His Excellency Ferdinand E. Marcos
President of the Philippines
To the Congress
On the State of the Nation
[Delivered at the Batasang Pambansa, Quezon City, on July 28, 1980]
“A Time of Challenge to the Nation”
Mr. Speaker; distinguished members of the Batasang Pambansa; Mr. Chief Justice of the Supreme Court and members of that highest tribunal of the judiciary; Your Excellencies of the Diplomatic Corps; distinguished guests; my fellow administrators in government; my friends:
It is the custom at the opening of the annual session of our young parliament for the President and Prime Minister to address himself here to a review of the year just concluded and to set before this Assembly the government’s program of legislation for the year now beginning.
With your permission, I shall depart from the stricture of custom, and shall instead endeavor to look at the state of the nation from the larger perspective of the decades of those that are now past, and the one that now confronts us—the decades of the 60s and the 70s and the 80s up to the 90s and the end of our century.
For this is what the times impel us to review and ponder here today. At no other time than now has it ever been more necessary for our people to understand the course of the nation—from where we have come and where we are going.
There is today a disturbing mood of disquiet and I confusion that neither reflects the real challenges nor befits the peoples of the world who have surmounted many dangers in the years just past.
Overnight, the world has become suddenly dominated by rumors and wracked by self-doubt. Overnight, there appears to have occurred an erosion of self-confidence, which was once the fount of dynamism, in spite of the many crises that have beset the whole world.
In all my 15 years as President of our Republic, I have never delivered a message to the legislature under such a fever of speculation and conjecture as that which shadows my appearance here today, except perhaps in the year 1970 about which I am reminded as I take this rostrum.
By this I do not mean the healthy examination and debate that should and must go on in the confrontation of those issues vital to national life in all democratic states. Nor do I make light of the fact that we live in times of profound challenge and uncertainty. Rather I am speaking of the sickly anxiety that seems to have overtaken most nations, as they view the course of developments abroad and reflect on their impact at home. I am speaking of the creeping defeatism that has perceptibly reared its head again among peoples of the world. And in the Philippines I am speaking of the predictable efforts of those who all these years have never shared the burden of effort with our people and have instead shirked their citizens’ duties and devoted their time wholly to the sowing of confusion and the undermining of the efforts of government.
The world has heard these voices before, of course, and history has found and proven them false.
Let us get our perspectives right and straight. Demagoguery has never solved problems. Inaction, immobility, and fearful cowering in hesitancy or procrastination have always ended in tragedy, individual as well as national.
In what we truly confront today, we do not face anything new or alien to our experience as a people.
There are for us only two ways of viewing the government’s duty in matters affecting our economic and social life today.
The first counsels us towards halting the programs, inaction, postponing decisions, and adopting half measures that are mere palliatives reminiscent of our past responses to problems, which falsely place at centerstage painkillers in lieu of real medicines for the disease in the hope that problems will wear themselves out and that the situation will return to normal. These measures make the claim of shielding the people from the onslaughts of crisis, but in fact succeed only in prolonging and deepening the nation’s state of embattlement. This course of action belongs to the past and to the party of reaction and opposition, which historically has never provided the nation with any sense of leadership, especially in a time of crisis.
Our philosophy of government, a radical departure from the old notions of powers and authority, has been most evident in our single-minded obsession with development planning.
Basically, we have addressed ourselves to fulfilling three overriding objectives:
- first, the attainment of national stability in the face of what dawned on us early as a pervasive time of crisis in the global economy;
- second, the accelerated expansion of the national economy in both industry and agriculture and particularly in new sectors of economic activity; and
- third, the sharing of the fruit of development and the democratization of wealth to narrow the terrible dichotomies between the rich and the poor, and the urban and rural sectors of the nation.
Because we live today seven years removed from the conditions of national life at the beginning of the seventies, many of us tend to falsely assume that the many things that now dominate the national landscape and characterize the state of the nation have always been with us. Yet the plain truth is that we have written during the last seven years perhaps the greatest success story in our entire national history.
