Btalk 2011 Midyear - 20100714

Failing Economy, Growing Disenchantment
MIDYEAR 2011:
IBON FOUNDATION INC. IBON Center 114 Timog Avenue, Quezon City Trunkline: (632) 9277060 to 62 Fax: (632) 9292496 E-mail: editors@ibon.org Website: http://www.ibon.org.
Yearend Briefing July 14 - 15, 2011
IBON Foundation is an independent development institution established in 1978
2 IBON Economic and Political Briefing
14 -15 July 2011
ne year is long enough to evaluate the Aquino administration. Economic directions and political priorities have been set which can already be measured against the countrys longstanding problems and the needs of the people. Without expecting that the change Filipinos hope for will happen overnight, a year is more than enough time to see if the first decisive steps towards this have been taken. Pres. Benigno Noynoy Aquino III promised change and so effectively sent this message that he won the presidency by it. A year later, however, the countrys economic and political problems are as entrenched as ever. The snag is not merely of untangling a mess inherited from the previous Arroyo administration the new administration itself has moved to the forefront of reproducing instead of resolving these problems. The countrys troubles are undoubtedly considerable: tens of millions of poor Filipinos, severe social inequality, manufacturing and agricultural decline amid global crisis, recurring fiscal troubles, persistent political repression, weak and undemocratic institutions of governance, systemic corruption, and lack of national sovereignty. The administration admits as much to justify its lack of tangible accomplishment so far and claims that its first year was about creating the foundations for future progress. Yet, especially in the realm of the economy, the policies and medium-term plan put in place actually undermine such progress. The Aquino administrations approach is identical to that of the previous Arroyo government, though economic strategies should have been overhauled towards real social, agricultural and industrial development. Much of the poor economic performance in the first year of the administration is certainly due to failed globalization policies of the past but in choosing those same policies, the Aquino administration has made this poor performance its own. The political inadequacies are more fully the Aquino administrations and go far beyond the widelyperceived personal incompetence and favoritism. The administration has consistently played up its banner anti-corruption/anti-Arroyo drive yet even here there is scant movement. On the other hand, state-sponsored human rights violations clearly persist astride rising militarism. Also conspicuous is the rapid subordination to United States (US) geostrategic interests at the expense of the countrys sovereignty. Any claim to a productive first year will rest on a flimsy case. The dole-out programs rolled out give temporary relief for the countrys poor but alarmingly mask how the roots of their socioeconomic woes are not being dealt with or, worse, being preserved. There are also narrow economic indicators meaningful only for international financial institutions, credit ratings agencies, investment managers and big business. And there are the tickling exposs of Arroyo-era corruption. These give the appearance of achievement but have not yet led to actual accountability and decisive action.
IBON Economic and Political Briefing
14 -15 July 2011
What is weightier is the absence of real economic nationalism which upholds the rights of Filipinos to development and that asserts social justice. Dissatisfaction is already spreading rapidly among the vast majority who are poor and directly suffer persistent joblessness, low incomes and unaffordable or decrepit social services. Even those reached by massive cash dole-outs know that these will be shortlived. Also striking is how the countrys political troubles have been reduced to merely corruption in particular the Arroyo governments corruption while there is stagnation or even backsliding on larger concerns of human rights, national sovereignty and real democracy. Working for genuine change in these vital areas is the continuing challenge for the people as the country enters the second year of the Aquino administration.
FAILING ECONOMY
hen Pres. Aquino took office, the Philippine economy was suffering problems accumulated from years of failed policies. There were record numbers of jobless Filipinos, real incomes were falling, poverty was widespread, landlessness persisted, domestic manufacturing and agriculture were on the decline, and the government was mired in debt. In short, there was much to be done. A year later it is fair to say that the situation has not improved and there has not been any headway against these problems. The only thing the government can claim to have concretely done in the economy so far is to dispense a few billion pesos in conditional cash transfer (CCT) dole-outs and Pantawid public relations damage control. Even its much-touted public-private partnership (PPP) program has apparently not yet taken off with the one project in a relatively advanced stage, the MRT-LRT contract, still being reviewed. It cannot take credit for the regular housekeeping and maintenance functions of government funded by its Php1.645 trillion budget these are normal expenses every year. If anything, the administration can even be put to task for choosing to spend less on agriculture, agrarian reform, rural infrastructure, public hospitals, and state universities and colleges. While the lack of accomplishment is one thing the disturbing direction of economic policy is another. In terms of policy intent, the administration finally released its Philippine Development Plan (PDP) 20112016. However this disturbingly only recycles the failed globalization policies of previous administrations with marked added emphasis on CCTs and PPPs and so cannot but have the same adverse results for the economy as before. These poor outcomes were already very much felt in the first year of the Aquino administration. Particularly disquieting is how the plan confirms that the government will not take the crucial steps needed to actively develop the domestic economy which are so urgent amid an increasingly volatile global environment. The administrations exposed attitude to such basic issues as wages and land also plainly show the limits of its pro-people rhetoric. Consequently, the prospects in the next five years are that the situation will not improve and may even get much worse depending on how quickly the global crisis intensifies. The administration will ensure a steady stream of CCT and other dole-outs in a massive propaganda effort that poverty is being reduced. It is also possible for a few big foreign and domestic investors to make their profits especially with the governments efforts to give guarantees through its PPP program. Although, as it is, there are already signs that implementation of these banner programs will be far from smooth. The persistent absence of nationalist economic policies however is of greatest consequence the peoples economic troubles will continue without real redistributive reforms, agricultural development and national industrialization. Growth will remain low and unstable, joblessness severe, incomes low and poverty fundamentally unresolved if there are no substantial policy changes in the coming years.
14 -15 July 2011
Peoples welfare
The prices of fuel, transport, water, power and food continue to rise and in many instances steeply. The prices of basic commodities and services are particularly significant given the generally low incomes of the largest number of Filipinos. Incomes are already so low that even slight price increases are burdensome in coming on top of previous rounds of increases. According to the National Statistics Office (NSO), the countrys headline year-on-year inflation rate (2006=100) went up significantly to 5.2% in June 2011 from 3.6% in July 2010; similarly, annual inflation in the National Capital Region (NCR) rose to 4.7% from 3.8% over the same period. (See Table 1) The increase in inflation in areas outside NCR was even larger and went up to 5.3% in June 2011 from 3.7% in July 2010.
Table 1. Selected Price Indicators, July 2010 and June 2011
Indicator and Commodity Inflation (National; in %) Inflation (Outside Metro Manila; in %) Metro Manila Inflation (in %) Jeepney fare (minimum; in Php) Oil prices (in Php/liter, except LPG at Php/kg) Diesel Gasoline LPG Water rates (All-in tariff; in Php/cu. m.) MWCI (Manila Water) MWSI (Maynilad) Power rates (in Php/kWh) Meralco (basic rate) Residential bill (consuming 150 kWh/month) Napocor (ERC-approved effective rates) Selected basic commodities (in Php) NFA rice (per kilo) Galunggong (per kilo) Sitao (18-20 strings/bundle) Eggplant (8-10 pcs/kilo) Cooking oil (lapad bottle)
July 2010 3.9% 3.7%
2011 (as of) 4.6% 5.3% (June) (June)
3.8% 7.00 32.50 42.00 558.00 - 625.00 29.98 33.08 9.32 1,571.46 3.75 25.00 100.00 50.00 30.00 20.00
5.2% 8.00 44.50 55.15 662.00 - 735.00 33.57 40.80 9.60 1,609.52 3.82 27.00 120.00 60.00 60.00 35.00
(June) (July) (July 12) (July 12) (July 3) (February) (February) (July) (July) (June) (July 7) (July 7) (July 7) (July 7) (July 7)
Sources: National Statistics Office (NSO), Department of Energy (DOE), Metropolitan Waterworks and Sewerage System (MWSS), and Bureau of Agricultural Statistics (BAS)
14 -15 July 2011
The past year has in any case seen prices of essential items going up by lesser or greater amounts collectively due to anti-poor and anti-national policies of globalization. Price increases have been particularly marked in the sectors subjected to deregulation (i.e. oil) and privatization (i.e. water, power, and transport). Domestic pump prices of oil products have seen the highest increases as global monopolization of the industry asserted itself once more with the prices of LPG, gasoline and diesel rising from 18% to 37% in the first year of the administration. (See Table 1) Domestically-based firms have moreover engaged in brazen profiteering and not adjusted local pump prices commensurate to changes in the price of global crude and foreign exchange movements. They have also been charging the highest possible prices that they can in provinces and regions outside the main urban centers. The privatization of key utilities also continues to be felt through soaring water and power rates. In the past year, water rates have risen by 12% in the Manila Water service area and by 23% in Maynilads continuing a trend of rapidly rising rates over the last decade. (See Table 1) Power rates have only slightly increased since the middle of last year but these nonetheless come on top of high power rates in the past decade under the implementation of the Electric Power Industry Reform Act of 2001 (EPIRA) with the rates paid by Meralco residential consumers for instance having more than doubled as of last year. More power rates are in any case looming with pending applications for even more increases. Food price increases have been mixed, although the prices of some basic fish and vegetable items have noticeably increased. (See Table 1) The continued push to privatize the National Food Authority (NFA) however raises the prospect of higher and volatile rice prices. The jobs crisis continues with double-digit real unemployment and underemployment despite growth. There has not been any meaningful improvement in the employment situation. The government officially reports the unemployment rate falling to 7.2% in April 2011 from 8.0% in the same period last year; this corresponds to just 2.9 million unemployed Filipinos. (See Table 2) IBON estimates seeking to correct for the changed employment definition in April 2005 however indicate that the unemployment rate is rather at 10.9% with 4.5 million unemployed Filipinos, while likewise seeing a slight drop in the unemployment rate (by 0.7 percentage points) and levels (by 184,000). There are at the same time clear indications of a decrease in the quality of jobs. The underemployment rate rose to 19.4% in April 2011 from 17.8% the year before which is a very large 829,000 increase in the number of Filipinos not earning enough from their jobs and seeking additional work to 7.1 million. This brings the total number of real unemployed and underemployed Filipinos to a considerable 11.6 million or 28% of the labor force. (See Table 2) Alternatively, there were 21.1 million Filipinos jobless or in insecure, low-paying and even hazardous work, equivalent to around 52% of the labor force consisting of the 4.5 million unemployed, 4.3 million unpaid family workers and 12.2 million own account workers. (See Tables 2 and 3) There are also the 1.8 million Filipinos working as generally poorly-paid household helpers earning the lowest among wage and salary workers at just Php130/day. In principle, the 969,000 additional wage and salary jobs and 783 million additional full-time work are welcome, especially after many years of new jobs disproportionately going to own account and unpaid family workers, or to part-time work. (See Table 3) However, a large portion of the 969,000 net jobs created since last year were in among the economys lowest-earning sectors (by wage and salary) agriculture (639,000 jobs at Php155/day) and trade (369,000 jobs at Php272/day). It is notable though how manufacturing jobs have only grown by a very small 67,000, despite supposed 8.6% growth in the first quarter, which affirms its failure to serve as the countrys main driver of employment. (See Table 3) The sector only accounted for 8.5% of jobs which is still among the lowest in decades. The scant 9,000 additional mining and quarrying jobs despite relatively rapid 18.6% growth
14 -15 July 2011
Table 2. Key Employment Indicators, Annual Average 2010, April 2010 and 2011
IBON Estimates Indicator 2010 Population 15 Years Old and Over (in 000) Labor Force Employed Underemployed Unemployed Not in the Labor Force Labor Force Participation Rate (in %) Employment rate Underemployment rate Unemployment rate
p a
Officially Reported a April 2011 61,778 41,304 36,821 7,126 4,483 20,474 2010 p 60,717 38,894 36,035 6,762 2,859 21,823 April 2010 60,561 38,512 35,413 6,297 3,099 22,049 April 2011 p 61,778 39,692 36,821 7,126 2,871 22,086
April 2010 60,561 40,080 35,413 6,297 4,667 20,481
60,718 40,438 36,044 6,758 4,394 20,280
66.6 89.1 18.8 10.9
66.2 88.4 17.8 11.6
66.9 89.1 19.4 10.9
64.1 92.6 18.8 7.4
63.6 92.0 17.8 8.0
64.2 92.8 19.4 7.2
- preliminary, totals may not add up due to rounding - based on new LFS definitions since April 2005 (official data based on old definition unavailable) Note: Since figures according to the old LFS unemployment definition since 2008 are unavailable even from the NSO, IBON made rough estimates for labor force and correspondingly unemployment by assuming a labor force participation rate (LFPR) of 66.1% in 2008, 66.5% in 2009 and 66.6% in 2010. These assumed LFPR figures were derived by applying the changes in official reported annual average LFPR in 2008, 2009 and 2010 to the LFPR in 2007 that was still computed using the old unemployment definition i.e., 0.4 percentage point reduction in 2008, 0.4 increase in 2009, 0.1 increase in 2010. A similar exercise was done to estimate the April round figures. Sources: National Statistics Office (NSO) Labor Force Survey and IBON estimates
in turn reflects the intrinsically low job-generation in this sector. The 228,000 increase in real estate jobs parallels the marked increase in foreign investment in this sector and may be driven by this; but it is uncertain how these jobs will fare if this reflects a growing bubble. The profile meanwhile of the unemployed remains disturbing with alarmingly high rates of jobless high school- and college-educated Filipinos. Almost nine out of ten (87.7%) of reported unemployed have reached a high school or college education, with over four out of ten (43.5%) even having college-level schooling. (See Table 4) This strongly indicates that the unemployment problem is not so much the lack of education per se but rather the lack of employment opportunities in the economy to begin with. Half of jobless Filipinos are young at between 15-24 years old, and nearly two-thirds (64.0%) are male. Poor employment and income prospects at home continue to force more and more Filipinos to work abroad. Some 4,030 Filipinos left the country every day in 2010, according to Philippine Overseas Employment Administration (POEA) data, which is slightly higher than the 3,897 leaving per day in 2009. The wage increase granted was far less than how much workers needed and employers could afford. The Aquino administration granted a Php22 cost of living allowance (COLA) increase in May 2011 bringing the mandated minimum wage in the NCR to Php426 per day. The meager wage hike, the first under the new administration, indicates the limits of the administrations pro-poor rhetoric.
14 -15 July 2011
Table 3. Employed Persons, Average Daily Basic Pay of Wage and Salary Workers, and Gross Domestic Product Growth By Industry
Employed Persons (in '000) April 2010 Total Employed Persons By Industry Agriculture, Fishery and Forestry Agriculture, Hunting and Forestry Fishing Industry Mining and Quarrying Manufacturing Electricity, Gas and Water Construction Services Wholesale and Retail Trade Hotels and Restaurants Transport, Storage & Communications Financial Intermediation Real Estate, Renting & Bus. Activities Public Administration & Defense, Compulsory Social Security Education Health and Social Work Other Community, Social & Personal Service Activities Private Households w/ Employed Persons Extra-Territorial Organizations By Class of Worker Wage and Salary Workers Private household Private establishment Government/govt corporation With pay (family owned business) Own Account Self-employed Workers Employers Unpaid Family Workers By Hours of Work 40 Hours and Over (Full-Time Employment) Less than 40 Hours (Part-Time Employment) Did Not Work 35,413 April 2011 p 36,821
Average Daily Basic Pay Change (Jul 2010, (2010-2011) in Php) 1,408 308
1st Qtr 2011 GDP Growth (in %; constant 2000 prices)
4.9 4.2 6.2 (3.7) 7.2 18.6 8.6 (0.4) 4.0 3.7 0.8 7.3 5.5 5.4 5.9 (4.6) 6.7 8.6 nda nda nda
11,512 10,073 1,439 5,487 212 3,063 137 2,075 18,414 6,885 991 2,741 383 1,061 1,959 1,156 447 984 1,804 3
12,151 10,678 1,510 5,634 221 3,130 147 2,136 19,036 7,254 1,031 2,688 405 1,289 1,952 1,178 442 957 1,841 -
639 605 71 147 9 67 10 61 622 369 40 (53) 22 228 (7) 22 (5) (27) 37 -
155 152 193 nda 272 310 515 291 nda 272 276 378 504 458 452 566 440 332 130 356
19,283 1,804 14,226 3,157 97 11,950 10,686 1,264 4,179
20,252 1,841 15,244 3,093 74 12,188 10,899 1,289 4,382
969 37 1,018 (64) (23) 238 213 25 203
308 130 294 508 235 -
21,715 12,959 738
22,498 13,661 663
783 702 (75)
Note: For purposes of comparability, "Financial Intermediation" in the National Accounts of the Philippines (NAP, source of GDP data) is considered equivalent to "Finance" in the Labor Force Survey (LFS, source of employment data), "Ownership of Dwellings & Real Estate" to "Real Estate, Renting & Bus. Activities", "Public Administration & Defense, Compulsory Social Security" to "Government", and "Health and Social Work" to "Medical and Health". p - preliminary, totals may not add up due to rounding nda - no data available Sources: Employment data from National Statistics Office (NSO) Labor Force Survey and GDP data from National Statistical Coordination Board (NSCB) National Accounts of the Philippines
14 -15 July 2011
Table 4. Summary Statistics on Unemployment, Annual Average 2010, April 2010 and 2011
Population (in '000) 2010 p Total Unemployed Persons By Sex Male Female By Age Group 15-24 years old 25-54 years old 55 years old and over By Highest Grade Completed No Grade Completed Elementary Undergraduate Graduate High School Undergraduate Graduate College Undergraduate Graduate
p
Share to Total (in %) 2010 p 100.0 April 2010 100.0 April 2011 p 100.0
April 2010 3,099
April 2011 p 2,871
2,859
1,809 1,051
1,936 1,163
1,837 1,034
63.3 36.7
62.5 37.5
64.0 36.0
1,460 1,293 106
1,584 1,400 114
1,436 1,329 103
51.1 45.2 3.7
51.1 45.2 3.7
50.0 46.3 3.6
14 374 174 201 1,293 363 930 1,178 621 557
15 415 191 224 1,380 407 973 1,290 682 608
14 339 152 187 1,269 336 936 1,249 663 586
0.5 13.1 6.1 7.0 45.2 12.7 32.5 41.2 21.7 19.5
0.5 13.4 6.2 7.2 44.5 13.1 31.4 41.6 22.0 19.6
