President Ferdinand R. Marcos, Jr. speaks at an event with the Filipino community in Washington, D.C., May 1, 2023. — KRIZ JOHN ROSALES/PPA POOL

By Kyle Aristophere T. Atienza, Reporter

PHILIPPINE President Ferdinand R. Marcos, Jr. failed to exploit his overwhelming mandate to pursue game-changing economic reforms during his first year in office, having used band-aid solutions to deal with persistent food shortages and spiraling prices, economists said on Thursday.

Mr. Marcos is unlikely to undo decades of neglect in the agriculture sector with unsustainable policies such as food caravans for the poor and easing import restrictions, while the country faces a widening funding gap, they added.

“We have more challenges coming than solutions as of now. We have headlines and promises, no clear results or even a direction how we’d get there,” Emy Ruth D. Gianan, an economics professor at the Polytechnic University of the Philippines, said via Messenger chat.

“We could say it’s just his first year, that is true. But even then, we need results because he has an overwhelming mandate from the elections,” she added.

Mr. Marcos told reporters his government continues to ensure sound macroeconomic fundamentals and remains focused on fighting inflation, which he said is one of the Philippines’ biggest economic problems.

Since peaking at 8.7% in January, inflation has eased to 6.1% in May. Inflation has averaged 7.5% this year, still above the Bangko Sentral ng Pilipinas’ (BSP) 5.4% forecast.

“Persistent food shortages — food has the biggest weight in the inflation basket — have yet to be decisively addressed,” Filomeno Sta. Ana III, coordinator of Action for Economic Reforms, said in an e-mail.

“The government has resorted to band-aid solutions like temporarily relaxing import restrictions on food, which, however, benefit only a few importers, thus retaining cartelization.”

Mr. Marcos, who is also the agriculture secretary, has pushed for food self-sufficiency in a decidedly populist direction.

“We have to undo almost 40 years of neglect when it comes to the agricultural sector,” Mr. Marcos said when asked to assess his first year in office, adding that “there is still a long way to go.”

To tame inflation, the BSP has delivered 425 basis points of hikes since May 2022, bringing the key rate to a near 16-year high of 6.25%.

The BSP was good in trying to rein in inflation via interest rate hikes, “but it has limited success as the main problem lies in the supply of agricultural commodities, which is the direct responsibility of the President,” said Enrico P. Villanueva, who teaches economics at the University of the Philippines Los Baños, via Messenger chat.

Economists also lamented that the Agriculture department has been focused on temporary solutions to food security issues, citing the Kadiwa program, which provides a farm-to-consumer food supply chain by removing middlemen.

“We’re promised lower food prices, what we get are caravans that are not guaranteed to be sustainable,” Ms. Gianan said, referring to the Kadiwa stores.

Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said the revival of the Kadiwa program and other policies that were implemented during his late father’s regime is an indication that the government has “taken the stance of a central planner of the economy.”

“However, it has not consulted much with the market, especially the consumers and workers,” he said. “In the process, the economy is now being controlled by elite groups and monopolies.”

Mr. Marcos marks his first year in office today (June 30), after promising to make the Philippines less dependent on imports and revitalize key domestic sectors, including the manufacturing industry.

Ms. Gianan said his economic policies during his first year in office are “lukewarm” — “it’s not necessarily a failure, but neither were they successful.”

“In a way, they’re hyped, but we have yet to see genuine results,” she said, noting that Mr. Marcos, who won by landslide in last year’s elections, has failed to utilize his “overwhelming mandate” to pursue new economic reforms.

For Mr. Sta. Ana, the Marcos administration “spent its political capital on nonessential, even questionable interventions, like the passage of the Maharlika bill.”

Mr. Sta. Ana said that despite the country’s limited fiscal space and the funding gaps for critical sectors like health and agriculture, Mr. Marcos has not actively pushed for new taxes or sought other sources of revenues.

“New taxes are necessary, but the government has not been decisive on this front,” he said.

The Finance department earlier this month proposed new taxes on junk food and higher taxes on sugar sweetened beverages. This is in addition to pending tax measures such as the Real Property Valuation and Assessment Reform, Passive Income and Financial Intermediaries Taxation Act, value-added tax (VAT) on digital services, tax on single-use plastics, motor vehicle user’s charge, and the rationalization of the mining regime.

Sonny A. Africa, executive director of think tank Ibon Foundation, said the Marcos administration “predictably” resorted to fiscal austerity since it refuses to increase revenues with a more progressive tax system and has continued the “same decades-old approach of relying on foreign investment as if this is a magic bullet for national progress.”

Mr. Africa said economic scarring from the excessive lockdowns and the slowing global economy should have prompted bolder government action to spur domestic-driven development.

Meanwhile, Paulo Duarte, European Chamber of Commerce of the Philippines (ECCP) president, said in an e-mailed statement the Marcos administration should take advantage of the opportunities presented by the Regional Comprehensive Economic Partnership (RCEP).

“There should be enhancing initiatives to further strengthen the agri-food supply chain, i.e., promote innovation and the use of digital technology in the agriculture sector, further liberalization of rice and corn industries, increase investment in sustainable agriculture infrastructure, etc.,” he said via e-mail.   

Mr. Duarte also urged the government to improve the Philippines’ global competitiveness and ease of doing business.

“This can be done by strengthening the role of the Anti-Red Tape Authority (ARTA) in addressing red tape and inefficiencies; further easing restrictions to foreign ownership; and ensuring a level playing field by strengthening market competition and reducing barriers to entry,” he said.

Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) President Danilo C. Lachica gave Mr. Marcos a passing grade for his first year in office.

“We need to review the effectiveness of the (Corporate Recovery and Tax Incentives for Enterprises) law’s incentives rationalization in attracting foreign direct investments in the electronics industry,” Mr. Lachica said.

Rosemarie B. Ong, Philippine Retailers Association (PRA) president, said the government should increase investments in infrastructure to “enhance the efficiency of the retail supply chain and benefit consumers.”

“Enacting the proposed VAT refund for nonresident tourists would boost retail revenue by encouraging tourist spending,” Ms. Ong said via mobile phone.

Mr. Marcos in January approved the VAT refund program for tourists for implementation by 2024.

Philippine Amalgamated Supermarkets Association President Steven T. Cua said the Marcos administration should address the supply problems for basic commodities which have driven up prices.

“After a year of trying out new executives and teams in the different government departments, bureaus and agencies, it is high time that the Marcos administration gets its act together, clearly define its roadmaps and lead this country into the economy we all deserve,” Mr. Cua said. — with Revin Mikhael D. Ochave