by Prof. Eduardo C. Tadem, PhD
On July 18, 2015, the country’s major news outlets reported on the findings of the Economic Intelligence Unit (EIU) of the magazine Economist that “despite the faster economic growth enjoyed (by the Philippine economy) during the past few years, the poverty rate will still be high as the gap between the poor and the rich widens.” The EIU also predicted that by 2019, “the Philippines will remain one of Southeast Asia’s poorest economies, with a lower level of GDP per head than the majority of the region’s other major economies.” These findings stand in stark contrast with the Philippines annual growth rate from 2010 to 2014 of 6.3 percent which “was the highest five-year average during the past 40 years.”
Inequality accompanies poverty and an Asian Institute of Management depiction of the Philippine social pyramid shows that only 0.1 percent of Filipino families or 21,700 families constitutes the upper class with per capita incomes of over P700,000 per year. The rest, or 99.9 percent (18.7 million families) constitutes the middle and lower classes of society. Among member countries of the Association of Southeast Asian nations (ASEAN), the Philippines was reported to have the highest inequality ratio as of 2011 based on the Gini coefficient index. A World Bank report further noted that the “richest 20 percent of the population outspent the poorest 20 percent by more than eight times.” The combined net worth of the 50 richest Filipinos was US$74 billion in 2014, a staggering 26 percent (one-fourth) of the country’s gross domestic product (GDP).
Poverty and Inequality
What these figures tell us is that widespread poverty and deepening inequality are still the most dramatic and sharpest effects of decades of development strategies that successive Philippine governments have adopted and implemented vigorously. This is a volatile mix which no amount of economic growth, no matter how sterling, can mask or overcome. Complementing this miserable legacy is a type of governance that has been dominated by self-serving dynastic families and wracked by corruption of gargantuan proportions. This combination of socio-economic deprivation for the greater masses of the people and political misgovernance has been left untreated like a gangrenous wound and allowed to fester through the years. More significantly, it has only served to further fan the flames of social unrest and revolution. The present government of Benigno Aquino III, contrary to its hyperbolic promises of a “matuwid na daan” (righteous path) and an “inclusive growth” when it took power in 2010, is certainly no exception to this pattern.
In March 2015, the Freedom from Debt Coalition (FDC) issued a call for President Aquino to step down as he has been as inept as his predecessors in improving the lives of the ordinary Filipino, or the 99.9 percent of the population. Let me restate portions from that statement and add updates from recent data and events as well as further insights.
Since taking the reins of government on the back of public sympathy following the death of his mother, Aquino has stumbled from one debacle to another. Barely a month into office, his government badly mishandled a hostage situation involving a busload of Hongkong tourists. One word is most often attached to that hostage incident: “tragedy.” And tragedy continued to haunt the next 4 years of the Aquino administration. In that one word is summed up the country’s experience under Aquino.
Debt Problems Linger
Despite official assurances to the contrary, the combined foreign and domestic Philippine government debt continues to be a major problem and currently stands at P5.790 trillion as of April 2015, or a 7.5 percent increase over the December 2014 figure. Every single Filipino, therefore, currently carries a debt burden of P57,900. Furthermore, debt servicing per day amounts to a staggering P2.24 billion, P818 billion a year, or 30 percent of national budget expenditures - an amount that could have gone for extremely deficient social expenditures such as in housing, health, and education. Borrowed funds were used to plug perennial revenue shortfalls for the national expenditure program.
Meanwhile, even as Aquino continued to prioritize debt-servicing including that of fraudulent loans that hardly benefited the people, the budget was being systematically plundered and misused by government officials and politicians through the notorious Priority Development Assistance Fund (PDAP) and Aquino’s very own Disbursement Acceleration Program (DAP), both of which have been rejected by the Supreme Court as anomalous and unconstitutional. While PDAP and DAP have ostensibly been expunged from the government budget, revelations have come to light that “pork barrel” in the form of lump sums inserted into the budgets of specific departments have remained and continues to be enjoyed by legislators and the executive department itself.
The government’s distorted sense of priorities and subservience to its international loan shark creditors were displayed in the wake of the widespread devastation caused by Typhoon Yolanda (Haiyan). Instead of issuing a humanitarian call for debt cancellation or moratorium of debt servicing the Aquino government instead incurred US$2 billion in new loans from the World Bank and the Asian Development Bank (ADB) for typhoon affected areas. It has, however, been reported that Philippine debt payments one year after Typhoon Yolanda was 25 times higher than total European typhoon aid. This means that the country could very well have funded on its own account the typhoon-related rehabilitation projects if debt cancellation and/or moratorium had been vigorously pursued.