Let me then review in outline form this story of our socioeconomic and political development. If I tend to stick to figures, perhaps it is because I am excited by figures, all kinds of figures. There is nothing, however, more fascinating than that particular figure, the figure of economic development. This fascinates, this turns me on.
Let us go back to 1965. In 1965 what was the gross national product in real terms? It was P39.5 billion. In 1979 the country’s GNP stood at a remarkable P86.7 billion, also in real terms. It represents a healthy growth rate of 6.6% a year. Our critics keep claiming that our growth rate has been kept from 2% to 5%. In 1980 the estimates placed GNP at P220 billion at current rates, four times the 1972 GNP level.
But how is this reflected in the individual citizen’s income? How does it affect his personal income? In general terms, we can say that in 1965 the per capita income stood at P736, and this reached P1,133 in 1970 and P1,428 in 1972; but as of the end of 1979 real per capita income, measured at constant 1972 prices, amounted to P1,862; at current figures, P4,630. This year the per capita income is expected to increase further to P5,874 or $780―a fivefold increase! This merely means that measured as of 1970 prices, the average income of every individual in the Philippines is not merely doubled and trebled, but quintupled.
Yet we kept hearing the repeated canard that the New Society has merely tended to the rich and not to the poor. A review of the sectoral averages in income shows a more dramatic picture.
We have converted a grain-deficit country to a rice-surplus-and-exporting country. What does this mean to the individual Filipino? To the individual farmer, it means an increase in the average rice yield per hectare of from 30 cavans to 60 cavans in the first five years and from 60 to 90 in the latter years. The income of the farmer not only increased twice or three times; in some, instances, it has quadrupled.
We do not need to speak of “Masagana 99″ nor the political will that went into the program for rice sufficiency, nor the participation of each and every citizen in every socioeconomic and political program of our country. However, let me say that in 1965 our farmers harvested only 4.3 million tons of rice and that in 1972 production had risen slightly to 5.1 million metric tons. But last year’s production was 7.25 million metric tons. And this was the achievement of a people barehanded and with limited resources.
In other food crops such as fish, corn, coffee, they contributed their share in the increase of our total crop production from 12.2 million metric tons in 1965 to last year’s production of 24.4 million metric tons—an exact doubling of productivity during the entire period under review.
Neither should it be necessary to speak of the increasing investments. From 1972 to 1979, investments rose at a healthy rate of 27.5%, from P11.6 billion in 1972 to P63.4 billion in 1979. Of this, foreign investments represented a vital percentage. To show the dramatic change in the business climate, in 1965, investments amounted to only P4.9 billion in its entirety. Let us take one sector alone. In 1979, applications solely for completely new industrial projects totaled more than one-half of the entire investments in 1965 and 1972. In 1970 local participation in investments was limited to about 50% of the entire investment. Today local participation, meaning Filipino participation, in investments, especially in industrial investments, has increased to 75%. This merely means that the individual Filipino has claimed successfully his rightful share of the industrial development of this country.
It is also said that the multinationals gobble up all economic opportunities, and this, they claimed, means that the multinationals have been permitted and licensed to rob the Filipino people of their rightful share of income and profit. Is this true? This is not supported by the data and statistics. When I took over as President, the only exports of the Philippines were the four traditional products that you and I know about at that time: sugar, coconut products, mineral ores, and forest products. They constituted about 85% of the entire export products of the country. There were no manufactures or semimanufactures, to speak of, exports coming from the Philippines. Or if there were, they contributed a meager, according to the data, 6.7% in 1972 to such exports. But by 1979 they were contributing 34%.
We have changed the complexion, therefore, of our exports; diversified our markets; and now we have such items sold to other countries like electronic and transport components, chemicals, woodcrafts, garments, and handicrafts.
