-economic policies. This approval is relatively fast compared to the previous two administrations. The PDP of President Duterte was approved in a span of seven months after his first SONA while President Aquino’s was 10 months.
The PDP intends to promote human and social development through improved health care and education systems, create more quality jobs, and foster an enabling environment for a prosperous, inclusive, and resilient society.
While it’s too early to measure the results of the PDP, job generation data as of April 2023 is encouraging. The unemployment rate declined from 5.7 percent in April 2022 to 4.5 percent in April this year, while the underemployment rate dropped to 12.9 percent in April 2023 from 14 percent last year. These are positive developments that must be sustained in the next few years, and this can be done through key policies that align with the government’s economic goals.
Notable policies
One of the government’s key policies is the creation of Green Lanes for Strategic Investments (Executive Order No. 18). This mandates government agencies to establish green lanes to expedite and streamline processes (i.e., issuance of permits and licenses) for strategic projects that create high-value jobs and attract foreign and direct investments.
The Philippine Export Development Plan (PEDP) 2023 -2028, which aims to boost the performance of our export industry, has also been approved. Trade and Industry Secretary Alfredo Pascual says the PEDP will help address production constraints, develop an innovative export ecosystem, and increase the country’s mindshare in the global market. The priority industries under the PEDP are industrial machinery and transport, technology, health, media, and telecommunications.
Moreover, the Legislative-Executive Development Advisory Council (Ledac) has included important policies in its priority legislation.
An example is the Government Financial Institutions Unified Initiatives for Distressed Enterprises for Economic Recovery (GUIDE) Act, which aims to provide financial assistance to MSMEs that were affected by the pandemic.
Another promising policy is the E-Governance Act, which aims to improve the ease of doing business by establishing online payment systems for businesses and creating integrated and interoperable networks for the delivery of government services.
These policies have passed in the House and are pending approval in the Senate. Overall, these policies have the potential to boost investments in key industries and help provide quality jobs for Filipinos.
Challenges and opportunities
What are the economic challenges and opportunities that await the current leadership’s second year?
We must note that the administration is targeting to reduce the country’s poverty rate to a single digit (8 or 9 percent) by 2028 — a tall order considering that the PSA’s latest data (2021) show that the Philippines’ poverty rate is at 18.1 percent. Furthermore, the Department of Social Welfare and Development (DSWD)’s Listahanan 3 survey for 2022 found that more than 5.6 million families were living in poverty.
The challenge is to make sure these potential investments bear fruit and that Filipinos feel a meaningful improvement in their living standards
One way to respond to this challenge is for the executive leadership and the Senate to align in approving the aforementioned bills.
In addition, the government must prioritize the proper implementation of proposed policies such as the Maharlika Investment Fund (MIF) Act, which aims to facilitate strategic investments in key sectors for economic development. The policy must serve its purpose of financing development projects so it can fulfill its role as a “vehicle for economic growth” per the administration’s economic team. Safeguards must be put in place in the implementing rules and regulations to protect the fund from abuses and mismanagement.
There are also promising opportunities due to the investment pledges from the President’s friend-to-all stance in foreign relations. According to Malacañang, the President’s foreign trips have generated a total of 116 investment projects amounting to P3.48 trillion. The next step is to ensure that these pledges translate into concrete projects that can propel business opportunities, improve our competitiveness and in turn, generate new high-quality jobs.
Forging ahead
Public policies significantly impact the lives of many Filipinos because they will institutionalize the necessary courses of action for an improved investment climate, more efficient government services, and better employment opportunities. For the second SONA, we must look beyond the accomplishments and see what the administration’s next priority policies will be. These will chart the country’s course in the succeeding years and help in the realization of inclusive economic growth that will be felt by every Filipino.
Emilio “Jun” Neri Jr. is lead economist and senior vice president at Bank of the Philippine Islands. One of the country’s top economists, he was ranked 1st by the Department of Finance (DOF) for accuracy of GDP projections in years 2016-2018. In 2019, he was recognized by The Asset magazine as the Philippines’ Best Local Currency Bond Individual in Research.