0.5 11.8 5.3 6.5 44.2 11.7 32.6 43.5 23.1 20.4
Note: Based on the new official unemployment definition - preliminary Source: National Statistics Office (NSO) Labor Force Survey
Taking away the effect of inflation, the new NCR minimum wage of Php426 is worth Php245 in real terms (measured in 2000 pesos). This real value is even less than what the Arroyo government was able to give in February 2002 when the Php280 mandated minimum wage was equivalent to Php258 in real terms. (See Chart 1) A higher Php25 wage hike was also even given on two other occasions in June 2005 and July 2006. If only by these standards, the current administration, ironically, is so far doing even less than the previous Arroyo government. The end result is that real wages have not broken from the trend of being basically flat over the last decade. The gap between the mandated minimum wage and the family living wage also continues to rise, reaching Php572 in June 2011. (See Table 5) As it stands, the minimum wage is just 43% of the Php998 estimate needed for decent living by a family of six in the NCR. The living wage is the amount of family income needed to provide for a familys food and non-food expenditures with sufficient allowance for savings for social security to enable the family to live and maintain a decent standard of human existence beyond mere subsistence level, taking into account all of the familys physiological, social and other needs. Small and large employers can evidently afford a much larger wage hike if only they accept a cut in their already considerable profits. The benefits for workers and their families are unambiguous and the wage hike will substantially improve their welfare even if not yet necessarily bringing all of them up to a decent standard of living. The economy has more than enough profits to support for instance a Php125 wage hike.
14 -15 July 2011
Chart 1. National Capital Region Daily Minimum Wage, 1986-June 2011 (in Php; 2000=100)
In 2008, establishments in the country with total employment of 20 and over had combined profits of Php895.2 billion and 2.74 million employees, according to the preliminary results of the 2008 Annual Survey of Philippine Business and Industry (ASPBI) of the NSO. Granting an across the board wage hike of Php125 means workers will receive an additional Php3,802 per month, and that employers will spend an additional Php49,427 per employee per year (assuming 13 months of pay). The total cost of the proposed wage hike will only be Php135.6 billion which, subtracted from total profits, will still leave establishments with Php759.6 billion in profits. This is only a 15.1% cut in their profits. Giving a Php125 wage hike in NCR in particular will cost employers Php61 billion and reduce their profits by only 17.3%, from Php352.1 billion to Php291.1 billion. Average profit per establishment in the NCR will only fall by Php6.8 million and still leave them with an average of Php32.2 million in profits each. A large wage hike will be beneficial not just for workers and their families but also the economy. The transfer of money from rich to poor households will increase aggregate demand and stimulate the economy. Highincome households have a higher propensity to save and low-income households, so deprived even of basic necessities, a higher propensity to consume. The administration gives low priority to agrarian reform and is among the poorest performing in terms of land distribution. The Aquino administrations low priority for land reform can be gleaned from its policy moves and, more importantly, its actual practice. It continues with Comprehensive Agrarian Reform Program with Extension and Reforms (CARPer) which merely extends the failed Comprehensive Agrarian Reform Program (CARP) as well as relegates land reform to an Asset Reform sub-section in the Social Development chapter of its new medium-term Philippine development plan.
1 0 IBON Economic and Political Briefing
14 -15 July 2011
Table 5. Daily Minimum Wage, Family Living Wage and Wage Gap, March 2009-June 2011 (in Php)
Year and Month 2009 March June September December 2010 March June September December 2011 March June
Daily Minimum Wage
Family Living Wage
Wage Gap
382 382 382 382 382 404 404 404 404 426
912 922 934 945 951 958 962 985 994 998
526 536 541 557 565 549 551 564 584 572
Note: IBON computed these family living wage (FLW) estimates by inflating the last FLW estimates released by the NWPC for September 2008. The NWPC reports that its FLW estimates are under review. Sources: Wage data and family living wage estimates from National Wages and Productivity Commission (NWPC) and inflation data from Bangko Sentral ng Pilipinas (BSP)
Realities on the ground however provide the strongest confirmation of the administrations biases against land reform. In its first nine months, and under CARPer, it has distributed an average of 19,901 hectares monthly. While this is slightly more than the 17,311 hectares per month under the Arroyo government it is far less than the average rates tallied by the Ramos government (38,229 hectares per month), Corazon Aquino (28,711 hectares), and Estrada (26,032 hectares). (See Table 6) Distribution under CARPer in particular at an average of 16,461 hectares per month is also considerably slower than the 26,030 hectares monthly average since 1987. Justifications that the land covered now involves more difficult private land, or that it is just the administrations first year, or that the program is in any case nearing completion are of little significance. Again, similar to the governments handling of the wage hike, this is not a performance consistent with the rhetoric of change. Such a conclusion also finds support with how the Hacienda Luisita Inc. (HLI) controversy is playing out. The Supreme Court (SC) in July ruled with a 6-4 decision to uphold the Department of Agrarian Reforms (DAR) revocation of the HLI stock distribution option (SDO) and called for a referendum for the haciendas agricultural workers to decide if they want shares, again, or for the land to be distributed to them. For one, the SC decision used legal obfuscations to avoid deciding on the constitutionality of the SDO and the giving of land to its tillers the heart of the controversy and emblematic of elite resistance to land reform nationwide. The decision rather endorses a process that since the beginning has been biased in favor of the Cojuangco-Aquino clan through its feudal control, economic threats and outright violence.
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Table 6. Land Distribution Accomplishment Per Administration, July 1987-March 2011 (in hectares)
Aquino
Jul 1987-Jun 1992 Jul 1992-Jun 1998 Jul 1998-Dec 2000 Jan 2001-Jun 2010 Jul 2010-Mar 2011
Ramos
Estrada
Arroyo
Aquino
Total
Jul 1987-Mar 2011
Land Type and Mode of Acquisition 848,515 471,621 358,915 22,938 105,498 11,906 26,330 nda 955,243 142,847 228,622 18,708 709,214 40,079 nda nda 1,900,039 333,389 1,031,403 106,190
Department of Agrarian Reform
4,219,536
Privately-owned Land (PAL) Operation Land Transfer (OLT)
Government Financial Institutions (GFI)
55,079 13,952 20,737 376,894 208,792 25,781 142,321 546,832 68,520 215,318
257,373 120,828 328,697 944,796 356,763 41,201
76,896 47,767 73,345 104,767 35,276 971
219,383 105,080 318,339 322,190 104,749 2,125
nda nda nda nda nda nda nda
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Voluntary Offer to Sell (VOS) Compulsory Acquisition (CA) Voluntary Land Transfer (VLT) Non-PAL Settlement Areas Landed Estates Government-owned Lands/Kilusang Kabuhayan at Kaunlaran (GOL/KKK) 874,139 539,086 335,053 1,722,654 28,711 2,752,500 38,229 373,392 489,069 113,383 334,189 780,961 26,032 1,973,427 17,311 862,461 447,572 942,024 942,024
Department of Environment and Natural Resources
72,918 72,918
3,199,114
Public Alienable & Disposable Lands Integrated Social Forestry/Community Based Forest Management (ISF/CBFM) Areas
Total
179,108 19,901
7,418,650 26,030
Land Distribution Average Per Month
nda - no data available
Sources: Presidential Agrarian Reform Council (PARC) and Department of Agrarian Reform (DAR)
For another, and notwithstanding a belated reaction by Malacaang to appeal the SC decision, the administration is evidently not going to devote any political capital to ensure that Hacienda Luisita, owned by Pres. Aquinos family, is going to be distributed among its farmers. The loss to the Cojuangco-Aquino would be considerable as various government infrastructure and other projects steadily drive up Central Luzon land values including of the hacienda. Indeed, the way the family has been acting is illustrative of the urgency of land reform leaving such vast tracts of lands in the hands of landlords is tantamount to institutionalizing backward agricultural production and foregoing dynamic rural development. The clan has merely settled for sugar production (apparently unprofitable) and land speculation (profitable, but unproductive) in the haciendas thousands of hectares. As it is, landowners continue to evade land distribution so having their own land to till remains elusive for farmers and farmworkers of various haciendas nationwide including those in Bulacan, Tarlac, Batangas, Laguna, Bicol and Negros. At the same time agricultural lands nationwide remain up for grabs in land deals with businesses and foreign companies, threatening local food security and undermining peasants centuries-old struggle for land. For instance, six million hectares of idle lands have been allocated for the production of sugarcane, coconut, cassava, jatropha, oil palm and other cash crops and two million hectares for agribusiness development. Expecting little from the administration, organized peasants especially under the Kilusang Magbubukid ng Pilipinas (KMP) are at the forefront of waging determined agrarian struggles. The relief from massive cash dole-outs and other smaller subsidies is only temporary and is being used as a smokescreen for further globalization. The CCT program is reported to already cover 79 provinces and to have reached 2.1 million beneficiaries, with an additional 300,000 by the end of the year and 700,000 by 2012. The program is claimed by government as an investment in the future of the Filipino people but, in the context of unreformed economic policies that do not create enough jobs and keeps incomes low, it will amount to little more than a hugely expensive effort that temporarily gives the impression of poverty reduction. The welfare gains for beneficiaries genuinely reached by the program are welcome and arguably long overdue. But even as poor families are benefiting does not necessarily mean that headway is being made against poverty, even if this seems commonsensical. The economics of the household are very different from the economics of the country and it is only at the economy-wide level that progress against poverty will be far-reaching and sustainable. Is the economy as a whole creating jobs? Have the prospects for decent work and incomes for everyone in the country improved or does the CCT program only give an income, health and education edge to its recipients in the scramble for limited work in the country? The CCT program is not implemented in a vacuum and should not be assessed as if it were. This is the main limitation of the usual CCT assessments. It is certainly important to look at the specifics of program implementation and to track any improvements in the welfare of recipients but this is not the entirety of the effect of CCTs nor, indeed, a correct way of seeing if there are gains in national poverty reduction. Indeed, the sheer size of the program with a Php22 billion budget in 2011 and Php35 billion in 2012, and supposedly 4.6 million beneficiaries after five years demands that the program be looked at in its entirety. And the reality is that beyond the welfare gains for individual beneficiaries the program is being used as a smokescreen to keep on implementing the policies that have stunted the domestic economy, caused massive joblessness, suppressed incomes and kept people poor. The targeted 4.6 million beneficiaries, assuming they are all reached, are going to be used to claim that poverty is being reduced and to justify continued free market globalization policies. Meanwhile, the tens of millions of Filipinos jobless, landless or forced abroad by these policies will still have to contend with an economy of generally poor prospects.
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At best, the CCT program will be continued indefinitely as an artificial trickle-down mechanism. Yet it is uncertain how the huge resources for this could be regularly raised. At worst, and more likely, is that the program and the welfare gains for its recipients will be merely temporary as the government restricts its spending to maintain its creditworthiness. There is good reason to doubt the sustainability of the CCT program. They were implemented most extensively and for the longest time in Latin America but this was during the 1990s and 2000s which was a time of relatively rapid global growth, high commodity prices, booming exports and better government revenues. The current global crisis has ended these favorable conditions so their continuation and indeed their supposed poverty-reducing effect will be put to the test. And then there are the various implementation-specific problems on the ground which are unsurprising given that the multi-billion peso expansion was done without benefit of a comprehensive assessment of previous CCT implementation especially regarding distribution and effectiveness. Problems are occurring across the country, at every stage of the process, and in being so widespread may conceivably involve hundreds of millions of misspent pesos. These include cash transfers going to non-deserving and nonpoor beneficiaries, non-complying beneficiaries, anomalously-chosen beneficiaries and non-existent beneficiaries. There are also reports of disbursements being lower than they should be and of beneficiaries unjustifiably being dropped from lists. There are also concerns apart from the leakages and loss of funds. Beneficiaries have complained of cash transfers being made conditional not just on the programmed health and education conditions but on following orders from local government and social welfare officials. Residents in the Bicol, Southern Tagalog, Eastern Visayas and Western Visayas regions for instance have complained of threats that they would be disqualified if they were found to be joining community activist organizations attributing these to the program being used for counterinsurgency purposes. The fastest reduction in poverty has been through changes in statistical methodologies. While strictly speaking beyond the first year of the Aquino administration, it is important to look at official poverty statistics inasmuch as the next two scheduled national poverty rounds, in 2012 and 2015, both fall during its term. There is reason to suspect that much of the supposed improvement in countrys official reported poverty is due more to consecutive changes in poverty methodologies than real poverty reduction. This is on top of concerns that the official poverty line is too low and underestimates the true extent of poverty. The National Statistical Coordination Board (NSCB) released official poverty figures in February based on adjustments on the poverty estimation methodology. According to the new methodology, there were 23.1 million poor Filipinos in 2009 and the previous estimate for 2006 was also lowered to 22.2 million (from the original count of 27.6 million). (See Table 7) The latest revision means that there are in effect three separate estimates for poverty in the last two and a half decades using 1992, 2003 and 2011 methodologies. Genuine improvements to scientific methodologies are welcome but the new methodology raises some concerns. First is that it seems unresponsive and detached to everyday realities. The official poverty threshold, or the amount supposedly necessary for a tolerable standard of living, is pegged at just Php46 per person per day. This implies that a Filipino on average needs just Php46 a day to meet all of his or her food and non-food needs. Basic needs include food, education, clothing and footwear, medical care, transportation and communication, fuel, light and water, housing, housing maintenance, furnishings, household operations, personal care and effects, and rental. Second is that it could create the impression that poverty is being reduced when, in fact, its incidence is not changing. Yet, on the contrary, it is possible that the actual poverty trend over the decade-and-a-half since the mid-1990s is essentially unchanging with poverty incidence implying, that with population
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Table 7. Poverty Incidence and Magnitude of Poor Population, 1985-2009
Indicator Magnitude of poor (in '000) 1992 Methodology 2003 Methodology 2011 Methodology Poverty incidence (in %) 1992 Methodology 2003 Methodology 2011 Methodology
1985
1988
1991
1994
1997
2000
2003
2006
2009
26,675
25,388
28,554
27,373
26,769
30,850 25,473
23,836 19,797
27,617 22,173
23,142
49.2
45.4
45.2
40.6
36.9
39.5 33.0
30.0 24.9
32.9 26.4
32.6 26.5
Source: National Statistical Coordination Board (NSCB)
growth, the absolute number of poor Filipinos is rising. Putting the various estimates side-by-side raises some questions about recent supposed poverty reduction. (See Chart 2) Abstracting from breaks in data sets due to changes in methodologies, it appears that poverty trends indicate little change from the mid-1990s if the flat movements according to the two most recent methodologies (2003 and 2011) are connected to poverty incidence according to the 1992 methodology.
Chart 2. Poverty Incidence and magnitude of Poor Population, 1985-2009
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15
Given the basically flat trend in poverty incidence since the late 1990s, it is for instance plausible for official poverty incidence in 2009 to still be around the some 40% level of 1994. If so, this would imply that the number of poor has increased by over 7.5 million, by a rough approximation, from 27.4 million in 1994 to perhaps around 35 million in 2009. But even this may be grossly underestimated with, in 2009, some 65 million or 70% of Filipinos living on Php104 or much less per day with the poorest half of the population desperately poor and struggling with Php22, Php35, Php45, Php55 or Php67 per day. Unfortunately with consecutive changes poverty estimates over time are going to be incomparable and, perhaps intentionally, will likely give the impression that poverty has been markedly decreasing. False positives The economy is already slowing from a year ago and is hobbled by weak internal sources of growth. The government has attributed the slow growth to external factors such as sluggish global trade and even political turmoil in the Middle East and North Africa. While these may be proximate causes it is wellestablished that the global environment is chronically uncertain, with periods of great volatility, so the real cause of low growth must be found internally. It also cited government underspending and the absence of election-related stimulus. More than external factors, the low growth in the country is due to peasant landlessness and lack of rural modernization, a low value-added and delinked manufacturing sector, and household consumption dampened by low domestic wages and incomes. The government reported 4.9% growth in real gross domestic product (GDP) in the first quarter of 2011 which was markedly slower than the 8.4% rate in the same period last year. (See Table 8) Consecutive quarters are not strictly comparable but it can still be noted that the first three quarters of the Aquino administration has seen progressively slower growth year-on-year from 8.9% in the second quarter of 2010, 7.3% in the third quarter, and 6.1% in the fourth quarter followed by the 4.9% in the first quarter of this year. On the other hand, the picture appears better using seasonally-adjusted quarterly growth rates which are computed to allow comparison between consecutive quarters (which cannot be done with the quarterly year-on-year figures). By this measure, the economy has been growing since mid-2010 with 0.3% growth in the third quarter, 0.5% in the fourth quarter, and 1.9% in the first quarter of 2011. While showing an upward trend these are still lower than the 3.8% and 1.9% rates in the first and second quarter of 2010, respectively. While at least showing better performance this is unlikely to be sustained since, historically, seasonally-adjusted growth has never been on an uptrend for more than four straight quarters. For one, there are no signs of any change in the underlying economic structure in the last year and, for another, the global environment will only become more adverse. On the industry side, the agriculture sector grew by 4.2% in the first quarter of 2011 which continues an improvement that begun in the fourth quarter of last year after consecutive quarterly declines. (See Table 8) Aside from being erratic this remains low, however, and indicates a large untapped potential for rural growth. Manufacturing grew by 8.6% and while higher than the growth registered in the second semester of last year, it is still a marked slowdown from previous double digit rates. The continued dependence of this sector on exports, especially of electronics, which are under threat is a matter of medium- to longterm concern. Much more sustainable over the long-term is if these two sectors were fundamentally driven by high domestic demand. Meanwhile, the contraction in public spending by 4.6% is consistent with the de facto austerity measures being implemented by the administration under the guise of anti-corruption campaign and being discerning as to its spending. A particular point of concern though, and which will be taken up more below, is the flat 0.0% growth in net primary income (previously called net factor income from abroad). The compensation received by overseas Filipino workers (OFWs) not, as is commonly misunderstood, their remittances is recorded under this item. While net primary income as a whole is flat at 0.0%, the sub-item of compensation