But if we are to limit our study to industrial growth, we see a more outstanding performance instead of the 6.4% growth recorded from 1967 to 1972. I refer to the record of industrial growth in the latter part of the 70s, when it averaged an annual growth rate of 8.3%. And this will no doubt increase even more dramatically with the acceleration of the momentum of industrialization which we have set as a program, especially with the 11 chosen basic factories and industries we are developing.
Suffice it to say that there is also another aspect which we find dramatic, and that is tourism. It is a sector well known to you. We have inched forward close to the 1 million tourists mark, bringing in earnings close to $250 million annually from this nontrade dollar-earner.
And the infrastructure, which is the basis of our economic planning, shows a quantum leap. In 1965 the existing road network totalled 55,544 kilometers. By 1972, we had increased it to 77,278 kilometers. Today a system of 129,186 kilometers of highways and access roads joins our remotest barrios to the centers of commerce and population. The entire system can now be said to be linked from the north to the south, island to island.
To further ease the movement of people and commodities, we have increased our airports from 140 to 199; seaports from 622 to 849, with 60 seaports being expanded and improved to receive foreign shipping.
One of the sectors that needs further improvement is communication facilities and network. But certainly there has been a great increase. During the seven-year period under review, there have been installed 33 rural telephone exchanges, 32 telegraph telex stations, 795 telegraph stations, and 424 radio stations; there have been organized 29 regional postal centers and 336 new post offices.
Over the brief span of seven years we managed to build as many irrigation systems or, rather, irrigation systems that water as much an area as is equal or more than that covered by all the irrigation systems that were constructed since the beginning of the Spanish regime in 1521; so that today our irrigated areas total 1.3 million hectares, a little bit more. Some of the data speak of 104 million hectares—compared to the original 616,000 hectares in 1970 and 300,000 in 1965.
There are some outstanding engineering constructions which we can refer to like Pantabangan, which irrigates 78,000 hectares and generates 100 megawatts of power as well as mitigate floods in the lower reaches of the Pampanga River.
The Magat River Multi-Purpose Project in Isabela, the biggest of its kind in the Philippines and perhaps in Southeast Asia, will irrigate 113,000 hectares in Cagayan Valley and, more importantly, generates 540 megawatts of power to augment the capacity of the Luzon grid, thereby reducing our dependence on oil, especially on foreign oil.
In the 60s, construction of schoolrooms was at the rate of only 1,000 rooms a year. In 1972 we immediately boosted construction of schoolrooms to a high rate of 6,000 a year. By 1979 we increased this to 13,000 a year.
One accomplishment which signals the new decade of the 70s is the rural electrification program. Before there was barely any electrification in the rural areas, but at the end of 1979 there were electrical connections to a million-and-a-half houses, servicing more than 8 million of our people, all of them in the rural areas. A total of 113 cooperatives were organized in the Visayas and Mindanao and the program is so successful that the United States and some developing countries have honored us by pointing to the Philippines as a model for rural electrification in developing countries. [Applause]
The question is often asked: How does the common man share in the fruits of economic development? Has development contributed to the social well-being of our people?
The answer to these questions is an unqualified “yes.” The income of the lowest 21% of our country’s population has more than doubled from 2.5% of the total in 1965 to 5.5% in 1975 and certainly in 1979 this has further accelerated.
How about employment? At what rate have we increased the employment of our people? I speak of the rate of employment. The period from 1965 to 1972 was marked by an employment rate of 2.3%. The period under review, 1972 to 1979, shows that the employment rate increased to 4.2%.
On the other hand, unemployment and underemployment went down to 5.1% and 10.9% during the last seven years, as compared to the high rates of 17% and 23% over the 1965-1972 period. Within the 80s we expect to bring down the unemployment rate further to 4%. Perhaps we should call attention to the fact that even in the United States unemployment sometimes reaches as high as 8%.
It will be noted parenthetically here that our population program has succeeded in reducing the high growth rate from 3.01% as of the close of the 60s to 2.38% as of the end of 1979.
