marcos twentieth state of the nation address 1985

8/9/2019 Marcos Twentieth State of the Nation Address 1985

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A Turning Point for the Nation

Message to the Batasang Pambansa

Of His Excellency Ferdinand E. Marcos

President of the Philippines

On the State of the Nation

[July 22, 1985]

Mr. Speaker, Mr. Pr ime Mini ster,Distinguished members of the Bata sang Pambansa:In keeping with both tradition and duty, we meet today as trustees of our people to setanew th e annual agenda for the nation.We should perhaps take note that this tradition surround ing the opening of Parliamentis as old as the nation itself, in the light of so much talk abroad about the allegedfragility of our democratic institutions.While the Batasang Pambansa is only one year old today, the declaration of partnership

between the Presidency and Par liament dates back to the very birth of our FirstRepub lic.And if this Constitutional principle has survived intact after so many tidal changes inour national history, surely this is one sign that democracy has roots he re in our land.There are others, and I ha ve come here tonight to report that our democracy has

prevailed over a year of crisis and un certainty, and to seek your support andcollaboration in meeting a new turning point in national life.Highligh ts of the Year

When we convened this assembly for the first time a year ago, we could feel within thischamber the fever of anxiety that gripped the nation. The economic cri sis was at itsheight . There was turbulence and confrontation on ou r streets. And insurgency andsubversion took the moment as an opportunity to revive and regroup .The past year bears witness to our combined resolve and determination to be master ofthe crisis, and not its victim.We hav e decisively stopped the slide of our economic for tunes, and restored them tohealth and renewed activity. Against every forecast of collapse made by so many, w ehave turned the odds in our favor and set a course towards recovery that is without

parallel among nations similarly embattled.


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We have demonstrated the efficacy of our democratic in stitutions and processes, inensuring national stability and in framing policies and programs to meet the tide ofcrisis in our midst. The elections that brought this Parliament into being and theinaugural session of this assembly exemplify our re sponse at this end.We have met the grave challenge of subversion and insurgency, which again sought totake advantage of our economic travails ' and political trials. In the measure of thechallenge, we have confronted the enemy on every front, we have insti tuted reforms in

our counter-insurgency program and our armed forces, and we have strengthened thebond between our soldiery and our citizenry which is so essential for success in thisstruggle.We have strengthened the mechanisms for dialogue and cooperation among all thesectors of our society, seeking relief for the plight of those who have been mostadversely affected by the crisis and providing for fruitful partnership between the

private sector and the government. A year ago the basis of social concord was . undergrave challenge. Today, that is now largely recovered and strengthened .We have protected the gains and the reforms of the past decade in our response to thecrisis, even though we have had to implement stringent measures of economy and

prudence .No major social program of reform has been abrogated by our belt tightening

efforts; rather savings have been generated in other areas so that the reform effortwould continue .And in our relations with the rest of the world, we have the confidence of other nationsand international institutions in our ability to surmount our problems and to meet ourobligations and commitments. The seal of international 'credit worthiness handed us bythe International Monetary Fund is only one aspect of this. As important and significantis the renewed vigor of our bilateral and multilateral diplomacy.

Not all the adversities and challenges ate behind us. Our agenda remains heavy anddifficult. But we have moved be yond .the arc of crisis into a new phase of struggle.At certain times in our history, the aspirations of our peo ple and the course of eventsconverge at a single time to shape a turning point in national life.

So it was in 1 896 when this landwas rocked by th e tremors of revolution. So it was in1941 and 1972.So it is today. The crisis ofthe past two years and our efforts to surmount it have led usinexorably to t his decisive turning point in our hi story when we either thrust oureconomy forward into full mo dernization or forever remain in th e shallows; when weeither stop once .and for all the challenge of Communi sm in thi s country orbe overrun

by it; when we either attain the full promi se ofdemocracy or be l ed away into alter -native routes toward th e future.To meet thi s challenge, we must address squarely those great issue s on which the futureof the nation hangs .National Economic Recovery

When we speak of national prioritie s today, the first on our minds is the econom y, andspecifically the progress of the na tional economic recove ryprogram.To understand recent developments and directions in the economy mu st first understandthe nature of the cri sis that struck us in 198 3.To .simplify a rather comple xphenomenon, the crisis stem med from two factors: Ourvulnerabilit y to the unexpected drop in access to international credit and high inte restrates, and our difficulty in managing ou r balance of pa yments po sition with limitedresources.These two factors were already constricting the growth of the economy when traged y


