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SONA 2022: Why Marcos Jr.’s economic plan will hurt the nation, ordinary people

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Without a radical shift from the long-discredited neoliberal paradigm, the Filipino people are doomed to greater misery and exclusion under President Marcos Jr.

By ARNOLD PADILLE

Bulatlat.com

MANILA — In his first State of the Nation Address (SONA), President Ferdinand Marcos Jr. left no doubt that his regime would continue on the path of neoliberalism. The general direction of the economy described by Marcos Jr. will lead to further liberalization and privatization at the expense of genuine national development, Philippine industries, and local jobs and livelihoods.

He opened his SONA with this statement on the macroeconomic front that his administration will pursue: “Our country must become an investment destination, capitalizing on business turnaround and business tax incentives or the CREATE Act and economic liberalization laws such as the Civil Service Act and the Foreign Investment Act. “.

Marcos Jr.’s priority is to ensure that the neoliberal policies enacted by his predecessor, President Rodrigo Duterte, are maximized to create the most favorable environment for big business, including foreign capital. To become an investment destination, the administration will provide massive tax breaks to corporations through the CREATE Act and provide foreign companies with more money-making opportunities with amended utility and foreign investment laws.

According to research group IBON Foundation, the CREATE law would provide about 372 billion pesos in additional profits to companies from 2021 to 2023, an amount that also represents lost revenue for the government.

The Civil Service Act or Republic Act (RA) 11659, which Duterte signed into law just six weeks before national elections, paves the way for 100% foreign ownership in telecommunications, railroads, highways, airports and maritime industries.

These policies are linked to the infrastructure development program of the Marcos Jr. regime, which will be pursued through public-private partnerships (PPP) or privatization. As he said in his SONA, he will maintain the momentum of Duterte’s “Build, Build, Build” program with “Build Better More.”

Allowing greater corporate, let alone foreign, control over critical public infrastructure is bad development planning. More than anything else, infrastructure development aims to provide essential services that meet the economic and social needs of the country on the basis of a clearly defined national program. Entrusting the design, construction, management and operation of infrastructure to private and foreign interests primarily motivated by profit fundamentally distorts this orientation of an infrastructure development program.

The Philippines already has a long history of how privatized infrastructure has caused massive burdens on the population and the economy. Exorbitant user fees for using rail, toll roads, and electricity and water services, among others, have made the cost of a decent life increasingly unaffordable for many Filipinos. . Meanwhile, precious public resources are being diverted to guarantee the profit rates of private companies involved in PPP projects.

Moreover, complete foreign control over critical infrastructure such as 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. announced his regime’s plan not only to continue this relationship with Beijing, but even to kick it into “a higher gear”. The expansion of Chinese participation in the global telecommunications industry, including in the Philippines, raises legitimate concerns about security risks and vulnerabilities such as espionage and the acquisition of vital information.

Marcos Jr.’s efforts in his SONA to make the country an investment destination through liberalization will further stifle the development of local capital and undermine our long-term industrialization. The Amended Foreign Investment Act or RA 11647 allows foreign nationals to own a business with a minimum contributed capital of just $100,000. This opens the floodgates to fierce and undue foreign competition that could bankrupt 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 out of 50 Filipino employees under the old law.

While potentially destroying more jobs with his favorite economic policies, Marcos Jr. also signaled in his SONA that his administration will continue to impose new consumer taxes, another neoliberal agenda. He cited, for example, the Value Added Tax (VAT) on digital service providers which will impose an additional 11.7 billion pesos on consumers in new taxes in 2023 alone.

All of these make Marcos Jr.’s SONA promises of prosperity for the people, including reaching single-digit (9%) poverty by 2028 and upper-middle income status with an income per capita of $4,256 by 2024, ultimately meaningless. Without a radical shift from the long-discredited neoliberal paradigm, the Filipino people are doomed to greater misery and exclusion under President Marcos Jr. Economic output may increase (i.e. SONA aims for a rate annual growth of up to 8% of our gross domestic product or GDP from 2023 to 2028), but income and wealth will remain heavily concentrated in the hands of the local and foreign elite. companies.

The President has made notable commitments to address the plight of landless farmers, such as the one-year moratorium on land amortization and Land Reform Beneficiary (ARB) interest payments via Executive Order, towards the exoneration of these debts by means of a new law. But in keeping with his neoliberal political bias, Marcos Jr. remained silent in his SONA on reversing decades of neoliberal agricultural restructuring that drove millions of farmers into landlessness and bankruptcy. Instead, he spoke of strengthening the value chain, which in the context of the country’s neoliberal agriculture means deepening ties to the global market and reinforcing the land monopoly that undermines local food security and destroys livelihoods. livelihood of farmers.

Marcos Jr. has spent a substantial part of his SONA outlining his regime’s plans for the economy amid the daunting global and domestic challenges facing the country. But what he has delivered, unfortunately, are hollow goals based on outdated and failed policies of liberalization and privatization. Like his predecessors, Marcos Jr. reveres irresponsible foreign capital as the engine of economic and national development instead of a greater role for government in providing public services and protecting national agriculture and local industries, especially MSMEs and small food producers.

The COVID-19 pandemic and its disastrous socio-economic impacts are teaching policy makers to be more introspective in terms of development planning. Marcos Jr. and his team of recycled neoliberal bureaucrats are not learning, or refusing to learn, the lesson.