Businesses to look for clearer pandemic exit strategy in final SONA

Ramon Royandoyan - Philstar.com
This Sept. 24, 2020 photo shows a view of Makati skyline as seen from Boni, EDSA.
The STAR / Michael Varcas

MANILA, Philippines — Before President Rodrigo Duterte delivers his final state of the nation address, the business sector believes his administration needs to do more if he wants to pull the Philippines out of the pandemic hole.

A year-and-a-half of languishing into this health crisis, the Philippine economy is still in bad shape, a problem that Duterte has been facing since his SONA last year. Indicators such as inflation and unemployment are also painting a bleak picture.

“Given that we are still deep in the recession hole and the economy, the most pressing issue would be for plans to get out of this pandemic and how to jump-start the ailing economy,” Nicholas Antonio Mapa, senior economist at ING Bank in Manila, said in an e-mail exchange.

“Secondly, the administration has left quite a number of priority bills on the table which I hope he can muster before his exit, but once again, the priority as of now is getting the economy back on its feet,” Mapa added.

Ahead of his final SONA at 4 p.m., the Philippine Stock Exchange index sagged by 2.27% as investors wait to hear Duterte’s plans to shore up the economy to recovery.

2020 a rocky year

The past year has been tumultuous for the Philippine economy, once a bright star in the region. An ensuing lockdown, which remains in place up to now, hobbled businesses up and down the supply chain, into the limbo that either forced them to downsize or close operations indefinitely.

Aside from staying in lockdown since March last year, restrictions have kept most workers in Metro Manila resorting to work-from-home situations or out of a job. To make matters worse, consumer prices skyrocketed beyond government expectations amid problems with food supply, especially pork, further straining Filipinos' incomes.

Remittances, a major dollar source of the Philippine economy, contracted after the pandemic forced companies everywhere to slash jobs, which left many Filipinos toiling overseas jobless. Meanwhile, the pandemic only worsened an already declining foreign direct investments under the Duterte administration,

On the monetary policy side, the Bangko Sentral ng Pilipinas brought down interest rates to historic-low to boost consumption, which is central to the country’s consumer-driven economy. By doing this, the BSP hoped ultra-low rates will spur commercial banks to lend more to pandemic-hit sectors which, unfortunately, is hardly happening as banks, saddled with soured debts, remain risk averse while borrowers are afraid of incurring more liabilities.

Legislative wish list

The turnout continues to worry business groups, which has been clamoring on the Duterte administration to speed up inoculation efforts to revive lost economic momentum.

In a text message, Edgardo Lacson, acting president of the Philippine Chamber for Commerce and Industry (PCCI), listed, among other expectations for the president’s final SONA, a ramped-up vaccination drive.

“Vaccination rollout program with 70% of the population having their second dose by November 2021 followed by the full opening of the economy that hinges on the success of this program,” Lacson said.

Among other concerns of businessmen were food security, adequate power supply, the continued implementation of the government’s infrastructure program, better Internet speeds, and the national ID system. Two issues that stuck with PCCI were the “clear and complete plan for the settlement of the P11 trillion public debt” and the “favorable closure of the West Philippine Sea issue with China,” both of which continue to polarize the public discourse under Duterte’s leadership.

This being Duterte’s final SONA, many are still wondering what issues will be top of mind for him. In past national addresses, the president went off the script to defend his bloody war on drugs, attack critics and political opponents.

On the economic side, a glaring spending hole is still in place. Bayanihan 2, the government's second pandemic stimulus, expired long before billions of public money could be used by the government to facilitate recovery. That said, Sonny Africa, executive director for IBON Foundation, agrees that in time for the president’s address, national pandemic spending needs a nudge.

“It isn't too late to fix the economic scarring caused by the interminable lockdowns with a real and substantial fiscal stimulus. To be effective, this has to involve bumping up government expenditure above its average growth these last years and also realignment to spending that boosts domestic demand and household welfare,” he said in a text message.

“President Duterte's final year in office is long enough to fix its economic policy and pandemic response missteps,” he added.

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