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struck former Senator Benigno Aqui no, Jr. in Augu st 1983. The tragic e vent, however,triggered the financial crisis , making a tough situation suddenly critical . A debtmoratorium had to be enforced on October 17, 1983.It was in these circum stances that we formulated the na tional economic recover y

program. The program which began in 1984 stressed five main lines of action:- First, a financial package to modify the maturities of part of ou r external debt, toresume normal credit lines, and to commit fresh credits to finance import s, eliminate

arrearagesand build up our international reserves;- Second, a disciplined financial and budgetary program to stabilize our balance of

payments posi tion, exercise g reater control on public spending and contain inflation;- Third, a structural adjustment prog ram for the econo my, consisting ofmajortariff andagricultural reform s, libera lization of import restrictions, investme nt and export

promotion and energy self-reliance;-Fourth, an economic priorities plan focused on the ba lanced development of bothagriculture with industry; and-Fifth, the e xpansion of outreach programs in employ ment, health, nutrition, housing,education, and the improve ment in the quality of social services to help our people,especially the most disadvantaged, to cope with the effect s of the economic cri sis and

the impact of the stabilization program.These adjustments were ofte n criticized as too severe and pai nful, but these werenecessary to put the econom yback on its feet.We did not flinch in biting the bullet as they s ay. With will and with imagination, wehave taken the course to relief and recovery. And today , as we meet here in thischamber, we can proudl y say that we have passed the initial test. Economic reco veryhas begun. 'The financial package for the period from October 17, 1983 to December 1 986 amountsto $13,760 million. Of thi s amount, about $3.6 billion represent "new money"

principally intended for the general requirements of the economy.The most critical component under the program is the stand by facility from t he IMF

amounting to SDR 615 million or ap proximately $610 million. The Philippine requestfor this fa cility was approved by the IMF boa rd on December 14, 1984. ' We drew thefirst tranche of $ 80 million last December 28, 1984 and thi s was used to pay thebridgefinancing loa n extended by the go vernment s of the United States, Japan, and Koreasubsequent draw downs will be contingent upon the achievement of cer tain quarterly

performance criteria outlined in the economic adju stment program. We expect therelease of the second tranche of $107-million thi s July because we have metsuccessfully the performance target a greed with the IMF last May 31, 19 85.The financial package likewise provides the country with $925 mi llion in new loans anda credit line of about $3 billion to finance imports, and re schedules overaperiod of10years maturiti es of$5.8 billion , falling due between 1983 and 1986.

The pledge of n ew money by our commercial creditors will enable us to service ourexternal debt obligations on a current basis, including the e limination ofarrears by theend ofour IMF program period. The r estoration of the trade facility, on the otherhand,will reopen normal trade financing whose disruption had imposed a heav y cost burd enon domestic producers.It has been s uggested by some quarter s that the government did not have to deal withthe International Monetary Fund withrespect to our debt paym ents. What, in fact, wereour otheroptions? We cou ld have followed the example of countries like Cuba, NorthVietnam and North Korea, whic h did not keep up theirpayments. Or else we could have


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merely ignored ou rdefault without any regar d for the consequenc es to the creditors.Dealing with the IMF and other creditor s, however, was the only hono rable alternative,first, because we are a signatory to the Bre tton Woods Agreement of 1945 and cannottherefore renege on our debt payment s; and second, be cause we have to protect ourexternal position in view offuture requirements forcapital.With respect to the economic s tabilizationprogram, we are meeting successfully the keyobjective of impro ving our bal ance ofpayments position.

The deficit in the current account was reduced to $ 1.3 billion in 198 4 from $2.7billionin 1983, surpassing the target of $ 1.5billion set for the year. The large improvement inthe curre nt accoun ts resulted in an overa llbalance of paymen t surplus of $ 243 millionin 1984, reversing a deficit of $2 .1billion in 1983.The result of the first fourmonths of1985 are eve n more positive with a current accountsurplus of $165 million as compared to a deficit of $502 mi llion for the same period in1984.This was, however, due to a mo re significant drop in imports by 12.6 percent whil eexports fell by 11.4 percent over the same period in 1984. By end of May , the tradedeficit was narrowed down by 22 percent to $220 mi llion compared to $ 283 million forthe same period in 1984. The dec line in export receipts was mainly due to unfavorable

markets for our major traditional exports, like coconut, sugar, copper concentrates,logs, timber, offsetting the gains from nontraditional exports in chemicals, coppermetal, textile yarns, handicrafts, nonme tallic mineral manufactures, garments, andnickel and fish products.On the other hand, non-merchandise trade improved im mensely from a deficit of $336million during the first quarter of 1984 to a surplus of $210 million for the first fourmonths this year.We have built-up in international reserves to $1 .06 billion as of June 1985 .Our total foreign liabilities at end-December 1984 amounted to $25 .4 billion. As ofend-Ma rch 1985, this declined by $212 mil lion to the level of $25.2 billion.Developments in the external account, together with prudent monetary and fiscal

policies , have stabilized the foreign exchange rate and stopped the depreciation of thepeso.In the domestic sector, tl1e rapid acceleration of commodity prices has levelled off. The

inflation rate has declined by a significant 7.34 percentage points from 34.99 percent in May

to 27.65 percent in June this year. Even more gratifying is the mere increase of 1.5 percentin the inflation rate from January to June of this year.