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Table 8. Gross National Income and Gross Domestic Product By Industrial Origin, 2010-1
st
Quarter 2011 (in %; constant 2000 prices)
2010 Industry Sector 2010 1 Qtr Percent Distribution to GDP 1. Agriculture, Fishery, Forestry a. Agriculture and Fishing b. Forestry 2. Industry Sector a. Mining and Quarrying b. Manufacturing c. Construction d. Electricity, Gas and Water Supply 3. Service Sector a. Transport., Storage, and Communication b. Trade and Repair of Motor Vehicles, Motorcycles, Personal and Household Goods c. Financial Intermediation d. Real Estate, Renting and Business Activities e. Public Administration & Defense: Compulsory Social Security f. Other Services Gross Domestic Product Growth Rates 1. Agriculture, Fishery, Forestry a. Agriculture and Fishing b. Forestry 2. Industry Sector a. Mining and Quarrying b. Manufacturing c. Construction d. Electricity, Gas and Water Supply 3. Service Sector a. Transport., Storage, and Communication b. Trade and Repair of Motor Vehicles, Motorcycles, Personal and Household Goods c. Financial Intermediation d. Real Estate, Renting and Business Activities e. Public Administration & Defense: Compulsory Social Security f. Other Services Gross Domestic Product Net Primary Income Gross National Income Source: National Statistical Coordination Board (NSCB)
st
2 Qtr
nd
3rd Qtr
4th Qtr
2011 1st Qtr
11.6 11.6 0.0 32.6 1.2 22.2 5.7 3.6 55.8 7.5 16.6 6.6 10.3 4.5 10.2 100.0
12.3 9.8 2.5 31.9 1.0 22.4 4.9 3.6 55.8 8.0 15.5 6.5 10.4 4.7 10.7 100.0
10.2 7.8 2.4 33.7 1.6 21.1 7.3 3.6 56.1 7.8 15.6 6.7 10.6 4.9 10.5 100.0
10.8 8.7 2.2 32.4 1.0 21.7 5.7 4.0 56.8 6.8 17.7 6.7 10.9 4.6 10.0 100.0
13.1 10.6 2.5 32.4 1.0 23.4 4.9 3.1 54.5 7.4 17.7 6.3 9.5 3.7 9.9 100.0
12.2 9.9 2.3 32.6 1.2 23.2 4.9 3.4 55.2 8.0 14.9 6.6 10.5 4.3 10.9 100.0
(0.2) 0.0 (31.3) 11.6 11.4 11.2 14.3 9.9 7.2 1.0 8.4 10.1 7.5 5.8 8.4 7.6 10.0 8.2
(1.8) (1.9) (1.1) 15.4 2.4 18.3 9.7 9.8 7.2 (2.2) 11.6 8.3 5.2 7.5 9.8 8.4 21.2 11.5
(2.0) (2.1) (0.2) 15.7 24.4 13.2 24.7 10.2 7.3 2.2 6.8 5.8 8.6 9.6 10.9 8.9 10.0 9.2
(2.0) (3.1) 2.8 9.8 6.8 8.4 15.6 10.1 7.8 3.0 11.0 13.1 6.6 6.5 4.4 7.3 5.7 6.9
4.1 5.4 (1.4) 6.5 6.9 6.5 4.6 9.4 6.4 1.4 5.0 13.6 9.4 (0.8) 8.7 6.1 3.9 5.6
4.2 6.2 (3.7) 7.2 18.6 8.6 4.0 (0.4) 3.7 5.5 0.8 5.4 5.9 (4.6) 6.8 4.9 0.0 3.6
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17
referring to overseas workers income has actually declined by 3.9% in the first quarter of 2011 (from 18.5% growth in the same period in 2010). This indicates falling real incomes received abroad by OFWs. This was just offset by another sub-item, outflow of property expenses which declined 35.2%, hence the overall figure of 0.0% growth. On the expenditure side, the drop in public spending is clear with a 17.2% decline in government consumption. (See Table 9) Also notable is the dramatic slowdown in exports to just 3.3% in the first quarter of 2011 after consecutive quarters of double-digit, albeit slowing, growth. Household consumption though picked up with 4.9% growth which is generally higher than in 2010. Also looking favorable is the 37.0% increase in capital formation which is generally higher than in 2010. The government has portrayed this is due to domestic investor confidence upon the administrations supposed good governance yet historical trends and recent developments suggest that, while welcome, this is a temporary spurt that will not be sustained. The domestic market remains constricted while the global market is becoming increasingly listless. There are signs that the limits of overseas work and remittances as a major lifeline for the economy have been reached. Overseas work has for decades been a major source of jobs and OFW remittances have, correspondingly, been a major source of consumption for households and foreign exchange for the economy. The continued slowdown in remittances, however, increasingly suggests that this lifeline function has reached its limits. This will lower the welfare of individual OFWs and their families as well as create greater problems for the economy as a whole. Latest official estimates record 8.6 million overseas Filipinos as of 2009 composed of 4.5 million temporary/irregular workers and 4.1 million permanent residents. Remittances growth is growing but at ever slower rates. Monthly year-on-year growth in April 2011 was at 6.3% which continues a general downtrend, despite month-to-month variations since 2005. (See Chart 3) Growth rates in remittances are considerably down from the earlier double-digit rates reaching as much as 30% (June 2008) to over 37% (December 2006). The slowing growth in remittances also parallels slowing growth in deployments of land-based and sea-based workers which slowed to 3.4% in 2010 (1.47 million deployed) from 15.1% in 2009 (1.42 million deployed) and 14.7% in 208 (1.24 million). Remittances in 2010 were reported at a record US$18.8 billion. Remittances had been rapidly rising and increasing in size relative to GDP since the 1980s: ranging between 1.3-2.7% in the period 1981-1990, more or less steadily rising each year after to 9.8% in 2004, and then appearing to reach some sort of plateau in the 6-year period since then and varying just between 9.5-10.9 percent. These calculations are according to GDP estimates using 1985 as the base year. (See Chart 4) The national income accounts were rebased from 1985 to 2000 recently slightly reducing the size of remittances relative to GDP but the plateau in the last six years remains clear. (See Chart 4) Using the rebased GDP figures, remittances as a share of GDP averaged 9.9% of GDP in the 7-year period 20042010 during which time it stayed within the narrow range of 9.4% (2004 and 2010) to 10.4% (2005 and 2006). Two factors appear to be at play. The main reason appears to be a tightening of labor markets abroad due to the global crisis as well due to more countries sending, in accordance with a decade of migration and development hype, increased numbers of their citizens abroad for work especially from India, China, Mexico, Bangladesh, Pakistan, Vietnam and Indonesia. These may have had the effect of lowering incomes and benefits and of making job opportunities scarcer. For instance, remittances from the US which accounts for around half of remittances to the country actually contracted 6.4% in 2009 after the financial meltdown there with barely a recovery to previous levels in 2010. From all countries, remittance growth slowed to 5.6% in 2009, again upon the onset of crisis, after 13.7% growth in 2008. The second
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Table 9. Gross National Income and Gross Domestic Product By Expenditure Share, 2010-1
st
Quarter 2011 (in %; constant 2000 prices)
2010 Type of Expenditure Percent Distribution to GDP 1. Household Final Consumption Expenditure 2. Government Consumption 3. Capital Formation A. Fixed Capital 1. Construction 2. Durable Equipment 3. Breeding Stock & Orchard Development B. Changes in Inventories C. Intellectual Property Products 4. Exports A. Exports of Goods B. Exports of Services 5. Less : Imports A. Imports of Goods B. Imports of Services Gross Domestic Product Growth Rates 1. Household Final Consumption Expenditure 2. Government Consumption 3. Capital Formation A. Fixed Capital 1. Construction 2. Durable Equipment 3. Breeding Stock & Orchard Development B. Changes in Inventories C. Intellectual Property Products 4. Exports A. Exports of Goods B. Exports of Services 5. Less : Imports A. Imports of Goods B. Imports of Services Gross Domestic Product Net Primary Income Gross National Income Source: National Statistical Coordination Board (NSCB) 2010 1 Qtr
st
2 Qtr
nd
3 Qtr
rd
4 Qtr
th
2011 1st Qtr
69.2 10.0 20.8 20.3 8.6 10.0 1.7 0.4 50.6 41.5 9.1 50.6 40.9 9.7 100.0 3.4 4.0 31.6 19.5 17.5 25.5 0.3 2.9 21.0 24.7 6.5 22.5 23.4 18.9 7.6 10.0 8.2
69.2 11.8 18.4 21.0 7.5 11.5 2.0 0.4 49.9 38.5 11.4 48.9 37.9 11.0 100.0 4.0 21.4 31.9 19.0 11.4 29.2 (0.2) 14.2 18.8 27.1 (2.7) 24.2 26.4 17.3 8.4 21.2 11.5
67.3 11.5 20.1 20.6 10.4 8.6 1.5 0.3 53.7 44.2 9.5 52.2 43.7 8.6 100.0 1.9 7.4 38.0 27.1 25.2 35.9 1.0 4.1 24.0 28.6 6.2 22.1 23.8 14.1 8.9 10.0 9.2
66.8 9.3 17.4 19.7 8.6 9.7 1.4 0.6 60.5 51.9 8.6 53.7 44.0 9.7 100.0 2.4 (6.5) 34.5 16.0 17.1 17.6 (0.3) (1.1) 23.1 26.6 5.5 22.1 21.0 27.6 7.3 5.7 6.9
73.1 7.7 26.5 20.0 7.8 10.2 2.0 0.4 39.4 32.3 7.2 47.7 38.0 9.7 100.0 4.9 (6.6) 25.7 16.1 14.0 21.6 0.7 (0.7) 16.8 15.3 24.3 21.9 23.1 17.4 6.1 3.9 5.6
69.3 9.3 24.0 22.4 7.7 12.7 2.0 0.4 49.2 40.4 8.7 50.8 41.0 9.8 100.0 4.9 (17.2) 37.0 12.0 7.2 16.7 3.6 10.0 3.3 10.1 (19.5) 8.8 13.3 (6.6) 4.9 0.0 3.6
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Chart 3. Monthly Overseas Filipino Remittance Growth, January 2000-April 2011 (year-on-year; in %)
Chart 4. Overseas Filipino Remittances, 1998-2010, 1st Quarter 2011 (in million US$ and % of Gross Domestic Product)
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reason has to do with the domestic economy which, if only through steady population growth, continues to increase in size. These tendencies are likely to intensify. For instance the Saudi Arabian government recently adopted a policy of Saudization or Nitaqat which requires greater hiring of Saudi nationals in a bid to create one million new jobs to address domestic unemployment. Yet the measure is not new Spain, Italy, South Korea and Australia all drastically reduced various quotas for foreign workers while the UK and Canada imposed stricter requirements for certain occupations as early as 2009. The implications are considerable. This trend highlights how relying on jobs abroad and overseas remittances to boost private domestic consumption is increasingly untenable. In the past, these remittances have substantially covered up for internal economic decay by boosting consumption, increasing the welfare of recipient households, and considerably boosting foreign exchange reserves. Of course they have still been insufficient to compensate for crisis-induced problems in export- and foreign investmentdependent sectors and more fundamentally, for the decline of domestic agriculture and industry. Trends in foreign trade and investment are consistent with the need to aggressively refocus on developing domestic sources of demand and capital. Recent short-term data show export and investment slowdowns that, in the context of global economic developments, are likely reflective of an overall long-term trend of poorer prospects for foreign trade and investment. According to the NSO, export earnings in the month of May fell 3.2% to US$4.10 billion from US$4.24 billion in the same period last year. While exports have been growing for 17 consecutive months after the last decline of 8% in October 2009 the last twelve months have for instance seen export growth rates slowing rapidly until actually going negative in May. (See Chart 5)
Chart 5. Chart 5. Philippine Export Annual Growth Rates, January 2010-May 2011(in %) Philippine Export Annual Growth Rates, January 2010-May 2011 (in %)
50.0
46.8
40.0
30.0
20.0
10.0
2010 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 2011 Jan Feb Mar Apr
(3.2)
(10.0)
Source: National Statistics Office (NSO)
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21
Total receipts from merchandise exports in the first five months of 2011 totalled US$20.6 billion which is for now still up 7.5% from US$19.2 billion last year. Low-value-added electronics products remain the countrys biggest export accounting for half of total exports at US$10.2 billion although a 9.1% decline was recorded in January-May 2011 from the same period last year. Exports of the next biggest item, coconut oil, increased 63.8% to US$780 million but this only accounted for 3.8% of total exports. Exports of the third biggest export earner, articles of apparel and clothing accessories (3.7% of exports), meanwhile increased by 15.5% to US$756.8 million. According to the NSO, the US$3.3 billion in outward shipments of manufactured goods which accounted for 79.8% of total export receipts in May 2011 was an 11.4% decline from the US$3.7 billion recorded in May 2010. Earnings from agro-based products which comprised 8.3% of total exports revenue in May 2011 rose 40.2% to US$339.3 million, from mineral products (5.8% of exports) increased by 81.2% to US$237.4 million, and from petroleum products (2.8% of exports) rose by 441.4% to US$114.3 million. The US was the largest export market in May accounting for 17.1% of exports followed by Japan (15.2%), China (11.9%), Singapore (9.2%), Hong Kong (7.8%) and South Korea (4.9%) cumulatively accounting for two-thirds or 66.1% of total exports. With slight month-to-month variations between them, these have been the countrys top export destinations in recent years. Foreign direct investments (FDI) meanwhile have fallen 15.1% to US$552 million in the period JanuaryApril 2011 from US$650 million in 2010 and US$872 million and 2009, respectively, over the same period. This continues a general slowdown in foreign investment since 2009 that has apparently not changed even upon the new Aquino administration. (See Chart 6). Investments in the first four months came largely from the US (74.6% of total equity invested), Singapore (12.3%), Hong Kong (7.4%), Netherlands (4.4%) and Japan (4.1%). Foreign equity investments in this period went largely to real estate (42.5%), mining and quarrying (22.0%), manufacturing (10.1%), utilities (6.0%), construction (5.2%) and wholesale and retail trade (2.3%).
Chart 6. Foreign Direct Investment, January 2009-April 2011 (in million US$)
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The Bangko Sentral ng Pilipinas (BSP) played up that net FDI inflows were still positive due to strong macroeconomic fundamentals and favorable growth prospects although could not but acknowledge the generally listless growth in the advanced capitalist economies, particularly Japan and the US, amid heightened global economic uncertainties. In contrast, foreign portfolio investments in the first five months of 2011 recorded US$2 billion in inflows which was 160.3% higher than the US$772 million in the same period in 2010. There was US$4.0 billion worth of investments in Philippine Stocks Exchange - (PSE) listed shares, much higher than the US$2.5 billion recorded in 2010. These went to holding firms (US$1.0 billion), banks (US$679 million), telecommunication companies (US$520 million), utility companies (US$509 million), and property firms (US$497 million). Outflows, according to the BSP, rose from US$2.8 billion last year to US$5.8 billion consisting mostly of withdrawals from interim peso deposits (IPDs). These recent export and investment trends reflect a protracted global economic crisis that could quickly deteriorate even further in the coming years. Overall, it is clear that the world economy after the 2008 crisis cannot go back to the relatively high levels in the 1990s and 2000s when massive debt and fictitious capital served to artificially drive growth. In particular, sovereign debt defaults appear imminent in weaker Eurozone economies despite ever more drastic austerity measures which, if anything, are fomenting ever greater political unrest. Japan in turn which has been more or less stagnant for well over a decade now has to deal with its recent earthquake and tsunami disasters. The US is still the worlds largest economy and the most advanced capitalist power but, even here, unemployment and government debt are at historicallyhigh levels. In short, the world economy is well into an era of high uncertainty and lower economic activity. Emergency stimulus programs are no longer viable and, indeed, governments now have to deal with the aftershocks of huge debt and drastic austerity. These suggest further distress for the economy down the road if the government remains overly focused on export markets and on foreign investments. National government deficit reduction has been through spending cuts more than improved revenue collection. The Aquino administration has been using its apparent gains on the fiscal front as proof of its anti-corruption successes and of rational frugality. The reality however is more basic and the government has made a policy decision to reduce the budget in the interest of creditworthiness even at the expense of public education and health services, infrastructure and other economic services. Also, there is as yet no reason for the Aquino administration to claim that it has significantly addressed the problem of revenue leaks due to corruption. There has been a striking turnaround in the national governments (NG) fiscal position. Its deficit of just Php9.5 billion in the first five months of 2011 is 94.1% smaller than the Php162.1 billion recorded in the same period in 2010. (See Table 10) However this was due more to severe spending cuts where NG expenditures fell 10.7% or by Php71.1 billion. Tax revenues from the internal revenue and customs bureaus on the other hand only increased by Php46.9 billion with most of this 10.3% increase likely just attributable to increased collections in line with the nominal GDP growth of 9.3% in the first quarter of 2011. The most remarkable revenue increase in this period was actually very specific and not even due to improved tax collections: a large one-off Php23.8 billion in income of the Bureau of the Treasury (BTr) from collections of dividends on shares of stock in January 2011 (part of the Php48.5 billion in Btr income). (See Table 10) These collections in just one month were more than double the amount collected for this item in the whole of 2010 (Php12.0 billion).
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23
Table 10. National Government Fiscal Position, 2010 - January-May 2011 (in Php million except rates in %)
January-May Indicator Revenues Tax Revenues Bureau of Internal Revenue Bureau of Customs Other Offices Non-tax Revenues Bureau of Treasury Income Privatization Others Grants Expenditures Surplus/(Deficit)
Source: Bureau of theTreasury (BTr) Source: Bureau of Treasury (BTr)
Change in million Php 81,492 46,934 46,989 (579) 524 34,830 27,009 582 7,239 (272) (71,075) 152,567 in % 16.3 10.3 13.7 (0.5) 10.5 80.7 125.8 612.6 33.5 (98.9) (10.7) (94.1)
2010 2010 1,207,926 1,093,643 822,623 259,241 11,779 113,877 54,315 914 58,648 406 1,522,384 (314,458) 500,009 456,585 344,103 107,473 5,009 43,149 21,467 95 21,587 275 662,116 (162,107) 2011 581,501 503,519 391,092 106,894 5,533 77,979 48,476 677 28,826 3 591,041 (9,540)
