Carlos P. Garcia

“ The Administration has launched a relentless drive against graft and corruption in the government. It has done its utmost to identify and expose corruption. But of course the professional cynics and hecklers are always trying to cast doubts on the sincerity of the Administration in this crusade, by insinuating that the Executive, being the chief of all the investigative bodies, can quash a case or exonerate a defendant whenever he wants or convict even the innocent when he so desires, irrespective of the merits of a case. ”

“ The other alternative we may choose is to refuse to raise the revenues necessary to support our program and in effect adopt a policy of stagnation.
I know that in this momentous hour of decision the resounding answer of Congress to the challenge will be for progress—never retrogression; for growth—never economic atrophy; for dynamic development—not stagnation. It will be for social uplift, for economic stability and security, and for the general well-being of the Filipino people, at any cost. ”

“ Development Momentum.—In the midst of the vicissitudes around us, I propose that we carry on with our economic development program within the scope of real resources available to us. We cannot freeze the economic development program although we have to decelerate to some extent our national budget financed by higher levels of tax revenues so that effective demand may be reduced, and our international reserve replenished while our industrial and agricultural production continues a healthy pace. ”

“ The production of corn and other agricultural products has shown much significant gains that warrant the claim that we have attained self-sufficiency in food. Unquestionably, industrial output has been on the rise.
Deficit Financing.—In my report on the state of the nation a year ago, I pointed out that the threat of Communism as well as the natural desire of our people to improve their lot prompted the administration of my late predecessor to accelerate economic development, to the extent of taking a calculated risk inherent in the liberal use of national credit. ”

“ It has been discovered that many holders of certificates of tax exemption have not actually established their industries, but have nevertheless exercised the privilege of importing commodities duty-free which, instead of being applied to their industries, are sold like ordinary imports at great profit. These holders of certificates of tax exemption, by the collusive practice of “purchase in transit” have facilitated non-tax-exempt traders to import duty-free goods worth millions of pesos, thus depriving the government of so much customs revenues. ”

“ Faced with limited savings characteristic of an undeveloped economy, the nation had to resort to credit creation. This was in order to cover the inevitable gap between the growth of needed investments and voluntary savings to finance the public works and power projects necessary in launching the momentum of development. The alternative would have been not to undertake development projects at all. ”

“ As pointed out in my budget message last year, we must recognize that the present revenue sources are no longer adequate to finance the requirements of an accelerated development program. During the fiscal year 1958 only eight per cent of the national income was diverted to the public sector in the form of taxes. It is obvious that we can raise this percentage by reducing consumption taxes and by increasing direct taxes on income and wealth thereby making an equitable distribution of tax burden on the basis of capacity to pay. ”

“ We must reduce our deficit financing for economic development. We must exert fresh efforts to increase revenues from new and revised taxes to be returned, as I have said, to our people in the form of public services and wider opportunities for expansion and employment.
OUR ECONOMIC ASSETS
Notwithstanding the grave difficulties encountered last year, this nation has continued to progress in general. Since 1954, the national economy has grown tremendously in volume of physical production. The national income has increased by about six per cent a year during the past five years. ”

“ To put an end to the yearly public school crisis, it is advisable that the present method of financing our elementary and secondary schools be re-examined so as to place it on a stable basis. It is my considered view that our public education system should be supported with revenues exclusively dedicated to such a purpose. I am certain that Filipino parents are willing to go to any lengths for the sake of the education of their children. ”

“ The procurement of goods and services under the reparation’s program will help finance the foreign exchange needs of our economic development. In 1957-1958 the total goods and services contracted for or procured by the Reparations Commission amounted to over $70 million, of which $42.6 million has been spent to meet the needs of the government projects and $27.4 million channeled to private industry. The Administration’s policy is to allocate in an increasing measure future procurements under the program to meet the needs of the private sector of our national economy. ”

“ Social Security.—Since the Social Security Act was implemented in 1957, 1,400,000 employers and employees throughout the Philippines have been covered against the hazards of death, disability, and sickness as well as of old age. Direct social security benefits are now extended to them. The System has also generated P28 million in public and private investments for the economic development of the country within a little more than a year.
However, our agricultural laborers who constitute the balance of 65 per cent of our workers are not yet enjoying the protective coverage of social security. ”

“ More than 80 per cent of imports last year were capital goods and raw materials. Only the balance of 20 per cent went to consumer goods. The increase in export production and the modified import pattern reflected an overall economic gain for the country in foreign trade.
As we can see, our foreign exchange earnings have not kept pace with the rising internal demand for imports. The gap had to be financed from our international reserve so that our development program would not be paralyzed at its crucial first stages. ”

“ There is therefore a clear need to re-examine the Tax-Exemption Law in order to curb these abuses and stop loss of revenues. We must bear in mind that the principal objective for which this law was approved, which was to stimulate and encourage the establishment of industries in our country and thus hasten our industrialization, has been more than realized. As a matter of fact, we have reached a point where our foreign exchange reserves can now hardly keep pace with the requirements of newly established industries. ”

“ On the part of the Government, the executive and legislative branches are especially called upon to formulate wisely and, more than that, to implement determinedly, once and for all, the most effective courses of action. On the part of the people, the most productive efforts, thrift, and consistently sustained willingness to contribute to the common weal must become a reality. ”