The same downward trend in inflation rates was observed in all areas of the country.Metro Manila's rate decreased even more significantly by 8 .72 percentage points from30.91 percent in May to only 22.19 percent in June. For areas outside Metro Manila,the inflation rate slid down further by 7.1 percentage points from 35.83 percent lastmonth to 28.73 percent in June.

Substantial decreases in food prices were observed in many areas of the country,notably in Metro Manila. From January to June this year, prices of vegetables and fruitsdeclined by 4.32 percent fish by .50 percent, and eggs by 2.14 percent. Between Mayand June, there have been encouraging decreases in the prices of certain food items.At the same time, the interest rate (Manila reference rate, 90 days) has graduallytapered from a peak of 37 .4 percent in November 1984 to 23.6 pe rcent as of July 19this year. For the first six months of this year, the interest rate averaged 25.6 percent.The deceleration of the in flation rate was d ue to a number of policy measures ,significant of w hich is the effective management of liquidi ty by limiting the growth in


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reserve money through active open market operations and other credit instruments.Consequently, reserve mon ey expansion was limited to 1 3.6 percent in end-May 19 85,reaching P30.9 b illion and well within the P34 .4 billion targ et during the sa me peri od.You mu st realize how difficult it i s to contain a budget deficit at such lo w levels but wewere able to cut our o verall deficit to 1.8 percent of GNP in 1984, a nd to keep it withinthe program target of 2 .0 percent of GNP. T his improvemen t was due to an austerespending policy, together with an increa sed revenue collection from implement ation of

new revenue mea sures and im proved tax collection .Certain ta xes were modified-to alleviate the burden on the taxpayers, p rovide bu sinessopportunities and broaden the ta xbase. In particul ar, the taxbase has been broadenedmainly by withdrawing ta x exemptions from public and pri vate enterpri ses and byshifting from spec ific to an ad valorem made of tax levy. A uniform tax rate on interestearnings hasbeen adopted, the method of inven tory valuation for income and corporat etaxation ha s been modified , and a levy -ofa one percent ta x on all foreign e xchangetransactions i n lieu of the levy on selec ted transaction has been imposed.To reduce the cost of ra w material s and make our indu stries operate mo re efficiently ,average nominal tariff ra tes were lowered to 2 8percent in January this year from the

pretariff reform average ra te of 43 percent. A uniform mark-up of 25 per cent on

imported good s has also been adop ted. Moreover, an addi tional 46 nonessential andunclassified consumer items can no wbe freely imported without p rior approval fromthe Central Bank,bringing to 967 the total number of liberalized item s.In the energy sector, our dependence on oil imports has gra dually declined due to acontinuous substitution of domest ic energy resources for impo rted energy. The share ofindigenous en ergy resources to our total energ y consumption has increased to 44

percent for the first four mon ths this year from la st year's 42percent . Consequentl y, ouroil import bill for th e same period this year has gone down by 6 percent. By yearend, wewill be 50 percent self-sufficient in energy requirements. Moreover, our government has veered away from the artifi cial pricing of electricityand petroleum products to reflect as close as possible the supply and demand for these

products in the market. In particular, our government has narrowed down the pricedifferential between close substitutes such as premium gas oline and diesel and hasgradually reduced the level of subsidized consumption for residential customers.In the agricultural sector, pricing, marketing and other forms of administrative controlsare being phased out in support of a balanced agro-industrial development. The retailceiling price of rice will be lifted in October this year, while that of corn has beenlifted since October last year. Domestic trading of sugar has been returned to the

private sector and the export marketing system for coconut products has beenliberalized. I have ordered the preparation of rehabilitation and development plan forthe sugar industry even as we provide food and other assistance to displaced workers.Furthermore, the importation of wheat and the distribution of ' flour have been opened

to the private sector .These measures will give more incentives to the farm sector to produce moreefficiently as agricultural product prices would now reflect competitive marketconditions.I want to say a few words here on why we have had to im port rice recently. Theseimportations are due to the production shortfalls caused by the combined effects of the

prolonged drought in 1983 and 1984, typhoons, spiraling production costs, andstandstill on credit. The current imports will beef up our buffer stocks for the leanmonths of July through September. This has become compelling because while palay


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production dec lined during the drought-stricken years, per capita consumption of ricerose. And it is imperative that the National Food Author ity holds enough rice in stockto stabilize the market when rice prices are deregulated in October l .Significantly, this year, we expect to harvest our largest rice crop ever. We foresee aharvest of 163 .9 million cavans of palay, equivalent to 5 .4 million MT of milled rice.This is 4.5 percent higher than last year's harvest, and 1 .2 percent higher than our 1982record crop.