That spending cuts account for most of the improved deficit situation can also be seen by looking at the fiscal situation relative to GDP. The NG deficit was reduced 1.2% of GDP in the first quarter of 2011 from 6.5% in the same period in 2010 or by a significant 5.4 percentage points. (See Table 11) However, NG expenditures clearly accounted for two-thirds of this with a 3.5 percentage point drop compared to just a 1.5 percentage point increase in revenues. As it is, revenues being equivalent to 14.4% of GDP in the first quarter is only a very slight improvement from 14.2% for the whole of 2010 and less than what was achieved in over two decades since 1989 where revenues ranged from 14.5% (2004) to as much as 19.9% of GDP (1994). It is also still smaller than the average 15.3% of GDP under the previous Arroyo administration covering the period 2001-2010 (which averaged 15.1% even if revenues from unprecedented privatization are removed). Revenue leaks can only be said to have been decisively addressed once the improvements in revenue performance are more uniform and sustained. It may also be recalled that the previous Arroyo administration allegedly window-dressed its revenue collection in 2006 by seeking advanced tax payments from big corporations, which subsequently showed up in lower collections from large taxpayers. Debt service and the public debt stock in any case continue to rise. The Aquino administration has paid Php634 billion in debt service between July 2010 and April 2011, which is Php8 billion more than what was paid by the Arroyo government in the period July 2009-April 2010. These payments over its first ten months also already exceed payments for the whole year of 2007 (Php614 billion), 2008 (Php613 billion) and 2009 respectively, and of the first two years combined of the Arroyo administration (Php632 billion). Yet the NG debt stock has still gone up from Php4.58 trillion in June 2010 to Php4.71 trillion in April 2011 consisting of Php2.69 trillion in domestic debt and Php2.03 trillion in foreign debt. This increase in the debt stock of Php129.5 billion was at least smaller than the Php209.4 billion increase during the equivalent period under the previous administration.
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Table 11. National Government Fiscal Position and Debt Servicing, 2010-1 (in million Php and in %)
st
Quarter 2011
in million Php Indicator 2010 Revenues Tax revenues of which -BIR BOC Non-tax revenues Grants Expenditures Surplus/(Deficit) Total debt service as % of revenues Interest payments Principal payments 1,207,926 1,093,643 822,623 259,241 113,877 406 1,522,384 (314,458) 689,799 294,244 395,555 2010 1st Qtr 265,824 237,660 173,892 60,581 27,979 185 400,003 (134,179) 339,340 108,898 230,442 2011 1st Qtr 323,078 265,652 199,549 62,618 57,425 1 349,275 (26,197) 332,065 90,720 241,345
% Change (2010 1st Qtr 2011 1st Qtr) 21.5 11.8 14.8 3.4 105.2 (99.5) (12.7) (80.5) (2.1) (16.7) 4.7
as % of GDP 2010 14.2 12.8 9.7 3.0 1.3 0.0 17.9 (3.7) 57.1 24.4 32.7 2010 1st Qtr 13.0 11.6 8.5 3.0 1.4 0.0 19.5 (6.5) 127.7 41.0 86.7 2011 1st Qtr 14.4 11.9 8.9 2.8 2.6 0.0 15.6 (1.2) 102.8 28.1 74.7
Source: Bureau ofof Treasury (BTr) Source: Bureau the Treasury
Aquinomics: A Philippine Development Plan (PDP) without development The Aquino administration has chosen the same decades-old economic policies behind low growth, joblessness, falling incomes and increasing poverty. The administrations first year confirms its lack of vision for national and nationalist development. The Philippine Development Plan (PDP) 2011-2016 it released in May 2011 is its blueprint for implementing its declared Social Contract with the Filipino People. The plan sums up the administrations chosen economic direction and defines its strategies and programs for the next six years. It recycles the market-based, foreign investment-led, foreign marketdependent globalization of previous governments despite the countrys poor experience with these in the last three decades. The plan specifically targets [globally] competitive industries and services: foreign tourism, cheap labor business process outsourcing (BPO), low value-added electronics for export, extractive mining, exportoriented agri-business and forestry, and foreign-dominated ship building. It can be noted that these priority areas of development are conspicuously similar to the Seven Big Winners pushed by the Joint Foreign Chambers of the Philippines (JFC) in 2009 and again in 2010. The plan moreover gives a central role to PPPs and CCTs both programs that have been aggressively pushed by the World Bank and Asian Development Bank (ADB) especially in the last decade. IBON has separately released a critique of the PDP with the following main points:* 1. The PDP 2011-2016 does not offer anything new in terms of strategies for more genuinely inclusive economic growth. The plans main problem is that it dogmatically stays the course of the neoliberal free market policies of globalization that have been so destructive for the country. This means the government foregoing strategic economic planning and letting the market and private sector decide on economic activity in the country national development is then expected to more or less spontaneously happen. The plan builds on the accumulated globalization policies of previous administrations including the Arroyo government.
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2. The plan is more concerned about a stable and profitable environment for big business, especially for foreign investors, than strategic Filipino-oriented development or ensuring the well-being of the people. On one hand, the plan is preoccupied with global competitiveness indicators because the countrys capacity to attract trade and investments is affected by its poor international rankings. On the other hand, measures for real national development such as greater regulation of foreign capital and more protectionist trade policies are actually avoided for undermining this competitiveness. 3. The plan further relinquishes government responsibility to provide essential public goods and social services. Using as justification that reducing the fiscal deficit is an absolute priority, the plan even promotes further privatization as a win-win solution for the country. The Aquino administration has adopted PPPs as a major strategy where government shall rely on the public-private partnership scheme to implement the bulk of its infrastructure program. This means that the private sector should be supported and allowed to profit from providing public goods and services. 4. The plan uses CCTs as income-boosting window-dressing to cover up how millions of Filipinos have been marginalized by globalization policies. The plan cannot but acknowledge the adverse impact of globalization policies even if it says this in a roundabout manner. Yet instead of correcting this, it merely proposes so-called social protection particularly CCTs. These are inherently limited though and cannot possibly cover the tens of millions of Filipinos economically and socially displaced by the free market. 5. The plan plays up misplaced benefits from big infrastructure projects and diverts from the more meaningful but politically more difficult socioeconomic reforms needed. There is no doubt that building physical infrastructure in transport, water, power and elsewhere is vital for a strong economy. But it is important to ask if this infrastructure will have the desired effect as in, be broadly developmental in the specific inequitable conditions of the Philippine economy. It is clear how big firms participating in PPPs will benefit from guaranteed profits, and how export-oriented corporations using the improved infrastructure may reduce their costs of doing business. Established foreign, corporate and landed elites will then likely gain. But it is less clear how the mass of underpaid workers, landless farmers and unemployed across the country will benefit especially if the infrastructure is concentrated in the countrys usual centers of economic activity. 6. The plans intensified privatization of health, education and housing will make these services available only to those who can afford them. The government is systematically turning vital social services into opportunities for private profit-making rather than directly providing these so that they are accessible to everyone including the countrys poorest. 7. The plan seeks to increase taxes paid by the poor while avoids taxing the rich. It has an imbalanced fiscal policy. The plan argues that the government faces deficit problems. Hence, it will tighten public spending and reduce outlays for domestic development in terms of public infrastructure, social investments and welfare spending. These will have adverse effects on the poor and on the economy. Yet the government judiciously avoids taxing the rich to raise resources such as direct taxes on highincome individuals and corporate profits, or indirect taxes on non-essential luxury goods and services. The administrations centrepiece PPP program is discriminatory in favor of big profit-seeking players and foreign investors over building a domestic economy providing for its constituents needs. The program plays up the role of profit-seeking private and foreign parties in infrastructure building and providing public goods and services. Instead of putting an end to the ills of privatization and other free market measures, the Aquino government is further opening up the economy for big businesses and profits at the expense of the people. (See Table 12) More expensive public facilities will aggravate Filipinos already serious problem with making ends meet. There are 12 priority rail, road and airport projects lined up this year worth Php157 billion although none have yet been successfully bid out, much less started.
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Table 12. Philippine Conglomerates with PPP-related Interests (preliminary listing)
Family Aboitiz Ayala Cojuangco Consunji Gokongwei Lopez Pangilinan Razon Ty Source: IBON
Corporation Aboitiz Equity Ventures (AEV) Ayala Corp. San Miguel Corporation (SMC) D.M. Consunji, Incorporated (DMCI) JG Summit Lopez Holdings/First Balfour Metro Pacific Investments Corp. (MPIC) International Container Terminal Services, Inc. (ICTSI) Metrobank
PPP-Related Interests power, transport power, water, telecommunications power, water, tollways and highways, rail, airport power, water, construction power, telecommunications power, telecommunications, construction power, water, tollways, ports, telecommunications ports power
The Aquino administration also clearly seeks to build on previous globalization policies and extend these to as many areas of the economy as possible. The leaderships of the Senate and of the House of Representatives have already expressed their willingness to push for charter change particularly towards opening up the economy to greater foreign investment. The government has also already launched a national campaign to promote free trade agreements (FTAs) as well as declared its intent to enter into a second FTA this time with the European Union (EU). All these indicate how the Aquino administration is relying mainly on foreign investments and foreign markets for economic development, rather than the painstaking but more sustainable and equitable approach of focusing on the domestic economy.
GROWING DISENCHANTMENT
mid deteriorating living conditions and apparent lack of decisive action from government to protect the public from rising cost of living, Pres. Aquino saw the steady and steep decline in his performance and satisfaction ratings. There is growing disenchantment especially among the masses, who were initially enthralled by Aquinos bold words about a presidency radically different from its predecessor one that is not only honest and humble but most of all sensitive to the needs of the people. Pres. Aquino and his handlers attempt to stem this trend by drawing public attention to the administrations banner issue of corruption thus the repeated tirades against the misdeeds of Gloria Macapagal-Arroyo. But whether or not Arroyo will face actual legal cases filed by the Aquino administration remains to be seen. After all the posturing of being the alternative to the corruption-ridden, undemocratic Arroyo regime, the Aquino presidency has proven in a year that it is not about to turn around this crisis-battered nation. Pres. Aquino promised reforms without a concrete reform agenda. He promised change without departing from failed socioeconomic policies. He talked about good governance using the same patronage and elite politics. One by one, the bubbles of expectations that he created burst as Pres. Aquino concluded his first year. The Aquino presidency is turning out to be more of the same anti-people, pro-foreign and undemocratic governance that has been all too familiar to the Filipino people. Its rhetoric on poverty alleviation remains that an empty rhetoric and worse, just an afterthought to its economic planning, the central theme of
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which is the vigorous but not so novel promotion of privatization. The Aquino presidency has not been radical to break away from the failures of its predecessor, nor has it been a reformist as its moderate supporters had wanted it to be. The Aquino presidency has been simply lazy, rehashing old programs and staying within the comfort zone of elite politics. Such inertia to address the worsening plight of the population is already one of the distinguishing marks of Noynoy Aquinos leadership. His lack of vision, his lack of inspiration, even his lack of decency to have purchased a multi-million-peso car (which he reportedly sold) while the people are reeling from poverty, has not helped reverse the peoples deteriorating perception of the Aquino administration. Instead, without efforts to be discreet about his coming from a ruling clan, Pres. Aquino has wasted no time to consolidate elite rule, continued militarist approach to stifle dissent, and up the ante for foreign investors. There has also been a strikingly increased puppetry to the US. Kayo ang boss ko. (You are the boss) Pres. Aquino addressed the people in his inaugural speech, dramatizing his supposedly unassuming brand of leadership and overemphasizing that he would not abuse power. Kayo pa rin ang boss ko, (You are still the boss) he said after a year when he marked the first anniversary of his inauguration, trying to convince some more a disillusioned populace, or perhaps even just his camp, that the worn-out sound byte would still work. But his appeal has waned. After having established allegiance to elite and imperialist powers and servitude to the already discredited policies of globalization, which have only driven the people further down to hardship, Noynoy Aquino has clearly demonstrated to everyone who his real boss is. The Aquino presidency does not hold the path to real change, not with its overused slogans of daang matuwid (straight path) and fighting corruption in order to end poverty, as none of these is true. Its politics has remained traditional, feudalistic, elitist and colonial, guided by the principles of free market democracy, back to business as usual, and putting in place only cosmetic changes to maintain legitimacy. Real change can only happen through the long, arduous road of overhauling the system that had entrenched the elite at the expense of the people and the countrys resources. Pres. Aquino could have at least paved the way by instituting relevant policies and programs that have long-term benefits to the people. But in a year, the Aquino presidency has shown that in its remaining years it could actually be an obstruction to real change. Consolidating elite rule The Filipino people can dream again, Pres. Aquino had declared during his inauguration. It has been a year of one nightmare after another for the Filipino people worsening joblessness, insufficient incomes, rocketing prices of food and basic commodities, increasing transport fares, oil price hikes, increases in water and electricity rates, more land grabbing stories, more demolitions, less social services. There has not been any respite from the crisis left behind by the Arroyo administration, while the Aquino administration has only continued to fuel the social unrest by doing nothing. Pres. Aquino just allowed things to happen, especially the things that could have uplifted the people if only he intervened. He could have used the political momentum driven by his large mandate to confront the oil companies on their profiteering or just to suspend any fare, rate or price increase until he had studied the workings of a liberalized economy and privatization. But he did not. Instead, in the classic trapo (traditional politician) fashion, Pres. Aquino has kept on blaming Gloria Macapagal-Arroyo for the mess he has inherited. His visible, decisive actions have only been on matters that secure his position. He has affirmed the same globalization policies that have been implemented by Arroyo and presidents before her, which have eroded
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the Philippine economy to its current sorry state. The Aquino administration is even poised to conclude the neoliberal programs that the previous administration failed to finish, like privatized infrastructure projects, privatizing hospitals and schools, signing bilateral deals for further trade and investment liberalization, and changing the Constitution for unbridled globalization. Now, the Aquino regime has to establish the brand of politics needed to defend these moves from the brewing fury of a discontented constituency. This is being done first by consolidating his camp. Like any new commander-in-chief, Pres. Aquino immediately secured the loyalty of the armed forces. He pushed the Arroyo-appointed chief-of-staff Gen. Delfin Bangit to retire early and rather grudgingly, without any apparent reason except that he was appointed by Arroyo. Pres. Aquino has had two chiefs of staff already since he sat as president: Gen. Ricardo David, Jr. who retired in March and was replaced by Lt. Gen. Eduardo Oban, Jr. who is due to retire as well in December. This could have implications to loyalties, and it remains to be seen if Pres. Aquino can install someone who is as loyal and will eventually last. But for now, it is enough that Pres. Aquino is making sure that the outgoing generals are rewarded with positions in government. Then of course, he has to provide some sort of benefits to the soldiers and policemen, such as the housing he was crowing about in his first anniversary speech. Finally, Noynoy Aquino, who used the issue of corruption to capture the presidency, has been markedly mum about the corruption in the military, even giving retired general Angelo Reyes who was linked to such dishonorable activities full military honors on his burial. Aquino then moves to consolidate his circle. It is amazing how the new president has revealed in such a short duration that he is not different from the ones before him when it comes to cronyism. Pres. Aquino has appointed his kabarkada, kaklase, kabarilan (KKK, as the clique is called friends, classmates, target shooting buddies) to juicy positions in his cabinet and in government. Even his kamag-anak (relatives) are dispersed in different offices. Expectedly, the KKK is an easy target of allegations of irregularities, especially coming from the Arroyo camp that only knows such things too well. But all these are just the usual squabbles between two factions of the ruling elite, nothing earth-shaking, nothing fundamental. What is serious is the lack of delicadeza or finesse in governance that is characteristic of Philippine politics. What is fundamentally wrong is how the ones currently holding the reins of power defend their clique to death and in the process neglect the more urgent issues of the people. Even then, within Aquinos circle there is infighting between the so-called Balay and Samar groups. Balay, the Bisaya for house, refers to the house in Cubao of Mar Roxas, Aquinos running mate. Samar is the street in South Triangle in Quezon City, the headquarters of those who instead supported the Aquino-Binay tandem. The Balay group refers to the Liberal Party, the so-called Hyatt 10 such as Social Welfare and Development Secretary Corazon Dinky Soliman, Budget Secretary Florencio Butch Abad and Finance Secretary Cesar Purisima, including Strategic Planning Secretary Ricky Carandang and Presidential Spokesperson Edwin Lacierda. The Samar group refers to the allies of the Aquino and Cojuangco families including even Aquinos sisters plus Executive Secretary Ochoa, Senator Chiz Escudero and Presidential Communications Operations Secretary Herminio Coloma. The Samar group is said to also include Speaker Belmonte, National Defense Secretary Voltaire Gazmin, Energy Secretary Rene Almendras, and Interior Undersecretary Rico Puno. It has been a year but the bitterness of the presidential race continues to be a moving force in the daily operations of the Executive Office an unprofessionalism never before seen in Malacanang, as some veteran senators have observed. As a result, Pres. Aquino has two communications officers and two other officers in the capacity to speak for him. When the possibility of appointing Mar Roxas as presidential chief of staff was floated, not surprisingly it ruffled Ochoas feathers among others and brought out the cracks within.