The current Greek tragedy of a developed European country defaulting on its debts and plunging its people into a quagmire of untold hardships, should serve as a strong reminder that, contrary to government assurances that Greece is too far to affect the Philippines, we have undergone that experience in 1983 when the endlessly corrupt and tyrannical Marcos regime also defaulted on its debts, stagnated the economy and paved the way for its eventual overthrow via a popular insurrection in 1986. Unfortunately, Marcos’ successor, President Aquino’s own mother, Corazon Aquino, when she assumed the Presidency, failed to capitalize on the tremendous goodwill gained by the country at that time, mindlessly opted to honor all debts, including the most obviously nefarious and illegitimate ones, and maintained the paralyzing “automatic appropriations law” for debt servicing. Till today, as Walden Bello has pointed out, the Philippines is only country in the world with such a suicidal automatic debt servicing provision.
Impact of Neo-Liberal Policies
The Aquino regime continues to embrace discredited neo-liberal prescriptions for the economy such as deregulation, privatization, and liberalization. In other words, the prevailing policy is to allow rapacious market forces to prevail and gluttonous capitalist corporate interests to dominate. The Public-Private Partnership (PPP) initiatives favoring big corporate initiatives is an example of this type of a skewed development model. The results of such directions have been calamitous for the Filipino people. Official poverty incidence rose to 25.8 percent as of the first half of 2014. That figure, however, may have been a gross underestimate as the Social Weather Stations (SWS) calculates that self-rated poverty stood at 51 percent (or 11.4 million families) as of March 2015.
For the Filipino working classes, jobless growth continues to characterize their plight. Higher growth rates have not translated into any meaningful contraction of the unemployment rate. While government statistics put the official unemployment rate at 6.6 percent in January 2015, the more credible Social Weather Stations surveys place the unemployment rate at 27.5 percent or 12.1 million individuals as of December 2014. The Philippine Daily Inquirer noted that the SWS finding made the 7.2 percent growth rate in 2014 “far from inclusive.”
Even for the employed, the minimum wage remains woefully inadequate to meet the basic needs of working families. IBON Databank calculates that the March 2015 “new minimum wage increase in Metro Manila … is only two-fifths (44 percent) of the estimated amount for a family to live decently.” Meanwhile, of the one million jobs reportedly generated in 2014, 90 percent were in precarious, unskilled, part-time, and low-paying work.
Agriculture and manufacturing have been all but abandoned in favor of quick-fix and unsustainable programs such as rent-seeking property development, a bloated service sector, OFW remittances, low-value added call centers, and the dole-out scheme of the World Bank and ADB-funded conditional cash transfer (CCT) program. Since January 2015, industrial production has decreased by a monthly average of 1.5 percent as of May 2015. Agriculture, on the other hand, grew by a mere 1.78 percent in the first quarter of 2015 with the crops subsector growing slower at 1.65 percent while farm gate prices fell by 3.37 percent compared to 2014.
Key social justice programs have reached an impasse. An incompetent and clueless bureaucracy allowed the agrarian reform program to lapse without completing the land distribution component, misrepresented its achievements by reporting only notices of coverage (NOC) instead of the more significant figures on distribution of emancipation patents (EPs), and turned a blind eye to reversals that have taken place such as harassments of land reform beneficiaries, killings of their leaders, massive land conversions and cancellations of land awards. In the process, the peasantry, rural workers, the rural landless, and indigenous peoples have been further marginalized and impoverished.
Inaction on Climate Change
Environmental organizations have chided Aquino for his inaction on the issue of climate change as evidenced by his approval for the construction of 59 coal-fired plants and the granting of 118 coal mining permits on top of existing ones. The government’s distorted economic directions in mining recently, once again, found its denouement in the collapse of an open pit coal mine of the Consunji-owned Semirara Mining Corporation in Antique province on July 17, 2015 which buried 9 workers, 8 of whom have been confirmed dead. This was the second accident at the mine following the 2013 cave-in which killed 5 workers.
Perhaps the most arrogant display of how the Aquino regime has allowed market forces to consistently trump social justice concerns was a recent candid admission by Ayala Land, one of the most notorious property development companies in the country, through a top executive, its President for international sales Thomas Mirasol, that the lack of a “land use blueprint by a regulatory body … has enabled it to acquire large plots of land and develop them according to its own plan and design” (Business Time 2014). Mirasol added that the fact that there is nobody in the Philippines who regulates urban planning has been great for Ayala Land, because we are probably the only company there that has the scale financially to take on large plots of land. We have resources far beyond any developer in the Philippines. By developing big tracts of land, we become the government; we control and manage everything. We are the mayors and the governors of the communities that we develop and we do not relinquish this responsibility to the government.
On the governance side, Aquino’s term has been characterized by aggressive efforts to weaken democratic institutions. When the Supreme Court, including his own appointees, declared most of his Disbursement Acceleration Program (DAP) unconstitutional, he openly rejected and castigated the Supreme Court’s unfavorable ruling and continued to shamelessly defend the program. If the president’s initial vacillation on eventual scrapping of the PDAF was explained away by some as owing to genuine concern about its supposed benefits, his pig-headed defense of the DAP unveiled his government’s true nature as just another abusive, elitist, trapo administration.
