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  2003 2002 2001 Ranking(2003)
Millions of US $ 80,574 77,076 71,400 43
GNI per capita
 US $ 1,080 1,020 1,050 135
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 022 - (31/10/05)

The Philippines economy continues to trundle along - thanks largely to the strong inward remittance factor that is propping up consumption expenditure. The government is seeking to take credit for the good performance (well, relatively good performance anyway given the global slowdown) but the truth of the matter is that the economy performs in spite of the government and not because of it.
This is not to say that the administration of President Gloria Macapagal-Arroyo has not done good things for the economy. It has. But it could be doing so much better. Witness the economic reform programme; finally (in November 2005) it appears that the Expanded Value Added Tax Law (EVAT) will come into effect - four months after it was supposed to have been introduced - but many other reform measures have been either stalled or watered down in deference to vested interests.
The fundamental problem and the one that will not go away is the issue of legitimacy. Did Ms. Arroyo fairly win the 2004 election or is she in power only because of a massive thwarting of the electoral will by corrupt election officials. The fact that she refuses to allow the facts to come out into the public arena is taken as a tacit admission of guilt by most people. That many of those accused of wrong-doing have already fled abroad to avoid answering tough questions has not helped. Her popularity rating is now at an all-time low -not only in relation to the period of her own presidency - but she now scores the lowest approval rating of any president since Mr. Marcos. To find out why, read on.

