Local economists were not that impressed with the President’s first State of the Nation Address (SONA) as the 72 minute-long speech contained mostly long-term measures and lacked efforts to address the country’s current inflation woes.
However, former Dean of the University of the Philippines School of Economics Ramon L. Clarete said the lengthy SONA said if the President could only achieve a third of his pronouncements, Clarete would be “happy” with the SONA.
“Most of what I heard he said are motherhood statements. They’re just simply correct, not controversial. I am less impressed but I could not complain. If he can just accomplish one third of what he promised, I’m happy,” Clarete told BusinessMirror.
Clarete expressed dismay that the SONA lacked efforts to “fight inflation, or raise farm productivity and incomes of farmers.” Some of his recommendations included the increase in the land retention in agricultural lands and developing Public Private Partnerships for agriculture.
He also said his recommendations would have included raising existing taxes and reducing aggregate demand to fight inflation.
Ateneo Eagle Watch Senior Fellow Leonardo A. Lanzona Jr. also told BusinessMirror that the SONA lacked short-term measures needed to “get our of the current difficulties” being experienced by the country.
“The speech does not address the need for solving the current hunger and education crises. The President does not realize that action is needed now and not in the future,” Lanzona said.
“Failure to respond to these challenges now will cause the nation to drift lower on its production frontier as the quality of its resources, especially labor, diminishes. These short term concerns are going to affect the way we progress further,” he explained.
Lanzona added that the SONA should have included efforts to innovate and develop institutions particularly by investing in human capital. Some of the changes proposed by the President, he noted, would actually lead to employment losses.
He also said the speech did not tackle how the government intended to support workers who were adversely affected by certain changes. “It is disappointing that none of the legislative priorities dealt with education which is a necessary condition for undertaking these technological innovations and institutional development,” he explained.
Meanwhile, Action for Economic Reforms (AER) Coordinator Filomeno Sta. Ana III said while the SONA was peppered with many programs and projects such as those for health and education, there was little mention of how this will be financed.
Sta. Ana said, however, that the tax reforms mentioned by the President were continuations of what the Duterte administration intended to pass but were unable to complete.
Among these, he said, were the reforms on real property valuation and passive income and financial transactions which Sta. Ana said should be pursued. However, he noted that these reforms were not designed to be revenue neutral.
“So the government must still find additional resources for the promises made. That’s why one of the things (needed to be done) is to increase sin taxes, which even DOF (Department of Finance) has said is an important source of increasing revenues,” he explained.
Meanwhile, University of Asia and the Pacific (UA&P) economist Peter Lee U said nuclear energy deserves a second look given recent developments in nuclear technology. However, he does not think this will lead to the revival of the Bataan nuclear powerplant.
U said the President’s statements that support renewables are welcome, considering that some of these technologies may no longer need subsidies.
“Conventional power is still needed for baseload. The trick for all of them is to make the investment environment conducive to attract investors,” U told this newspaper. ###
Image credits: Bernard Testa