“ Social Objectives.—Nor must we lose sight of social objectives which can be achieved only through economic development, if our people are to have the more, materially as well as spiritually, satisfying life they hope for and expect. We cannot abandon the masses to perennial poverty. ”

“ Without veering away from America, but rather in pursuit of our own resolution to help in spreading the gospel of democracy in Asia, we have drawn ourselves closer to our immediate neighbors in this part of the globe. ”

“ The immediate problem today is how to check the inflationary forces that are exerting a heavy pressure on our international reserves. At the same time, we should maintain the momentum of development at an appropriate rate so that the gains we have already achieved will not be dissipated. Thus, the country will forge ahead towards its goal of development. We cannot afford to stop. We must not stop. ”

“ We must bring economic stability to the common man and his family as well as to the nation at large. We must pursue a course which will bring about a good balance between agricultural and industrial developments. ”

“ The fact that power remains a threat to nations and peoples, because others would use it to dominate them, call for the generation also of defense power to forestall aggression. In this regard, we have to rely on the friends and allies. ”

“ Housing for the Masses.—We are faced with the problem of housing for the working masses. For this purpose, I am asking the backing of Congress to an extensive low-cost house-building program in which the active participants are the SSS, the GSIS, the HFC, and the PHHC. This plan envisages a coordinated program of low-cost housing at nominal amortizations within an extended period of from 10 to 30 years to enable every earning laborer-family of the Philippines to own a part of their native land and earn the dignity of being a stockholder in the Philippines body-politic. ”

“ We can, however, take comfort and even pride from the achievement that whereas in 1957 our dollar reserve faced a balance-of-payment deficit of $124 million, in 1958 we brought it down to $17 million. Still it is commonly agreed that we have the imperative need of increasing the supply of dollars. We have the following ways open to us, viz., (1) the further expansion of our export industries; (2) encouragement of the right kind of foreign investment; (3) tapping all possible resources from abroad, including loans and procurement of productive machinery on a deferred payment plan ”

“ If this accumulation of unmarketable tobacco is allowed to continue unchecked, in due time the entire government price support fund intended to assist the Virginia tobacco industry will be tied up in these stocks, thus frustrating the noble purpose of the law. Production of Virginia tobacco industry will be tied up in these stocks, thus frustrating the noble purpose of the law. Production of Virginia tobacco is growing by leaps and bounds, and very soon the industry will require larger amounts from the government for the maintenance of the price support program. ”

“ We must build up our maritime fleet, both domestic and foreign. We must push on our irrigation program. We have to build roads and bridges over agricultural and mining areas to connect them with ports. As a necessary step towards genuine industrialization, we have to set up an integrated steel manufacturing industry. We must carry on such projects as the construction of feeder roads in rural areas; the development of industrial power y harnessing waterfalls and rivers ”

“ This is a measure that may prove beneficial to a handful of privileged classes, but it will certainly bring hardships and suffering to millions of our people. In order to avoid a forced devaluation of a our currency, we must take the necessary measures to stabilize the Government’s fiscal position, by increasing its revenue through a more equitable tax program based on ability to pay, and by enforcing a more efficient and effective collection system. I shall elaborate on the fiscal stabilization program in my forthcoming budget message. ”

“ As additional funds, are made available for this purpose, scientific and technological researches will be pursued in a systematic manner with a view to harnessing science for the attainment of our economic goals. The objective of increasing the economic utilization of our agricultural and natural resources, of expanding our export products and external markets, as well as of building a reservoir of competent scientists and technologists would be assured. ”

“ The Central Luzon electrification project is underway and the construction of the biggest hydro-electric plant in the Philippines in Binga, with an estimated rated capacity of 100,000 kilowatts, is expected to be completed next year.
Operations of the Philippine Air Lines continue to play a vital role in the economic life of the Philippines. Domestic operations for Philippine cities and towns were improved by expanding existing landing fields to accommodate heavier traffic. ”

“ Today, the Philippines finds herself in the flux of development in spite of many odds. Among important items in this development being attained may be mentioned the following: (a) the conclusion of agreement with Japan to build the multi-purpose Marikina project to generate industrial power for waterworks and industrial use and will irrigate 6,200 hectares of ricelands; (b) the telecommunications project which will connect the provinces, cities, municipalities and even rural areas to Manila ”

“ Mining.—Mineral production, one of the primary sources of export earnings, has gone up by more than 50 per cent since 1954 though it has not yet recovered its pre-war level. Gold production showed a substantial rise of six per cent in 1958 over that of 1957. This was the outcome of concessions to the industry in the form of liberal allocations of foreign exchange for equipment and of the grant to owners of blocked funds of the privilege to purchase gold for resale to the Central Bank for foreign exchange. ”

“ In our policy of moving closer to our neighbors in Asia, we have tightened bonds of amity with them to a greater measure than heretofore—with South Vietnam, Thailand, Indonesia, South Korea, Nationalist China, Laos, Cambodia, India, Burma, and Malaya. ”

“ Increased emphasis has been given to science, mathematics, and vocational education.
Educational opportunities have been extended to more children and adults than ever before. As a result, our percentage of illiteracy has been reduced from 50 per cent in 1948 to 30 per cent this year.
The community school program has continued to stimulate and improve community living, principally in the rural areas. ”