Meanwhile, there have been some improvements in income distribution in our country.The share of the bottom 60 percent of families in the income ladder increased by 1 .2

percentage points from 21 .7 percent during the fourth quarter of 1981 to 22.9 dur ingthe same period in 1983, based on quarterly integrated sur veys of households.Average annual incomes of both rural and urban households have increased over theyears. The average rural household in come increased fivefold from P2,818 in 1971 toP14,646 in 1982, while average urban household income improved fourfold fromP5,867 in 1971 to P23,637 in 1982.The improvement in the palay yield from an average of 30 cavans in 1972 to about 50cavans in 1984 - has significantly con tributed to the increase in rural and agriculturalhousehold in comes. This was due to our government's continuing thrust on agriculture

as the linchpin of economic growth. Furthermore, the current minimum wage for plantation and nonplantat ion agri cultural workers has been increased to P46.67 andP36.67, respec tively, from P4.75 in 1972.The average urban household income, on the other hand, has been positively affected

by the series of minimum wage adjust ments. These have raised the present minimumwage of nonagri cultural workers in and outside Metro Manila to P57.08 and P56.00,respectively, from P8.00 in 1972. In the public sector, gov ernment employees weregiven a 10 percent salary adjustment beginning January this year. These adjustmentswere made to enable workers to cope with the price increases and improve the genera lstandard of living.These encouraging developments in the economy come at a time when the economic

recovery of the developed economies is slowing down. Despite the softening ofinternational interest rates and world oil prices, commodity prices are similarlydeclining.The tight stabilization program and weak demand for our exports by our major trading

partners have impaired our ability to restore economic growth. Nevertheless, theexpansion of the agricultural se ctor by 2.1 percent as of the first quarter pre vented alarger fall in .real output. The improved income in agri culture will raise the purchasing

power of two-thirds of our po pulation who live in the rural areas and eventually raisethe demand for industries and re vive industrial activit y.The l atest statistics show that th e level of unemployment has levelled off. The fir stquarter data for 1985 show ed an actual decrease in the unemployment rate t o 5.8

percent from 6.3 percent and the underemployment rate to 24 percent from 36.5percent, over the same period last ye ar. The number of laid-off workers for the fi rstfour mon ths of th is yearalso decreasedby 43.7 percent to 2 3,280 from 41,326 over t hesameperiod l ast year.An even closer look at th e employment d ata showed that the num ber of self-emplo yedincreased by 12.8 percent in the first quarterthis year over t he same period last year.This offsets a decline in the number of wage an d salaried workers, which fellby 1.6

percent overthe sameperiod last year. Thi s reflects the resiliency o four peopl e whenthey venture into entrepreneurial activities as a matter of eco nomic adjustment and


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social p rotection.To a ssist the l aid-off workers, an additional P45.6 million was released asunemployment a ssistance loans during the first semester. Industrial peace was

promoted with the increased num ber of collecti ve bargaining agreements reaching atotal of 1,9 31 as of Ma y covering some 255,000 workers.Sugar workers who we re affected by the slump in the world price of sugar were gi venassistance in the form of an emergen cy employment p rogram. U nder the program,

displaced sugar plante rs and millers were encouraged to plant food and cash crop s insugar land s rendered idle due to drastic production setbacks. In addition , I haverecently imposed a sugar production qu ota of 1. 6 million tons to keep this co mmodityavailable in the dome stic market as well as to fulfill our coun try's export quot arequirement to the U.S. I have also di rected the Philippine Suga r Commi ssion toensure that the domestic pric e of sugar b e maintain ed at P300 per picul to enable sugar

producers to gain re asonableprofits.I have ordered the rele ase of funds to rehabilitate areas de vastated by the recenttyphoons. I assure you, there are enough stock s of rice to meet any contingency. .Moreo ver, P1.4 million was disbursed in the form of long term soft loans to assi stdistressed hospitals in upgrading their facilities and services in the fi rst five months of

1985. The pri mary health care approach has also been instituted in 37,705 ba rangaysas of March 1985. M eanwhile , Pag-ibig housing loans availed by members reachedP4,368.6 million in April 19 85, an in crease of 12.7 percent from the December 1984level.Tasks for Economic Manag ement

All these gains, t aken singly or toge ther, are a signpost telling us that the reco veryprogram is working, and that the sacrifices and t asks we have borne with fortitudehave not b een for naught. When we say that t he Cassandras of doom among us and inthe forei gn media have been wrong in th eir prognosis on the country, these are therealities on which we b ase ourclaim.But we have only passed the first stage in the arduous road to recovery. We cannot

lingeron the road and riska lapse to compla cency.What was true at t he onset of the c risis is still true today: our econom y, hence ourrecovery efforts, are challenged by circum stances b eyond our control, by condition s

beyond our shores. We are confronted by a s lowdown in world trade, by a growthrecession in our major trading p artner, the U.S ., by a fall in export pri ces and by agrowing wa ve to protectionism in the developed econ omies ofU.S., Japan and Europe.These will hamper our p rospects for a higher export growth,but thi s should enc ourageus to further diversify our exports and search for other nontradition al markets for our

