Philippines 2010

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Philippines 2010:
Distorted Development
On the national economic situation
IBON Foundation
September 19, 2010
Rapid economic growth…
Philippines Real GDP Growth by Administration, 1986-2009
8.0
7.0
6.0
Aquino:
ave. 3.9%
Arroyo:
ave. 4.5%
Ramos:
ave. 3.8%
Estrada:
ave. 2.4%
5.0
%
4.0
3.0
2.0
1.0
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
0.0
(1.0)
Year
… rising unemployment…
Highest
sustained
unemployment,
11.2%
(ave. 2001-09)
Unemployment Rate, 1956-2009 (% )
14.0
12.0
10.0
%
8.0
6.0
Rising during
period of
“globalization”
4.0
2.0
Year
07
20
04
20
01
20
98
19
95
19
92
19
89
19
86
19
83
19
80
19
77
19
74
19
71
19
68
19
65
19
62
19
59
19
19
56
0.0
… during “globalization”…
Unemployment Rate, 1956-2009 (% )
14.0
12.0
10.0
8.0
%
1980s Tariff Reform Programs: TRP I, II at III
6.0
1990-2004 Lower tariffs/removal of import restrictions
•In agriculture, lowered by 85% down to 9% average
•In industry, lowered by 92% down to 3% average
4.0
07
04
01
98
95
92
89
86
83
80
20
20
20
19
19
19
19
19
19
1994 World Trade Organization (WTO), ASEAN Free
Trade Area
(AFTA), 2008 JPEPA, 2010 ATIGA
Year
19
74
19
71
19
68
19
65
19
62
19
59
19
19
56
0.0
19
2.0
77
1991 Foreign Investments Act, 1993 Build-OperateTransfer (BOT), 1993 Removal of forex controls, 1995
National Water Crisis Act, 1998 Oil Industry Deregulation,
2001 EPIRA; 1992 Liberalization of water transport,
1993 telecommunications, 1994 banking and shipping,
1995 airlines, 2000 retail trade
… record joblessness…
 Real unemployment rate*
 4.3 M unemployed (2009)
 28.1 M in poor quality work, of
35.1 M “employed” in 2009:
 4.2 M “unpaid family workers”
 12.2 M “own account workers”
 11.7 M “wage and salary workers”
without written contracts (IBON
estimate on NSO data)
* adjusting for govt’s change in methodology in April 2005; 2009 labor force ~ 39.4 million (IBON
estimates on NSO data)
… record forced
migration
 2008: 8.2 M Pilipino
forced abroad for work
(stock of “permanent” &
“temporary” workers)
 2009: 3,900 leaving daily
Overseas Remittances,
1980-2009 (US$ million, % of GDP)
20,000
18,000
2004-2009:
Flattening
share of GDP?
OFW remittances (US$ million)
As percentage of GDP (% )
16,000
10
1990-2004:
Rapidly growing
share of GDP
14,000
8
12,000
10,000
6
1980-90:
Slowly rising
share of GDP
8,000
6,000
4
4,000
2
2,000
0
0
1980
1982
1984
1986
1988
1990
1992
1994
Year
1996
1998
2000
2002
2004
2006
2008
% of GDP
US$ million, current
12
28 M poor?
(NSCB, 2006)
Official poverty line
(2006) = P41 =
=
1 kilo rice,
1 egg
33%
Official poverty
incidence
66 M poor!
(94 M population, 2010)
Alternative poverty
line (2006) = P86 =
=
67% Self-
rated poverty
(April 2010)
70%
Poverty
incidence
Deep poverty among poorest
Severe inequality
Net income of Top 1,000
corporations:
2001: P116 billion
2002:
2003:
2004:
2005:
2006:
2007:
P173
P176
P371
P497
P599
P686
B
B
B
B
B
B
2008: P416 billion
Ave. 2002-08: P417 billion
US$15.6
billion
Net worth of 20
richest Filipinos
(2006)
Combined income in a year of poorest
10,400,000 families
(52,000,000+ Filipinos)
Gross Domestic Product, by Industry
1946-2009p (% of GDP, current prices)
60
50
Agriculture, fishery & forestry
Industry
Manufacturing
Services
40
%
Manufacturing
30
as small as in
1950s
21.8%
20
18.1%
Agriculture
10
smallest
in
history
2009p
19
46
19
49
19
52
19
55
19
58
19
61
19
64
19
67
19
70
19
73
19
76
19
79
19
82
19
85
19
88
19
91
19
94
19
97
20
00
20
03
20
06
20
09
0
Year
1st semester 2010 trends
 7.9% GDP growth (NSCB)
 Listed companies doubled 1st quarter
profits (PSE)
 1Q-09 : P64.1 billion
 1Q-10 : P137.1 billion
 Apr 2010 (NSO)
 4.7 million unemployed Filipinos
 11.6% unemployment
Political economy of
underdevelopment
 Political repression & human
rights violations
 1,205 extrajudicial killings, 206 enforced
disappearances, 371 political prisoners
 Militarist approach to armed conflict
 2001 National Internal Security Plan (NISP),
National Military Strategy (NMS), Oplan Bantay
Laya 1 & 2
 Erratic peace talks with CPP-NPA-NDFP & MILF
 US military aid (2001-11): US$427 million up to
est. US$1.3 billion; helicopters, aircraft, ships,
