What was advertised to be the shortest State of the Nation Address (Sona) turned out to be the longest ever to be delivered in the august halls of Congress—100 minutes to be exact.
On Monday President Duterte laid out where (and how) he would lead the country to.
The Sona is traditionally the vehicle where a sitting president communicates his blueprint on the country’s current social, political and economic condition, and how he plans to move the nation forward under his stewardship.
Duterte’s first Sona—however winding and peppered with off-tangent comments—outlines three main points: his war against drugs, the push for federalism and a promise of peace. But what energizes the business sector more is his direction to continue and improve on the previous administration’s macroeconomic policies, an admission that his predecessor did well in managing the country’s coffers.
Mr. Duterte’s vow to cut income and corporate taxes, and its implications for revenue collection, was also warmly received by some economists. I, too, believe that it is the right thing to do. The move is expected to spur consumption, business and investment activities. A low tax regime enables companies and individuals to raise more money, which will allow the government to march on with its plans. It can spur greater activity that can result to more revenues, although not necessarily from taxes. It’s now up to the Bureau of Internal Revenue (BIR) to device creative ways on how to cover some of the expected revenue losses. Nonetheless, this measure is a strong indication that President Duterte is serious in creating jobs by stimulating business activities.
Francis Chua, chairman of the International Chamber of Commerce of the Philippines (ICCP) and chairman emeritus of the Philippine Chamber of Commerce and Industry (PCCI), was impressed with the President’s openness: notably, his directive to condense business registration to only three days, and the relaxation of the economic limitations in the Constitution to allow more foreign investments into the country.
“The President has again reiterated that ease of doing business [is] mandatory; [and that there is a need to reduce] personal- and corporate- income tax [and sustain a] clean government. All of these are music to the business sector’s ears,” Chua was quoted as saying.
The Makati Business Club (MBC), Mr. Duterte’s critic during the presidential campaign, extolled the President’s “all-inclusive” Sona.
“We believe that the Sona was very comprehensive and was able to detail a clear vision for the next few years. He was able to set a strong tone from the top that, while there will be a strong stance against criminality and drugs, abuse of authority will not be tolerated,” MBC Executive Director Peter Angelo Perfecto said in a statement.
The MBC welcomed the inclusion in the Sona of priorities critical to doing business and furthering the country’s competitiveness, including significant reduction in red tape, tax reform, massive infrastructure investments and improvement of current macroeconomic policies. Expressing great appreciation for the adoption of the recommendations from the “Sulong Pilipinas: Hakbang Tungo sa Kaunlaran,” the consultative workshop held recently by the government with the business community, the MBC said it looked forward to the continuation of this process, which it hoped would be expanded to include civil society and other cause-oriented groups.
“The declaration of a unilateral cease-fire and the call to correct historical injustices is a very bold move, and sends a strong signal that the government is serious about ensuring permanent and lasting peace,” Perfecto added. “Significantly, he was able to effectively show that he cares for improving the people’s welfare, whether in the small aspects of eliminating long lines, extending the validity of licenses and passports and opening communication outlets for Muslims and indigenous peoples.”
What this corner found lacking, however, is the administration’s silence on how it will tackle the country’s energy sector.
A booming economy needs sufficient power, especially in the context of a power shortage that experts foresee in the near future. These experts warn that “brownouts,” or the lowering of operating voltage to prevent a total blackout, may be a regular occurrence if the government fails to address the looming power shortage. Such energy-conservation measures can cause damages to some electrical devices and is not a practical long-term solution to energy problems.
We have seen some ineffective solutions to this problem in the past, such as power companies with an energy shortage buying excess power from other regions. But this works only as long as there are companies with extra power. Unfortunately, a power surplus in Laguna does not help a power shortage in Baguio. Going solar? Wind? The major problem with these approaches is that both are dependent on the weather. The sun does not always shine when electrical demands are high, and we cannot always expect windy weather.
We are still many years away from being able to enjoy the large-scale consumption of these alternative energy sources. Another potential solution is to increase our use of petroleum at a higher level of efficiency. However, this approach would only be practical if we decreased our petroleum usage in other areas, which is very unlikely. Another strategy involves the construction of more coal-fired power plants. Our electricity production would surely increase, and there is enough coal to last for 400 years. However, coal adds radioactivity to the environment and releases toxic sulphur and nitrogen oxide gases into the air. Additionally, the coal reserves that are currently being mined are high in sulphur content, making them that much more harmful to the environment.
Experts warn that the prospect of power outages is real, leaving us with few options to cope with the threat. It takes more than five years to build a power plant with enough base loads to provide 7,000 megawatts of power to fill in the projected power gap.
The Duterte administration should focus more on what happens if the Philippines can’t meet the projected power shortfall. The scenario of power outages should not concern only ordinary people, but also those engaged in big or small businesses. The cascading effects—business slowdown, unemployment and inflation, among others—are too serious to simply ignore.
For comments and suggestions, e-mail me at mvala.v@gmail.com
1 comment
that is why we need power plants like coal