Tipping points
"Emergency rule," "martial law," "illegal demonstrations, "crackdown," "calibrated pre-emptive response." 
These are the current buzz words being bandied around in chat rooms and in the Filipino press. Various pressure and advocacy groups are piling the pressure on and at the bottom of the pile, underneath all the pressure being generated by the political class, as always, are the poor. 
However businesses are also suffering from the current climate of "psywar" - and in the end that is just what it is. It is not to be expected that GMA will declare martial law or even emergency rule any time soon but even the threat of such action comes with a price. One of the questions must be "when will this price be too great to pay?" The talk by government officials of nationalizing transport, power, oil and other sectors of society will hardly result in a more positive business and investment climate.
Now, even pro-administration lawmakers have joined the opposition bandwagon, warning President Gloria Macapagal-Arroyo that she risks losing not only the support of her political and military allies, but that of the whole political landscape if she continues down her present path.
The "left" does not have the numbers to mount a credible direct threat but it grows in strength aided by the combative phrases that are being thrown around by the administration. Filipinos may well have short memories but how many of them want to live under martial law again? Even the spectre of it worries many. 
Members of the NPA have sworn off urban action to focus on their rural communities (after all, they are following a Maoist agenda) but again this kind of climate is perfect for them to recruit headstrong students in the cities, special when these students are being water cannoned. 
Business as well as church leaders are currently divided, with some of the best brains of the country being offered what one commentator called "sinecure posts" on the Constitutional Consultative Commission debating the issues surrounding charter change (See September 2005 and more on this topic below). Yes, the Philippines needs constitutional change (or at least constitutional amendment) but this is neither the right time nor climate to get the best result and the Review Commission is not representative of the political class as a whole. Then of course on the fringe we have the small, but growing Grand Coalition or Bukluran para sa Katotohanan (Coalition for the Truth) seeking to ensure the issues surrounding the legitimacy of the presidency are not swept under the carpet. In a country where politics is based more on the powerful individual than on ideology, the idea of a grand coalition may at first glance look like a good one, but with so many of the members pulling in different directions, will they ever achieve their objective? They are not likely to do so directly, but they can certainly cause a lot of discomfort with their righteous indignation that appears to be provoking the administration into ever more extreme courses of action. A dangerous game of brinkmanship is being played by both sides.
The business community wants stability above all else and is unlikely to take the lead unless it sees its own interests directly threatened (as was the case in the removal of Estrada from power). However, with the present political mindsets showing a polarisation of attitudes on both sides, those who have not so far taken sides are unlikely to get the stability they desire. The middle ground is fast eroding. Attitudes are hardening on both sides and the present policy of" calibrated pre-emptive response" is having the opposite effect of what was intended. 
Remember, this was the president who way back in December 2002 declared she would not run again (in 2004) because she would always be a divisive president. So it has proved to be. It seems she no longer cares, just as long as she remains the president.
No wonder then that the middle-class - that group that provided the tipping point for the ouster of President Estrada - has so far stayed on the sidelines. They do not see any alternative political leader around which to rally. While Vice-President Noli de Castro, being another media personality, enjoys wide support among the masa of the country, he has failed to inspire either the business community or the middle class. Wisely, he has stayed on the sidelines, knowing full well that were an election to be held, he would have more than a passing chance of obtaining the presidency on the strength of the masa vote. Nobody knows what his agenda would be. He is holding his cards very close to his chest.
The role of a "Loyal Opposition" is an important one in a functioning democratic system however much those dissenting are a thorn in the flesh. But the missing ingredient is that of an alternative policy framework. An opposition must have an alternative platform for it to prosper. The sad thing for the Philippines is that neither the government nor the opposition has any kind of platform other than one based on expediency. The Grand Coalition makes that fact self-evident. 
· The Grand Coalition wants the president impeached for "stealing" the election.
· The Speaker of the Lower House (a failed presidential aspirant) wants to change the constitution so he can gain the trappings of presidential power for himself and for his political machine (Lakas Party) as Prime Minister under a unicameral, federal parliamentary system of government.
· The President wants to hold onto the presidency at all costs and is indulging the Lakas Party while stonewalling the opposition.
The Senate is acting as the true opposition at the moment but of course the president has tried as best she can to stifle their voices of dissent also. In so doing, she has found herself being accused of acting like an absolute monarch. Can we really expect the Senate to join with the House of Representatives to act on the important issue of Constitutional change? The House version of a new charter would see a unicameral assembly that in the first instance dilutes the senate voice by absorbing those with a remaining term into the membership of the much larger assembly. After expiration of that remaining term the senators become as extinct as the dodo. It would be much better to follow the American, Canadian and Australian models and have an upper house voted in by region. After all is that not what federalism is all about - a balance between local, regional and national interests?
We may yet get constitutional change foisted upon us but it will certainly not be by acclamation. Rather it will be another sleight-of-hand job. As of now, it would be more likely for the people to proclaim Gloria as their queen than obtain a genuine consensus on charter change! Meddling with the charter at this time is one sure road to constitutional crisis. More on this below.
The worry is that the president and the house speaker will strike a deal whereby instead of going to the people to sanction any proposals for constitutional change (as indeed required by the constitution), they will "in the interests of saving time and money" simply use the device of getting the mandate from local government units, most of which have been bought off anyway. If they do so, this may prove to be the elusive tipping point.
The church (or rather the Roman Catholic Church which functions much like a state religion in the Philippines) has so far been staunchly pro-Gloria but there are signs that the church is now starting to hedge its bets and is backing away from giving her total support. Subjecting bishops to water cannons during a prayer rally (at least that is how they described it, although to be totally honest, it was to all intents and purpose a political protest march) neither wins hearts nor minds and only sows the seed of doubt in those who have so far supported the cause. Then of course we now have a new Pope who appears to want his bishops to withdraw from active involvement in politics. After all even Rome these days keeps one eye on Beijing.
Already the military has started to show cracks within its upper echelons with General Gudani testifying to the Senate against the orders of the Commander in Chief on his knowledge of election irregularities. Of course we all know who that is and why she would prefer him not to have testified! But Gudani, a principled and respected marine officer, is not, and was not, alone. The revolving door at the top of the military structure may have been a means of keeping senior military commanders loyal to Malacañang but it also suggests that the most senior generals do not have the full respect or loyalty of the younger officers who see their commanders jockeying for power and influence rather than focusing on military affairs as they are supposed to do. 
Indeed, it is the military that is tasked with the job of defending the Constitution under the 1987 Constitution itself. So would the military sit idly by while the government of the day rides rough shod over its provisions? We simply don't know. We must note it was of course the military that finally brought down President Estrada. The military are to be seen as Gloria's biggest threat. Maybe that partially explains the "bunker mentality" that is currently operating, but this "bunker mentality" is not serving the country. Now we are seeing reports of gun-running into Luzon (not Mindanao as might be expected) and hints that the president is marshalling her own "private army" to defend Malacañang and the presidency. Again, this suggests that Malacañang feels it needs to hedge its bets in order to survive.
So another question being ask is that of who is serving the country and putting the country first? Neither Grand Coalitions, people's movements, loosely-used words, terrorist threats, nor even the Church are currently a threat to the president and ultimately it will be the military that will decide the president's fate one way or another. Former President Ramos, House Speaker, the Hon. Jose "Joe" de Venecia, and others may be looking to give the president a dignified exit strategy via Constitutional change but many have doubts that the president will accept it. It has become a hallmark of this government that it will say one thing at one point and do the opposite at another so long as it meets the exigencies of the moment. In all the twists and turns, it has become trapped in its own maze.
The final question must be under what conditions would the military reach the tipping point? For if they do there will be no escape and Ms. Arroyo's biggest fear of sharing the same fate as Mr. Estrada may be realised. President Arroyo may have given a lead when she said back in June at a forum of senior business leaders that her loyalties were in order to God, country and then family. If the Catholic Bishop's Conference deserts the president, will the military command choose God over country?
The Philippines desperately needs stability and suffers from too much politicking. Most people in the country would not be against "tough" government; indeed they would welcome it. But it has to be the kind of toughness that is rooted in principled governance and not opportunism. What we are seeing at the present moment is a display of naked power by a president concerned with "survival at all costs" but with a total lack of statecraft.

