His Excellency Ferdinand E. Marcos
President of the Philippines
To the Congress
On the State of the Nation
[Delivered at the Legislative Building, Manila, on January 24, 1966]
Mr. Senate President, Mr. Speaker, Mr. Chief Justice, Members of the Senate and House of Representatives, excellencies, friends, my countrymen.
Today, I come to Congress as a partner in a great enterprise. Congress is the “seat of reason,” and the Executive is the “seat of the will.”
We are indispensable to each other. Reason without the power of will is impotent, and will unaided by reason degenerates into brute and force. Thus, it is that you and I are bound to each other, and crisis strengthens this interdependence. And we are in crisis.
And so I come to you not as a partyman, for it is my fervent hope that I shall always conduct myself as a President of all the people.
I was met with disbelief when, during my inaugural address on December 30 last, I stated that we were in a state of crisis. It is my task today to recount the unhappy details of such a crisis. Our government has been spending more than it has been earning. The daily income of government is P4 million while its daily expenditures are P6 million. This means a daily deficit of P2 million. As of December 31, 1965, the cash position of the government was minus P228 million.
During the preceding six months from July to December 1965, the total net borrowings amounted to P300 million. This was utilized to finance the excess of expenditures over income. As of December 31, 1965, the total budgetary loans of the government aggregated P1,018.1 million. This is broken down as follows:
|1. Treasury notes issued under R.A. No. 245||P562.3 million|
|2. Special demand notes issued in favor of IMF under R. A. No. 245||P184.0 million|
|3. Provisional advances (overdraft line) granted by the Central Bank under R.A. No. 265||P170.0 million|
|4. Nonnegotiable, noninterest-bearing promissory notes issued under R.A. No. 2686 and R.A. No. 2052, to cover CB advances for the payment of the Philippine subscriptions to the IMF, IBRD, and IDA||P101.8 million|
Out of the outstanding treasury notes amounting to P562.3 million as already indicated, P213.4 million will mature during the current fiscal year 1966; P197.9 million in FY 1967; P30 million in FY 1968; while the balance of P121.0 million will mature in FY 1970. But in addition to these maturing obligations, the provisional advances of the Central Bank granted to our government of P170.0 million will also be due on or before the end of September 1966. You can see, therefore, that our government is hard put to meet its obligations. And the financing horizon is shrouded in darkness. For the different government financial institutions are floundering.
The Philippine National Bank is holding loans to the Rice and Corn Administration, the Philippine National Railways, the NAMARCO, the National Development Corporation, and the Agricultural Credit Administration in the amount of P408 million which it may have to pay itself, if it does not transfer it to our government. The most probable alternative will be that our government will have to pay for this. The Philippine National Bank, therefore, now seeks to borrow funds for its own operations. The GSIS has overdrawn its count with the Philippine National Bank by P35 million. The Development Bank of the Philippines with a billion capitalization lost more than P5 million in operations last year, the first time since its organization. The Social Security System is badly indebted. This is the picture about our fiscal position. And let’s not forget that we have just survived a ruinous electoral campaign which threatened to debauch the national treasury.
Election—the noble process of manifesting the mandate of the majority’s will—has been degraded into a contest of the rich and the unscrupulous. Apparently, only by a miracle, so the observers say, has the deserving but penurious candidate won in an election.
It is now time to rise from such a degradation. We must curtail unnecessary expenditures and limit the period for active campaigning. I therefore propose legislation limiting the expenses of any candidate to four times the annual salary for the position to which he aspires.
The total expenses of the party to which he belongs, all his contributors, and all supporting organizations should not exceed the total of one centavo per registered voter in the country or about a millions pesos.
It is suggested that perhaps it would be better if no sample ballots were distributed except as incidental to or as a part of other propaganda leaflets within the limits prescribed, but the names of all candidates of each party, and independent groups, should be posted in every election booth at election time. The use of newspapers, television, and radio should be limited to a reasonable level. The period of campaign should be limited to six months for national offices and to three months for local offices.
I therefore recommend legislation which would prohibit any campaign activity such as the printing and distribution of any poster, advertisements for candidates, or activity of any candidate seeking insertion of such advertisements before such period allowed by law for campaigning.
