Tariffs, Duterte risks loom as Philippines' Marcos charts last years in power

The Star

5 days ago

MANILA: Fresh from tariff talks with President Donald Trump, Philippine leader Ferdinand Marcos Jr (pic) is on Monday (July 28) set to unveil plans to boost growth as he starts the second half of his single six-year term beset with economic and political risks.
Marcos will use his annual speech to Congress to push welfare and infrastructure programmes as he steers the South-East Asian economy through global trade tensions.
He's also likely to call for national unity after his rival, Vice President Sara Duterte, on Friday successfully thwarted efforts to disqualify her from office and the 2028 elections.
"We will be talking about the social projects of the government for people in need,' Marcos said on July 22 of his upcoming fourth State of the Nation Address.
"We will talk about the programmes that we have initiated and will continue to promote and endorse.'
The speech comes days after Marcos returned from the US, where he secured a modest tariff cut to 19% which his government hopes to further reduce ahead of Trump's Aug 1 deadline.
His economic managers have tempered economic growth targets this year due to the potential impact of Trump's levies on the global economy.
Still, the Marcos agenda faces hurdles after his allies had a disappointing performance in May's midterm elections, while Duterte is now free of the threat of an impeachment trial at the Senate.
"Duterte allies in the Senate and even VP Duterte are expected to be obstructionists,' said Arjan Aguirre of the Ateneo de Manila University's political science department. Marcos "will still pursue those basic services that are meant to pull his numbers up or make him popular to the public but, again, it will not be easy.'
Here are the main things to watch for in the president's speech, scheduled for 4pm Monday, Manila time:
Marcos will likely push his plans to build over 8 trillion pesos (US$140 billion) worth of flagship infrastructure programmes, with three years left in his term. He's also expected to highlight agricultural reforms, as lowering rice prices remains a focus for his administration.
Those programmes need funding, but new tax measures could be tougher to pass as Marcos' popularity wavers. His government is expecting a wider fiscal deficit this year compared to earlier projections.
"Pushing for broader tax measures might be more politically challenging now,' said Union Bank of the Philippines chief economist Ruben Carlo Asuncion.
"With midterm elections behind us and the clock ticking toward 2028, the window for passing complex tax legislation is narrowing.'
The marginal US tariff reduction has frustrated some, including Marcos' allies. But unlike its neighbours, Marcos - who Trump called a "tough negotiator' - is opening up the Philippine market to a relatively limited number of US exports, such as cars, soy and wheat products and medicines, in a bid to protect domestic industries.
"The deal looks very lopsided for Washington's closest ally in Asean, though Manila seemingly put little on the table,' Peter Mumford, South-East Asia practice head at risk consultancy Eurasia Group, said in a note on July 23.
The Philippines is aiming to negotiate further with Washington to drop the tariff to 15%, Manila's envoy to Washington Jose Manuel Romualdez told Bloomberg Television on Thursday.
"We will continue to protect major domestic agricultural and manufacturing industries,' Philippine Trade Secretary Cristina Roque said in a statement. "They are not included in our concessions.'
The president's relationship with his vice president broke down more than a year ago, and Sara Duterte - who denied wrongdoing - was impeached earlier this year for allegedly misusing public funds and plotting to assassinate Marcos.
On Friday, the Supreme Court said the impeachment complaint was unconstitutional, ending prospects of an August trial in the Senate.
The political chasm between the country's two top politicians, who ran for office on a successful joint ticket in 2022, widened this year when the Marcos administration turned over her father, former President Rodrigo Duterte, to the International Criminal Court.
The elder Duterte denies charges he committed crimes against humanity during a war on drugs that killed thousands. And the Marcos government has signalled its openness to rebuild ties with the ICC severed during Rodrigo's presidency.
While Marcos had long disavowed the impeachment effort, his deputy may not hear any call for unity. Even before her court victory, the vice president was reportedly set to skip the speech for a second straight year.
A sector that Marcos could pitch as a source for new taxes is the country's booming online gambling industry.
The rise of Internet betting has raised alarm among lawmakers and Church leaders wary of gambling addiction, which could give the president reason to pitch regulations.
The question is how far will Marcos go to curb an industry that's also contributing to government coffers. There's a proposal to ban online gambling operations, while there are also suggestions to just limit access to it.
In his 2024 speech, the president outlawed online casinos that catered to Chinese gamblers, amid claims it was involved in crimes including money laundering.
Marcos is also likely to affirm his efforts to safeguard the Philippines' rights in the South China Sea, which has seen him forge closer defence ties with like-minded nations as he pushes back against Beijing's expansive claims in the resource-rich waterway.
During his first three years in office, the Philippines expanded the number of military bases that the US can access, ramped up drills with American troops and hosted US missile systems, which riled up Beijing, Manila's top trading partner.
But the Philippines may have to weigh whether Marcos' warmer ties with the US are paying off following the latest tariff deal.
"Washington's stiff tariffs risk undermining Marcos' US pivot, though Manila needs US security support given South China Sea tensions with Beijing,' Eurasia's Mumford said. - Bloomberg