(Manila) – Philippine President B.S. Aquino III delivered his much-anticipated State of the Nation address to a joint session of Congress on Monday, reciting a litany of achievements in his first two years in office, but disappointing business and political interests with a lack of clear objectives for his government in the coming year.
The one-and-a-half-hour speech, Aquino’s third since taking office – a factoid he helpfully reminded his audience about by beginning his address with “This is my third SONA” – was said to have been the longest by a Philippine president since the overthrow of Ferdinand Marcos in 1986. As in his first two SONA presentations, Aquino devoted a considerable proportion of it to condemning the administration of his predecessor, Gloria Macapagal-Arroyo, although perhaps less directly than in his previous SONA addresses. Somewhat oddly, Aquino repeated an error he committed in his first SONA two years ago, complaining early on in his speech that “we were bequeathed, at the start of our term, 6.5 percent of the entire budget for the remaining six months of 2010,” a “shocking revelation” in his 2010 speech that his own budget managers later had to retract after the President was ridiculed for his lack of understanding of basic government financing. Only about one-third of the speech (which is slightly over 9,000 words in its English translation) highlighted specific achievements of Aquino’s administration, while his agenda for the remainder of his term was limited to a mere 850 words, drawing sharp criticism from backers of several key political initiatives – among them a pending bill on Reproductive Health, the Freedom of Information Act, development of ICT, and proposed changes to the economic provisions of the country’s Constitution – that were noticeably omitted from the speech.
As in 2011, Aquino’s office released a Technical Report along with the Tagalog and English transcripts of the speech, which provides somewhat richer detail about his Administration’s claimed achievements and the short list of key initiatives proposed by the President:
1. Outstanding Performance of the Philippine Stock Exchange Index (PSEi) and Strong GDP Growth:President Aquino cited the excellent performance of the Philippines’ stock market as proof of the effectiveness of his economic and investment policies, and while the PSEi has been among the best-performing indexes in the world, there is little to suggest that Aquino is not simply confusing correlation with causation. According to PSE expert and Business Mirror columnist John Mangun, a likely explanation for the strong performance of the local market – and corresponding strong corporate revenues over the past 18 months or so – is that the Philippines has become a “hyena economy,” benefitting from comparatively moribund business environments elsewhere in the world. And there are other indications that the big numbers being put up by PSEi traders are not really evidence that the Philippine economy has caught up to the rest of the region. Since the beginning of 2011, the PSE has only registered 10 IPOs; Indonesia’s IDX, by contrast, has seen 38 in the same period. Ironically, the PSEi ended Monday down 1.37%, joining the rest of the Asian markets in an off day despite the praise of the President.
There is likewise an air of unreality about the unexpected 6.4% GDP growth in the 1st Quarter of this year, which Aquino is all too happy to take credit for after six quarters of weaker-than-forecast growth. The positive growth rate may be a matter of using a favorable yardstick, in this case, Year 2000 constant prices – which happen to be the baseline for his predecessor’s nine years in office. In her first full year as president (2001), Gloria Arroyo eked out a 1.8% GDP growth; not impressive, but several orders of magnitude ahead of what Aquino has achieved from his baseline, a negative growth rate of roughly 9.6% – a serious recession by any definition, last quarter’s good news notwithstanding.
2. The “Four P’s” Conditional Cash Transfer Program: As expected, Aquino highlighted what he has described as one of his favorite programs, the Pantawid Pamilyang Pilipino Program (“Four P’s”), which provides up to Php 1,500 ($35) cash per month per family. Surprisingly, however, neither the speech nor its Technical Report provide many details about the program, which will see its budget climb from Php 39.44 billion this year to Php 45 billion next, or nearly two-thirds of the entire budget of the Department of Social Welfare and Development.
It is entirely possible, however, that whatever Aquino had planned to say about the CCT program was preempted by the recent controversy over the “Four P’s” that has erupted in the wake of allegations of widespread embezzlement by DSWD personnel and a scathing report by the Commission on Audit that revealed, among other things, several billion pesos’ worth of misallocated funds and potentially thousands of ineligible recipients.
3. Improvements in Health Care: This is another area in which the Aquino Administration’s achievements are highly debatable and fraught with controversy. According to the Technical Report, 81.63 million people, or about 85% of the country’s population, are now covered by the government-managed PhilHealth insurance program, and that all 5.2 “identified” poor families have now been enrolled, a necessary precursor to the Administration’s plans to privatize some government hospitals and eliminate charity wards in the remainder. Critics of the health care plan have charged that both the PhilHealth enrollment rates and the count of poor families are inaccurate, and just last week an association of 900 private hospitals announced they would no longer accept PhilHealth-covered patients due to non-payment of bills by the agency, a move that would force an even greater number of patients into the Philippines’ already grossly inadequate public hospital system.