In relation to electoral reforms, I feel that the power of the Commission on Elections should be expanded so as to clothe it with more investigative and regulatory authority. Our Supreme Court, the final arbiter of the law, has clothed the Commission on Elections with power to annul votes that appear in election returns that are patently fraudulent. I recommend legislation which would grant the Commission on Elections the additional power to issue injunctions against any candidate, under pain of cancellation of his name from the list of candidates, for violating the limitation on expenditure and the period of campaign.
The implementation of the new registration law must continue so as to prevent flying voters and other malpractices vitiating the popular will.
I recommend the passage, however, of amendments to this new registration law, such amendments to include the punishment of possession by persons other than the owner of identification cards of voters.
I also recommend the increase in the penalty for violation of the election law committed by public officials, especially public officers, and the legal methods to stop these violations should be made summary.
It is now propitious to study the amendments to the Constitution to synchronize elections, provide a single term of six years for a president. We must remove the infirmities of the fundamental law. And perhaps, it is now time also to prevent the deadlocks in the Senate, by providing for an increase in its membership.
Let me now resume the recounting of the woeful state of our nation.
The productivity of our fields has barely inched upwards from substandard levels.
Our industries face the challenge of recovery. Their growth has been stunted. Machines in our factories have sputtered to a stop, thereby leaving industrial capacity unused and hundreds of workers unemployed.
Our industries have been the main propellent of our growth. Now they are suffering from being too thin in capital base, too fat in accounts receivables, too starved for credit, and too drained of profits.
At year-end 1965, the country continued to be plagued by serious port costs and inadequate communications.
The convenience of water supply facilities is afforded to less than half our population. Electric power reaches only a segment of the cities and the municipalities. Only 5% of our rice lands are irrigated. Indeed the challenge of adequacy on the basic complements of public service and physical facilities seems insurmountable; and our need for public works seems unlimited.
Our school system continues to experience difficulties in accommodating the annual increment to the school population; in improving the quality of instruction at all levels; and in efficiently utilizing the output of our colleges and universities. We are faced with the irony of having to religiously invest a very high proportion of our limited resources in education and yet experiencing so much waste in high dropout rates and in the incidence of unemployment among college graduates.
Despite advances in public health during the last decade, tuberculosis, intestinal and communicable diseases continue to take a heavy toll of life among our people.
There is a very disturbing upsurge in the incidence of criminality in our country. The crime clock indicates murder and homicide every hour; theft every 30 minutes; robbery every hour; sexual offense, estafa, and falsification every two hours. Speed in the investigation of complaints, prosecution of criminals, and adjudication of cases is far from satisfactory and there is backlog of more than 80,000 cases pending in our courts.
There are other crimes whose pernicious influence rests not so much on their rate of incidence, but more importantly, on their adverse effects on the national economy. I refer particularly to the problem of smuggling—that cancerous evil that has wreaked havoc on our economy and weakened the moral fiber of our people.
These threats to our security are further aggravated by the state of preparedness of our military and police establishments, which is far from adequate.
We face a pervasive threat from a military power that has resorted to open aggression to attain its ends and has never accepted that general war would be disastrous.
Limited but protracted warfare is very much in evidence in areas immediately adjoining our territory.
The conflicts in South Vietnam and Malaysia present security problems of the gravest concern.
These are some of the problems and realities in our national life. I state them with candor; and in the light of their graveness, we must solve them with vigor.
As against this background, the temper of the people has changed. It has turned from complacency into an aggressive demand for greatness. So let me outline the plan of action of this administration.
One of our first concerns is to strengthen the agricultural sector.
Self-sufficiency in the production of food, especially rice, must be attained in the shortest possible time. We must also improve and diversify our production of export crops so that we can develop Philippine agriculture into a reliable earner of foreign exchange.
This administration is prepared to find the means for the implementation of land reform. If necessary, we shall consider the sale of government properties not immediately needed to realize the funds for the proposed Land Bank. The Agricultural Credit Administration must be reoriented to permit a total concentration of its resources on land reform cases.
Community development shall be pursued with greater momentum and depth to develop a new sense of values and to further strengthen our social, economic, and political base in an atmosphere of mass participation and mass involvement.
