Noy touts economic gains

MANILA, Philippines - A stable economy with the highest GDP growth in 40 years and second best in Asia after China; a million jobs generated as of January further reducing unemployment, and reduced number of overseas Filipino workers from 10 million to eight million in five years under his stewardship.

These are among the achievements President Aquino will highlight when he delivers his sixth and final State of the Nation Address (SONA) today before the joint session of Congress at the Batasang Pambansa complex in Quezon City.

The President is also expected to mention the lower incidence of self-rated hunger, citing surveys that showed it was the lowest in 10 years, as well as the end of shortages in classrooms and textbooks.

He is also expected to mention the 7.4 million graduates of the Technical Education and Skills Development Authority, the 4.4 million conditional cash transfer beneficiaries, and the 85 percent coverage of PhilHealth.

Under the Aquino administration, people now have more stable and permanent jobs and not short-term contractual employment, officials said.

They say the Philippines under Aquino has been a magnet for foreign investment over the past five years, pushing its stock market to record highs and lowering the cost of debt.

However, the looming change in the administration next year reintroduces an old risk – political uncertainty.

Since Aquino won the presidency in 2010 promising reform and clean government, the Philippines has outpaced its neighbors and drawn money into its markets.

But with elections next year, and global volatility pushing investors to seek safe havens, the uncertainty over his successor is a reason for caution.

In the June quarter, foreign investors sold a net $700 million of shares – the most since the Asian crisis in 1998. Still, they are net buyers of more than $4.6 billion of stocks since Aquino assumed office.

Since presidents under the Constitution are limited to serve a single six-year term, Aquino’s final SONA today will keep the succession issue prominent.

“The Philippines has, over a long period of time, suffered from cycles of better governance and poorer governance,” said John Forbes at the American Chamber of Commerce in Manila.

“It is in a cycle of better governance right now but it has not proven its ability to make that sustainable in the long run,” he said.

“The risk as we move forward into 2016 is that whoever takes over may not impart the same economic stability as this president,” JP Morgan economist Sin Beng Ong added.

Slowing but strong

Sputtering global demand saw exports post their biggest annual fall in more than three years in May. Slower world growth could trim remittances from the millions of Filipinos overseas that underpin domestic demand – the main economic engine.

Manufacturing output has fallen and net foreign direct investment halved to $1.2 billion in January-April from a year earlier.

“The slowdown in the Philippine economy is happening faster than we thought,” UBS bank economists wrote in a report, chopping their 2015 growth forecast to 5.7 percent from 6.5 percent.

Still, the Philippines is weakening from a position of relative strength. Gross domestic product grew by an annual 5.2 percent in January-March.

While down from 6.6 percent in the final quarter of 2014, the Philippines was still faster than growth in Indonesia, Singapore and Thailand.

“The economy continues to grow, inflation rate is low and stable, the international reserves are sufficient to cover the requirements of the economy, the banking system remains sound,” Bangko Sentral ng Pilipinas Governor Amando Tetangco said.

Election uncertainty

Ahead of the October deadline for nominations for the 2016 elections, some government officials may resign to run for office. This could disrupt government spending, weighing further on growth.

“The main risks in the Philippine economy these days are on the fiscal spending side,” said Eugenia Victorino at ANZ Bank, who reckoned growth could reach 6.1 percent if the government can “ramp up spending very fast from now until October.”

The 1987 Constitution limited presidents to single terms to guard against authoritarian leaders.

And with no obvious successor waiting to sustain Aquino’s reforms, others note that the strong growth of recent years will not continue by itself.

“There is no doubt the Philippines can grow faster and raise its potential further,” said Shanaka Jayanath Peiris, the representative of the International Monetary Fund in Manila.

He added this would require improvements to infrastructure and regulation.

Tetangco said the BSP would do its part to ensure a smooth transition in 2016.

“Whoever is going to be the next president, I think reforms will be sustained and the thrust toward more market friendly policies will continue. BSP will still be there,” he said.

