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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: 106 - (26/05/13)


Summary: The mid-term election that took place on May 13 saw the return of pro-administration candidates in many areas of the country and in sufficient number to give President Aquino a majority in both houses of the Philippine Congress. This can only be a benefit to the reform agenda he has promised. Attempts by the Catholic Church to make this election about ‘pro-life’ were stillborn. Most voters ignored the admonitions of the clergy.

Filipinos went to the polls on 13 May in a mid-term election that was seen widely as a judgement of the Aquino Administration’s first three years. President Aquino’s position was not in contest – the next presidential poll comes in 2016; rather, it was an opportunity for the government to seek the endorsement of the people for its reform program.

For the most part, Aquino got what he wanted. The pro-Administration candidates won nine of the twelve senatorial seats contested (a half Senate election is held every three years) and in the new Congress will control both the House and the Senate. Most provincial governments are also under the control of pro-Administration officials. A day after the election, the main index of the Philippine Stock Exchange breached a new high on the expectations of the business community that the pleasing result will mean an acceleration of the economic and political reforms introduced over the past three years.

Interestingly, the pro-administration candidates outpolled the opposition in all ten of the poorest provinces of the Philippines. Most voters appear to have turned a deaf ear to the admonitions of the Catholic Church to only support ‘pro-life’ candidates, which has to be good news for the eventual success of the Reproductive Health Bill.

In results that surprised many, veteran (and traditional) politician, Dick Gordon – standing on the opposition United National Alliance lost out to Gringo Honasan for the 12th Senate place. Also missing out was Jack Enrile, son of veteran senator Juan Ponce Enrile who rose to fame during the Marcos years. On top of the leader board was Grace Poe standing with the Administration’s Team PNoy. This was unexpected. Grace is the daughter of the late Fernando Poe Jr who was cheated out of the presidency in the rigged election of 2004, which gave the unfortunate Philippines six more years of Gloria Macapagal Arroyo.

Before we celebrate too much at this ‘mostly peaceful’ exercise in the democratic process, it is worth a couple of other observations ahead of consideration of the implications of the election. Firstly, this was touted as the first truly ‘automated’ election to be held in the Philippines and the promise was that the final tally would be known within 24 hours. That did not happen. Many of the automated poll machines broke down – some by accident, some by design – such that here we are a week later and the vote has still not been fully counted and the final results declared. Even worse, it has been uncovered that the company that supplied the machines and managed the poll did not have licensed software!

Secondly, electoral manipulation in terms of vote buying and outright ballot rigging appears to be alive and well. Indeed a few newspaper columnists and other observers claim that the situation this year was worse than in the 2010 election. Overall, voter turnout was better than expected, especially since it was a mid-term poll. According to COMELEC, the body that manages the electoral roll and supervises the election process, 75.72 per cent of registered voters turned out to vote. The last time mid-term elections were held was in 2007 and the voter turnout then was 73.1 per cent. On the flipside of that particular coin comes the observation that the high voter turnout was aided by the fact than in a surprising number of electoral districts, voter turnout was precisely 100 per cent! This situation was encountered mostly in Muslim Mindanao, which has the reputation as being the ‘poll cheating capital of the country’. One observer shrugged off the result with the comment “You know, barangay officials there accomplish the ballots themselves. It has always been that way in the ARMM.” Poll automation has done nothing to change the situation.

Thirdly, political dynasties are alive and well – and indeed appear to be getting even stronger. In the Senate race, eight of the twelve senators proclaimed come from prominent political families who appear to be passing on their power to the next generation. The desire of these families to protect their political and economic clout, against challenges from others, accounts both for most of the election violence against contending candidates ahead of the election, and for the vote-buying that took place on the day.

According to international observers who monitored the poll, widespread vote fraud was evident in – Pampanga, Cagayan Valley, Camarines Sur, Masbate, Cebu and in the Autonomous Region of Muslim Mindanao.

So what now for the Philippines?
In recent months, President Aquino has come under fire for his cautious approach to the reform agenda and for not doing enough to ensure that the benefits of growth permeate to all levels of society. Over the first three years of his term Aquino has been working on a number of structural challenges on the economic front including greater efficiency in public spending, seeking to reduce the leakage from corruption and malversion, closing tax loopholes that have allowed the highest income earners in the country – personal and corporate – to pay virtually no tax, and instilling confidence in the governance of the country – particularly at the national level.

Despite pleasing economic numbers over the past two years and an upgrade of the sovereign rating to ‘investment grade’ by two global ratings agencies, the Philippines has been experiencing ‘jobless growth’ and for a country with one of the world’s highest birth rates, that is a major problem. Traditionally, the Philippines has solved its high unemployment rate by exporting labour to the rest of the world and relying on remittance income from these workers to stimulate domestic consumption. But with the global economy still faltering in many places, economists are coming to the realisation that eventually, the Philippines must create more jobs at home.

Here is another dilemma. In recent years the manufacturing base of the economy has been in steady decline as evidenced by the fall in exports – particularly electronic goods – as a percentage of GDP. Instead, the Philippines has relied on the service sector, and particularly business process outsourcing to generate employment. It has had some success but these jobs only benefit those who can afford to be educated. The real challenge is to create more jobs for the unskilled workers of which there are millions. Officially, the unemployment rate stands at around 7.1 per cent of the labour force of 41 million. But the story is not complete unless you factor in the underemployment rate – those in the workforce and working, but who are seeking more hours of work. Another 20 per cent of workers come into this category. Statistically, a person only has to be employed for one hour per week to be considered employed and this includes unpaid work. Self-employed (mostly hawkers) and ‘unpaid family workers’ make up 36 per cent of the labour force. And if you have given up looking for a job because none are available – then you are deemed to be out of the labour force statistically speaking.

The greatest challenge in job creation can be found in the agriculture and fisheries sector, which employs almost five million workers, but at rates of pay averaging only Php200 per day (around GBP3.2). Much of agriculture is subsistence still, as is the case with fisheries. Of the 1.6 million licensed fisheries operators in the Philippines, more than 1.3 million are engaged in ‘municipal fishing’ – inland or coastal waters within 15 kilometres of the coast. Most of these use small open ‘dinghy type’ boats, or no boat at all. Only 16,000 are involved in commercial fisheries operations.

For an archipelagic country comprising more than 7,000 islands and with territorial waters exceeding 2.2 million square kilometres this is an abysmal situation and shows the level of neglect that the Philippines has in the past paid to its maritime resources. With competition heating up to exploit the marine reserves of the region – witness ongoing spats with China over fishing and the most recent one with Taiwan (reported in our current Taiwan report) – it may well be a case of ‘use it or lose it’. Fisheries at the present time account for only around two per cent of gross domestic product and is an area demanding better management and investment.

Over the past three years, after aeons of neglect, wilful or otherwise, the Philippines has made some headway in putting its house together, but much remains to be done. Rebuilding the fisheries sector could be one place to start. With the next State of the Nation address scheduled for July we should not have long to wait before the blueprint is revealed.
 

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