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This is not helping development planning, which is sorely lacking to begin with. It is also discomforting to know that a basically inexperienced president is surrounded by equally amateurish men and women whose priorities lie in alliances to secure their positions beyond 2016. But ambitions tend to survive after the elections especially if the incumbent lacks the vision and inspiration to make people get to work. The sad fact still is that the infighting is not entirely about career competition but animated by the very factions of the elite and their incessant realignments based on self-interests. Eventually Mar Roxas was appointed as transportation and communications (DOTC) secretary, but only after the resignation of Jose Ping de Jesus along with his three undersecretaries. The resignations, although admittedly convenient for Pres. Aquino after having thought of two possible positions already (executive secretary then chief of staff) for Mar Roxas, cannot be dissociated from the complaints of anomalies filed against Land and Transportation (LTO) chief and de Jesuss assistant secretary Virginia Torres, who is also the Presidents target shooting buddy. There has been a Department of Justice (DOJ) recommendation to the President for the suspension of Virginia Torres and the start of investigation, but there has not been any response from Noynoy Aquino. Like the other incompetent kabarkada, kaklase, kabarilan of the President, such as the interior undersecretary Rico Puno of the hostage-taking fiasco, Torres remains in office. Those who are hoping that Mar Roxas would address this issue in the DOTC are missing the point of the appointment, however. The DOTC is crucial in the implementation of the public-private partnerships of the Aquino administration. It is crucial that someone who holds the same interests in privatization is assigned to the post, and Roxas, scion of the Araneta family, is the man. Several planned infrastructure projects are seen to benefit the Araneta family, such as the MRT Line 7, for instance, as pointed out by farmers groups, which shall traverse Tungkong Mangga in Bulacan where the 311-hectare farmland being claimed by the Aranetas lies. Pres. Aquino has also reportedly given Roxas the free hand in the privatepublic partnerships, which is, and only fittingly so, the biggest political payback yet given by the Aquino administration. Using civil society The political transition from Arroyo to Aquino has not been dramatic after all. It has been the usual consolidation of rule and allocation of spoils among the elite quite a huge letdown for those who believed that real change or even simple reforms were forthcoming. Philippine politics remains qualitatively unchanged oligarchic, elitist, shaped by corporate and landed elite interests. The Aquino presidency thus needs a huge amount of rhetoric on social justice, human rights, poverty alleviation, good governance, etc. The development plan, the so-called social contract, as well as the obscure 16-point agenda are replete with fine wording on these ideals. To prop up the rhetoric, so to speak, and to sustain its otherwise dwindling popular support, the Aquino government has to put a twist to the transition of power that has been nothing but traditional. The Aquino government has consciously included civil society organizations and their personalities who seemingly have been involved in democratic social movements to lend credence to the good governance propaganda. Pres. Aquino has to tame the elitist, pro-business, pro-foreign character of his Cabinet for instance by absorbing civil society personalities. It must be understood that the use of civil society in modern history has been consistently to give legitimacy to an undemocratic political system. In the 18th century, the term was used to refer to the free associations of citizens outside a coercive state to intimate that there was freedom after all. Today, especially in the beginning of the era of neoliberal globalization, the government that accommodates civil society is considered inclusive. This modern interpretation is being promoted by the World Bank and other international financial institutions and imperialist governments such as the US, Japan and the European Union. It is being embraced by the Aquino government.
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Non-traditional politics in the Philippines is mainly the colorful and vibrant social movement that is coming from the countrys revolutionary tradition, especially kept aflame by the progressive Left. Philippine non-traditional politics has also engendered a people power culture that already ousted two presidents. Civil society organizations are coming from this same stream of democratic movements. Their employment in government, however, although seemingly a natural flow after the fall of the Marcos dictatorship, happened while there was nothing really revolutionary about Corazon Aquino and while her newly-installed democratic government had to implement the complete package of neoliberal globalization. In short, the idea has been to coopt a portion of the Philippine progressive movement and give governance a semblance of peoples participation. The Noynoy Aquino administration is employing the same tactic. It has involved various civil society groups and seemingly Leftist progressives in government, even if the intention has become increasingly clear and even if some groups have been themselves involved in controversies like the Php10-billion Poverty Eradication and Alleviation Certificate (PEACe) bonds scam. The PEACe bonds allowed the Caucus of Development NGO Networks (Code NGO) to earn a Php1.4-billion commission on a government bond flotation in 2001, which upon maturity this year will require the government to pay Php35 billion in obligations. Code NGO was previously headed by Secretary Dinky Soliman of the Department of Social Welfare and Development (DSWD), the lead agency in the CCT program of the Aquino government. No amount of participation by pseudo-progressives (in the poverty commission, social welfare department or peace process office) has effected an even slight departure from neoliberal globalization. The PDP 2011-2016, for instance, which could have been the tool in urgently addressing the countrys crisis, only manifests that civil society groups and their representatives have been utilized to prop up the language but barely have any influence on democratizing the economy. Worse, some pseudo-progressives have also been instrumental, in the name of poverty alleviation and community development, in facilitating counterinsurgency projects in the countryside. Whether or not consciously, with or without the military, civil society has used its past association with the progressive movement to neutralize the progressive demands of rural sectors and to penetrate organized communities, the uncivil society, which are resistant to globalization. These are being done in the process of CCT implementation. The Aquino governments utilization of civil society participation is not without benefits to civil society. It is not as though the civil society groups and their representatives are the clueless victims of propaganda. They are aware and in fact, some of them have maximized the opportunity to build bureaucratic and diplomatic careers. Others meanwhile continue to believe that they would still make a difference in governance and unfortunately rally their organizations away from progressive demands and towards the reformist, defeatist line. At any rate, after just a year of the Aquino administration, civil society has outlived its usefulness as the government it is serving has openly chosen to sustain the globalization policies that have impoverished the grassroots sectors. Corruption: banner or side issue? After all the tough talk on corruption, even using the issue to launch himself to the presidency, Pres. Aquino has not taken any decisive action to prosecute and punish Gloria Macapagal-Arroyo and her gang of corrupt officials. Not a single case has been filed by the Aquino administration against Arroyo, whether on the glaring issues of plunder, on election fraud or on human rights violations. Gloria Macapagal-Arroyo has continued to walk around freely in the halls of Congress like nothing happened, and happily with a Php2 billion pork barrel for her congressional district.
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The initiative to file the long-overdue cases has even come from outside government, from peoples organizations, partylist groups, anti-corruption watchdogs, victims and their families, while the Aquino administration has dilly-dallied on preparing its prosecution. It is quite ironic and fast becoming such a shame that the one who pronounced that he would be the champion of the people against corrupt officials has been lame and cannot even backstop the more vigilant citizenry. It was party-list Representative Teddy Casio of Bayan Muna who filed the case on the scandalous Php329-million national broadband network-ZTE deal. It was the peasant federation Kilusang Magbubukid ng Pilipinas, along with former solicitor general Atty. Frank Chavez, which filed the case on Php728-million fertilizer scam. Then, Arroyos corruption scandals have surfaced one after another, and it could have been the perfect time for the Aquino government to start filing charges against Arroyo since Arroyos immunity is already lifted. But Pres. Aquino has not moved a finger. The DOJ has filed a plunder case, based on the complaint filed by Atty. Chavez on the alleged illegal transfer and misuse of more than Php500-million fund of the Overseas Workers Welfare Administration (OWWA) to PhilHealth from March 2003 to February 2004. Aside from the transfer being illegal, there were no catastrophic diseases at that time of epidemiological proportions to merit such transfer, and the health care claimants turned out to be fictitious. Like the fertilizer funds, the OWWA funds apparently went into the campaign kitty of Arroyo and her allies for the 2004 elections. Arroyo also apparently approved US$293,500 budget of OWWA to buy vehicles for Philippine officials assigned in Jordan, Lebanon, Bahrain, Oman, Iran and Egypt in response to the US call for support for the war against Iraq. Bayan Muna party-list Representatives Teddy Casio and Neri Colmenares have already filed a plunder case at the Office of the Ombudsman on the alleged misuse of Php325-million intelligence funds of the Philippine Charity Sweepstakes Office (PCSO). Former PCSO general manager Rosario Uriarte had already admitted at the Senate Blue Ribbon Committee hearing that the funds were diverted to other uses upon the approval of Arroyo and avoided auditing by the Commission on Audit (COA). No matter how important the cited reasons may sound, such as the blood money paid in behalf of four OFWs on death row in Saudi Arabia and relief goods for calamity-affected areas, the diversion still constituted malversation. And of course, the reasons cited still have to be investigated if they were true. The facts are already staring Pres. Aquino in the face. Linking the bishops to the misused PCSO funds that they allegedly received vehicles during the time of Arroyo in exchange of their endorsement of Arroyo when she was being ousted is no longer necessary. The case as it is already contains the criminal elements of plunder. What is urgently needed is for the Aquino government to go after Arroyo. The people are appalled by these revelations but more shocked at the reaction of the Aquino government. All the Aquino presidency has done, without thinking, is to deny its involvement in the exposes. It was indeed unfortunate that the creation of a Truth Commission, Noynoy Aquinos first-ever executive order, was quashed by the Supreme Court for being unconstitutional. The second executive order on revoking midnight appointments made by Arroyo was also stopped by the high court, along with the impeachment proceedings against then Ombudsman Merceditas Gutierrez who, thankfully, eventually resigned. If ever some truth was revealed by all these, it was the ineptitude of Pres. Aquino and his lack of preparedness for the presidency. He has also failed to rise above these blunders to pursue other means to bring out the truth. Pres. Aquinos inaction on the gross and high-profile corruption cases, especially on putting Arroyo behind bars, has led many people to believe that he is not really serious about his banner issue. Even the appointment of the reputable Secretary Leila Delima at the DOJ is seen by many as a way of letting the good Secretary do the dirty work while the President is doing nothing. In reality, putting Arroyo behind bars shall put an end to the blame game of the Aquino administration that covers up its own incompetence.
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The most Pres. Aquino had done, using the occasion of his first State of the Nation Address (SONA) and his first anniversary in office, was to reveal to the people the anomalies in the government Arroyo left behind, which his administration apparently discovered. It has been conspicuous, however, that the agencies involved in the shocking revelations, for instance the National Food Authority and Philippine National Construction Corporation (PNCC), are big tickets for privatization. President Aquino has obviously been singing the introduction of a familiar globalization tune that in order to have good governance and reliable service, the government should privatize corrupt and inefficient state-owned enterprises. In short, the corruption issue is just being used to further justify the Aquino governments central program, the public-private partnerships. Gloria Macapagal-Arroyo is just a side issue and she can walk free. Human rights violations Likewise, not a single criminal and perpetrator of the numerous human rights violations, including 1,206 cases of extrajudicial killings and 206 cases of enforced disappearances of mass leaders and activists under the Arroyo regime, has been punished. Even if international observers and bodies including the United Nations (UN) Special Rapporteur on Extrajudicial Killings have already expressed strong indications that the crimes were State-sponsored and the Philippine military was definitely involved, the Aquino government has opted to play safe by not pointing the accusing finger. Gen. Jovito Palparan remains at large despite his numerous heinous crimes related by surviving victims, families and whole communities. A known Arroyo henchman, who was even praised publicly by Arroyo in one of her SONAs, Palparan is being linked to terror sown in various communities in Mindoro, Central Luzon, Samar and Southern Mindanao. He is also being held culpable by human rights advocates for the abduction, rape, torture and disappearance of numerous activists including University of the Philippines students Karen Empeo and Sherlyn Cadapan, peasant activist Manuel Merino and the Manalo brothers. Pres. Aquino is mum about all these. Pres. Aquino has kept on whining about Arroyos faults and about inheriting a house in disarray. But he has seemingly failed to see a decade of political killings and human rights abuses and to hear that families and victims are still crying out for justice. Filed charges have even come from outside his administration, notably by the United Church of Christ in the Philippines (UCCP) and by six of the health workers collectively known as Morong 43, and none from inside government, effectively making the Aquino government party to the systematic human rights violations. The UCCP has filed a Php5-million civil suit against Arroyo as the commander-in-chief for the abduction and torture of one and death of five pastors and members of the UCCP and its affiliated churches. On the other hand, Dr. Merry Mia Clamor, Dr. Alexis Montes, Gary Liberal, Ma. Teresa Quinawayan, Reynaldo Macabenta and Mercy Castro six of the Morong 43 have filed a Php15-million damage suit against Arroyo and top military officials including former National Security Adviser Norberto Gonzales for the physical and psychological torture they suffered as political detainees. Meanwhile, under the new administration, human rights violations have continued unabated. In just a year under Pres. Aquino, there are already 48 cases of extrajudicial killings and five cases of enforced disappearances, not to mention that 354 political detainees including 17 consultants of the National Democratic Front of the Philippines (NDFP) to the peace talks remain in jail. The human rights group, Karapatan, has monitored thousands and thousands of victims of demolitions, forced evacuations, threats, harassment, intimidation and physical assaults, and other military abuses in the communities from July 2010 to June 2011. (See Table 13) Independent monitoring done by the Center for Trade Union and Human Rights (CTUHR) shows that there have been 218 cases of civil, political and socio-economic rights violations with 33,178 victims on Pres. Aquinos first year. (See Table 14)
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Table 13. Violation of Civil and Political Rights Under the Aquino Administration, July 2010-June 2011
Violations Extrajudicial Killing Enforced Disappearance Torture Frustrated Extrajudicial Killing Illegal Arrest without Detention Illegal Arrest and Detention Illegal Search and Seizure Physical Assault and Injury Demolition Violation of Domicile Destruction of Properties Divestment of Property Forced Evacuation Threat/Harassment/Intimidation Indiscriminate Firing Forced/Fake Surrender Forced Labor/Involuntary Servitude Use of Civilians in Police and/or Military Operations as Guides and/or Shield Use of Schools, Medical, Religious and Other Public Places for Military Purpose Restriction or Violent Dispersal of Mass Actions, Public Assemblies and Gatherings
No. of Victims 48 5 29 13 56 95 78 32 5,722 87 5,006 52 3,010 9,589 5,047 32 33 15 5,245 803
Source: KARAPATAN Alliance for the Advancement for Rights Source: KARAPATAN Alliance for the Advancement of PeoplesPeople's Rights
The report by the UN Special Rapporteur on Extrajudicial Killings, Philip Alston, in 2008 had conclusively linked the killings and enforced disappearances to the governments counter-insurgency (COIN) program, then packaged into Arroyos Oplan Bantay Laya (OBL). At some point, it was also revealed that the OBL whose main objective was to crush armed resistance especially the one led by the Communist Party of the Philippines (CPP), had explicit strategy of summarily executing activists, including those from legal organizations. It must be understood that the underlying reason for the continuation of the grim human rights situation in the Philippines that sows terror and curtails freedom under a pretentiously democratic government is the retention of the basic doctrine of the failed OBL, now packaged into Aquinos Oplan Bayanihan. Winning the peace In a broader context, the COIN is actually a guide issued by the US government in 2009 as its summed up military doctrine that would crush revolutionary movements around the world. Its formulation obviously coincided with the latest explosion of the global economic crisis and expectably the intensification
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Table 14. Trade Union and Human Rights Violations Under the Aquino Administration, July 2010-June 2011