Often repeated is the claim that the value of the peso has been so eroded that the minimum wage is minimal. Is this correct? Let me clarify the figures. In 1970, the minimum wage was P8.00. Assuming that there has been a reduction by as much as 60 or 70% in the purchasing capability or value of our currency, therefore, there should be doubling or a trebling of the minimum wage in order to catch up with the value of the peso in 1972 or 1970. It has not only trebled; it has reached P26.38 as of this year. If counted on the basis of the value of the peso, the P8.00 of 1972 would be equivalent to about P19 today. It is obvious, therefore, that the present minimum wage of P26.38 exceeds the value of the take-home pay of wage-earners in 1970 by P7.00.
To fight unemployment, we have encouraged the development of skilled and semiskilled labor, and have allowed these workers to work overseas. Those abroad, 500,000 of them, earned for their families and the country a total of more than $1 billion every year.
In social services, particularly in health and nutrition, we have made significant headway. The life span of Filipinos has increased from 58 years in 1970 to 62 years in 1980, the infant mortality rate has been reduced to 66 per thousand from 80 per thousand.
Calorie intake has increased from 83.6 to 88.6% in 1978. Greater protein intake has also been noted from 94.5% to 102%.
The nutrition program of the Philippines, incidentally, has been adopted as a model by the United Nations for all Third World countries, and the Philippines has become a part of the United Nations University. [Applause]
Every year there is an increase in the number of pupils who are accommodated in our school system. In 1979-1980, enrollment was about 9 million. This year, 1980, there are 12.2 million pupils enrolled. The literacy rate has been increased to 88.9% this year from 83.4% 10 years ago. In Manila, the literacy rate is almost 100%.
I point out these facts because it is not well known how much we subsidize education in our country. Not only do we give free elementary and secondary education; we grant educational benefits to state institutions. For the University of the Philippines alone, let it be noted that we have provided yearly a subsidy of P5,000 for every student except for the College of Medicine where we provide P18,000 per student annually.
I need not perhaps refer to the Human Settlements and the BLISS project have been looked upon by most of our people as their last hope to own a home. They find a blossoming of that hope for a home, and not just for a home but for a source of livelihood for it is the goal of the Human Settlements Ministry that it does not merely offer an empty dwelling but also provide a decent means of livelihood for idle people.
I have not spoken to you of the other important programs, the projects of national development which, however, are founded on peace and order. All I can say is, that not only have the Armed Forces of the Philippines and the defense establishment established the atmosphere which allows the continued implementation of all these ambitious programs but, at the same time, we must also commend our citizenry all over the country for they have taken it upon themselves to cooperate and extend support to the Armed Forces. Indeed, never in the history of this country have the soldiers of this nation been truly the armed forces of the citizens of the Republic of the Philippines.
There are 100,000 men in uniform, more, but they are not mentioned in exact number. Add to this are about 70,000 policemen and about an equal number of local militia, the home defense units.
There are bound to be scoundrels in any group of men, especially in such a number of men who are taught the art of killing. In such a large group of men, of course, there is need to clean the ranks and we are happy to note that the citizenry, for once, are participating in the efforts to clean the ranks of the Armed Forces of the Philippines and have given their cooperation, understanding, and sympathy, which has allowed the Armed Forces to work out its program not only as guardians of our security but also as participants in the economic development program.
As I review the achievements of the Armed Forces, the police as well as the others, I see many weaknesses, many failures, yes, but I shudder to think what would have happened to the Republic of the Philippines and to its citizenry had we not taken the steps necessary to utilize the Armed Forces, not to take over the civil government but to strengthen the civil government of the Republic of the Philippines in 1972. We established a crisis government, for if we had taken the counsel of fear and delayed action, it would have been too late to save the Republic. Let us look around us and we see the lessons taught by such countries, like Kampuchea, with its people of about 4 million reduced to 2 million by war, disease, internal fighting through the wrong decisions of their leaders and their people. We see the same lesson in Africa, South America.