product s.We mu st recognize that the emergence of a dynamic national economy will n ot be anaccident of de velopment, but the product of a national effort animated by a vi sion of

the fu ture.At lea st six areas of econom ic management ne ed to be subjected to further action andreform for the re st of 1985 and 1986.First, we shall con tinue to adhere to a disciplined financial and budgeta ryprogram tostabilize ourbalance of payment :, position , maint ain an enduring reduction in theinflation rate, and exercise greater contr ol on public spending.We hope to maintain positive interest rates principally by keeping the infl ation rate aslow aspossible to encourage greater domestic produc tion and investment s. We expectthe inflation rate to decelerat e further to around 10 percent b y the end of this yearand


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further down to a single digit level by 1988. Money supply e xpansion will be restrictedto around 1 5percent to further bring down the infl ation rate.Dome stic borro wings of the public sector will be regulated and the nationalgovernmen tbudgetary deficit will be further cut down this year.The stimulus for growth w ill definitely come from the in vigorated rural andagricul tural sectors and an inten sified e xport activity in lieu of a slack on governmentspending and pri vate real investment s.

Second, we shall strengthen and where necessary, rehabilitate the financial system toimprove its efficienc y and to re store public confidence .In particula r, government financial institutions will be reformed to avoid unn ecessaryduplication of functions as well as e xcessive and une ssential competition with the

private sector. We shall acti vely assist mergers a nd consolida tions among bank s toencourage the m to b uild up their resources and equity ba ses. We shall pursue therestructu ring of the legal and administrati ve framework for priva te institutions. Also,the Central Bank's role as a stabilizer and overse er of banks will be furthe rstrengthened .Third, we shall limit g overnment sector in volvement to socially desirable activitiesand to those wherein the private sector is unable or unwilling to invest in due to

unprofi tability, high risks, and exorbitant co st involved but which activities are alsoof high social and economic p riority. Thi s would enable the pri vate sector to continueits dynamic role in our economic recovery in the conte xt of a free e nterpriseeconom y. Our go vernment can then utilize it s limited and critical resources moreefficientl y, effec tively and economically as possible over the long run th rough th e

judicious use and management of govern ment corporation s, among others.Towards this end, the coordination, super vision and regu lation of go vernmen tcorporations will be tigh tened to en sure public accountability. We shall subjectgovernment corporations to more rigorous performance criteria, based on theireconomic and social contributi on, actual output and producti vity and co st recoveryrecord. In addition, private firms and assets which have been transferred or acquir ed

by the government due to fo reclosure, default or non fulfillment of contractualobligation s shall be rehabilit ated onl y after t hey have been p roven to be satisfactorilyviable. O therwise, their divestiture to theprivate sector at the best te rms available will

be unde rtaken.Fourth, we shall step up the revenue gene rating capacity of the public sector through anupgrading of the ta x and nontax system and through more efficient re source utilization .Let me say at once, we do not propos e or contemplate any new taxes except whereaction is req uired to repeal and change certain tax me asures in the interests ofimprovement and fairness.To improve resource mob ilization, we will strive for a more efficient tax coll ectionsystem to achieve a broader ta xbase. Improve ment in the collection and utilization of

tax resources shall be the focu s of our efforts . Vola tile international ta xes shall bereplaced by m ore desirable domestic tax es. The t ax and gross recei pts on foreignexchange tran sactions and the remaining five percent additiona l ad valorem importduty shall eventually be phased out i n favorof alternative and better tax measures.To ensure more efficient resource utiliz ation, public investments will be re gularly

programmed. Due to our limited public funds, we have to curb any future spending.Priority shall be given to ongoingprojects, t hose with the highest eco nomic and soci alrates of ret urn, and t hose which are financed from foreign sources.Fifth, we shall revitalize the agricultural sector, which is envisioned to propel n ational


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recovery and sustain economic growth in the comin g years.In terms of output, agricultural value added is expe cted to increase owing to theimplementa tion of variouspolicy reforms in the agricultural sector. The reforms shall

be built on the principles of liberalization, d eregulation and technologicalmodernization. Policy deci sions will be aimed at de veloping a more buoyant andcompetiti ve agricultural secto r and at improving the inc entives to small fa rmers.Finally, we mus t press on structural reforms to improve the efficiency of resource

allocation, to make our indu stries internationally competiti ve and to dev elop anddiversify domestic sources of ene rgy.For such changes to be undertaken smoothly, ' it is impera tive that we have industrial

peace. It is imperative that there be no disruption in the production process which willhamper our government's efforts to ensure price stability and a favor able financialenvironment to encourage more investments, the creation of livelihood opportunitiesand a rise in incomes and wages.Towards this end, I have recently created the Presidential Council for EconomicRecovery. I have directed this body to address issues of importance to economicrecovery and to study ways and means to promote a harmonious relationship amongthe tripartite sectors--government, workers and employers.

