By Bao-chiun Jing

Philippine president Benigno Aquino III delivered his third State of the Nation Address (SONA) on July 23. In this annual address to parliament, Aquino’s voice was one of sovereign confidence. He is a leader with ambitions and vision for the remaining three years of his one and only six-year term.  Aquino sent important messages germane to the country’s security posture, governance, economic development, and poverty reduction.

Amid an ongoing standoff between Chinese and Philippine vessels at Scarborough Shoal, Aquino reaffirmed that Manila would not back down from its claims in the South China Sea, saying the Philippines will not “give away that which is rightfully ours.”  He also called for solidarity on the issue from the public so that the government can speak with one voice. Polling in Manila shows strong support for Aquino’s message, but some concern in the business community which is anxious about market access and investments from China.

Consequently, President Aquino highlighted steps by his administration to boost the Philippines’ military capabilities, including a modernization program for the military, and a Defense Capability Upgrade and Sustainment of Equipment Program supported by the United States. He also said the Coast Watch Center being developed with assistance from the United States would soon help the country guard its shores. Coming just a week after U.S. Pacific Commander Admiral Samuel Locklear visited Manila and vowed to help the Philippines develop a “minimum credible defense capability,” Aquino’s address sent a strong message that the Philippines and the United States would continue to strengthen their military partnership. Reading between the lines, it seems that Manila believes it has a strong position vis-à-vis perceived Chinese aggression in the waters that Filipinos call the “West Philippine Sea.” This belief is informed by, but not fully dependent on, Aquino’s reading of a rising bilateral relationship with the United States.

On the economic front, Aquino highlighted the country’s solid economic performance, including the fastest GDP growth, at 6.4 percent, in Southeast Asia in the first quarter of 2012, and the second fastest in Asia behind only China. The Philippines has created 3.1 million jobs in the past two years, steadily cutting its unemployment rate from 8 percent in 2010 to 6.9 percent this year. Aquino emphasized government efforts to improve the country’s infrastructure to boost growth across sectors, but especially in tourism. Over 2 million tourists visited the Philippines in the first half of 2012, and the government expects the total for the year to reach 4.6 million — 1.5 million more than 2011. In a nutshell, Aquino argued that confidence across the Philippine economy is growing and good governance by his administration deserves much of the credit.

The economic issue Aquino did not address in his speech was whether the Philippines might help balance its strengthening ties with the United States and other like-minded Asian nations by taking a major step toward economic reform and joining the Trans-Pacific Partnership (TPP) negotiations. This question must ultimately be addressed, and the earlier in his term Aquino tackles it, the more likely he will be to find political support and success despite some heartburn among the club of companies that dominate the Philippine economy.

The other focus of Aquino’s third SONA was a reaffirmation of his commitments to improving living standards and fighting corruption.  He said Filipinos “are tired of corruption and poverty; it is time to restore a government that is truly on the side of the people.” With respect to social welfare and poverty issues, one distinct example raised by Aquino was the Philippine Health Insurance Corporation (PhilHealth). Only 62 percent of Philippine citizens were enrolled in this national health program two years ago, but that number has now increased to 85 percent. Further, Aquino noted that the 5.2 million poorest households in the country will fully benefit from PhilHealth without any charge.

In order to fully implement his anti-corruption policy, Aquino said he would not allow infrastructure to be built on favoritism and kickbacks. Instead, the government would “build them according to a clear system.” In addition, Aquino urged the Philippine Congress to pass pending amendments to the country’s Anti-Money Laundering Act, which would institute stricter rules against tax evasion and improve financial oversight.

Aquino is finding his stride as a leader. In order to achieve his goals of protecting the nation’s sovereignty, enhancing governance, and eradicating poverty, he will need to find the courage to lead and make the effort to revise economic clauses in the Philippine constitution that prevent him from aligning his country with Asia Pacific economic integration – namely some version of the TPP.

Mr. Bao-chiun Jing is a researcher with the CSIS Southeast Asia Program covering the Philippines.