First State-of-the-Nation Address of the newly elected President

On 25 July 2022, the newly elected President of the Philippines, Ferdinand Marcos Jr., delivered his inaugural State-of-the-Nation Address (“SONA”). The address gave the President a first formal opportunity to outline the cornerstones of the policies that may be expected from the newly elected administration in the years to come.

In Focus

The SONA focused on the economic recovery from the Covid-19 pandemic, the rising inflation, on infrastructure and digitalization. The address also laid out the various components to achieve such economic recovery. Among the components brought up by the President during his address were:

Tax administration reforms, including taxation on the digital economy and tax compliance;
Increase of foreign investments;
Establishment of additional economic zones, especially for those engaged in high-tech manufacturing, health and medical care as well as emerging technologies;
Discipline in the disbursements.

The President also unveiled his Medium-Term Fiscal Strategy. This strategy is based on the forecasts such as: 6.5 - 7.5 percent real GDP growth in 2022, 6.5 – 8 percent real GDP growth for 2023-2028; 9 percent or single-digit poverty rate by 2028; 3 percent National Government deficit to GDP ratio by 2028; less than 60 percent National Government debt-to-GDP ratio by 2025; and at least 4,256 USD income per capita as well as the attainment of upper middle-income status by 2024. Other economic drivers that the President mentioned during his address were:

agriculture and agrarian reform;
tourism;
healthcare;
public infrastructures;
cheap and reliable energy.

Infrastructure

As to the infrastructure, the President emphasised that it is the backbone of the economy. He vowed to continue, and expand if possible, the momentum gained under the Duterte Administration´s infrastructure projects, which played a significant role in the past years´ economic development of the Philippines and is at the same time crucial for the future development of the country, its industries and people. Public-Private-Partnerships are also being eyed to strengthen the country’s infrastructure.

Energy

On clean and reliable energy, the President emphasized the need to search for alternative sources of energy. He added that the country’s energy demand far exceeds the supply. He advocated the utilization of renewable energy to increase energy production. He added that the country’s position on nuclear energy should be re-examined.

Healthcare beyond Covid-19

On the health and Covid-19 front, the President vowed that there will be no more lockdowns. He added that the health of the people will be balanced with the interest to re-build the economy. He further added that the country’s vaccine booster program will continue.

Digitalization

Last but not least the President highlighted the need for the country to continue its digitalization progress. He started with the continuation and acceleration of the issuance of the digital national ID-cards which will play a key role in the countries digital transformation. Furthermore, he reiterated the amendments to the Public Service Act, which removed restrictions on foreign investment in various sectors which before the amendment were considered of national interest. The changes would also open the doors for foreign investment and translate into better quality, availability and affordability of digital and telecommunication services.

Key legislative projects

The key legislative undertakings that the President tagged for the Congress to take up in its upcoming session, are:

National Government Rightsizing Program
Budget Mordernization Bill;
Tax Package 3: Valuation Reform Bill;
Passive Income and Financial Intermediary Taxation Act;
E-Government Act;
Internet Transaction Act;
Government Financial institutions Unified Initiatives to Distressed Enterprises for Economic Recovery;
Establishment of Medical Reserve Corps;
National Disease Prevention Management Authority;
Creation of Virology Institute of the Philippines;
Department of Water Resources;
Unified System of Separation, Retirement and Pension;
National Land Use Act;
National Defense Act;
Enactment of an Enabling Law for the Natural Gas Industry;
Amendments to the Electric Power Industry Reform Act or EPIRA; and
Amendments to the Build-Operate-Transfer Law.