Issue of Charter change moved to the top of the agenda
In her State of the Nation Address back in July, President Gloria Macapagal-Arroyo brought charter change off from the back-burner:

"Over the years, our political system has degenerated to the extent that it is difficult for anyone to make any headway yet to keep his hands clean. To be sure, the system is still capable of achieving great reforms but by and large, our political system has betrayed its promise to each new generation of Filipinos…

…The system clearly needs fundamental change, and the sooner the better. It's time to start the great debate on Charter change."

Well, the debate has begun. Executive Order 453 issued last month by Malacañang Palace called for the establishment of a Consultative Commission, composed of "not more than 50 persons" to look into a number of proposals for charter change. Among them (and quoting from the Order):
· A shift from the Presidential-unitary system to a parliamentary-federal system of government;
· The refocusing of economic policies in the present Constitution to match the country's vision for global competitiveness; and
· A review of the economic policies which tend to hinder that vision and adversely affect the people's welfare.

Members of the consultative body are charged to hold nationwide consultations with various sectors of society as part of the process and to report (together it seems with a draft of proposed revisions to the 1987 constitution) before the end of the year. December 15 - less than 3 months after the first meeting, has been set as the date for delivering a report to the president.
The 49 persons that have been appointed to the Consultative Commission face a daunting task. Given the time scale, considered debate appears to be a luxury that the members can ill afford and there is a real fear among certain sections of he community that the outcome has already been predetermined by the very way in which the mandate was framed. You see, considered debate was never part of the agenda. This is a group that was hand-picked to come up with the outcome that the majority in the Lower House wanted. To say that the debate has been railroaded is a massive understatement.
At its first session on Wednesday 28th September and in what seems to have been a prior "done deal," avowed federalist the Honourable Jose Abueva was elected as chairman of the Commission. It was hardly a bipartisan appointment. A reading of the transcript of the session gives the impression that the whole election was manipulated with nominations being declared closed immediately after the single nomination was made. The whole election process took barely 10 minutes. Vice chair, Brother Roland Dizon has already resigned his position - ostensibly for reasons of health but it appears that he was under pressure from the La Salle university community (from which he came) to resign before the university became embroiled in controversy.
Many of those elected to the Commission are hardly of the mould who will accept a "rubber stamp" view of the work being undertaken although the Commission membership does appear heavily stacked in favour of those who favour the parliamentary-federal system. That alone, means that its work will likely come under attack once it completes its task. Speaking in October to members of the Manila Overseas Press Club, House Speaker Mr. de Venecia appeared to suggest that the outcome - within a narrow range of options - had already been agreed upon. Not surprisingly, he spoke in favour of a unicameral legislature and echoed the theme of the president quoted above that it is not the politicians themselves that should be blamed for the climate of corruption but rather the system that they work under. An interesting argument indeed and also a revealing one. Perhaps even more revealing was Mr. de Venecia's statement in response to a direct question that whatever option was finally chosen, the pork barrel would remain. As he said (to paraphrase his words) the pork barrel is an essential part of service delivery at the local level and many countries have a system of pork barrels. 
Yes, that is true. But it comes at a serious cost in terms of misallocation of national resources as Mr. Koizumi is now finding as he tries to unravel the mother of all pork barrels, the Japanese postal savings system.

