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PHILIPPINES


 

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
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: 077 - (25/07/10)


The different faces of corruption
An opinion survey conducted in late June by Philippine pollster, Social Weather Stations, shortly before the inauguration of President Beningno Aquino on 30 June showed an approval rating of no less that 88 percent. Clearly the country has high expectations of his presidency. What surprised many was that the incoming vice-president, former Makati City mayor, Jejomar Binay scored almost as high at 77 per cent. Binay, it may be recalled was running on a separate ticket and was allied with former president, Josef Estrada.

Binay is a controversial figure in many quarters, while successfully running the premier business hub in the Philippines for many years, he and his family has in the past been accused of corruption, of rigging votes and stealing taxpayer funds. For a period, and in order to keep control of Makati within the family; his wife replaced him as the mayor after his initial two terms had expired. Other family members run a development company that has an uncanny habit of bagging many Makati construction projects. Yet none of this appeared to matter in the eyes of voters.

Respected Filipino columnist, Conrad de Quiros, writing in one of the country’s leading newspapers gave an interesting interpretation of the high marks given both Aquino and Binay. He noted that the public view of corruption had less to do with stealing money which has been a common feature of politicians across several presidencies and is certainly not confined to the Philippines; rather it had to do with public revulsion at the manner in which former President Arroyo and her clique stole not only the vote, but debased society’s democratic values and its institutions, destroyed lives (often through summary execution of journalists and those opposed to her) and, in his words “the theft of decency.” He went on to note that, aside from the Arroyo presidency, that kind of corruption was evident only during the Marcos years.

They trust, and expect, the two leaders who have fought GMA to undo her rule, bring justice to this country, and stand their world back on its feet by punishing the guilty and rewarding the innocent. They trust and expect the two leaders who have fought GMA to run after those who helped her trash everything this country holds sacred, wrench this country from its moral moorings, plunge this unfortunate country into a pit beyond the pale of the very word “corruption.”

Those are strong words but represent as good a summation of the Arroyo legacy as any. People do not expect President Aquino to be a miracle worker; they do expect him and his government to restore a semblance of order in society. Binay is trusted and respected because as mayor of Makati he stood firm against Arroyo and because – despite any allegations made against him – Makati was a modern, efficient and well-run city.

Yet Gloria Arroyo and her ilk refuse to fade into history. Rather, with the Filipino Congress due to reconvene in later July, the former president appears to be engineering a new power base there. Now the representative of the electoratal district of Pampanga she has already announced she will seek the speakership and a move to change the system of government from a presidential to a parliamentary system – which would effectively put her back in control. She has entered Congress by winning the seat formerly held by her son Mikey Arroyo. Yet Mikey remains in Congress as a representative of the party-list group Ang Galing Pinoy, which supposedly represents the marginalized group of security guards and tricycle drivers. It appears that COMELEC has issued contradictory decisions regarding who can represent such groups.

Introduced in 1995 through Republic Act, 7941, the party-list introduced a system of proportionate representation whereby voters are given two votes for their congressional representatives; the first vote is for a district representative. The second vote is for a national party-list representative in which the voter selects a party rather than an individual and on a nationwide basis. Twenty percent of all Congressional seats are reserved for party list candidates as a means of providing representation to marginalized and under-represented sections of society. However,unsurprisingly under the Arroyo watch, even this system became debased with wealthy friends of the former president nominating themselves to represent marginalized voters. And with others from this group making the decisions in COMELEC as to who is in and who is out, and with a tame High Court (all members of which were personally selected by Arroyo), even this system has been totally debased.
Prosecuting those who corrupted the entire system is not going to be easy in such an environment and while Filipinos expect the former administration to be held to account for its excesses, the danger is that the country may once again be plunged into political turmoil as a result. Philippine ombudsman, Merciditas Gutierrez, a friend of the former First Gentleman who was roundly criticized for shielding friends and relatives of the Arroyo family from investigation during the former administration, has let it be known publicly that she has no intention of standing down. Arroyo it seems has covered all bases.

And so while the focus of the incoming administration needs to be on reforming the economy, creating investment and jobs that will finally bring down the appalling rate of poverty in the country, much of the focus will be on the fancy footwork needed to thwart Arroyo’s plans of returning to “business as usual.”
The economy is expected to do relatively well this year as the worst of the recent global financial and economic crisis recedes. The Manila-based Asian Development Bank has raised its growth forecast for the Philippines this year to 5 percent from an earlier 3.8 percent. While raising the 2010 outlook it has kept the 2011 forecast steady at 4.6 percent. For the entire Developing Asia, ADB now forecasts an 7.9 percent rise this year (earlier 7.5 percent) and for Emerging East Asia 8.1 percent (7.7 percent).

While at face value this appears to be a pleasing result, the macroeconomic number hides some serious problems that need to be addressed as a matter of urgency. First among these is the budget deficit which since its low of PhP12 billion in 2007 has been creeping up again. The deficit rose to PhP68 billion in 2008 and to PhP299 billion in 2009 due in part to the stimulus package introduced by the government at the time of the financial and economic crisis (and to counter the impact of two strong typhoons, Ondoy and Pepeng, that wreaked havoc in Luzon in September/October of that year). But the real worry is that for the first half of this present year, largely as a result of overspending ahead of the election, the deficit has climbed to PhP196.7 billion. This is 35.5 percent higher than the target of PhP145.2 billion for the period. As a result the target deficit for the year as a whole has been increased to PhP340 billion. This represents around four percent of GDP. It has been revealed that ahead of the May elections, the Arroyo administration realigned a French government loan of 150 million euros or roughly PhP8.9 billion intended for climate change mitigation to plug the budget deficit.

Incoming Finance Secretary, Cesar Purisima, has vowed to halve the budget deficit by 2013. This will be done by targeting tax evaders rather than increasing the burden on existing tax payers.

To this effort might be added that of enticing greater direct foreign investment into the country. In recent years, FDI into the Philippines has been among the lowest in Asia, especially when considered on a per capita basis. According to the Central Bank, net equity infusion in the first four months of 2010 amounted to a paltry $57 million which was 91 percent lower year-on-year than in 2009. Admittedly the 2009 base year was high because of a foreign acquisition.

Foreign investment is desperately needed to create new jobs. While unemployment dipped slightly last year on the strength of government stimulus spending, as that runs its course, unemployment is again creeping upward. The employment data shows that much of the job creation in recent years has been in intermittent or part-time employment rather than full-time wage earning opportunities. Even the business process outsourcing sector claims that the talent pool has been all but exhausted. Underemployment of course remains at around the 20 percent mark and there has been a continued drift to the informal sector as jobs in manufacturing have dried up. Informal employment – much of it self-employment – now accounts for more than 70 percent of the workforce; after all the very poor cannot afford to be without some form of work. The middle class – that sector that can afford it – sends family members overseas. For the very poor the option is street vending or household service – or a drift into illicit occupations such as the sex trade.

The picture is not a pleasant one. The saving feature is that the Philippines now has an administration that cares.

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