Case Title Civil and Political Rights Violations (CPR) Extrajudicial killing Frustrated/Attempted killing Massacre Torture Physical assault/injury (includes mauling) Grave threat, harassment, intimidation (includes surveillance, coercion and other forms) Political persecution Red baiting/Red tagging Arbitrary arrest/detention Sexual harassment Abduction Enforced disapperance Fabrication of criminal charges due to political acts/belief or labor dispute Illegal search and seizure Divestment of property Destruction of property Violation of domicile Assault on the picket line Breaking up/Violent dispersals of workers' concerted actions Food blockade Total CPR Violations Economic, Social and Cultural Rights Violations (ESCR) Violation of the right to security of tenure Illegal dismissal Retrenchment/Closure Dismissal due to labor dispute Forced leaves/Reduced workdays Long-term contractualization Unsafe working condition Death due to unsafe working condition Violation of the right to receive fair/just wages Underpayment of minimum wage Non/Delayed payment of wages Violation of the right to social security, insurance and other statutory benefits Violation of the right to freedom of association and collectively bargain to collectively bargain Non-recognition of union Union-busting Workplace harassment on unionists Intervention on trade union affairs Anti-Union discrimination Prohibition of the right to strike Collective Bargaining Agreement (CBA) violations and issues Non-implementation of CBA Bargaining in bad faith/Refusal to bargain Other ESCR Violations Demolition of urban poor communities Total ESCR Violations Total TUHR Violations Source: Center for Trade Union and Human Rights (CTUHR)
Number of Cases
Number of Victims
6 2 9 20 2 5 11 1 1 2 3 62
6 2 125 207 14 37 69 28 5 84 1,328 2,519
9 18 6 6 10 10 6 8 6 13 18 2 7 6 10 13 8 156 218
1,959 1,049 4,645 1,366 34 2,623 2,918 1,145 736 2,379 2,261 737 744 4,440 3,790 3,992 18,475 31,947 33,178
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of globalization policies in backward, neocolonial countries such as the Philippines. In short, it is the militarist approach to further globalization. The COIN is explicit that in order for it to succeed, a seemingly credible government, a public-service-oriented armed forces, and a cooperative media that shapes public opinion in favor of the government and the military must be installed. In short, the militarist approach to free market requires a free market democracy. Oplan Bayanihan is essentially the same as OBL, except for its more deceptive catchphrase, winning the peace, which employs non-combat operations such as sociocivic activities but still combined with more suppressive and violent combat operations. The design of Pres. Aquinos CCT program is perfect for this purpose. The idea is to distribute palliative cash transfers to create the illusion that the people, especially in the countryside where insurgency is rife, are being uplifted from their miserable condition. The role of the CCT in counterinsurgency is clearly seen in how the soldiers of the Armed Forces of the Philippines (AFP) have taken over the distribution of cash transfers and the delivery of other government services. It has also been conspicuous that the other components of the bogus poverty-alleviation Pantawid Pamilyang Pilipino Program (4Ps) like the Kalahi-CIDSS target known communities of the revolutionary New Peoples Army (NPA). Pres. Aquinos Oplan Bayanihan is the local translation of the US COIN Guide, adopting the same language of population-centric approach while continuing brutality in the communities through psywar, intelligence work and combat operations. The AFP itself has declared that the intensity of combat operations shall continue with Oplan Bayanihan. This shall be concealed, however, with a soft approach through community organizing for peace and development or COPD operations such as the CCT implementation, livelihood projects, medical missions, etc. For this purpose and using a whole-of-nation approach, the AFP, arrogating unto itself the role of the civilian government, shall mobilize government agencies, civil society, NGOs, private corporations, schools, etc. An essential component of Oplan Bayanihan is an information campaign that aims to embellish the image of the military as well as the government and dissociate the state from decades-long record of human rights violations. It is no coincidence thus (although it is partly incompetence) that the Aquino administration has two communications offices. On the other hand, the AFPs presence in the mass media has been quite noticeable, whether in the news, features or telenovelas (soap operas), to put on and defend a loveable image. There has also been a marked increase in the enrolment of soldiers in colleges offering community development courses, either to learn the strategies in dealing with communities or to conduct psywar operations in the academe. The essence of the failed, discredited OBL is retained in the Oplan Bayanihan. No amount of putting a human face in an otherwise inhuman, violent and fascist scheme can win the hearts and minds of the people. Not surprisingly, the culture of impunity has continued and intensified under the Aquino administration and the body count of activists and ordinary citizens continues to rise. On a daily basis, communities in the countryside continue to be terrorized by militarization and so-called civil-military operations. Like the OBL and other Oplans of previous presidents, which aimed to end the armed conflict, Oplan Bayanihan is bound to fail. It is the same militarist approach that continues to ignore the roots of armed conflict, which lie in the violations of peoples basic democratic rights the continued landlessness and lack of access to basic resources as well as the implementation of policies that intensify these. Not even the soft approach of Oplan Bayanihan can hide its failure and deceive the people that the fundamental problems are being addressed. When this failure becomes manifest, and it wont be long, and the people have only intensified their struggles, the military shall unmask its real violent nature.
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Failing test of sincerity The Aquino government has based its framework in entering the peace talks with the countrys armed and revolutionary movements on the same framework of its bound-to-fail Oplan Bayanihan. This is quite telling of the Aquino governments lack of seriousness in making peace talks prosper and tackle substantive issues. The peace talks with the Moro Islamic Liberation Front (MILF), for instance, which started in February 2011 and still dragging, have been marred from day one with mistrust from both sides. The Aquino government questioned the unity of the leadership of the MILF, pointing out factions in the group. It also attempted to reduce the issues that have already been agreed on with previous administrations. It remains to be seen if the secessionist objectives of the MILF would be tackled by the Aquino government or negotiations would be reduced to land disputes, voting districts and clan feuds. The delay in the talks is fully due to the government which casts doubt on its sincerity to address the legitimate demands of the Bangsamoro people. While the MILF submitted its draft comprehensive pact to the GPH panel as early as February, the GPH panel in turn has yet to make any formal comment on it and failed to meet its own deadline of a counter-draft by the end of June. Meanwhile, formal peace negotiations with the NDFP resumed on February 15, 2011 in Norway, six years after the last round broke down, but short of being a breakthrough as the Aquino government has not stood by its commitment to release the 17 NDFP consultants, two of them were arrested and detained under Aquinos watch, one of them, Allan Jazmines, just a few hours before the re-opening of formal talks. The insincerity of the Aquino government and its AFP is showing. The Aquino government is in complete violation of the Joint Agreement on Safety and Immunity Guarantees (JASIG), a peace agreement that was signed in 1995 by the Ramos government and NDFP, which guarantees immunity from arrest to the members, consultants and staff of the NDFP who are part of the negotiating team. Contrary to the dismissive statement of the Presidential Adviser on the Peace Process Teresita Deles that the JASIG is a side-table issue, the JASIG is actually important in starting peace negotiations and a crucial test of sincerity. In the Joint Communique signed on January 18, 2011 by the Aquino government and the NDFP and witnessed by Ambassador Ture Lundh of the Royal Norwegian Government, the Aquino government agreed to work for the expeditious release of the detained NDFP consultants in compliance with the JASIG and in the spirit of goodwill. The release of the NDFP consultants, however, is not just goodwill but an obligation under the JASIG. And it has been six months since the Joint Communique but not one of the detained consultants has been released, which is not really being expeditious on the part of the Aquino government. The Aquino government also committed during the formal talks in February to release the more than 300 political detainees in accordance with the Comprehensive Agreement on Respect for Human Rights and International Humanitarian Law (Carhrihl), which was signed in 1998. Still not a single detainee has been freed. The NDFP has postponed meetings by the Reciprocal Working Committee on Socio-Economic Reforms and the Working Group on Political and Constitutional Reforms. Simply, for the NDFP, if the Aquino government cannot be trusted to comply with the JASIG, how much more with agreements on social and economic reforms, on political and constitutional reforms, or any other agreement. It appears that the Aquino government, following its military plan, hopes that the armed conflict could be resolved by the surrender of revolutionary forces and is not so keen on pursuing agrarian reform, rural development, national industrialization and respect for human rights to achieve just and lasting peace.
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Puppetry to the US The political investment that Pres. Aquino had when he assumed presidencybuilt only on his personality and being the son of democracy icons is gone too soon. There are several obvious reasons for this. In the main, the Aquino administration lacks genuinely pro-people and pro-poor policies and fails to cover up its pro-business and pro-foreign character with dole-out programs, civil society, and hype on good governance. Pres. Aquino has even refused to realize genuine land reform in his own Hacienda Luisita. The erosion of its credibility is also coming from its inability to go after and to go beyond Arroyo to pursue real reforms. Pres. Aquino has overused his slogans and played his blame game too much to the point of going into inertia. The Aquino administration has also started rearing its undemocratic head, perpetuating economic inequality as well as systematically allowing human rights violations to continue. Pres. Aquino is even planning to give the dictator Ferdinand Marcos a heros burial, which is a mockery and utter betrayal of the historic victories of the people against the dictatorship. Another reason for the waning appeal is Pres. Aquinos blatant puppetry to the US economic and military interests. Kayo ang aking lakas. (You are my strength.) After a year in office, it is clear where these words really echo. Noynoy Aquinos first year is quite reminiscent of early post-colonial times, the Martial Law era, the regimes thereafter, or even just the last decade of Arroyo, where US support was the first and the last source of a regimes strength. Aquino represents the interests of the domestic elite, which aside from being aligned with US imperialist objectives, assures the US that nationalist, anti-imperialist sentiments are not in the agenda of the Aquino government and shall remain suppressed. He has been the perfect candidate for foreign and big local business, imperialist governments, international financial institutions, and the countrys creditors to restore legitimacy and carry on with the neoliberal policies of globalization. In order to push for fiercer globalization, especially at this point of the imperialist crisis, the US has been quite overt about its preference the semblance of a concerned, reform-oriented government and political stability, a break from the incredible Arroyo, which nonetheless embraces neoliberalism. Here, Aquinos yellow army is useful for the US, since it plays a role in drowning the demands of the nationalist mass movement that is opposed to US imperialism and downplaying the need for armed revolution. The Philippines is strategic for US economic and military interests in the region as the base and launch pad of US military hegemony in the region, as a facilitator of US participation and intervention in regional diplomatic affairs, and of course, as a homebase of US imperialist plunder in the region to moderate Japan and block China. These roles were affirmed during the first Philippines-US Strategic Dialogue in January 2011 where foreign policy, trade and economic, and defense and security issues were discussed in one sitting. The US remains the countrys biggest foreign investor, accounting for 22.9% of total net foreign direct investment in the past decade. There has been a remarkable increase in the figure in the first quarter of 2010 (76% of total) and 2011 (70%), compared with the first quarter of 2009 (4.71%). American transnational corporations (TNCs) are entrenched in the Philippine economy and continue to dominate revenues and sales of the top 1,000 corporations in the Philippines. Merchandise trade with the US amounted to US$15.4 billion in 2010 the market of 15% of Philippine exports and the source 11% of Philippine imports. Currently, the Philippines is the country coordinator for ASEAN US Dialogue relations, which means that the Aquino government shamelessly facilitates the US to secure a place in a regional forum where it does not belong but has covert interests of dominating. The country is the bridge between the US and
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the 10 members of the ASEAN until July 2012, by that time the US hopes to have forged framework agreements with the ASEAN states, whether individually or collectively. The whole archipelago is practically the USs military base, where the US can deploy troops, hold military exercises, engage in civil-military operations, store war materiel and weapons, park, dock, refuel, etc. The US is the only country that maintains a colonial military agreement with the Philippines, the Mutual Defense Treaty of 1951, which is the basis of unconstitutional and defective laws such as the 1998 Visiting Forces Agreement (VFA) and the 2002 Mutual Logistics Support Agreement (MLSA). Both are upheld by Pres. Aquino, and resulted in intensified US military presence, operations and abuses in the country. Pres. Aquino promised to look into the constitutionality of the VFA. But like the other issues on his list of things to do, it remains undone. On the contrary, he has allowed already 27 joint RP-US military exercises in a year in different parts of the archipelago involving thousands and thousands of troops. He has allowed the permanent deployment of the 700-strong Joint Special Operations Task Force-Philippines (JSOTF-P) in Camp Navarro in Zamboanga City to go on. Citizens have already complained that the American soldiers are overstaying, i.e. they have already established their residence in the country for years. But the VFA Commission dismissed the allegation. True enough, the JSOTF-P was activated by the MLSA for the purpose of intelligence work and direct guerrilla combat operations, and specifically for permanent stationing and overstaying of US troops. In just a year, Pres. Aquino has allowed the arrivals of nuclear-powered US warships and the unloading of thousands and thousands of American servicemen. The USs largest, the 6,000-crew USS George Washington, accompanied by three missile-guided destroyers, docked on Manila Bay in September 2010 and again in March 2011. The most controversial so far was the arrival of the 25,000-strong US North Arabian fleet in Manila Bay on May 15-21, 2011. It is the USs base of operations against Afghanistan, Pakistan and Libya, and allegedly was used to launch the assassination and dispose the body of Osama bin Laden in Pakistan on May 1. The fleet is composed of four ships the USS Shiloh, the USS Bunker Hill, the USS Gridley, and the USS Carl Vinson, which President Aquino boarded while it was still in international waters. In a sheer display of puppetry, President Aquino was flown by a US jetfighter to the fleet and was shown around, and the Philippine mass media was showing the Philippine president awestruck by US military technology. It was an appalling sight for the thousands of victims of human rights abuses by US soldiers and those who demand that the VFA be junked for the sake of Philippine sovereignty. The Aquino government has also provoked China on the Spratlys issue to serve the real aim of the US in the region, which is to stoke diplomatic and military tensions, assert military hegemony, and eventually restrain China. In reality, the US has long been aggressive in preventing China ever since the latters economy started emerging as one of the worlds largest, and ever since China made advances in the disputed territories and making military build-up in the South China Sea. There is also of course the underlying US interest in the oil and mineral resources found in the islands. Indeed, the US has been mouthing maritime diplomacy in forging cooperation with the Philippines, with the explicit reference to the countrys role of being the USs best ally. The recent visit of US Secretary of State Hilary Clinton and the meeting this year with US Assistant Secretary for East Asian and Pacific Affairs Kurt Campbell have affirmed this role. To carry out the plan on China, politically, the US has to have greater involvement in the ASEAN and its forums and forge bilateral deals as necessary, especially with the Philippines, Indonesia, Vietnam and Singapore. Militarily, it has to be able to send its largest and most powerful fleet as reconnaissance in the South China Sea and be able to dock within the vicinity. All these are being done already, thanks to its best ally. It was actually no longer necessary for the Aquino government to fan anti-China sentiments or engage in war-mongering just to promote what the US wants.
