The SONA and the defects in our eco-political system

I have grown increasingly frustrated by the President’s failure to confront the country’s core eco-political defects – the very defects that hinder our national development. In last Monday’s SONA, the only significant reform I heard was the pledge to expose and arrest abusers of flood control funds. The rest were peripheral issues – important but far from transformative.

What eco-political defects am I referring to? With limited space, let me cite five.

First is the poor quality of political leadership. This is a result of the out-of-control proliferation of dynasties and the absence of meritocracy in our electoral system.

Poor leadership has given us a dysfunctional government. We see and feel it in the subpar delivery public services; in a legislature that prioritizes partisan politics and political survival over all else; in the inability to elevate the economy’s competitiveness and in runaway corruption.

Poor leadership hijacks our national destiny – our future – and benefits only the entitled political elite. Despite this, electoral reform did not even figure in the President’s SONA, let alone his core agenda.

The second defect is the country’s inhospitable investment climate. The sheer difficulty and risk of doing business in the country is the reason we are unable to make that all-important shift to an investment-led economy.

Resolving the investment climate is complex. It demands sweeping reforms in the justice system to allow faster, corruption-free resolution of disputes, labor cases and insolvencies; accelerated digitization of government functions for efficient permit processing and tax compliance; stricter oversight of local governments to stop the harassment and extortion of investors and urgent action to close supply chain gaps.

Although there have been some token reforms to improve the business climate, it has not been significant enough to make a dent in our FDI numbers. The much ballyhooed CREATE MORE Law didn’t move the needle either.

The one percentage point reduction in US tariffs was a fail in that it does not give us a competitive advantage versus Indonesia and Vietnam. To think we are the US’s closest ally in the region.

No wonder the President didn’t speak of economic achievements in his SONA, save for a passing mention in the beginning.

We would be in a better position today if the President focused on fixing the investment climate with the same passion he displayed to get the Maharlika Fund passed. Leaving it in the hands of the economic team has proven it just won’t cut it.

The third defect is the vulnerability of the country’s two main money makers – the IT-BPO and semiconductor industries. The former is threatened by artificial intelligence while the latter is threatened by American tariffs. This administration has been remiss in preparation.

Even at this late stage of AI adoption, neither the President nor the DTI has identified – much less championed – the next industry to carry the torch when AI renders call centers and back-office services obsolete. The DTI has long spoken of making the Philippines a global center for excellence for AI and cloud infrastructure but has not made the investments needed to make it a reality. Without preparation, the economy will be left high and dry when AI inevitably bites into the IT-BPO sector.

As for semi-conductors, tariffs aside, the bigger problem is the sluggish growth of the industry due to the lack of new players. Semiconductor manufacturers choose to invest elsewhere, given our comparatively inhospitable investment climate.

Th fourth defect is food insecurity. The revival of the agricultural sector was among BBM’s much-hyped promises. It remains unfulfilled. In fact, agriculture outputs have contracted in 2022 and 2024 and, most probably, in 2025 too. This is because the main impediments remain unaddressed. These include an ill-conceived land reform law; the squeezing out of farmers’ profits by traders and middlemen; the undercutting of local producers by rampant smuggling, among others.

The President promised to crack down on smugglers and hoarders. This too remains unfulfilled.

The last and most damaging defect is corruption, grotesquely embodied in pork barrel funds. Corruption watchdogs have flagged “unprogrammed appropriations” as a key source of this pork. This year alone, unprogrammed appropriations amounted to P532 billion. Let that sink in – the lion’s share of the national budget went to politicians.

Instead of curbing the insatiable greed of elected officials, BBM chose to penalize the public by levying a 20 percent final tax on interest income derived from bank investments. This was a let down and a disservice to the saving public.

The bright part of the SONA was the President’s announcement of a crackdown on abuses of flood control funds amounting to a whopping P245.29 billion this year alone. We all know that the lion’s share goes to kickbacks and ghost projects of elected officials. How ironic that the very personalities purportedly guilty gave the President a standing ovation. Such hypocrisy in that room!

These defects in our eco-political system are what impedes our progress and deprives our children of a bright future.

A forward looking Chief Executive will prioritize resolving these defects first – but doing so is difficult and entails much sacrifice. This is because pushing the anti-political dynasty bill will disenfranchise the Marcos political dynasty and other dynasties that benefit from this evil loophole. Leveling the playing field in business will obliterate the undue advantages that the few conglomerates enjoy, forcing them to compete without the benefit of political favor. Putting a stop to the feeding frenzy of pork will cause fall-out of support. Reforming populist laws like CARP will erode political capital.

History remembers not those who coast along or choose the convenient road, but those who chose the right path, however difficult and painful it may be. President Marcos still has time – but only if he dares to confront these uncomfortable defects.

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Email: [email protected]. Follow him on Twitter @aj_masigan