Administration allies, on the other hand, said Aquino should not say goodbye in his SONA today, but to instead lay down his post-2016 agenda.      

“The President should never say goodbye. Even after he bows down, he can transform himself into a moral leader to influence the course of nation building,” Quezon City Rep. Winston Castelo said.

“The President should set the agenda after he leaves office and make sure his successor follows his Daang Matuwid (straight path) core advocacy,” he said.

Castelo said he expects Aquino to indicate his preferred successor but he should not name him because the SONA is about the presidency and the state of the nation.

“The President should find a perfect occasion to name his preferred successor, but certainly not the SONA, which is strictly a state affair not intended for power play,” he added.

Castelo pointed out that Aquino should ensure a smooth transition to his successor who should continue the reforms he has started, including his anti-corruption campaign.

Isabela Rep. Rodolfo Albano III agreed with Castelo that Aquino should ensure the continuation of the reforms he has started by choosing the right person to succeed him when he steps down on June 30, 2016.

Vice President Jejomar Binay said he will attend the SONA and listen what President Aquino has to say.

Binay, however, refused to comment on what he is expecting from the SONA.

“It is hard to speculate. I cannot say anything about it yet. We just have to wait and listen to his message,” Binay said.

Binay said that in spite of the political differences he had with the President, he still considers Aquino as his friend. 

“Somehow, may pinagsamahan kami (we’ve been through times together) and what I am today, I owe it to his mother,” Binay said, referring to the late former President Corazon Aquino.

Binay also explained that somehow he acknowledged the fact that Aquino appointed him to the Cabinet.

Binay, embroiled in a corruption controversy, resigned as presidential adviser on overseas Filipino workers’ concerns and as chairman of the Housing and Urban Development Coordinating Council.

Following resignation from the Aquino cabinet, Binay went full speed ahead on his plans to seek the presidency in the 2016 elections.

Trumpeting

Aquino has been trumpeting his accomplishments in many of his speeches, both local and foreign, saying he beat all of his predecessors, most particularly former President and now Pampanga Rep. Gloria Macapagal-Arroyo whom he consistently blamed for the country’s woes.

He said an assessment among members of his economic team showed that while the local economy usually grows by an average annual growth of 6.3 percent GDP, the current administration stands alone in terms of reaching its peak.

“For the past 40 years this is the highest rate of growth. If we could gain the seven to eight percent growth this year, we could set the record of achieving this accelerated growth for the past 60 years,” he said.

Aquino said the country’s economy reached its peak under his watch and that overseas Filipino workers have started coming home.

As funds are disbursed judiciously, Manila can no longer be regarded as the “Sick Man of Asia” but as the new “Darling of Asia” with investment grade status and a robust economy – the second highest performer in Asia next to China.

“We achieved 6.3 percent average GDP growth every year since 2010 up to 2014 and of course this year,” he said.

Aquino attributed this to his policy of having “inclusive growth,” one that does not widen the gap between rich and poor, and where social services can be directly felt by the masses and opportunities are not limited to the upper class.

This is on top of the all-time high foreign direct investment of $6.2 billion in 2014, although the Philippines still lags behind most of its Asian neighbors who got double digit foreign investments.

Great expectations

Senate President Franklin Drilon said the President is expected to outline his accomplishments in the last five years of his term. This includes reforms, the fight against corruption and improvement in the economy.

Drilon will lead the senators at the opening of the joint session of Congress in the last SONA of the President.

He expressed belief that the Aquino administration’s straight path campaign made significant changes in the country. 

While there was controversy on the alleged misuse of the pork barrel fund allocations by some lawmakers, Drilon said this was uncovered during the current administration and necessary safeguards were put in place

For his part, Sen. Ralph Recto said he wanted to look into the “technical report” on the SONA and the proposed P3-trillion proposed budget for next year, which is 15-percent higher that P 2.6-trillion in 2015.