I observe that today it is becoming fashionable once again to talk disparagingly of the man in uniform.
We hesitate to speak in defense of our Armed Forces and our police even if they are in the right. We hesitate to speak for our security; we hesitate to speak for the men who place at the disposal of the Republic their lives and their properties and their honor. And we expect from them the utmost vigilance, dedication, patriotism, and heroism. The economic development program of our Republic in Mindanao is possible only because of the heroic efforts of that armed force and of the civilians who have fought for the peace and order of that portion of our country. For we must bring back to the mainstream of our political and economic life the members of our Muslim community.
We hesitate to adopt the social services program and the health program which are both for the good of the ordinary Filipino. We hesitate to provide funds for the necessary projects found in the budget. What was the level of our funding in the budget?
Let me give you some facts. From a level of P2.7 billion in 1965 and P6.3 billion in 1972, the national budget grew to P42.2 billion in 1979. Comparing the seven-year period, there was an annual growth rate of 12.9% over the 1965-1972 period and a 31.2% increase over the 1972-1979 period.
So, how did we spend these budgetary allocations? In 1965, 85% of the budget was spent for what is known as operating or current expenditures. This actually means the salaries and services of employees, and only 15% of the entire budget was spent for capital outlays like roads, bridges, irrigation systems, and schoolhouses.
We have now reversed these. In 1979 operating expenditures were drastically reduced from 85% to 63.5% and the greater amount or, rather, what was not spent for the services and salaries is now being spent for investment and capital outlays, capital outlays which, of course, were critical to the national development effort. This is a shift which all must understand, a shift towards more development budgeting, which is the reason for the growth in the economic capacity of the common man during the seven-year period, 1972 to 1979.
With a longer-term perspective of what the rest of the 1980s has to offer and with confidence in the program of our government, we should seize the moment to act while we have the time and while we have the capability.
This is the course that I now commend to the support of the Batasan.
We shall be submitting forthwith for the immediate deliberation of this body our proposed budget program for calendar year 1981.
In the proposed National Budget, we seek the wherewithal to carry through with this strategy of accelerated development in this time of challenge to the nation.
We have strived to embody in the General Appropriations Bill a program of expenditures to match the program of development and to meet the urgent problems of the day.
With one eye turned to the difficulties of the times and the other to the need to build bridges to a better future, we have sought to make the budget flexible and resilient, so that we can respond to the new and the unknown that will face us in the coming year and so that we can fund activities that will steadily strengthen national stability and enhance national productivity.
Total outlays are proposed at P54.8 billion for 1981, representing an increase of P13 billion over the budget for the year 1980. Current and capital expenditures will constitute P53.1 billion, while debt repayments are projected at P1.7 billion. Receipts are anticipated to grow and reach a total of P45.3 billion. Some 15% of expenditures, or about P8 billion, represent the budgetary deficit that must be supported by net borrowings.
It will be seen upon examination of the budget program and from the totality of our program of government for the decade of the 80s that it is our conscious policy to steer away from facile and illusory solutions and to embrace instead the strategies and programs that will confront the basic problems.
We ambitiously invest in an accelerated energy development program because we are confident of its success. I have ordered that we now spend every year, for the next five years, a total of P5 billion, a doubling of the original program, for we must accelerate our development of the renewable indigenous sources of energy. And because this promises our true deliverance from the energy crises, we are committed to it. We espouse increased production and improved productivity, both in agriculture and industry, because these are the true and lasting solutions to inflation and the trade imbalance.
We continue to stress infrastructure development, knowing from experience their vital importance to the acceleration of the economic effort.
Finally, we propose special attention to the quality and scope of social services to the 11 basic needs of man to ensure that our development will meet the test of social justice and democratization.
