ON SONA 2024: Not Yet Out of the Woods

Capping off what may be the most eventful year of his term by far, President Ferdinand Marcos Jr. delivered his third State of the Nation Address (SONA) on Monday. And while it is easy to drown out with the political turmoil that has stirred the country for the past months, Marcos Jr. made it a point to highlight his administration’s economic achievements on the road from pandemic recovery. But despite the numerous headways he stated, it is safe to say that there is a lot more work to be done to ensure the long-term success of the Philippine economy.

To kick off his speech, Marcos Jr. pointed to market forces – brought about by wars overseas, supply problems, and force of nature – as the primary determinants of price. However, government interventions could have done better in easing the rising prices amidst the disruptions to the market. 

For instance, the president implemented a month-long price ceiling on rice last year to address the accelerating inflation. This controversial policy even led to the ‘forced resignation’ of Finance Undersecretary Cielo Magno who spoke out against the matter by posting a simple demand and supply graph on her Facebook. True enough, the price cap did not yield the expected lower prices. While it decreased the average retail price of rice in the month it was implemented, rice prices have been on a steady increase since the cap was lifted. This means that the price ceiling was just a band-aid solution and did not necessarily fix the problems surrounding the rice industry.

Aside from the price cap, the chief executive also bannered the reduction in tariffs for rice, corn, and pork to ease the domestic retail prices. However, historical data from IBON Foundation shows that since the implementation of the Rice Tariffication Law which allowed the unlimited importation of rice, its inflation has been on continuous rise, from 4.5 percent in February 2019 to 23.7 percent in February 2024. This shows that flooding the market with ‘cheaper’ imports does not automatically result in lower prices. 

Instead, the government should be focused on supporting the local production of agricultural commodities to further boost the market supply and drive down prices, just like what Marcos Jr. highlighted in his SONA. Farm-to-market roads and irrigation systems are a good starting point but the government must go beyond infrastructure to maximize the productivity of the agriculture sector. The World Bank already recognized agriculture as a key ingredient in the Philippines’ road to recovery and to make this work, they underscored the need for more investments in public goods, not just infrastructure but also in research and development, among others.

Another important note in the president’s agriculture agenda is the optimism surrounding the KADIWA stores, paving the way for its continuation and eventual permanence. While these outlets provided consumers access to cheaper prices, they are just mere distortions of the market. First-hand accounts even show that the prices in KADIWA stores are not much different from the normal market prices and that if there are any savings from buying in these stores, they are offset by the cost of transportation due to the inaccessibility of the KADIWA. It is important to offer cheap alternatives to the people, especially to the poorest of the poor. However, if Marcos Jr. means business in helping the people, government efforts must be geared towards the lowering of prices for all people, not just a select few.

Meanwhile, on the part of infrastructure, the chief executive placed emphasis on government projects to address the electricity problems throughout the country. Most notably, the “unified Philippine grid” brought about by the Mindanao-Visayas Interconnection Project is expected to increase the reliability of electricity supply especially in the southern part of the archipelago. While transmission mechanisms have improved, this means that the Philippine grid is now connected to a larger demand base, which would require higher power generation. In this matter, the government must see to it that the supply of electricity meets the demand because if it is not, then the interconnectivity of the Philippine grid would not matter if the nation would have recurring blackouts.

Besides the electricity infrastructure, Marcos Jr. also stressed the transportation-related infrastructure projects including various expressways like the Central Luzon Link Expressway, NLEX-SLEX Connector, Cavite-Laguna Expressway, and the C5 South Link. However, these roads only provide relief to the car-owning public which in turn promotes car dependency, leading to further traffic congestion. Instead of focusing on road construction, the government needs to shift its attention to public transportation which moves a lot more people than private cars. The EDSA Carousel is a testament to how incentivizing active transport can help reduce the traffic volume in roads. This will be furthered with the construction of railway projects like the MRT-7 and the North-South Commuter Railway. However, efforts in improving public transportation should be sustained in order to fix the traffic woes in the long run.

Moving on to the economy as a whole, the president highlighted the realization of investment pledges he gathered throughout his foreign trips. In particular, he stated that the operation of these pledges would yield 202,000 jobs for Filipinos, attributed to the materialization of around 14.2 billion dollars in investment pledges. However, the actualized investments are only 20 percent of the 72.2 billion dollars in pledges that the chief executive has secured from his trips abroad, which leaves around 58 billion dollars of investments hanging in the balance since they remain as pledges. Marcos Jr.’s overseas trips did bring investments into the country, but it cannot be branded as a success if a huge part of the fruits he reaped are still promises.

The economy is indeed in a far-better position than it was when the president took office. However, the big caveat is that it is coming from a low base, which brings everything the country achieves on the positive side. If this administration is truly committed to making long-term strides in improving the Philippine economy, efforts must be made to address the core issues affecting the ordinary Filipino – inflation, traffic, and a lot more. The macroeconomic numbers will not matter if the people cannot feel the supposed successes of the economy, because the fact that the Filipinos still suffer means that we are not out of the woods just yet.