Salceda to PBBM: Lay out agenda for nation-building, set “basic ingredients” for national development in second SONA; House tax chair warns of “existential threats” to PH service sector

July 24th, 2023

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) is hoping that President Marcos will adopt a “back-to-basics” approach to his second year in office, ahead of the 2nd State of the Nation Address today. Salceda made the statements in a six-page paper on the solon’s thoughts on the President’s upcoming address.

“PBBM’s historic mandate is a clear demonstration of the nation’s clamor for another nation-building effort – for unity as a governing principle only appeals to people if it is unity of purpose. One does not get 60 percent of the vote only to undertake a presidency of management. That mandate, the largest number of votes any President has received in Philippine history, demands a presidency of ambition. That is what I hope President Marcos will lay out today,” Salceda wrote in circulated remarks.

“Before our more successful neighbors achieved their aspirations of national development, they undertook massive projects that we ourselves have only recently begun to have fiscal space for. As President Marcos has expressed a commitment to double down on the infrastructure push of the past administration, we have the opportunity to revisit several ingredients to national development which we find ourselves currently lacking,” Salceda added.

Salceda cited that the country’s main international gateway, the Ninoy Aquino International Airport, has not built a new passenger terminal in 15 years, “while all other countries in the ASEAN-6 have built new airport terminals over the past 10 years.”

“This clearly emphasizes the need for a new international gateway that can service not only passengers, but an export and reexport sector. That is why I maintain that the Bulacan Airport, and a master-planned ecozone around it, is basic to our national ambitions.”

Salceda also emphasized that we have the smallest main port in the region.

“The Port of Manila, including North and South Harbors, and the MICP, has only 34 berths and piers and the smallest land area in the region,” Salceda added.

“The size of our main Port is not the type that can allow us to compete in scalability with other manufacturing centers in the region – or to aspire to be a hub for international trade.”

On rail infrastructure Salceda said that “Our railway system is the shortest of all major ASEAN economies, which reduces our competitiveness in terms of logistics costs, and prevents meaningful interconnectivity among our manufacturing centers and ports of entry and exit.”

On maritime trade, Salceda pointed out that Vietnam has already taken over the country in shipbuilding, an area the Philippines used to dominate in the region.

“The ability to build ships is the strongest indicator of our ability to connect our islands as well as our ability to project economic and trading strength into the global economy. Vietnam has fully overtaken us in shipbuilding tonnage last year, given our own rapid decline in shipbuilding activities since 2019, with the closure of the Hanjin Shipyard.”

Salceda also pointed out that the country has the largest supply deficit of power in the region, driving power costs upward.

“We also have an alarming deficit in power supply, which primarily explains our comparatively expensive power cost. The last time we built a power plant of reliable generating capacity above 1,000 MW was in the year 2000, with Ilijan Power Plant. If Bataan Nuclear Power Plant were made operational, it would have produced some 621 MW of reliable baseload power, which would have made it the 6th largest power plant by generating capacity in the country, behind Sual, Pagbilao-Marubeni, Mariveles, Ilijan, and Santa Rita, and the only plus-500MW plant not powered by fossil fuels.”

Not just bigger infra spending, but bigger infra items

Salceda pointed out that these challenges will require “not merely undertake large aggregate spending on infrastructure, but also large single-item projects on these key areas of national development.”

“The funding does not need to come from the state coffers. That is why the enactment of the Maharlika Investment Fund and the Public-Private Partnership Act will be critical steps towards leveraging untapped private-sector resources for infrastructure.”

Apart from foreign direct investment, Salceda pointed out that “Our corporate sector has accumulated some P56 trillion in gross savings from year 2000, or 66.96% of their total income during the same period,” which can be tapped.

Salceda also estimates some P500 billion in assets held by overseas Filipinos.

Tapping this pool of national wealth will require economic vision and direction that is resolute, credible, and above all investable. That is why it is essential that the President lays out a strategy that we can all pitch into.

AI is an existential threat to US service sector

Salceda also pointed out that “like abaca in the past, and shipbuilding in the present, artificial intelligence could kill our thriving services sector.”

“Our strategy must thus be three-pronged: to harness the power of this awesome technological advancement, to prepare for its disruptive effects, and to create new service sectors that are resilient to artificial intelligence.”

Salceda identified three key promising service subsectors that could be “resilient to artificial intelligence.”

“First, our tourism sector remains a sunrise sector. Tourism, being a “face-to-face” industry, is resilient to artificial intelligence. Among the ASEAN-6, we still have the fewest tourist arrivals even in 2019 or pre-pandemic figures. We can certainly do better.”

“Second, our healthcare sector, while lacking in its aggregate quality, contains some of the best hospitals in the region. We also have a reputation for having topnotch nurses. The Philippines certainly has a future in medical tourism – but we must be prepared to make the necessary changes, including expedited visa for those seeking treatment and their families and allowing foreign doctors more leeway to operate in the country.”

“Third, our education sector, again while suffering from aggregate deficiencies, has some of the best universities in the region. The University of the Philippines usually ranks among the ten best universities in the region, while our top private universities are recognized as among the best in certain areas of study, including English.”

“We are already an educational destination for countries like Japan, Korea, China, and India, and increasingly, for countries like Nepal and Pakistan. The President is right to emphasize the need to strengthen our edge in English education. We have a future in this service subsector.”

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