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All these efforts by the Aquino government are not without rewards from its imperialist master. The Aquino government also uses the Spratlys issue to obtain US assistance, which amounts to US$132.8 million in 2011, 21.8% of which goes to foreign military financing, military education, law enforcement, and anti-terrorism. The US government is increasing this next year to US$163.68 million, if ever, the highest since the US$167.0 million in 2004. Pres. Aquino also garnered last year the 9th largest of the 45 grants given by the independent US Millennium Challenge Corporation (MCC), amounting to US$434 million. A huge portion goes to the palliative poverty alleviation program, which is important for counterinsurgency operations. This year, the Philippines earns another reward from the US. The country is one of only four countries in the world that have been chosen for President Obamas Partnership for Growth (PfG), which is a commitment for creditors and donors to prioritize these countries for opportunities, such as trust fund access and private sector window. The other countries are El Salvador, Ghana and Tanzania. Along with the Philippines, these countries have been chosen because of their strong commitment to marketoriented and growth enhancing policies, democratic governance, and sustainable development. The budget for the PfG for 2012 is coming from the US$27-billion Obamas policy directive on global development (PPD), the key outcome of which is the PfG. The PPD is a policy framework that says global development is the key pillar of American power, alongside defense and diplomacy. US imperialism is indeed in its worst crisis, and it should be discomforting for the Aquino government to be among those summoned to be part of the imperialist solution. System overhaul It has been a year since Noynoy Aquino won the presidency reluctant, unprepared, without many political achievements, yet riding on an untarnished image and on the fact that he is Ninoy and Cory Aquinos son, he stood opposite a discredited, morally bankrupt and fascist regime. An Aquino presidency captured the imagination of the disillusioned masses and drew spontaneous and sentimental support. But the political transition has not been as dramatic. In just a year, Pres. Aquino has revealed his lack of commitment to bring about real change. He has actually reproduced social unrest and political uncertainties. For those who hoped that Noynoy Aquino could be a shorter route to real change, one year is enough to realize that he actually stayed on the same road to ruin. He recycled and rehashed the failed policies, repeated the same mistakes, defended the same culprits, and perpetuated social inequality and inequity, poverty and misery. He has upheld the interests of the landlord elite such as himself, big local business, transnational corporations, foreign creditors and donors the entrenched few that have kept this country poor for decades. There has been nothing democratic and upright about the path of Noynoy Aquino . There has not been a decisive measure on corruption because the Aquino government uses a defective analysis. There is systemic, large-scale corruption precisely because the economy is liberalized for the plunder of foreigners and the domestic elite, which has weakened institutions. Yet, despite its myopic view, the Aquino government has still failed to resolve the latent cases. On the other hand, the grim human rights situation remains, as a president, heedless of the lessons of history and deaf to the cry for justice, sits and continues with undemocratic, repressive policies. It has been an unproductive year for the Aquino administration, not acting on matters that need immediate attention for justice to prevail and dragging its feet on peoples gut issues. Beyond incompetence or simple laziness, however, the Aquino governments inaction actually endorses and maintains a corrupt and repressive system. There is nothing good about this governance. The blatant puppetry to the US and the continuation of undemocratic policies that trample upon national sovereignty one year is enough to see the countrys overall direction under the presidency of Noynoy
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Aquino. Surely, this shall not be a government that nurtures nationalist aspirations for sovereign economy, progressive and democratic to cover for peoples needs, free from foreign control and dictates, and cultivating a politics and culture that is pro-poor and pro-Filipino. There is nothing that people can hope from the elitist, pro-imperialist Aquino government, which hides behind its narrow slogans. Nationalism, building democracy and challenging elite and imperialist rule are still the agenda of the Filipino peoples movement. Nothing in the past year has brought the people closer to the attainment of genuine change. There is an urgent need to counter the rhetoric that changes can happen overnight and simply by changing presidents. If this is done immediately and effectively, nothing in the coming years can stop the people from struggling to overhaul the system.
NATIONALIST ECONOMICS, DEMOCRATIC POLITICS
here are three compelling reasons for a radical reorientation of the countrys socioeconomic policies towards more nationalist economics. The first is that neoliberal free market policies of globalization have clearly not developed the Philippines. The country has rapidly integrated in the global economy and the share of foreign trade and investment in the economy is by far much larger now than in the 1980s while economic policy-making is determined most of all by foreign considerations. Yet the poor development outcomes are clear and have carried into the first year of the Aquino administration. The problem is not of insufficient integration. The problem rather is the way the country has integrated with acquiescence to foreign investment, low value-added activities, and lacking a vision of self-reliant national development. The administrations adherence to failed and ineffective globalization policies is particularly obsolete given global trends. Governments around the world have been implementing between 400 to 500 protectionist and discriminatory measures annually since late 2008 with the advanced capitalist countries of the G-20 accounting for the overwhelming number of these. The World Trade Organization (WTO) itself has been stalled for years with countries refusing to implement further liberalization measures. The historical record is also unmistakable. Nationalist economic policies were central to the successful trajectories of advanced capitalist powers such as the US, United Kingdom (UK), Germany, France and Japan, erstwhile Socialist countries such as Russia and China, the Scandinavian countries, the newlyindustrialized countries such as South Korea and Taiwan, and virtually every other country that has achieved any level of development. There is in contrast no such record of progress by backward countries under globalization, with the Philippine experience a case in point. Second is that the global economy has entered an era of generally slower growth in the advanced capitalist powers and even in the acclaimed emerging economies. Also, other countries will seek to advance their national interest even if this is at the expense of others so the Philippines must rely on the resources it has and can develop. Put another way, the foreign investment- and export-led model that has been popular in past decades with mixed success is plainly no longer viable. These underscore the need for developing domestic broad-based sources of growth. Third is that internal problems accumulated over decades of globalization are reaching a breaking point. At the economic level this includes the drastic erosion of domestic manufacturing and agriculture and, at the social level, the amassed poverty, hardship and exploitation of tens of millions of Filipinos. The government has also been self-destructive and its steady abdication to the profit-seeking private sector is undermining its long-term capacity to responsibly guide the economy. These urgently need to be reversed.
IBON Economic and Political Briefing 14 -15 July 2011
41
The conditions for nationalist economic policies and development exist. The Filipino population of almost a hundred million is the 12th largest in the world and offers a vast potential market and productive labor force. The Philippines has rich agricultural and aquatic resources and is among the top 20 most biologically diverse countries. Its rainforests and long coastlines are habitats to diverse flora and fauna. The country is among the most mineral-rich countries in the world with metallic and non-metallic minerals necessary for industrialization in abundance. There is gold, copper, iron, chromite and nickel as well as sand and gravel, limestone, marble, clay and other quarry materials. The Philippines is among the worlds biggest producers of many minerals, yet vast numbers of its population are among the worlds poorest. The countrys resources need only be tapped for the countrys national interest. Foreign trade and investment potentially provides opportunities for domestic development but the country must engage with these on far more mutually-beneficial terms than at present. Partnerships with countries beyond the traditional US, Japan and Europe can be explored. Such partnerships with other countries may also be used to improve the terms by which the country relates with these traditional capitalist powers. These mutually-beneficial economic relations can be done on a bilateral or regional basis, and the Philippines can even be at the forefront of pushing for more genuine regionalism in the interest of national economies rather than the advanced capitalist powers. The ASEAN countries, some East Asian countries, so-called BRICS (Brazil, Russia, India, China and South Africa) and Latin America countries asserting sovereignty such as Cuba and Venezuela offer opportunities for anti-imperialist alliances. The strategic directions of agricultural development and national industrialization are necessary. The complementary programs of genuine agrarian reform and national industrialization are needed to overcome underdevelopment and poverty, ensure the peoples wellbeing, and achieve social justice. The absence of agrarian reform in the vast countryside underpins rural unrest and agricultural backwardness. The absence of national industry also has far-reaching consequences: weak job creation, low incomes, poor capital formation and accumulation, technological stagnation, and undue economic dependence on external powers. Real agrarian reform and rural modernization creates a large domestic market for the products of industry, produces food and raw materials, and generates capital for industrial development. A real land reform program that results in the economic, social and political liberation of peasants and farm workers will improve their conditions, increase agricultural production, and expand the domestic market for the products of light industry (consumer goods and agricultural equipment). National industrialization meanwhile is the key element for long-term Philippine growth and development. This means building Filipino-owned industry and domestic productive capacity in terms of the following basic elements: 1) producing the goods and services that Filipinos need; 2) achieving ever-higher technologies and productivity; 2) ensuring internal capital accumulation; 3) growing inter-linkages, industrial deepening and geographic dispersion; 4) domestic job creation and skills upgrading; and 5) national ownership or otherwise dominant and effective control. Initial steps towards can already be taken. 1. Give immediate social and economic relief to the people. This can begin with an immediate across the board nationwide wage hike of Php125. The usefulness of emergency cash transfers on the other hand critically depends on larger economic policies being in place that creates jobs and raises incomes over the long-term. 2. Complete real agrarian reform and begin rural modernization. i. Immediately distribute the Hacienda Luisita land to the farmers and cancel all stock distribution
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option (SDO) schemes this will be an important signal of political will to implement genuine agrarian reform. ii. Conduct a credible accounting of the real extent of land distribution and any subsequent land reconcentration. iii. Immediately stop the conversion of land and fisheries to other uses. 3. Initiate the process of national industrialization. i. Draw up a deliberate, explicit and strategic national industrial policy consistent with the countrys resource endowments and existing capacities, and coordinated with its trade, investment and financial policies. ii. Identify major industrialization projects for jump-starting industrialization. The food and beverage, garments and textiles, mining, metallurgy, petroleum products, chemicals, pharmaceuticals, construction materials, capital goods, and power industries are initially seen as important industries to prioritize. 4. Ensure that essential social services are publicly-provided. i. In general, the government must aim to account for the largest part of conventionally acknowledged recommended spending levels of 6% of GDP/GNP for education and 5% of GDP/GNP for health. Providing just three-fourths of these amounts means approximately Php383 billion for education and Php319 billion for health. 5. Remedy foreign trade and investment agreements to be on mutually-beneficial terms. i. Suspend and review the Japan-Philippines Economic Partnership Agreement (JPEPA) and the Partnership Cooperation Agreement (PCA) with the European Union (EU). Review and remedy free market-driven government negotiating strategy. ii. Convene a multi-stakeholder review of ASEAN and ASEAN-related deals (i.e., Japan, China, Korea, Australia-New Zealand, India, EU, US and the ASEAN Trade in Goods Agreement). iii. Halt all preparatory, informal or formal talks on free trade deals (ex. EU-RP or TPAA) and WTO agreements. iv. Convene a multi-stakeholder review to identify local products that can be given increased tariff protection initially up to the simple average bound tariff already allowed under WTO rules of 25.8% (from the simple average applied tariff of only 7.1%). 6. Mobilize financial resources for development in a rational, fair and just manner. i. Repeal the regressive VAT Reform Law (RA 9377). Study alternative sources of revenue including higher taxes on corporate incomes, wealth, estates, real property, luxury goods and services, and unproductive assets and transactions. ii. Repeal the automatic appropriation for debt service by amending Section 31 of PD 1177 that provides for this, and also by amending Section 26, Chapter 4, Book VI of EO 292 (Administrative Code of 1987) that reiterates in toto Section 31 of PD 1177 The political foundations for economic progress need to be continually built. In general this means that Filipinos as a whole embrace and are committed to nationalist development. The only possible framework for such a collective national effort is real democracy and sovereignty in the country. The political, electoral, legal and constitutional reforms necessary for comprehensively upholding the rights of Filipinos are expansive and beyond the current paper. There are however two matters of urgency which, if addressed, can lay the basis for even wider reforms. The first pertains to removing the most glaring anti-democratic tendency in the country: political repression. The efforts of organized groups with well-defined alternative agendas are important. More than any other political force in the country, peoples organizations do the groundwork of ensuring that grassroots constituencies discuss, debate, develop and embrace pro-people and pro-Filipino programs.
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Yet they are attacked with impunity by state forces either to decimate them or otherwise keep them at the fringes of political power. Pro-democracy organizations, institutions and party-list groups must be protected. The second pertains to the lack of sovereignty of the people to freely define, assert and pursue their just aspirations. Domestically this manifests in how tens of millions of Filipinos are denied their basic rights as to work, to adequate standard of living, to health and to education through flawed economic policies and in oppressive work conditions. Nationally this manifests in the unequal economic, political and military relations with foreign powers, especially but not only the US which intervenes the most. Measures to immediately arrest this situation are vital and can include the following. 1. Investigate and prosecute former president Gloria Macapagal-Arroyo for: implementation, as commander-in-chief, of the Oplan Bantay Laya (OBL) and other military campaigns that resulted in extrajudicial killings, enforced disappearances and other serious human rights violations; and electoral fraud and the various corruption scandals during her administration involving herself, her family and allies. 2. Investigate and prosecute military and police officials for their direct or indirect involvement in extrajudicial killings, enforced disappearances and other serious human rights violations under the OBL and other military campaigns. Transmit the 1998 Rome Treaty of the International Criminal Court (ICC) to the Philippine Senate for ratification. 3. Immediately halt implementation of Oplan Bayanihan covering its combat operations and harassment/ abuse of civilians. 4. Subject economic policies and programs to judicial review whether they uphold or violate peoples economic, social and cultural rights. Also, promote the concept of rights among citizens where they become aware of their legal entitlements as well as of the legal obligations of the State towards them. 5. Suspend and review the Visiting Forces Agreement (VFA) with the US and, in the meantime, expel all US military personnel in the country and stop all on-going or planned operations, trainings, exercises, projects and other activities involving US forces. 6. Withdraw from interventionist pseudo-aid programs such as the US Millenium Challenge Corporation (MCC) and the Partnership for Growth (PfG). 7. More aggressively bring forward the peace talks between the Government of the Republic of the Philippines (GRP) and the NDFP, consistent with agreements already made with open discussions on comprehensive social and economic reforms, and between the GRP and MILF. NDFP consultants can be released in compliance with prior agreements. Further, as a confidence-building and goodwill measure, government must immediately and unconditionally free all political prisoners, and drop trumped-up charges against them and others. The steps towards more nationalist economics and democratic politics are there to take. The difficulty, rather, is that a minority of domestic and foreign elites see these as threats to their economic domination and political hegemony. The transformation will be anything but smooth and will have to rely most of all on the steady accumulation of political power from the grassroots. A strong social movement is the only viable counterfoil against entrenched interests that will oppose major and controversial structural reforms and the only viable base on which to build real social change.
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Annex
Dead NPA 43 + undetermined # 21 1 13 6 19 92 30 29 + undetermined # 259 + undetermined # 22 + undetermined # 132 + undetermined # 7+ undetermined # 127 + undetermined # 41 + undetermined # 84 + undetermined # 329 + undetermined # 158 + undetermined # 171 + undetermined # AFP/PNP/CAFGU Civilian NPA AFP/PNP/CAFGU Civilian NPA 25 24 49 Wounded Captured AFP/PNP/CAFGU 4 6 10 Civilian 25 3 13 4 38
Armed Confrontations Between the NPA and Government Forces Under the Aquino Administration, July 2010-June 2011
Date
Number of Incidents 142 158 300
2010 Jul-Dec
2011 Jan-Jun
Total
- These include seven (7) civilians branded by the AFP as NPA members: four (4) in Mobo, Masbate on September 7 and three (3) in Catanauan, Quezon on December 1. There are also three (3) civilians that the AFP claimed to have been caught in crossfire during an alleged encounter in Kananga, Leyte on November 15.
- These include two (2) civilians branded by the AFP as NPA members: a Bayan Muna member on February 25; and local resident of Agusan del Sur who was also claimed by the AFP in as a child warrior.
Clabiga, - These are civilians illegally detained by the AFP and reportedly forced to admit to being NPA members: a farmer resident of Calbiga, Samar on August; two (2) farmers in Ilocos Sur on September 12; three (3) members of Pagkakaisa't Ugnayan ng mga Manggagawa sa Laguna in Lumban, Laguna on October 5; four (4) activists in Daet, Camarines Norte on November 10, known as the "Daet 4"; five (5) local residents in Malapatan, Sarangani on December 14; and ten (10) students of Polytechnic University of the Philippines (PUP) in Bgy San Andres, San Narciso, Quezon on December 28. Fourteen of these civilians were reportedly released by the AFP when the said allegation were not substantiated, namely the Daet 4 and the 10 PUP students. 4 - These include civilians illegally detained by the AFP and reportedly forced to admit to being NPA members: two (2) farmer residents of Sitio Tambulang, Bgy Danwata, Malita, Davao del Sur on February 27; a member of Karapatan on March 1; three (3) local residents of Bgy Kiling, Alfonso Lista, Ifugao on May 24; and three (3) children from San Agustin, Surigao del Sur on June 26. There are also two (2) consultants of the NDFP for the ongoing peace talks with the Philippine government and two (2) activists. NDFP - National Democratic Front of the Philippines NPA - New People's Army
AFP - Armed Forces of the Philippines CAFGU - Citizens Armed Forces Geographical Unit PNP - Philippine National Police
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Source: Various publications monitored by IBON
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Btalk 2011 Midyear - 20100714