It is therefore my privilege to now ask of the Batasan its support for this budget program and for its continued commitment to our entire program of the decade of the 80s. [Applause]
Occasionally, we forget our objectives and targets. Let us devote our talents and time to the decisive issues of our day. Let us not be diverted from them by marginal, even if apparently popular, issues.
It is time to make some changes in both the Cabinet and the Armed Forces of the Philippines. It is my intention to consult the members of the Batasang Pambansa before I make such changes.
We must simplify and rationalize further the tax system of the Philippines. For the present, there should be no additional tax on oil products. [Applause]
For the present, we must depend upon greater efficiency in the tax collecting arms of the government and, in addition, simplify and strengthen these organizations.
The trisectoral conference on income and wages must meet as soon as the oil prices are decided upon. We must reduce some of the taxes. We can start right now with an announcement that the highest rate of personal income tax is 70%. It is my intention to see to it that this is reduced to 60%. [Applause] But more than this, it is now necessary to review the entire tax system, to see to it that the middle-income group and lower ranks of our people do not pay the same high rates, whether in income taxes or in indirect taxes, as do the owners of such big corporations like Ayala and San Miguel.
We must seriously consider a gross personal income tax. [Applause] We must consider as part of our program a study of a simplified capital gains tax privilege especially for stock market operations.
But we must give additional incentives to the officers and employees of the Bureaus of Internal Revenue and of Customs so that they may remain faithful to their trust.
In fairness to the BIR, may I say that in the year 1979 and 1980, so the record shows, there was an increase of P10 billion in collections. Of this, P1 billion was due to the increase in the rates of taxes but P9 billion was due to increased efficiency in tax collection. [Applause]
The Ministry of Finance perhaps is due for congratulations for this, and so with the new leadership in the Bureau of Internal Revenue.
There has also been an increase in the collections by the Bureau of Customs notwithstanding the fact that there has been a reduction in the volume of our exports—in volume and value. Congratulations are also due to the Bureau of Customs. [Applause]
So, the Batasan must continue to give vitality to the basic political unit, the barangay. Through the barangays we have been able to harness the smallest citizen for both political and socioeconomic action. It has become the operational level of all our programs whatever such programs may be, be they security or economic.
I take occasion, therefore, to congratulate the barangays, their leaders, and workers who have been instrumental in the success of our development program. Without them, all these achievements that I speak of would not be there. The momentum must be maintained; the momentum of achievement must be kept. We cannot lose our orientation nor our inertia of achievement and progress.
It is inevitable that we choose the road of development in meeting the challenges and uncertainties of the times. For it will not do merely to state that the present crisis is rooted in circumstances beyond our control. It will not do to say that all nations are similarly beleaguered and embattled. Neither resolves the predicament in which we find ourselves.
We have made a tremendous start towards national development. To draw back now simply because certain factors seem inhospitable to efforts, or because greater demands will be made of all of us is to nurse the illusion that the future will be more propitious.
But this, at best, is an illusory hope. In the meantime, should we opt to wait, the costs of programs will irrevocably spiral and then again we shall be admonished to wait for a better time.
I say “no.” This cannot be the course of the nation.
The burden of national leadership in a time such as this is to provide vision in the midst of uncertainty; to hold out hope and confidence when threats and difficulties appear to mount, when danger confronts us in the face, and to clear a path through which the people may find refuge and security.
Out of this profound challenge to national life today, we ought to emerge as we did in the crises of the past, stronger in our resolve, surer of ourselves, and clearer in our purposes.
This is the historic charge of the party in which has been vested the mandate of the people: to provide direction, to give leadership, and to rally the nation to action. [Applause]
But always we must be one in the advocacy of this program, this bold program of action. This is the legacy of this Batasan, whatever be the party to which we belong.
And let it be the charge of the party in opposition to bring to the Batasan the light of its criticisms, so that we may then debate and discuss the policies, the programs, and the actions we propose to the nation. That, too, is their legacy.
In this spirit, I now commend the Batasan to its historic work.
Thank you and good day.