The attainment of these objectives, of course, requires the unstinted support of Congress, which I now ask. It is necessary to enact legislation to
- adjust to more realistic and rewarding levels the floor of the government buying price for rice and corn;
- provide legislative authority to borrow funds abroad to finance the construction of irrigation systems;
- reorganize governmental agricultural agencies to achieve a reduction in operational costs in order to attain efficiency and maximum coordination in all levels of governmental planning and implementation.
Next I come to the problem of industry. It is clear that the government must assist in the rehabilitation of ailing essential industries and promote the development of basic manufactures to balance our industrial structure.
Let this message go forth to businessmen: Our faith in free enterprise demands that we accept the consequences of this bold adventure. While we in government are committed to defend the free initiatives of business which are not inconsistent with the public interest, we will not shy away from our responsibility to intervene, to sustain ailing essential industries. On the other hand, we expect infant industries to grow, sick industries to recover and begin to stand on their own feet. We believe in helping by temporary assistance, not in pampering through permanent subsidies. We act from a conviction that in business, as in any other activity, only those who know how to exercise their freedom deserve to be free.
We appeal to the businessmen of this nation to harness their best qualities towards our common goals. With the lifting of the retention scheme and the relative easing of credit policy, we invite our investors to direct their attention towards ventures that contribute to our productive capabilities.
To achieve these aims, we shall
- minimize the outflow of invisibles and remove the source of unfair competition engendered by all forms of smuggling; this we have started and we shall pursuer with relentless vigor;
- continue to ease the credit situation so that existing industrial firms can secure their normal credit needs from commercial banks;
- extend refinancing assistance through government credit institutions on a selective basis to firms faced with financial difficulties but which show definite potential viability;
- stabilize the exchange rate at the present level;
- maintain an adequate level of international reserves available for free market purchase;
- reexamine tariff policy with a view towards its use as a temporary assistance to domestic industries which give convincing promise of growth and eventual financial independence.
To complement the efforts of the Executive in this area, I would like to see the enactment of an investment incentives legislation which shall
- give first consideration to our own citizens so that they can carve out for themselves through their own initiative and their government’s assistance their rightful places in their own country;
- specify investment priorities consistent with our objective of developing basic industries;
- utilize the significant role of tax legislation in channeling investments to preferred areas;
- define terms under which foreign investors shall venture into the Philippines.
There shall be created an Investment Office which shall furnish all the information that may be required by prospective investors, foreign or domestic. Such an office should be ready to recommend openings for investment and to help to extend all facilities in both the public and the private sectors to the entrepreneurs.
The loss of our traditional American export market by 1974 with the expiration of the Laurel-Langley Agreement should be counterbalanced by the exploitation of new markets in Europe and among our Asian neighbors, the diversification of our export products, and a switch in export emphasis from unprocessed and semiprocessed raw material to intermediate manufactures and finished goods. For this purpose, we are submitting for congressional consideration the following measures:
- The creation of a National Export Trade Authority which shall have the responsibility of promoting Philippine export trade. This Export Authority shall coordinate and unify the activities of government agencies concerned with exports, update and simplify export procedures, impose quality control and standardization of export products, and generally lend all manner of assistance to Philippine exporters.
- The promotion of the wood products industry by lifting the percentage tax on all domestic sales of logs for manufacture or processing into wood products, and by imposing a tax on all foreign sales of logs. We have the necessary capacity and potential for producing veneer, plywood, wood pulp, and other wood products for export. If there be a necessity for setting up new wood processing factories or expanding existing ones, a portion of the increment from this tax policy shall be made available as loans to finance these industries. It is indeed incongruous that by our own extensive log exports, we provide foreign competitors of our wood products with the valuable raw materials which make such strong competition possible.
In view of the scarcity of public funds, it shall be necessary to seek the aid of private financiers for some of these projects. Toll roads may be established by private contractors under Republic Act No. 3751, which I now recommend to be amended to make the terms less onerous on the contractor.
Here are some of the projects conceived within the new Four-Year Development Plan which we are finalizing:
|Waterworks and artesian wells||P60 million|
|River control and drainage||P345 million|
|Air navigation||P23 million|
|Ports and harbors||P98 million|
These projects amount to an astronomical total of P3,986 million.