Social DevelopmentWhen we appeal for industrial peace, we do not propose to make labor a scapegoatfor the crisis that befell us or a sacrificial lamb on the altar of economic recovery. Weare merely appealing for reason and sobriety in the approach to disputes anddifferences in our industries. And we make the same strong appeal to managementnever to make the climate of hard times a convenient club with which to frustrate thedemands of labor.In sum, we need the energetic cooperation of al l in diffus ing the climate ofconfrontation on labor-management issues with voluntary steps on both sides toamicably discuss and settle issues. Let us take every effort to avoid factory shut downsas our ready recourse to attain social justice .

For the productivity we seek simply will not be achieved if our factories and plantsdo not operate . All of us in this country will sink or swim together, and we shall swimabove the water only if we will it .We have always stressed the important role of our most valued resource, the Filipino

people, in the successful imple mentation of our recovery program . The other side ofthis is government's obligation and commitment to the improvement of the q uality of

people's lives, especial ly of those in the disad vantaged groups.Accordingly, through more efficient and effective resource use, we will expand andimprove the delivery of basic social services.In health and nutrition, the primary health care approach will conti nue to ensure the

provision of e ssential h ealth services to th e most basic communiti es. Also, we will

further strengthen th e herbal medicineprogram to cut down reliance on imported drugsand introduce acupun cture in various ho spitals to reduce th e costs of medical c are.Likewise, we are committed to fur ther impro ve and develop the health infrastructurenetwork, particularly ho spitals , to meet the needs of the growing po pulation.In education, the quality and equity in elem entary educa tion will be sustained throughthe Program for Decentralized Education Dev elopment (PRODED). Through thi s

program, the elementary cu rriculum i s gradually being revised to em phasize the 3Rsand the inculcation of humani sm and Filipi nism. Improvements initiated by PRODEDat the elementary level will be 'continue d onto the secondary education program .


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The study-now-pay-lat er plan will be further expanded to extend educ ational loans topoorbut deserving tertiary stu dents. Likewi se, scholarship programs will be broadenedat both undergraduate and gradu ate levels .In housing, we will shift our shelter produc tion program to rural areas and make itmore affo rdable to a greater num ber of people b y offering l ow cos t housing unit s.Moreover, no new massive housing units c onstruction will take place, except thosealready approved for production and those which are in the process of construc tion.

We have a lso limited th e Pag-Ibig housing to P50,000 to ensure that the programbenefits accrue to the lo w and middle income groups. Furthermore , an addition of threenew housing loan benefits has been ap proved aimed at helping Pag-Ibig member s fortheir education al, medical and o ther needs, forhome improvement, and for organizedlabor and government employee organizations .The Rent C ontrol Law has also been implemented and rents have been programmed foradjustments on a staggered basis to help some one million hou se renters all over theland cope with the current economic crunch and to encourage more social and low-co sthousing acti vities.We shall also step up local and overseas job placements to compensate for the de clinein employment opportunities due to the general slo wdown in industrial activity.

Moreover, we will create more jobs through the Kilusang Kabuhayan at Kaunla ran(KKK) and the Kilusang Sariling Sikap (KSS) programs.The goals of our recovery program have always converged on the overriding goal ofhuman resource development. Every measure of growth we have in the last analysiscomes down to what it means for people.Peace and Securit y

In pursuing these initiati ves for the economy and society, peace and security areimpera tive to success. This administra tion has shown how much can be done tostrengthen law and order in our social life , and to secure the Republic from everythreat to overthrow it.As economic difficulties ha ve beset us during the last three years, however, those

seeking the overthrow of . Government by force found the time opportune to expandand intensify their activities. And today the peace and security situation is of prior ityconcern.Although stability has been attained with respect to the secessionist movement in theSouth, other elements now pose grave threats to our communities, the most critical ofthese be ing the Communist New People's Army.There has been a tendency, particularly on the part of foreign media and foreignobservers, to exaggerate the extent of the Communist threat, so much so that we arenow the sub ject of all kinds of scenarios on when and how the Communists will takeover. This kind of "o veracting" on the part of those who do not know the situation firsthand merely serves to con fuse the issues and do not help u s any in dealing with the

realities of the problem.While the CPP/NPA has managed, since 1969, to increase its strength, improve itsfirepower, and expand its political in fluence, it is still far from being an immediatethreat to gov ernment and overall national stability. But it does pose a serious threat to

peace and order in some of our communities, and to life and welfare for severalthousands of our people. Intelligence estimates today place NPA membership at

between 10,000 to 12,000 men, and this armed force is potent enough to affect peaceand order conditions in four percent of our 41,615 barangays where it has political andmilitary organizations and in the additional nine percent which it occasionally visits.