Government by expediency
Despite what may be said by the Speaker of the Lower House of Congress (and wannabe prime minister under a transformed constitution that would shift government from a presidential to a parliamentary system), the key issues confronting the Philippines are not those surrounding charter change but rather matters of governance. One interpretation is that Charter change is being foisted on the people of the Philippines as a means of achieving a graceful exit for President Arroyo while at the same time ensuring that her own supporters control power so that she does not suffer the same fate as former President (Erap) Estrada. The Speaker, Mr. de Venecia, believes that the president is willing to step down no later than 2007 - or at most remain in office beyond that time as no more than a figurehead president while real power is passed to parliament (and to Mr. de Venecia). We are not so sure the president and the speaker of the house are of one mind on this. He claims he has the agreement of the president. We would only point out that we have doubts as to whether the president is of a fixed view on this and believe that she may well change her mind. Power, after all, is an aphrodisiac. As we noted above, the president may well have her own plan for the end-game.
Meanwhile, while the debate plays itself out, all the signs are that the president has adopted a bunker mentality and is going to be extremely difficult to dislodge. Right now, government is in survival mode and the reform agenda has been abandoned in all but name. Political accommodation in exchange for support is the new game. Good and competent people are being eased (or in some cases, pushed) out of government and replaced by others who are prepared to toe the line.
As has been pointed out many times, the depth of political appointments in the civil service extend in the Philippines down to the Director 3 level - far more appointments are at the whim of the president than in any other country of Southeast Asia. The positions of some 12,000 public officials are at the discretion of the president and beyond the purview of the Civil Service Commission. Whereas, former presidents exercised this power of appointment sparingly, the incumbent president has used this power of appointment to maximum effect; in many cases as a means of extracting loyalty from provincial and local government officials. Highly competent career officials (who cannot simply be dismissed under the Civil Service Code) have been moved around for "exigencies of the service". This is no more than a euphemism for people who fail to bend or break the rules of good government as laid down in the regulations, when it suits palace officials to do so.
We are seeing more and more talk of "emergency rule" and pre-emptive responses with Malacañang Palace taking a tough line on demonstrations - using water cannons and beatings to disperse lawful demonstrators. Recently the Makati police chief was removed from office because Makati Mayor Binay (a leader among the opposition forces) had allowed demonstrations to take place in Makati City, Manila's premier business district, and the local police chief had failed to break up what was to all intents and purposes a legal demonstration (inconvenient perhaps, but legal). In parallel to this development has come a gag on public officials speaking out, even when called to do so by a congressional inquiry. Many believe that this amounts to suppression of information and the constitutional rights of citizens. Say "goodbye" to the system of checks and balances.
One of the major problems of the Philippines has been that there has been too much democracy - resulting in a national paralysis of "all talk and no action." But acting tough - especially in a democracy - has to be no more than a means to an end; and an end-game that strengthens the country as a whole rather than the ruling elite. Unfortunately in the present case we see signs of the reverse happening. Rather than taking a tough stance in order to clean up the system and improve both transparency as well as governance, toughness is being used to preserve the opaque and local vested interests.
In such circumstances, the country can still progress but it will under-perform. Neither the Philippines nor the presidency are likely to achieve the greatness they desire.

A fresh crisis in the making
We do not buy the line that the problems of the Philippines are systemic and that a change from a presidential to a parliamentary system of government will cure the ills of this country and open the path to a glorious future. That is what proponents of the unicameral parliamentary and federal system would have us believe.
In late October, and after a heated debate, the committee of the consultative commission looking at the future form of government voted overwhelmingly - by a margin of 32 to 7 - in favour of a unicameral and federal parliamentary system for the Philippines. The margin was not surprising and the cynics may well wonder why the vote was not unanimous given the biased manner in which this body was set up. After all, the instructions "from above" appear to have been for the commission to come up with recommendations for just that.
The matter has still to be debated - along with all the other recommendations - within plenary but it is clear that this recommendation is more than likely to be included in the final report of the commission, which is due to be submitted to the president in mid-December and who may then refer it to Congress.
Now, as we remarked earlier, we are not saying that revision to the constitution is not warranted. Clearly the present document has been found wanting in several areas and some fine tuning may be appropriate. Indeed, the commission itself has made the point that it is not throwing out the 1987 constitution; merely it is refining it. 
Well, turning government on its head hardly sounds like a refinement to us. Indeed, despite protestations to the contrary, abandoning one form of government for a different form changes the nature of the entire Republic of the Philippines and may well alter the course of the nation's history. The worst case scenario is that the entire country will fracture as an entity. How this can be pitched as a refinement boggles the mind.
We cannot understand either why it is that a "federal, unicameral parliamentary system" appear to be being bundled together as a "take it or leave it" package. The three issues involved are entirely different.

