The 4th SoNA of President BBM has been hailed by allies, cronies, sympathizers and millions of good-hearted Filipinos, with fingers crossed behind their backs, as an honest, sincere, bold, and reform focused assessment of where the country is at and provides hopeful optimism that if indeed followed through could augur well for the country’s future.

On the other hand, oppositionists, cynical critics, skeptics, perennial pessimists, and the usual suspects of presidential, senatorial, congressional, and other political wannabes eager to be in the public spotlight, sensing another opportunity to pounce on a prey seemingly in the throes of a sinking Titanic, with sneers and smirks, loudly bellow on air, in chat groups, and on print, “we’ve heard all these lines before — so what else is new?”

Let me add my voice along with others who have chimed in on some key business-related topics that I think deserve a closer look before we judge whether the SoNA was largely just a passing wistful dream or the stark reality of today and what could be the tomorrow.

On the economy, BBM said in so many words that business prospects are looking good.

Inflation is down. Yes, indeed, from the previous highs of 5.8 to 6 percent in 2022 and 2023, the latest estimates seem to suggest a low of a shade below 1 percent at 0.9 percent to a high of 1.5 percent, both numbers significantly much lower than the government’s official target range of 2 to 4 percent.

A slight spike in oil prices because of the Houthi blockade of the Red Sea preventing a more cost-effective route for vessels delivering oil from the Persian Gulf has fortunately been negated domestically by lower rice prices driven largely by cheaper imported rice.

Reality check. Local rice producers are clamoring for a higher tariff on rice imports that could definitely put the brakes on cheaper rice. The political winds vividly expressed in the last election’s results strongly suggest the administration will have to give in to these demands, distancing farther from BBM’s promise of P20/kilo compared to today’s going rate of about P40 to P50/kilo.

Add to this the spate of typhoons and floods inundating our rice fields. He has premised his promise on the availability of cheap rice in Kadiwa stores provided by the NFA and has pledged to add more Kadiwa stores. But it’s not just the number of outlets.

The driving consideration is really the continuing ability of the NFA, read Philippine government, to fund the subsidized rice prices. This can only be achieved through borrowings, which will obviously further balloon the country’s debt levels. The revenue base has to improve and right now, the only game in town is the … BIR? Need I say anything more?

The big question is to what extent we can further leverage without clear signs of external investment inflows without affecting our debt ratings. Let’s hope Trump’s reciprocal tariff deal quid pro quo promise of $21 billion in investments will come sooner than later. In the meantime, it looks like the promised P20/kg rice is like being stuck between a rock and a hard place for BBM.

Conclusion. Rice at P20/kilo, if at all, is likely going to be only for a short interlude of a dream. Inflation woes, consequently, could still definitely be a trigger for dimmer prospects in the long run.

BBM: Business confidence is up. Indeed, according to the BSP, the confidence index was up in the second quarter to 45.4 percent but this came largely from a dip in the first quarter of 31.2 percent as reported by the Inquirer.

Reality check. The reciprocal tariffs of Trump may still dampen some prospects for certain industries, particularly for products destined for the US. Plus, we are still seeing the apparently never-ending conflicts in the Middle East and Ukraine that could disrupt critical supply lines at any time, spiraling up prices for oil and other imported commodities.

Then, of course, we still have to see how the ongoing drama of Sara Duterte’s impeachment will eventually pan out. I suspect the telenovela will drag on all the way to 2028.

Property prices are still depressed, with a lot of vacancies due to the disappearance of legit Pogos. Our stock market has also been in the doldrums for an interminably long period now and shows no signs of perking up anytime soon. Notwithstanding current sincere efforts on the part of various business organizations to improve the capital market by suggesting some structural changes, it will be a long time before any meaningful change will occur.

On the bright side, the drop in interest rates of late will improve P&Ls and could prompt some businesses to expand and generate new employment.

Conclusion. Business prospects will largely depend not just on inflation but very much also on the macro-global and political issues. On balance, I would think businesses are still very much adopting a wait and see attitude before taking any serious plunge to put in more money in their businesses.

Until next week… OBF!