Economic policies of pinoy

The Philippine economy: After the first year of the Aquino administration

IBON Features | 29 June 2011 | The administration... is most of all about aggressively pushing corporate
interests, especially by big foreign investors, over the economy's or the people's development needs.

"From a President who tolerates corruption to a President who is the nation's first and most determined
fighter of corruption; From a government that merely conjures economic growth statistics that our
people know to be unreal to a government that prioritizes jobs that empower the people and provide
them with opportunities to rise above poverty." A Social Contract With the Filipino People, Benigno S.
Aquino III

IBON Features-- No one would hold that one year is enough time to resolve social and economic
problems accumulated over many decades, arguably even over centuries. Yet a year is certainly long
enough to set strategic directions for the Philippine economy that are firmly biased for the poor majority
and, indeed, also long enough to take the first determined steps towards these. None of this has taken
place in the first year of the Aquino administration.

In his inauguration speech a year ago Pres. Benigno "Noynoy" Aquino, III trumpeted that, under his
wing, the Filipino people can dream again. This raised hopes among many Filipinos aspiring for decent
living in a society where a few prosper while the majority remain desperately poor. The Aquino
administration however finishes its first year in office with little to show in terms of new socioeconomic
policies to distribute land, create long-term jobs, raise incomes, improve social services, develop the
rural economy and build domestic industry.

The images painting the Philippine economy are familiar and are likely to persist in the remaining five
years of this administration absent in real changes in economic policies: demolitions of urban poor
communities; unrest in haciendas nationwide; workers pressing for a Php125-across-the-board wage
increase; abuses of overseas Filipino workers and their return home to poor jobs prospects; increasing
oil and food prices; power, toll and fare rate hikes; rising costs of schooling, health and housing; land-
grabbing and mineral plunder; and growing poverty amid rising corporate profits.
Economic growth is slowing under the Aquino administration. The government reported 4.9% growth in
real gross domestic product (GDP) in the first quarter of 2011 which was markedly slower than the 8.4%
rate in the same period last year. Consecutive quarters are not strictly comparable but it can still be
noted that the first three quarters of the Aquino administration has seen progressively slower growth
year-on-year from 8.9% in the second quarter of 2010, 7.3% in the third quarter, and 6.1% in the
fourth quarter, followed by the 4.9% in the first quarter of this year.

According to the national income accounts, compensation of overseas Filipino workers has been
stagnant (measured at current prices) or even declining (by 3.9%, measured at constant prices). The
compensation inflow item net under net factor income from abroad now called net primary income
refers to total earnings of overseas Filipino workers and not, as is commonly misunderstood, to their
remittances.

The government attributed the economic slowdown to short-term factors such as public underspending,
weaker global trade and the absence of election-related stimulus rather than basic internal economic
weaknesses.

The country's jobs crisis continues with no meaningful improvement in the employment situation. The
government officially reports the unemployment rate falling to 7.2% in April 2011 from 8.0% in the same
period last year although IBON estimates that the real number of unemployed is higher at some 4.5
million. There are also indications that the quality of jobs remains poor. The underemployment rate rose
to 19.4% in April 2011 from 17.8% the year before which implies a very large 827,000 increase in the
number of Filipinos not earning enough from their jobs and seeking additional work (now standing at 7.1
million).

Being educated is also apparently no longer enough and two out of five jobless Filipinos have college
degrees or at least reached college level. But even as it is, from 2006-2009, poor economic conditions of
families mean that only 14 out of every 100 children get to go to college.

There are still 16.5 million Filipinos in poor quality work unpaid family workers (4.2 million) and own-
account or informal sector workers (12.3 million) aside from 1.9 million working as generally poorly
paid household helpers. Joblessness also continues to force more and more Filipinos to work abroad and
some 4,080 Filipinos left the country every day for most of 2010, up from 3,850 leaving per day in 2009.
Wages remain pegged at meager amounts. This makes it consistently difficult for Filipinos to cope not
only with rising food and oil prices and increasing utility rates but also with more expensive education,
health and housing. The mandated minimum wage of Php426 upon the mere Php22 wage increase last
May is still far from the some Php1,000 needed for a family of six in NCR to cover its basic expenses. The
real wage under the Aquino administration so far is even less than the most that was granted under the
previous Arroyo administration in February 2002.

Debt service and the public debt stock have continued to rise. It paid Php634 billion in debt service
between July 2010 and April 2011 which is Php8 billion more than in the equivalent previous period
under the Arroyo administration. These payments over its first ten months also already exceed
payments for the whole year of 2007, 2008 and 2009 respectively (and of the first two years combined
of the Arroyo administration). Yet the national government debt stock has continued to rise from
Php4,582 billion in end-June 2010 to Php4,706 billion in March 2011.

Fiscal problems persist. The small Php61 million fiscal surplus reported for the first four months of 2011
was also primarily due to a Php60.5 billion or 11.6% cutback in government spending in this period
compared to the year before rather than any significant increase in revenue collection. The Aquino
administration actually continues the distorted fiscal priorities of the Arroyo administration. It keeps
relying on the regressive 12% value-added tax while refusing to increase taxes on the rich, to roll back
revenue-losing trade liberalization, to lessen fiscal incentives for foreign investors, and to cut back on
military spending (up by Php4.2B at Php77.5B) and huge debt service (up by Php80.4B to Php823.3B).

The government itself also does not even appear to believe that its "Kung walang korap, walang
mahirap" anti-corruption drive will significantly increase revenues. For instance, the 2011 revenue
program submitted with the budget last year did not project significantly higher revenues this year
(though it remains to be seen if this will be different in the 2012 budget). A year into its term, the
government does not yet appear to have successfully prosecuted even one big-time culprit of the
phenomenon which it blames so much of the country's economic woes on. Similarly, big corporations
like Shell and Chevron which have supposedly not been paying Malampaya taxes properly are not being
confronted.