A bad year for governance
This has been a bad year for governance in this country and the entire debate over constitutional change has the characteristics of a smoke screen to take the heat and the focus off the ineptitude and downright deceit that appears to be the hallmark of the current administration. As this was being written the press has reported a fresh wave of killings in Central Luzon with labour leaders being gunned down with impunity. At the same time two more senior officials have fled the country. Former Agriculture Secretary, Luis "Cito" Lorenzo Jr., and under-secretary Jocelyn "Joc-Joc" Bolante boarded flights just hours before they were scheduled to appear before a Senate Inquiry into the alleged mismanagement of a multi-million-peso fertilizer fund during the 2004 election (in which funds intended for distribution to poor rural communities to buy fertilizer were distributed to Metro Manila cities such as Pasay that does not have a single farm within its boundaries). Sadly, such events now pass for the norm.
Transparency International has now placed the Philippines in the same league as Afghanistan, Bolivia, Ecuador, Guatemala, Guyana, Libya, Nepal and Uganda in perceptions of the level of corruption. It is not hard to understand why that is.
So, back to constitutional questions. Already as a result of corruption and poor governance, foreign investment into the Philippines is at an all time low. Globally, investors are wary as they have been ever since the Asian financial meltdown. Many are putting their surplus cash into US Treasury bonds, which is one reason why the US dollar has held up as well as it has. Aside from a few countries such as China, investment flows globally have all but dried up. The Philippines needs desperately to turn on the tap. Changing from a central to a federal system of government - and the need for a transitory regime - hardly seems a good way to convince investors to come in. (In fairness, we should also note that the consultative commission's committee on the national economy voted to eliminate the foreign nationality restrictions and requirements of the constitution on all public utilities, education, media, land and natural resources. If this recommendation is adopted, it will be a step in the right direction.)
Instead of abolishing the Senate, why not transform it by giving it regional electorates - say two representatives from each of the 17 regions of the Philippines? Instead of placing all power in an unelected prime minister, who - if Malaysia and Singapore are any models to follow - would regard it as a lifetime sinecure, why not distribute powers between the President and a Prime Minister (and give each a maximum term). 
To ensure better governance, why not professionalise the civil service? A good start would be to abolish the ability of the President to make more than 10,000 appointments of people who serve at presidential pleasure . Another measure would be to make Cabinet secretaries truly responsible for the management of the departments they run. At present, the presidential appointees within their ranks can be very effective saboteurs of any reform efforts from the top.
Of course, a smaller central government and devolution of power to the provincial level can be achieved under the present system. It does not require a fracturing of the country, which could be the result under a federal system.
There is a widespread belief within the community that behind the current debate is a series of hidden agendas. It is already clear that members of the lower house of Congress would be the greatest beneficiaries of a unicameral system. It is equally clear that any outcome from the consultative commission that is acceptable to the House would be unacceptable to the Senate and vice-versa. The likely scenario to emerge in the early part of 2006 is that the president will refer the recommendations to Congress where the Lower House will convene to vote on the amendments, inviting the Senators to a joint session in which it will have the overwhelming numbers. On the other hand, the Senate will take the view that each chamber will have to meet separately and each approve the proposed constitutional amendments. The result will be that the matter will be put to the Supreme Court for resolution. The legislature will be in a state of gridlock. The country as a whole, will suffer further.
The winner of course, from any stalemate will be President Arroyo. A failure of the constitutional review process will mean a reversion to the status quo. And there you probably have the end-game from the presidential standpoint.

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