boats, trucks, rifles, helmets, vests…
Declining unionism…
Union Membership, 1978-2007
4,500,000
4,000,000
Number
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
1978
1981
1984
1987
1990
1993
Year
1996
1999
2002
2005
2008
Ja
n86
Ja Ju
n- l
87
Ja Ju
n- l
88
Ja Ju
n- l
89
Ja Ju
n- l
90
Ja Ju
n- l
91
Ja Ju
n- l
92
Ja Ju
n- l
93
Ja Ju
n- l
94
Ja Ju
n- l
95
Ja Ju
n- l
96
Ja Ju
n- l
97
Ja Ju
n- l
98
Ja Ju
n- l
99
Ja Ju
n- l
00
Ja Ju
n- l
01
Ja Ju
n- l
02
Ja Ju
n- l
03
Ja Ju
n- l
04
Ja Ju
n- l
05
Ja Ju
n- l
06
Ja Ju
n- l
07
Ja Ju
n- l
08
Ja Ju
n- l
09
Ja Ju
n- l
10
Pesos
… flattening wages
NCR Daily Non-Agricultural Minimum Wage,
1987-2010p (Pesos, 2000=100)
450
400
100
50
Nominal w age
350
Real w age (inflation-adjusted)
300
Aquino:
rose P82
250
120.92
238.10
203.10
200
201.02
150
Ramos:
P16
Month
242.35
216.63
237.42
216.16
Estrada:
P22
Arroyo:
P5
0
… declining land ownership…
 By farm area:
63% (1971)  51% (2002)
 By number of farms:
58% (1971)  48% (2002)
Hacienda Luisita
SDO, evasion of
land reform…
Oligarchic rule
 Political dynasties, warlords
& electoral violence
 Ex. Aquino-Cojuangco, Marcoses
 c/o CenPEG – 16 senators (67%), 130+
congressmen (60% of regular seats), 53
gov/26 vice gov from political families
 Money/big biz-driven victories
 Tens/hundreds of millions & billions of pesos to
finance campaigns
 c/o NEDA – P10 billion campaign spending by
all candidates
 c/o PCIJ – P4.3 billion in just ad spending by
natl/partylist candidates
 US influence in spirit of ‘democratization’
Elite political power
 New old senators
 Revilla (Lakas-Kampi), Estrada (PMP),
Defensor-Santiago (PRP), Drilon (LP),
Enrile (PMP), Cayetano (NP), Marcos (NP),
Recto (LP), Sotto, III (NPC), Osmena, III
(LP), Lapid (Lakas-Kampi), Guingona, III
(LP)
 Millionnaire Congress
(HOR)
 75% triple or double-digit
millionnaires (P10.5 - 947.9M)
The story so far…
“Insanity: doing the same thing over
and over again and expecting different
results.”
Albert Einstein
1879-1955
Elite economics: Aquino
administration policy thrusts
1. No asset/wealth redistribution – ex. real
and speedy land reform
2. Increased foreign domination of economy
i.
ii.
Free trade agreements – ex. “WTO+” with EU
Privatization through public-private partnerships
(PPPs)
3. Reliance on overseas work as safety valve
4. Mining liberalization & plunder of national
patrimony
5. Disguising poverty (in absence of basic
reforms) – ex. conditional cash transfers
(CCTs)
Salamat po
www.ibon.org
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Policy challenges
7 major tasks
1.
2.
3.
4.
5.
6.
7.
Immediate social & economic relief
Avert fiscal crisis in a progressive manner
Address jobs crisis of record high unemployment,
poor quality work and low earnings
Rectify severe inequalities in income, wealth and
assets (including of land)
Promote real democracy & human rights
Curb pervasive corruption including electoral fraud
Restore country’s sovereignty in its international
economic and political affairs
Building economic momentum:
Anti-globalization
1.
2.
3.
4.
5.
6.
7.
8.
9.
Cancel Hacienda Luisita SDO and distribute
land to the farmers; real accounting of land
distribution
Immediate across-the-board nationwide Php125
wage hike
Repeal RVAT Law; place revenue burden on
wealthy/big corporations
Repeal automatic debt appropriation law
Ensure social service budgets of at the very
least P281 B for education, P39 B for health and
P13 B for housing in 2011
Deliberate national industrial policy
Suspend & review JPEPA & EU-RP PCA
Convene multi-stakeholder review of ASEAN
negotiating strategy and deals
Convene multi-stakeholder review to identify
local products for tariff protection
Building political momentum:
Pro-democracy & peace
1.
2.
3.
4.
5.
Investigate/prosecute former Pres.
Arroyo/allies for electoral fraud,
corruption and serious human rights
violations (HRVs)
Investigate/prosecute military & police
officials for involvement in serious HRVs;
transmit 1998 ICC Rome Treaty to Senate
for ratification
Independent probe of May 10 elections
Suspend/review Visiting Forces
Agreement (VFA) with US and, in
meantime, expel US forces
Immediately resume formal peace talks
with NDFP and MILF