The Aquino administration is cutting back on social services. The administration's first budget, for 2011,
still gives more priority to debt service than to social services. The budget for total debt service, interest
and principal, increased by Php80 billion to Php823 billion while the education budget increased by
just Php31 billion (to Php272 billion) and housing by Php273 million (to Php5.7 billion), with the health
budget even reduced by Php1.4 billion (to Php39 billion).
The budget for state universities and colleges was cut by Php364 million, for 67 public hospitals
nationwide used mainly by the poor by Php368 million, for five specialty hospitals by Php971 million,
and for subsidies to indigent patients by Php20 million. As it is, the average cost of confinement in a
public hospital is already equivalent to 60 days worth of daily wages and in a private hospital 87 days.
Housing services meanwhile remain poor even as public-private partnership (PPP) projects have
displaced tens of thousands of Filipinos such as in the North and East Triangle for the Php22-billion
Quezon City Business District.

Most alarmingly, the economic policies adopted are the same ones that have caused low growth,
joblessness, falling incomes and increasing poverty. The administration's economic thrust as contained
in its Philippine Development Plan (PDP) 2011-2016 is essentially the same as that of the previous
Arroyo administration: stick to the globalization policies implemented over the last decades but
deepen and broaden privatization through public-private partnership programs (PPPs) and selectively
implement social protection programs especially conditional cash transfers (CCTs).

The administration's centerpiece PPP program makes clear its bias for big profit-seeking players and
foreign investors over building a domestic economy that provides for its constituents' needs. The
program plays up the role of profit-seeking private and foreign parties in infrastructure building and
providing public goods and services. Instead of putting an end to the ills of privatization and other `free
market' measures, the Aquino government is further opening up the economy for big businesses and
profits at the expense of the people. More expensive public facilities will aggravate Filipinos' already
serious problem with making ends meet. There are 12 priority rail, road and airport projects lined up
this year worth Php157 billion although it is still unclear how much of these have already been
successfully bid out, much less started.

The Aquino administration also clearly seeks to build on previous globalization policies and extend these
to as many areas of the economy as possible. The leadership of the Senate and the House of
Representatives have already expressed their willingness to push for charter change particularly towards
opening up the economy to greater foreign investment. The government has also already launched a
national campaign to promote free trade agreements (FTAs) as well as declared its intent to enter into a
second FTA this time with the European Union (EU). All these indicate how the Aquino administration is
relying mainly on foreign investments and foreign markets for economic development, rather than the
painstaking but more sustainable and equitable approach of focusing on the domestic economy.
Cash dole-outs are being used as a temporary smokescreen for further globalization. The administration
has greatly expanded the conditional cash transfer (CCT) program initiated by the Arroyo government
with a Php22 billion budget just for 2011 even borrowing US$805 million from the World Bank and the
Asian Development Bank (ADB) for this. This multi-billion peso expansion was done without benefit of a
comprehensive assessment of previous CCT implementation especially regarding distribution and
effectiveness.

This debt-driven and unsustainable social protection program provides temporary relief but cannot
replace the long-term benefit of stable jobs and decent incomes. The targeted 4.3 million beneficiaries
are few compared to the some 65 million poor Filipinos. Meanwhile the government is paying Php1 for
every Php4 in cash given out, and is paying US$5 for every US$4 in foreign loans taken out. These CCTs
are unsustainable, expensive and relief without reform.

Land reform is not a priority and landlessness remains widespread. The Aquino administration has
relegated land reform to an Asset Reform sub-section in the Social Development chapter of its PDP
2011-2016, aside from continues with CARPer which merely extends the failed Comprehensive Agrarian
Reform Program (CARP).

Landowners continue to evade land distribution so having their own land to till remains elusive for
farmers and farmworkers of various haciendas nationwide including those in Bulacan, Tarlac, Batangas,
Laguna, Bicol and Negros. Pres. Aquino meanwhile remains silent over the Hacienda Luisita controversy
while the Supreme Court has repeatedly postponed deciding over the affirmation of the PARC's
revocation of the stock distribution option and over its constitutionality.

Meanwhile agricultural lands remain up for grabs in land deals with businesses and foreign companies,
threatening local food security and undermining peasants' centuries-old struggle for land. For instance,
six million hectares of `idle lands' have been allocated for the production of sugarcane, coconut, cassava,
jatropha, oil palm and other cash crops and two million hectares for agribusiness development. At the
same time, corruption and anomalies in the National Food Authority (NFA) are being hyped to justify its
privatization portending a hike in rice prices.

The Aquino administration is failing to consider the people's long-term well-being in terms of jobs,
higher incomes, land distribution, progressive taxes, delivery of efficient and accessible services, and
sovereign trade and investment policy. Like its predecessors, it has resorted to giving a positive spin to
any and all economic indicators while avoiding taking doable and lasting measures to actually improve
the lives of the people. It recently claimed that economic growth features a stronger manufacturing
sector and rebounding agriculture. Yet there has not been any policy move to reverse the steady decline
in manufacturing and agriculture over the last four decades.

The administration persists in refusing to depart from the `free market' dictates of globalization to boost
local agriculture and build domestic industries. It is most of all about aggressively pushing corporate
interests, especially by big foreign investors, over the economy's or the people's development needs.
These discredited policies will only aggravate the people's situation.

The government needs to be one that does not place elite or bureaucratic self-interest over that of the
people. The remaining five years of the administration should not be more of the same if the country is
to find solutions to its decades-old travails. IBON Features

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