These intentions, however, when translated into action are only a small contribution towards bridging the wide gap between present needs and present realities. Our inability to make a bigger contribution does not derive from any lack of will but from a lack of means. To augment the limited government resources available for these projects, we have recommended to Congress the amendment of the Reparations Law in order to allow greater utilization of reparations, goods, services, and funds for public works development.
In the event that our financial resources fall below present expectation, I shall not hesitate to call upon Congress to legislate such measures as may be necessary in order to avoid the alternative of having to fall back in our public works program.
Third, the government must provide a solid physical base which can adequately support planned and sustained economic growth.
We seek to provide
- a structurally safe and sufficient network of major thoroughfares, with supplementary integrable developmental road systems, complementary water and air transport facilities, and a comprehensive communications network;
- improve and extend irrigation facilities to such coverage as to attain sufficiency in staple crops through exploitation of regions of great agricultural potential;
- power and water supply facilities to serve the increasing requirement of our growing industry and population;
- civil works designed to solve the perennial flood problems of the country;
- an adequate physical plant for regular governmental social services, in the form of schools, hospitals and sanitaria, public buildings, mass housings, and community development.
To these ends, we intend to build no less than 1,500 kilometers of concrete roads and more of asphalt and gravel roads. We intend to improve 16,000 kilometers of feeder roads and close to 30,000 lineal meters of permanent bridges. We intend to develop an additional capacity for 1 million kilowatts of electric power and provide adequate water services for 3.7 million people in the provinces. We will irrigate an additional quarter of a million hectares and undertake river control projects in eight regions and 38 localities.
These objectives seem ambitious and they may take more than four years to accomplish, but this does not indicate any political ambition. They are merely clearly set for our planning.
We are committed to provide an educational system which can tap the potentials and vitality of our human resources. We shall continue to meet the constitutional mandate of providing free and universal primary education. Our best efforts shall be directed
- to overcome the crisis in classroom accommodations by undertaking a school building program which would not only meet the annual increase in requirements but would also gradually eliminate the existing backlog of 50,000 classrooms;
- to define responsibility over the financing of the different levels of our school system;
- to encourage the teaching of science and the development of research;
- to strengthen our vocational and technical school system to afford our youth training in essential skills for the promotion and expansion of our agriculture and industry;
- to dissociate the educational system from adverse political influence particularly in the recruitment, promotion, and assignment of personnel.
The fifth plan is we shall extend maximum protection to the working man and we shall do so through a vigorous and effective implementation of existing labor laws, and we shall enhance the productivity of workers through training and placement services. However, I shall periodically present and recommend to Congress amendments to some of the existing labor laws.
Sixth, we shall strive to raise the efficiency of our public health services to a level which should meet the minimum requirements of our people.
Seventh, the elevation of the standards of the administration of justice is a primary concern of this administration, as it should be for all administrations. It is essential that crime prevention and law enforcement should be complemented by the speedy and fair adjudication of cases. To this end, the performance of the judiciary, particularly at the lower courts, shall be improved by instituting reforms within the judicial machinery and by limiting appointments to judicial positions to men of known dedication, integrity, and knowledge of the law.
At this juncture, it may be well to remind the Members of Congress of the bills that failed to pass which sought to transfer jurisdiction and responsibility for certain cases from the Supreme Court to the Court of Appeals and from the Court of First Instance to the lower courts. I shall propose legislation of this nature as they fall due.
Investment and production are the true answer, the final answer to our economic ills, but this true final answer requires as condition a measure of social and political stability.
It is imperative that certain measures be undertaken to enhance our national security, therefore, both externally and internally. These measures should be directed towards revitalizing our regular force, including local police forces, and accelerating the buildup of our reserve elements. The following are some of these measures:
- I propose to effect a more vigorous implementation of the National Defense Act, extending the period of trainee service to 18 months and authorizing the utilization of trainees in regular military duties.
- I propose to replace outmoded equipment and augment existing equipment by new equipment from all available sources. Towards this end, the costs to absorb, utilize, and maintain such new made available. I shall propose this item in the new budget.
- I propose to reorganize the military institution as a step towards restoring its morale and “esprit de corps.”
- I recommend the enactment of legislation which will institute administrative reforms among all our police forces to upgrade their effectiveness and efficiency.