Hiding behind the now overused and tattered cloak of national security, Aquino has reversed significant gains in our still lingering quest for sovereignty and an independent foreign policy with his ill-advised policies. The Enhanced Defense Cooperation Agreement (EDCA), secretly hatched both by the US and the Philippine governments, and at the expense of Philippine Constitutional provisions against war and nuclear weapons on Philippine soil, is a glaring act of betrayal of Philippine sovereignty and national interests.
Ironically, the almost permanent stationing of U.S. troops in various areas of the country have only made the country less secure and dependent on foreign assistance. Unwilling to stand on its own and failing to get the firm support of the Association of Southeast Nations (ASEAN) on the Philippine territorial claims in the South China Sea and the consequent dispute with China, Aquino embarrassingly revealed his colonial subservience by running for help to and clinging to the coat-tails of the US government. The US, however, has publicly maintained a neutral position on the conflict while privately disputing Philippine claims.
As the country prepares to host the Asia Pacific Economic Cooperation (APEC) summit of 23 heads of state in November 2015 and the Association of Southeast Nations (ASEAN) summit in 2017, the Philippine government continues to peddle the deception that regional integration of the neo-liberal free-market-based type as represented by both APEC and ASEAN will benefit the country and people. In reality, such integration will only exacerbate inequalities within and between countries with national elites and richer economies taking in the lion’s share of the economic pie.
Human Rights Violations
Human rights violations remain a sticky point in Aquino’s administration with the failure to arrest the culture of impunity as powerful interests blatantly conduct extra-judicial killings and other instances of human rights violations. Instead of addressing these violations, Aquino has regularly ignored findings based on on-site investigations by local and international human rights groups. Human Rights Watch (HRW) World Report for 2015 Philippines noted that the Aquino administration “continues to send mixed signals about its commitment to improve human rights in the Philippines … (and) has failed to make good on many of his commitments, chiefly his expressed intent to end killings of activists and journalists and bring those responsible to justice.”
While acknowledging that “the number of cases of extrajudicial killings, torture, and enforced disappearances by state security forces has declined in the last four years,” HRW argues that “such abuses regularly occur.” The human rights watchdog concluded that abuses “are fueled by the government’s lack of political will to end the longstanding impunity enjoyed by the police and armed forces, a dysfunctional criminal justice system, and military resistance to accountability.”
On the legislative front, potent measures to potentially check official abuses, such as an anti-dynasty bill and a freedom of information bill, continue to gather histaminic dust in the morally decrepit halls of Congress. The Aquino government has made only lame efforts to influence the passage of these bills which it could very well do if only it possessed the political will to do so.
The 2015 Mamasapano tragedy is the probably the last straw and also clearest indicator of government incompetence. The ultimate responsibility for the tragedy, which needlessly claimed the lives of 44 PNP SAF personnel, 15 MILF combatants, and 3 civilians, has been laid squarely at the doorsteps of Malacañang by no less than the PNP Board of Inquiry and the Senate committee that conducted hearings on the incident. The Mamasapano tragedy prejudiced not just the fate of the proposed Bangsamoro Basic Law but has also derailed the long quest for peace in Mindanao-Sulu.
Aquino’s reaction to this latest tragedy has been to wash his hands of any culpability and pass the blame to his subordinates. This overbearing arrogance and refusal to own up to strategic failures while dismissing all criticism as ill-informed if not malicious has long characterized the Aquino Presidency. This arrogance could only emanate from an overdeveloped sense of entitlement and superiority common among the scions of the rich and powerful.
This is the true state of the Filipino people and their nation. It is a sad and depressing state. It is the outcome of a socio-economic and political system that is controlled by rich and powerful vested elite interests that pursue plunderous capitalist profit and insatiable greed at the expense of the people’s welfare and livelihood. It is the duty of all concerned Filipinos to expose the state of the nation address trumpeting imaginary and bloated accomplishments that President Aquino will present on Monday, July 29, 2015 as a sham and a deception.
As the country and people once again get into a farcical bourgeois electoral circus of choosing who among Tweedledum and Tweedledee from the ruling elite families will carry on the task of oppression and exploitation, progressive and popular leftwing forces should vigorously assert that it is not enough to merely expose the lies and distortions; the point, however, is to end elitist rule and advance the cause of a true people’s government of the Philippines.
Revised version of a presentation at the State of the People’s Address (SOPA) organized by the Freedom from Debt Coalition (FDC) at Balay Kalinaw, University of the Philippines Diliman, 23 July 2015. Eduardo C. Tadem, Ph.D., is President of FDC and Professor of Asian Studies at UP Diliman.
Freedom from Debt Coalition
The Freedom from Debt Coalition (FDC) – Philippines is a nationwide multi-sectoral, non-sectarian and pluralist coalition conducting policy advocacy work and campaigns to realize a common framework and agenda for economic development.