Marcos in his first SONA: 'State of the nation is sound'

MANILA, Philippines — While admitting that the Philippines is facing difficult times, President Ferdinand Marcos Jr. described the state of the nation as "sound" and expressed optimism that the country can withstand its problems, including the impact of the pandemic and rising commodity prices.

In his first State of the Nation Address (SONA), Marcos acknowledged that life has not been easy for Filipinos in the last two years and yet they continue to do everything they can to cope with the trials confronting them.

"We live in difficult times brought about by some forces of our own making, but certainly, also by forces that are beyond our control. But we have, and we will continue to find solutions," Marcos said during his address, which lasted for more than an hour.

"I do not intend to diminish the risks and challenges that we face in this turbulent time in global history, and yet, I see sunlight filtering through these dark clouds. We have assembled the best Filipino minds to help navigate us through this time of global crisis," he added.
 
"We will endure. Let our Filipino spirit ever remain undimmed. I know this in my mind, in my heart, in my very soul that the state of the nation is sound."

Marcos vowed to implement sound fiscal management and tax administration reforms to increase revenue collections.

"Expenditure priorities will be realigned, and spending efficiency will be improved to immediately address the economic scarring arising from the effects of COVID-19, and prepare for future shocks. Productivity-enhancing investments will be promoted," the President added.  

Marcos said measures like the Corporate Recovery and Tax Incentives for Enterprises Law and economic liberalization laws like the Public Service Act and the Foreign Investments Act would be capitalized to make the Philippines an investment destination. He vowed to provide full support to economic zones to lure strategic industries like those engaged in high-tech manufacturing, health and medical care, and emerging technologies and to promote growth outside Metro Manila.

The president also announced a plan to adjust the tax system, including imposing value-added tax on digital service providers, citing the need to "catch up with the rapid developments of the digital economy." The initial revenue impact of the measure would be about P11.7 billion in 2023 alone, he added.

Marcos promised to simplify tax compliance procedures and to pursue measures to determine possible undervaluation and trade misinvoicing of imported goods.

Fiscal strategy

Marcos' first SONA  also tackled the administration's medium-term fiscal strategy, which aims to achieve short-term macro-fiscal stability while supporting  economic recovery

Under the strategy, the government aims to achieve a 6.5% to 7.5% economic growth this year and a 6.5% to 8% real gross domestic product (GDP) growth annually between 2023 to 2028; cut the poverty rate to single digit or 9% by 2028; reduce the national government deficit-to-GDP ratio to 3% by 2028; cut the national government debt-to-GDP ratio to less than 60% by 2025; and elevate the Philippines to an upper middle-income status with $4,256 income per capita.

"Still, the economic growth momentum remains firm as demonstrated by the strong 2022 first quarter GDP growth at 8.3%.  However, the recovery process from the impact of the pandemic is still on-going amid elevated uncertainty in the international economic environment," Marcos said.

Marcos instructed the National Economic and Development Authority to coordinate with other agencies, work on the Philippine Development Plan for 2023 to 2028 and submit a complete blueprint and progress of its implementation by yearend.

'Full speed ahead'

Marcos promised to sustain and to expand the ambitious infrastructure program of his predecessor, former president Rodrigo Duterte, noting that the infrastructure system is the "backbone of an economy."

Infrastructure development spending would remain at 5% to 6% of the GDP, he added.

"We must keep the momentum and aspire to build better more. Necessarily, infrastructure development will remain a very high priority in our drive for growth and employment," Marcos said.  

"Once again, I will not suspend any of the ongoing projects as those have already been shown to be of benefit to the public that they serve. I will continue to study the proposals that have been made," he added.

Marcos said encouraging the participation of the private sector would enable the government to expand its infrastructure projects.

He vowed to modernize old railway systems, finish ongoing transportation projects, improve roads and modernize airports and seaports.

"My order to the Department of Transportation is simple: Full speed ahead," Marcos said.

Missed opportunity

Marcos admitted that the government has missed "a great opportunity" to develop the country's rail transport system, noting that it remains to be the cheapest way of transporting goods and passengers. 

He noted that there are a dozen rail projects on the ground, above the ground, and below ground at various stages of implementation, and with a combined cost of P1.9 trillion.

Marcos said his administration is committed to finish building approved railway projects such as the North-South Commuter Railway System, the 33-kilometer Metro Manila Subway Project, the 147-kilometer North-South Commuter Railway System, the 12-kilometer LRT-1 Cavite Extension, the 23-kilometer Metro Rail Transit-7 and the Common Station that will connect Light Rail Transit-1, MRT-3  and MRT-7.

Larger scale railway systems like the 102-kilometer Mindanao Railway Project; Panay Railway Project; and the Cebu railway system would be integrated as a vital part of the country's transport and communications systems, he added.

Marcos also promised to continue improving roads and transportation systems in key cities through various projects like the Cebu Bus Rapid Transit, Davao High Priority Bus System, Ilocos Norte Transportation Hub, and the El Nido Transport Terminal.

Digitalization efforts

Marcos also called for the digitalization of records stored in government warehouses and archives and revealed the government's targets for the National ID system.

He said the government is expected to issue 30-million physical IDs and 20-million digital IDs by the end of the year.  The target is to issue about 92 million IDs by the middle of next year, he added.  

The president also instructed the information and communications technology department to deploy digital connectivity across the country by implementing the national broadband plan and the common tower program and connecting geographically isolated and disadvantaged areas through the ‘Broadband ng Masa’ project.

"All relevant modes of digital transport should be utilized. These may be through a combination of terrestrial or submarine fiber optics, wireless and even satellite technology," Marcos said.