- I now ask for the creation of a Philippine Coast Guard within the administrative framework of the Philippine Navy. Unabated smuggling through our sea routes, rampant disregard of our laws designed for the protection of life and property at sea, and the absence of a central agency to administer and enforce our maritime laws are the compelling reasons for the creation of a Philippine Coast Guard.
Concurrent with these efforts to revitalize our Armed Forces, I also propose to mobilize the manpower, material, and equipment resources of the Armed Forces in order that they may be able to assist in the execution of our social and economic development programs.
We believe in the principle of free enterprise. We realize that when the public sector goes into debt and competes with the private sector for credit, the scale is biased against the latter. This results in the draining of the credit flow to business, which in turn impinges upon production and thereby operates against our basic growth. Our financial policy therefore will be so designed that the public sector may not unduly tax the existing credit sources in competition with the private sector.
It will also be so designed that consumers do not suffer from the consequences of a rise in prices. Not only will we exercise the utmost responsibility in monetary and fiscal policy in order to hold the line on prices, but we are determined to undertake massive production programs in rice, fish, vegetables, and meat. We shall fight hoarding and market manipulation with every force at our disposal. We will continue to use the persuasive powers of the Presidency to prevent the spiraling of prices in key sectors and products.
We cannot lay any claim to nobility or greatness unless we can improve our tax collection system. We must show convincing proofs that we are using in the most judicious and economical manner the funds we collect in the form of taxes in order to leave no room for the justification of the popular hesitation to pay taxes which taxpayers claim will just be squandered away. We are recommending that the debt ceiling on domestic borrowing specified under R.A. No. 1000 and on external borrowing specified under R.A. No. 16 be raised to higher levels to provide for policy maneuver during the times of financial stress.
We must achieve not only a balanced budget with respect to current expenditures but, if possible, generate a surplus which we can use to finance capital expenditures for economic development. However, when it will not be possible to generate a surplus in the magnitude that will suffice to cover our requirements for economic development, we shall not be limited to the mere extent of such a surplus. For we intend to fulfill our responsibilities of providing adequate growth and maximum employment opportunities for our people.
I therefore seek the cooperation of Congress in the amendment of R.A. No. 1000 and R.A. No. 16.
To guard against the indiscriminate use of the foreign borrowing authority, we propose that all borrowings will be on a project basis and only after the plans for such projects have been developed by the agencies concerned, approved by the National Economic Council and the Monetary Board. In view of the ambiguity in R.A. No. 16 and R.A. No. 1000, it is also desirable that we clarify the respective ceilings as applying to the amounts outstanding rather than to the amounts incurred under the respective borrowing authorities.
The challenges we face pose unprecedented and unremitting demands for high quality in ideas and performance of the public service. High competence in administration, integrity, responsibility, responsiveness, and stability in performance, and most important, the capacity for innovation and change, are needed to envision and attain our national goals.
In the past, governmental programs requiring innovations have most often been entrusted to newly created agencies staffed by dynamic “new blood” as new to the public service as the program itself.
We must accept that the infusion of new blood is desirable and necessary rather than just a concession to political exigency. Let me state here and now that I respect the civil service system and will do all in my power to strengthen it. However, the existence of a “closed” career civil service should not be made a shield for incompetence and mediocrity.
The challenge of our times demands that we mobilize the best talents available in the private sector as well as in the public service if we are to realize our aspirations as a people. To this end, I would like to see the infusion of our career staff with “new blood” at all levels of the national government and the interchange of talent between government and private employment and among government agencies in order to enhance the responsiveness of our public service to the challenges we face.
Our administrative machinery must be regenerated to gear it to the requirements of national growth. Graft and corruption in our government must be exposed and eliminated.
We resolve to effect reforms in governmental operations. To promote economy, simplicity, and efficiency in the conduct of public affairs of the government, we have already recommended to Congress, during its recent special session, a bill authorizing the reorganization of the executive department and entities.
At present, there is no single body responsible for the orderly growth of the shipping industry. We shall propose the creation of a Maritime Commission to consolidate the functions dispersed among several entities, concerning coastwise and overseas navigation.
Beset as we are with tremendous challenges at home, we are also affected by the momentous happenings abroad.
The foreign policy of our Republic shall continue to be dictated by our national interests and the interests we share with other peoples of identical aspirations and goals. It must serve the enduring welfare of our nation by promoting its prosperity, security, and liberty. Its primary goals must be the security of our country from aggression and subversion, and its economic development through our own vigorous efforts and in close economic cooperation with other countries.