The technical report indicates what the government has done since the last SONA while the budget would indicate the priority projects of the administration.

“In governance, funds proposed in the budget speak louder than words in a SONA,” Recto said.

Sen. Juan Edgardo Angara, on the other hand, is hoping the President will support efforts to approve the measure that will lower personal income tax rates.

“Of the thousands of words in his SONA, one of the most awaited and the one which will be most applauded is the President saying that he will back bills that will lower individual income taxes,” he said.

Sen. Loren Legarda expressed hope that the President will mention the country’s commitment to combat climate change.

Sen. Antonio Trillanes IV said he is simply expecting the President to deliver his list of accomplishments for the past five years.

Rep. Albano said he expects the President to harp on his accomplishments thus far.

He conceded that most poor Filipinos still feel they are poor despite the nation’s economic growth.

“But the latest survey showed a slight reduction in poverty. This could be a manifestation that growth is finally trickling down and government resources are reaching the poor through such programs as conditional cash transfers and universal health coverage,” Albano said.

Davao City Rep. Karlo Nograles credited Aquino for economic growth, which he said has “averaged 6.3 percent a year despite the series of devastating natural calamities such as the Bohol earthquake and Typhoon Yolanda.”

“And this growth has translated to improvements in the generation of quality employment, which grew annually at an average of 2.4 percent,” he said.

Nograles said that despite the calamities, the economy created 4.3 million jobs between 2010 and 2014.

Anti-Crime and Terrorism through Community Involvement and Support (ACT-CIS) party-list Rep. Samuel Pagdilao said the President should cite in his SONA specific measures to curb and address the increasing criminality in the country.

Church leaders said the President should tackle the problem of poverty and corruption in his last SONA.

“(I want to hear) that the poor are attended to and corruption is really... greatly diminished,” said Catholic Bishops’ Conference of the Philippines (CBCP) president and Lingayen-Dagupan Archbishop Socrates Villegas.

Villegas said he is hoping that corruption is greatly diminished since Aquino knows that it is something impossible to eliminate.

“You know the problem of corruption has become cultural. It has become part of our cultural norms, behavior, so it will certainly take more than just policies,” he said.

The President is expected to make a pitch for development projects in Mindanao under the stewardship of Autonomous Region in Muslim Mindanao (ARMM) Gov. Mujiv Hataman whom he fondly calls “ghost buster” for removing ghost projects and employees in the region.

Aquino is expected to make a pitch for the Bangsamoro Basic Law that government had forged with the Moro Islamic Liberation Front (MILF), in the hope of ending four decades of conflict by bringing about lasting peace and real development in impoverished Mindanao.

Hataman, for his part, said he is expecting the President to highlight his accomplishments in the development and positive changes in Mindanao including the peace process with the MILF.

Aquino will most probably commend Public Works Secretary Rogelio Singson who had consistently applied their 5R policy – right projects at the right cost, right quality, and right on time, and implemented by the right people.

 Five years of achievements

 As President Aquino marks his fifth year in office, Malacañang reported on June 30 of this year its achievements in the past five years, vowing to continue to uphold the rule of law, and fight corruption and poverty.

“Today, as he marks the completion of five years of his term of office, he reiterates his sworn commitment to ‘faithfully and conscientiously fulfill his duties as President of the Philippines’,” Presidential Communication Secretary Herminio Coloma Jr. said during a press briefing.

“While the President will deliver a comprehensive report to the people in his final SONA on July 27, it is well to affirm how he has lived up to the promises that he made in his platform of government when he filed his certificate of candidacy,” he said.

Coloma highlighted the implementation of the Conditional Cash Transfer (CCT) program, saying that the number of beneficiaries ballooned from 800,000 families to more than 4.4 million families at present. – With Christina Mendez, Jess Diaz, Edith Regalado, Edu Punay, Roel Pareño, Jennifer Rendon