In his first State of the Nation Address (SONA), President Ferdinand Marcos Jr. left no doubt that his regime would continue the path toward neoliberalism. The general direction for the economy that Marcos Jr. outlined will lead to more liberalization and privatization at the expense of genuine national development, Filipino industries, and local jobs and livelihoods.
He opened his SONA with this pronouncement on the macroeconomic blueprint that his administration will pursue: “Our country must become an investment destination, capitalizing on the Corporate Recovery and Tax Incentives for Enterprises or the CREATE Law and the economic liberalization laws such as the Public Service Act and the Foreign Investments Act.”
Marcos Jr.’s priority is to ensure that the neoliberal policies that his predecessor Pres. Rodrigo Duterte passed are maximized to create the most favorable environment for big businesses, including foreign capital. To become an investment destination, the administration will provide massive tax breaks to corporations through the CREATE Law and provide foreign companies more profit-making opportunities with the amended laws on public services and foreign investments.
According to the research group IBON Foundation, the CREATE Law would provide around ₱372 billion in additional profits for corporations from 2021 to 2023, an amount that also represents revenue losses for the government.
The Public Service Act or Republic Act (RA) 11659, which Duterte signed into law just six weeks before the national elections, paves the way for 100% foreign ownership in telecommunications, railways, expressways, airports, and shipping industries.
These policies tie up to the infrastructure development program of the Marcos Jr. regime, which will be pursued through public-private partnership (PPP) or privatization. As he declared in his SONA, he will keep the momentum of Duterte’s “Build, Build, Build” program with “Build Better More.”
Allowing greater corporate, much less foreign, control over critical public infrastructure is flawed development planning. More than anything else, infrastructure development is meant to provide essential services that address the country’s economic and social needs based on a clearly defined national agenda. Turning over the design, construction, management, and operation of infrastructure to private and foreign interests primarily motivated by profits distort at a fundamental level such orientation of an infrastructure development program.
The Philippines already has a long history of how privatized infrastructure caused massive burdens on the people and the economy. Exorbitant user fees for the use of rail transit, toll roads, and power and water services, among others, have made the cost of decent living increasingly unaffordable for many Filipinos. Meanwhile, valuable public resources are siphoned off to guarantee the profit rates of private corporations involved in PPP projects.
Moreover, complete foreign control over critical infrastructure like telecommunications could compromise national sovereignty and security. A glaring example is China which has already established a strong presence in the country’s infrastructure development through Duterte’s Build, Build, Build program. Marcos Jr. has declared his regime’s plan not just to continue this relationship with Beijing but even to shift it into a “higher gear.” The expansion of Chinese equity in the global telecommunications industry, including in the Philippines, is creating legitimate concerns about security risks and vulnerabilities such as espionage and acquiring vital information.
Marcos Jr.’s push in his SONA to make the country an investment destination through liberalization will further stunt local capital development and undermine our long-term industrialization. The amended Foreign Investments Act or RA 11647 allows foreign nationals to own an enterprise with a minimum paid-in capital of just US$100,000. It opens the floodgates for stiff and undue foreign competition that could drive the bankruptcy of more Filipino micro, small, and medium enterprises (MSMEs). It also exposes the local workforce to foreign competition as 100% foreign-owned MSMEs are only required to hire a minimum of 15 Filipino employees from 50 under the old law.
While potentially destroying more jobs with his preferred economic policies, Marcos Jr. has also signaled in his SONA that his administration will continue to impose new taxes on the consumers, another neoliberal agenda. He cited, for instance, the value-added tax (VAT) on digital service providers that will burden consumers with an additional ₱11.7 billion in new taxes in 2023 alone.
All of these make the SONA promises of Marcos Jr. on prosperity for the people, including the attainment of a single-digit (9%) poverty rate by 2028 and upper-middle-income status with a per capita income of US$4,256 by 2024, ultimately meaningless. Without a radical shift from the long-discredited neoliberal paradigm, the Filipino people are doomed to greater destitution and exclusion under the Marcos Jr. presidency. Economic production may increase (i.e., the SONA targets an annual growth rate of as high as 8% in our gross domestic product or GDP from 2023 to 2028), but income and wealth will remain heavily concentrated in the hands of the local elite and foreign businesses.
The President did make notable commitments to address the plight of landless farmers, such as the one-year moratorium on the land amortization and interest payments of agrarian reform beneficiaries (ARBs) via executive order, towards the condonation of such debts through a new law. But consistent with his neoliberal policy bias, Marcos Jr. was silent in his SONA on reversing the decades of neoliberal restructuring of agriculture that has driven millions of farmers into landlessness and bankruptcy. He instead talked about strengthening the value chain, which in the context of the country’s neoliberal agriculture means deepening the ties to the global market and enhancing land monopoly that harm local food security and destroy farmers’ livelihood.
Marcos Jr. spent a substantial portion of his SONA presenting his regime’s plans for the economy amid the daunting global and domestic challenges confronting the country. But what he gave, unfortunately, are hollow targets based on the obsolete and failed policies of liberalization and privatization. Like his predecessors, Marcos Jr. worships unaccountable foreign capital as the driver of economic and national development instead of a more significant government role in the provision of public services and protection of domestic agriculture and local industries, especially the MSMEs and small food producers.
The COVID-19 pandemic and its disastrous socioeconomic impacts are teaching policymakers to be more inward-looking in terms of development planning. Marcos Jr. and his team of recycled neoliberal bureaucrats are not learning, or refusing to learn, the lesson. ###