One comparative bright spot, however, is the apparent success of the RNHeals rural nursing program, which began in February 2011 with the objective of providing trained medical personnel to underserved areas of the country. The program aims to deploy a total of 31,500 nurses by the end of this year, and has so far deployed 30,801; an achievement that not only improves health care coverage, but also helps to reduce the country’s considerable surplus of nursing program graduates. However, the Technical Report does note that the one-year commitment of 9,518 nurses in the first of three groups recruited has expired, reducing the actual number of working nurses to 21,283; neither the Technical Report nor Aquino’s speech indicated whether the program will be continued beyond the end of this year.
4. Education Funding: Aquino’s proposed 2013 budget will increase the allocation for the Department of Education from Php 238.8 billion to Php 292.7 billion, an increase of 22.6%. The education expenditure in 2012 represented 2.57% of GDP, but despite the President’s self-congratulations for the increase, according to IMF projections for the Philippine economy, the percentage – which is only slightly more than half the 5% global benchmark for education spending – will actually decline slightly to 2.56%.
5. Infrastructure Improvements: Obviously responding to two years’ worth of sharp criticism about Aquino’s lack of ambition to develop the Philippines’ creaky infrastructure, the Technical Report devotes a considerable amount of space to details of completed and planned projects. On closer examination, however, the flurry of positive-sounding statistics are not particularly impressive:
- 14.75% increase in air traffic year-on-year (January-June 2011/2012) as a result of the Pocket Open Skies Policy (EO 29) – Executive Order 29, which provided for Open Skies Agreements with foreign carriers, was in fact one of Aquino’s decisively positive acts early on in his term, and it has encouraged some new entrants in the sector, such as AirAsia Philippines, All Nippon Airways, and Tiger Airways. On the other hand, the opening up of the Philippines’ air market has, if anything, simply exposed how woefully unprepared the country is, and how apparently hapless former Aquino running mate and now Transportation Secretary Mar Roxas is at trying to deal with it. As a result of severe overcrowding at the Ninoy Aquino International Airport in Manila – the country’s primary international hub – Roxas has resorted to ordering airlines to cut the number of flights by 30%, while exempting the bulk of general aviation traffic, so-called “fish runs” and private jets, from similar restrictions.
- Airport construction – The Administration has planned an upgrade of Puerto Princesa Airport in Palawan, the construction of a new airport at Panglao on the island of Bohol, and construction of new domestic and international terminal buildings at Cebu’s Mactan International Airport. According to the Technical Report, the bidding process is underway for the Puerto Princesa project, which is expected to begin construction in the 3rd Quarter of next year; the Panglao airport project is currently under review by NEDA; and the Mactan project is still undergoing “project structuring”, technically making it behind schedule as it was supposed to be submitted to NEDA this month. Thus, none of the three projects are “off the drawing board” as of yet, which is not necessarily bad or unexpected; it remains to be seen, however, if the thus far non-performing public-private partnership initiative will be able to meet the unequivocal promise made that all three will be operational by the end of Aquino’s term in mid-2016.
- School construction – Bidding is ongoing for the construction of 9,301 classrooms in Regions I, III, and IV-A on Luzon, intended to make a dent in the estimated 66,800 shortfall in classrooms throughout the country. While Aquino confidently promised these would be completed by the end of his term, a single shovelful of dirt has yet to be turned for them. The school construction is being managed through the PPP as well, but since it is not – unlike other projects, such as airports, ports, or toll roads – a particularly attractive revenue-generating proposition for investors, seems to be encountering a lack of enthusiasm. In addition, the projection of 418,545 students to be housed by the new classrooms is based on a class size of 45, still crowded by most any judgment.
- LRT-1 light rail extension to Bacoor, Cavite – A planned 11.7-kilometer extension from the existing end of LRT-1 in Baclaran to the southern suburb of Bacoor seems to have better prospects for success, having attracted a great deal of attention by potential bidders. While traffic-challenged commuters in the southern part of the metro area (in the interest of full disclosure, present company included) are keenly anticipating the new light rail, the project will face some significant challenges; it will be operated separately from the existing LRT-1, an awkward arrangement at best, and will be feeding several thousand commuters into a system which is already showing its age and is grossly over capacity, issues that have yet to be addressed in any substantial way.
As one commentator has observed, President B.S. Aquino’s third SONA was a “citing [of] disembodied statistics out of context and stringing them together into a litany of little ‘wins’ to tell a story of ‘achievement’,”and looking at it from the background perspective of the Technical Report, that is probably a fair assessment. Although there has been some progress, there is little sense of continuity or an overall plan. It is reactive rather than proactive, which may simply be reflective of the personality of the leader for whose benefit the report was written – one who continues to focus on the perceived misdeeds of his long-departed predecessor, yet who seems to be unable to break away from the Philippine tradition of a rhetorical, short-term, and piecemeal approach to governance.
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