A meaningful assessment of the 2024 State of the Nation Address (SONA) by President Ferdinand Marcos, Jr. should be made relative to clear goals and targets in terms of what the country needs. Such goals were spelled out in the 2017-2022 Philippine Development Plan (PDP) for the Duterte administration and the 2023-2028 PDP for the Marcos Jr. administration. Both five-year plans were developed in the context of the longer-term Ambisyon 2040.
This piece will focus on just a couple of thematic but very critical, even existential, issues that need to be addressed forcefully and at a scale significant or massive enough to make a dent on the problem.
The opening tone got my attention that this was a serious SONA, when the president faced head on the gut issues by acknowledging that economic growth numbers did not mean anything to the people who have to buy rice at P44 to P65 per kilo. This is a vast improvement from last year’s opening, when he erroneously said “Bumaba ang presyo ng mga bilihin” (prices of basic commodities went down) when he meant to have said “bumagal ng pagtaas ng presyo” (inflation rate slowed down).
The inflation rate for the bottom 30% of households has been consistently higher by one to two percentage points than the national inflation rate. The inflation basket for the bottom 30% consists mostly of food and basic necessities like water, electricity, and transportation. For the last June 2024 inflation rate of 3.7%, a full 45.2% was accounted for by rice alone. This is consistent with Engel’s law in economics which says that the lower the income level, the greater the proportion spent on food and basics. Conversely, at higher income levels the share of basic necessities goes down, while the share for discretionary spending goes up.
Without going into much detail, one can only point out that the historical growth rate of the Agriculture, Fisheries, and Forestry (AFF) sector has been in the 1% range. While the 2023-2028 PDP targets for AFF growth at 1.8-3.3% (very optimistic or aspirational), the World Bank projection for 2023-2026 for the sector is only 0.1% (WB, Philippine Economic Update, June 2024, page 40). An economy expected to have a growth rate of 5-7% that includes an agricultural sector growing at only 1% can only mean it will not be producing enough to feed its people, with serious repercussions on food inflation and nutrition.
NUTRITION — AN EXISTENTIAL ISSUE FOR THE NEXT GENERATIONSThe chronically low growth of agriculture which underpins food inflation directly impacts the malnutrition problem that handicaps one-third of our young children.
Dr. James Heckman of the University of Chicago won the Nobel prize for Economics in 2000, and he was a keynote speaker at the 2022 annual convention of the Philippine Economic Society. His work emphasized the importance of drastic interventions to address malnutrition from age zero to age three, or the first 1,000 days. Some correctly argue that the intervention should begin with proper pre-natal care, even before the child is born. If they do not get the proper nutrition by age three, they will remain stunted forever, and no amount of additional nutrition or learning input will improve their cognitive capacity. As an analogy, children stunted by age three will just become the equivalent of a Celeron chip and will never become a Pentium chip no matter what you do afterwards.
This is the most basic starting point for an economy and society. Both the World Bank and the Philippine Statistics Authority document that 29-30% of children at age three are malnourished, which handicaps them EVEN BEFORE they reach pre-school. To be fair, this finding is clearly recognized in the EDCOM 2 Year One report, although it uses a slightly different metric of under-five stunting at 26.7% (MISEDUCATION: The Failed System of Philippine Education, page xxv). The report identified Nutrition and Feeding as a Priority 1 recommendation (page xxxvi, Executive Summary).
DEMOGRAPHIC DIVIDEND — NUTRITION and EARLY EDUCATIONHaving properly nourished children is just the first building block that will determine whether a country can reap the so-called demographic dividend. There is a major distinction between a demographic WINDOW and the demographic DIVIDEND. They are not the same. Demographic window is a period during which the working age population increases as a ratio of the total population —this is projected to last up to 2045 for the Philippines, longer than the same window for India.
On the other hand, the demographic dividend is achieved only when the working age population is productive, which is the result of receiving the proper nutrition and the proper early education. If the children are malnourished, at best they will end up as unskilled workers while at worst they will end up as drug addicts and criminals. In short, a demographic burden to society instead of a dividend.
The second very critical building block to reaping the demographic dividend is quality EARLY EDUCATION. Here the starting point is also dismal. The 2023-2028 PDP notes that learning poverty rate, defined as children at 10 years old who are unable to read a simple text, stood at 91% as of 2021 (PDP 2023-2028, page 55).
NO TARGET IN PDPWhile the 2023-2028 PDP was an improvement over the previous five-year plans which start with a baseline number of 90.9% as of 2019 and projected targets for improvements through 2028, it is rather shocking to learn that there is no numerical target for the reduction of the learning poverty rate in the PDP — only the world “declining” (PDP 2023-2028, page 55). This target, so conspicuous by its absence, should be a priority area for Education Secretary Sonny Angara that should sharpen the focus of the numerous EDCOM 2 recommendations.
Without discussing anything else in the SONA, the issue of malnutrition and early education are the foundational issues that will determine in the next 10-20 years whether we can indeed reap the demographic dividend. From my perspective as a strategic planner, it is imperative for the president to set bold goals to address these two foundational issues of malnutrition and early education.
The key task of a CEO or head of state is to challenge the nation, his cabinet and Congress with clear, unequivocal goals that will galvanize them into a clear direction. For example, I would recommend:
1. Accelerate the target to cut the rate of stunting from 26.7% in 2021 to 5% by 2030, instead of 17.9% in the 2023-2028 PDP (page 87).
2. Reduce the learning poverty rate from 90% to 10% in five years. With corresponding adjustments to the EDCOM 2 recommendations on how to achieve this.
3. Improve the PISA scores from an average of 250 points in reading, science, and mathematics by 100 points in 2028. This will cut the gap between Philippine and Singapore (which has an average score of 550) scores by half. The PISA report states that a 10-point gap means a one-year lag. This means the 200 points gap with Singapore is equivalent to 20 years! A marginal or incremental improvement is no longer acceptable.
With the clear, specific and measurable targets the president’s task of throwing the challenge is set. It is then incumbent upon the rest of his team to work together to work backwards and figure out how to reach that goal. The team can then focus on WHAT WILL IT TAKE (resources, organization, especially multi-agency coordination and alignment) to achieve the desired results.
And for the next SONA, the message of the president on the issue of malnutrition and early education — and any other key result area — should be simplified to say the following “At the start of my term or last year we set the following audacious goals for my administration. For this year’s report, this is what we have accomplished, and this is where we did well. On the other hand, this where we fell short and this what we are doing to catch up.”
This change in approach will mean a major paradigm shift — focusing on RESULTS that really matter instead of simply activities. And whether the results or progress are good enough.
Alexander C. Escucha is president of the Institute for Development and Econometric Analysis, Inc. (IDEA), and chairman of the UP Visayas Foundation, Inc. (UPVFI). He is a fellow of the Foundation for Economic Freedom (FEF) and a past president of the Philippine Economic Society (PES) and a past president of the Corporate Planning Society of the Philippines (CPSP). He wrote the Handbook on the Overview of the Banking Industry for the BAP’s 65th anniversary in 2014. He is an international resource director of The Asian Banker (Singapore).