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Btalk 2011 Midyear - 20100714

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Failing Economy, Growing Disenchantment

Yearend Briefing July 14 - 15, 2011

IBON Foundation is an independent development institution established in 1978

2 IBON Economic and Political Briefing

14 -15 July 2011

IBON Economic and Political Briefing

14 -15 July 2011

14 -15 July 2011

July 2010 3.9% 3.7%

2011 (as of) 4.6% 5.3% (June) (June)

IBON Economic and Political Briefing

14 -15 July 2011

14 -15 July 2011

April 2010 60,561 40,080 35,413 6,297 4,667 20,481

60,718 40,438 36,044 6,758 4,394 20,280

66.6 89.1 18.8 10.9

66.2 88.4 17.8 11.6

66.9 89.1 19.4 10.9

64.1 92.6 18.8 7.4

63.6 92.0 17.8 8.0

64.2 92.8 19.4 7.2

IBON Economic and Political Briefing

14 -15 July 2011

1st Qtr 2011 GDP Growth (in %; constant 2000 prices)

19,283 1,804 14,226 3,157 97 11,950 10,686 1,264 4,179

20,252 1,841 15,244 3,093 74 12,188 10,899 1,289 4,382

969 37 1,018 (64) (23) 238 213 25 203

308 130 294 508 235 -

21,715 12,959 738

22,498 13,661 663

783 702 (75)

14 -15 July 2011

April 2010 3,099

April 2011 p 2,871

1,460 1,293 106

1,584 1,400 114

1,436 1,329 103

51.1 45.2 3.7

51.1 45.2 3.7

50.0 46.3 3.6

14 374 174 201 1,293 363 930 1,178 621 557

15 415 191 224 1,380 407 973 1,290 682 608

14 339 152 187 1,269 336 936 1,249 663 586

14 -15 July 2011

1 0 IBON Economic and Political Briefing

14 -15 July 2011

Daily Minimum Wage

Family Living Wage

14 -15 July 2011

Department of Agrarian Reform

Privately-owned Land (PAL) Operation Land Transfer (OLT)

1 2 IBON Economic and Political Briefing

Government Financial Institutions (GFI)

257,373 120,828 328,697 944,796 356,763 41,201

76,896 47,767 73,345 104,767 35,276 971

219,383 105,080 318,339 322,190 104,749 2,125

nda nda nda nda nda nda nda

14 -15 July 2011

Department of Environment and Natural Resources

Land Distribution Average Per Month

nda - no data available

IBON Economic and Political Briefing