We shall be friends to all nations that either share our values or wish us no evil. We shall maintain close relations with our allies on a basis of mutual respect, equal dignity, and genuine identity of purpose.
Communism remains an ever-present danger to the security of this region. We shall stand ever alert to this menace and are determined to resist its expansion through our own strength and in cooperation with other nations.
We shall continue to give loyal support to the United Nations. We have participated in the establishment of the Southeast Asia Treaty Organization, the Association of Southeast Asia, and MAPHILINDO. It is our hope that these organizations will continue to strengthen our capability to ward off aggression and subversion, build our economy, and enrich our culture. We are prepared to consider with our allies and fellow members in what ways these organizations can more effectively serve our regional interests.
We intend to set arrangements in motion for the normalization of our relations with Malaysia without, however, prejudicing our claim to North Borneo and impairing our friendship with other countries.
We extend the hand of friendship and goodwill towards the Indonesian people. We pray that they shall emerge from their present trials strengthened in foreign intervention and domination.
We shall endeavor to strengthen our present policy of friendship with the Republic of China. We, therefore, intend to reexamine the procedures for the entry of persons of Chinese origin, and seek an early and just settlement of the long-pending problem of overstaying Chinese.
Recognizing the importance of our relations with Japan, we shall seek to more stable political and economic arrangement with this country.
The Philippines has a vital stake in the survival of the Republic of Vietnam. We shall continue to assist this nation to the best of our ability. But at the same time, we shall support any reasonable move for a negotiated peace in Vietnam. It is my intention to send a fact-finding mission to South Vietnam to report to the Security Council and the leaders of our country thereafter.
Our relations with the United States shall be maintained on a basis of common ideas and interests, of mutual respect and consideration. We are convinced that this great nation would want nothing better than to see our nation prosper in dignity and freedom.
Since trade with the United States is essential to the national economy, we shall maintain this trade on equitable and mutually advantageous terms. At the same time, we shall seek to expand our trade with other countries under conditions consistent with our fundamental interests.
These are the problems that we face; these are the plans that I propose to utilize to meet them. This is the challenge of our responsibilities. Complete dedication, total heroism are demanded as the proper response. For our body politic is ill, perhaps paralyzed by a great disease, and we must meet this ailment vigorously.
Some questions have been raised about the stem measures taken like the laying off of casuals. The truth of the matter is that there were no funds to pay for them. It would have been the easy way out on the part of the Chief Executive to have allowed their retention in government, but it is the hard role of the leader to sometimes inflict pain during the process of medication and perhaps of surgery. And this will be, I know, the heavy burden, the thankless task that the Chief Executive must perform during this period of recovery. But I accept this heavy burden; I ask you to accept it with me. I accept it for today my life seems to have run full circle.
During the war and after the war, I participated in the recovery and rehabilitation of our people from a devastating conflict. And in these Halls of Congress, like you as legislator, I often stood up to plead for self-abnegation and sacrifice.
Today, I come to you again not as a legislator but as a partner, as I said, in this great enterprise, in this enterprise for the recovery of our dignity and of our freedom, and I come with the same plea. The democratic faith is premised on the concern of our people for the individual’s life, liberty, his security, and his health, but we still have very far to go to do justice to this faith. With the help of the Almighty, the bounty of our resources and the energy of our people, I am confident that we will meet the demands of our faith.
We must, for too long have we procrastinated as a people, be never daring to forsake, in the phrase of Rizal, “a humble present for a brilliant future.” But our people cannot wait and they ask us to act, and I hear them say there is no margin for pettiness. There are no reserves for partisan strifes. Our people look to Congress and to the Executive for effective, dedicated leadership for the attainment of greater freedom for all. I therefore call upon you and the rest of the nation join with me in a massive and unrelenting effort to translate these expectations into action and accomplishment. For our survival, and beyond it, our progress is in our hands. We cannot look to anybody else. We expect no help from any other sector. We must look to ourselves alone. Our nation can be great only according to the scale of our own labors, our self-abnegation.
Therefore, I ask you, let us look to ourselves, and I pray that God grant guidance to all of us in this sacred and noble mission.