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Likewise, it is significant that 70 perce nt of v iolent incidents perpetrated in thecountryside and in some urban areas in recent years have be en ini tiated b y the NPA .Political bias should never cloud ou r perceptions of the se acts o f violence andterrorism. From J anuary 1985 to J une thi s year, the NPA moun ted attacks on 27municip al buildings and 29 integrated national INP stations, causing an estimateddamage o f P92 million. In the period from 19 81 to 1984, damage cau sed by NPAattacks amounted to P 330 million . In terms oflives lost, NP A violence and terrorism

have taken the li ves of 600 c ivilians, including 46 government officials. .Our re sponse to the in surgency has been a dual strategy . In the short term, this strategyconsis ts of the uncompromising utilization of military power and the application ofnational se curity laws against insurgent s. For the long term, however, our strategyseeks to achieve social, economic and political deve lopment as the la sting gua ranteefor social peace.It is wo rth remembe ring that the Philippines stand unique in Asia in havingsucces sfully beaten a communi st insurgency twice, and without any help from foreigntroops. The record of our current cam paign a ssures us that we will do so ag ain.For we ha ve not been standing still, re sting on pa st victories, in confronting the pre sentinsurgency challenge . As the enemy has changed in tactic s and weaponry in recent

year, so have we on our part sought t o make major adjustments in ou r counter -insurgency program, not lea st in terms of reforms within our armed forces.During the past year, the AFP undertook major reforms in its command structure,

personnel training and retraining, unit logistics, and tactics. We have placed thehighest priority on both troop discipline and morale.At the same time, we have l aunched a P1 billion civic action program to beimplemented together with the military cam paigns in those areas whe re the NPAoperates. Increased civil relations work has enabled our a rmed forces to mobilize local

populations to help government in civic action programs, and in drawing up integratedsecurit y plans for the entire communi ties.As this twin-pronged strat egy is seeping into re bel-infested areas, we have come to see

the softness of NP A support among our people. We see how much of its hold oncommunities is built on plain intimidation and terror, because government troops canonly visit these areas from time to time. And we are more confident than ever that wecan establish the kind of social and political infrastructure in these areas that willeliminate this presence in the countryside.To succeed at this, however, we need to be concerned about providing support to ourarmed forces, instead of denying it the wherewithal to fight the insurgency. Let us facethe fact squarely that the reduction of the defense budget in 1983 and 1984 has donemuch to sap the potency of our programs.Let us remember that the structure of compensation under the military bases agreementwas not a capricious decision, but an integral part of our defense program.

We need likewise to rebuild anew the links between our military and our people,because upon those ties the final solu tion to communist insurgency can be forced. Letus recognize that while abuses have been committed by our men in uniform, ourdefense establishment is not passive before its shortcomings, It is striving today toweed out undesirables from its ranks and to ' institute greater professionalism anddiscipline in the corps.In human history, it has often been the fate of a nation's soldiery "to be neglected andignored in times of calm, and to be trustingly looked to in moments of fright ." We mustnot make the mistake of moving to support our armed forces when the ene my is already


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at the gates.And let us remember that in the kind of world we live in today, moments of calm and

peace are merely the cover under which insurgency and subversion fester. There is nospecific time for us to be watchful in our vigil over the security of the nation. Everymoment is a test of our watch.Strengthening our democratic institutions

To say this is to underscore the fact that we must fight vi gorously also on another front:

the battle of ideas.It has often seemed to me that it is on this front where our shortcomings . are greatest,

because we have been complacent while the other side ~as been committed, obsessed,fanatical We have been oblivious to the transparency of radical ideas, while beinghesitant in the advocacy of our own ideology. And many of our young have beenseduced by the false promises of apocalyptic change.We need have no fear as we engaged in this struggle ofideas, in this test between our rival

faiths and ideologies. But it is no longer enough to simply trust to the worn saw that our

people will neverbe won overby communism or socialism, because of ideals and beliefsthey were born to.

Tradition is indeed on the side of democracy. But it i3 vain and illusory to imagine that this

struggle can be won without renewing ourselves many times by an act of faith. It cannot bewon without tapping anew the great resources of democratic ideology and tradition. It

cannot be won ifwe do not carry the struggle also to the citadels ofthe enemy, and under-score the sour fruit of communist and socialist experience.

This is the reason why I have not stopped insisting that we must develop and nurture our

own democratic ideology, one rooted in our experience and needs.

This is why I believe it is not enough that we parrot the beliefs of others in democratic

processes and institutions. We must understand theirpractical import to society, and whythey must be defended.

So much ofpolitical life is dominated by cliches and empty slogans. Yet the point ofpolitics

and government is exceedingly practical and concrete.

This is the lesson we have been learning in ourlong education in the ways ofdemocracy.Thus, we know now that for a democratic political system to be truly effective, a sufficient

foundation must be laid in terms of the people's control over their own affairs. It is not

enough that citizens vote periodically in elections. They mustparticipate actively in makingdecisions that affect their economic and social lives.