Release all political prisoners as confidencebuilding and goodwill measure
State of play:
Possibilities & realities
(–)
(+)
 Inadequate &
misdirecting framework
Simplistic “Kung walang
corrupt, walang mahirap”; no
devt vision
 Rather, main problem:
reckless ‘globalization’
policies
So far… Traditional Cabinet




economic team steeped in
failed/obsolete economics
unable to assert people’s rights
& national sovereignty
State of play:
Possibilities & realities
(+)
(–)

… Continued globalization offensive
– Economic life under control of
private profit-seeking interests



Privatization – “Public-Private
Partnerships” (ex. water/power rate
hikes, LRT/MRT rate hikes, toll fees…)
FTAs – DTA Sec. Domingo: “We’ll try to
join as many trade agreements as
possible…”
… Continued anti-people fiscal
policy




To pay rising debt service…
Higher taxes, fees & charges
?! Why not tax wealthy/high-income
Decreased spending on social &
economic services
State of play:
Possibilities & realities
(–)
(+)

… Continued political violence


… Continued militarism




Strengthening military/rising
spending
6-month OBL 2 extension
Uncertain peace processes w/
MILF/NDFP
… Continued neglect of human
rights


3 political killings, Mendiola peasant
dispersal w/ 42 arrested
“Truth Commission” mainly
corruption-focused, aside from
having weak powers
… Continuing neglect of
agrarian reform
 Not admin priority, HLI scam
compromise…
Pagbabago?
 Bangayan: Kamaganak Inc, Trapo LP,
Hyatt 10, The Firm, Soc Dem/civil society…
 Ochoa (Exec Sec), Abad (PMS), Lacierda (Spokesman),
de Mesa (Legal counsel)
 de Lima (DOJ), Romulo (DFA), Robredo (DILG)
 Paderanga (NEDA), Purisima (DOF), Henares (BIR), Abad
(DBM), Domingo (DTI)
 Reyes (DAR), Alcala (DA), Paje (DENR), Baldoz (DOLE),
de Jesus (DOTC), Singson (DPWH), Almendras (DOE),
Lim (DOT), Montejo (DOST)
 Soliman (DSWD), Deles (OPAPP), Luistro (DepED),
Licuanan (CHED), Ona (DOH)
 Gazmin (DND), David (AFP chief-of-staff), Verzosa (PNP
chief)
Pagbabago?
 de Lima (DOJ) – most positive
appointment; strong HR advocate
 Romulo (DFA) – recycled, pro-VFA, favored Daniel
Smoth transfer to US embassy, pro-JPEPA, ex-DFA/DOF
 Paderanga (NEDA) – ex-NEDA, ex-ADB, Foundation for
Economic Freedom, pro-neoliberal globalization, UPSE
 Purisima (DOF) – Hyatt 10, pro-VAT, ex-SGV/Ernst &
Young, Arthur Andersen
 Domingo (DTI) – ex-SM Investments Corp, ex-Chase
Manhattan/Chemical Bank, ex-DTI USec
 Henares (BIR) – ex-World Bank, ex-BIR
Pagbabago?







de Jesus (DOTC) – ex-president Meralco
Singson (DPWH) – ex-Maynilad CEO
Almendras (DOE) – ex-president Manila Water
Lim (DOT) – Makati Business Club
Soliman (DSWD)/Deles (OPAPP) – anti-Left
Luistro (DepED) – no public school experience
Ona (DOH) – pro-health privatization, procorporatization
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