This is the reason why we have sought to introduce barangay into the basic unit of our

society and why we now diffuse political power to some 240,000 elective officials, wherebefore our people only had some 15,000 elected.

We know too that in spite of all the hectoring from others about how democracy shoulddevelop in ourland, we can only trust and listen to our e xperience s and our needs . Ourinstitu tions must be in the image of our need s, otherwise they will not serve us well.

I believe this is what we have at last found, after many pit falls and starts, after manytrials and errors; a democratic ideo logy that can serve our aspiration s as a people.This Parliament no le ss than the Presidenc y is a reflection of that faith.The stability of go vernmen t today, the strength of le adership, is a funct ion of ou rexperience of go vernments paralyzed by check and balance and domina ted by factionand division.Clearly there are still many a reas, in which our political system and processes requireimprovement and modification, but the basic edifice is alread y in place and we ha ve alla stake in defending it;


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Similarly , the task of imp rovingpolitical proce ss and insti tutions in our count ry mustbe an abidin g concern, and this assembly is the seat fo rdeliberation on such initiati ves.At this crucial time in national life, we must stre ss anew the need for further reform inthe machinery of government. There are three areas in which we should move forimprovement:First, greater economy in go vernment operations in order to generate more sa vings butwithout diluting go vernment services.

Second, reorganization of the bureaucracy to ma ke possible more effective andefficien t government.Third, strengthening of the administration and manage ment of government programsfrom national to regional to local level of the government bureaucracy.It was once said: " Government is personal. It is as com passionate and vibrantor asineffectual and spiritlessa s the men and women who shape the la ws, who make thedecisions , and who translate program s into action. "Ibelieve the re is much that we can do to improve the quality of government itselfitsmachinery, its manpower and its me thods so that our programs ma y truly touch the

lives of our people and our communities.Legislative P rogram

In all these in itiatives I have proposed, we need the support a nd collaboration of th isassembly. In some are as, we shall look to you for action that requires the ma king ofspecific law and po licy.High on your legislative agenda, I urge the honorable mem bers of the Batasa n tosupport the 1986 budget proposa l which is the lifeblood of the government's action

program for the nation.In line with strengthening the po liticalprocess, we urge the speedy p assage of electoralreforms w hich are vital for the holding of free elections next year.In support of agriculture as the linchpin of the nat ional economy, we shall seeklegislationproviding forincentives to agricultural d evelopment.To rationalize the ro le of private corporations in a free enterprise economy, we shal l

seek guidance from the Batasan to improve the int ernal structure and operation s ofpublic corporations, and to effectively supervise and regulate corporate activities.In support ofevery initiative, we take in th e sphere of social equity , government reform,and peace and security; we shall as ever seek the counsel and assistance of thisassembly.Conclusion

This is the course we askthe nation t o take.These are thepolicies andprograms we co mmend to the support and coll aboration ofthe Batasan.We have no ill usions that these proposed p olicies and programs will resolve overnighteveryproblem before us, orfulfill in a fortnight every a spiration we nurture.

We know rath er that each step in this difficult agenda, each in itiative we propose, callsforeffort, for dedication, and above all for collaboration among us and with all sectorsofsociet y.The reco very and growth of the national economy, the wellbeing and welfare of ourfifty-four million peopl e', the campaign against communist in surgency and for civilityand law in our social life, the revitalization of our armed forces and of the bonds

between oursoldiery and ourpeople, the strengthening of our dem ocratic insti tutionsand of t he appa ratus ofgovernment-all these tasks are to be hurdled step by s tep, with

patience if nece ssary but always with the de termination to see them through to their


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fulfillment.All these ta sks are surely not for this leade rship alone, not for our sympathizers alone,to pursue andbring to frui tion.Surely thisbusiness ofmaking our nation strong and pros perous is above partis anship.I cannot believe th at any Filipino, any of our leaders re gardless of party, woul d wishus to fail in these labor s in the petty hope that on ou r failure they may then rise to

power.

I cannot believe th at any countryman of ours the heir of so many historic st rugglesby our fathers for nati onal indepen dencewould invite upon t his land the rene wedintervention of foreigner s. .Let us, if we must, contend in the political arena .But when the is sue is the welfare, the hono r, and the future of the nation, let u s be oneand undivided.Let us remembe r the words sa id so long ago, but which today are still fresh an d full ofmeaning:"Let our object b e ourcountry, our whole count ry, and nothing but our c ountry."Ladies and gen tlemen of thi s assembly, when I came here a year ago , it was to forgeourpartne rship at a time of trial for the nation. I return today at a moment of resurgent

hope and pride in our land.I spoke with no little apprehension then. I sp eak with confidence and optimism no w.For this turning point in n ational life is also a moment of opportunity for the n ation.Let us seize the moment together. Let us m ake common cause, whatever party we ma y

belong to, in strengthening our one and only family -our people and our country.Thank you and good da y.

marcos twentieth state of the nation address 1985

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