Birdtalk 2014 Yearend

Birdtalk
Economic and
Political Briefing
yearend 2014:
Aquino on Defensive
January 23, 2015

University of the Philippines
Diliman, Quezon City
114 Timog Avenue

Quezon City 1103 Philippines
Tel. Nos: +63 2 927-7060 to 61
Fax: +63 2 929-2496
www.ibon.org
slowing economy, intensifying social unrest and peoples opposition have pushed the
Aquino administration into a defensive position in 2014. Severe inequality amid elite economics
and governance as well as deepening corruption have steadily eroded the legitimacy of the
Aquino presidency. Faced with the unfavorable Supreme Court (SC) decisions on pork barrel and
the Disbursement Acceleration Program (DAP), the Aquino administration sought to clip the powers
of the high court through Charter change and even floated the possibility of term extension. But
the public outcry over this proposal removed any remaining belief that the administration was still
enjoying broad support. The Aquino administration has resorted to early electioneering to discredit
its political opponents and secure an Aquino-backed successor in 2016. It has also brought its level of
subservience to US interests and businesses to greater heights. The use of political repression against
critics and grassroots movements on the other hand has been on the rise.
Fading Economic Miracle

The steady unraveling of the hyped Philippine economic miracle in 2014 weakens the Aquino
administration even on its acclaimed economic front. The slowing of growth after just two years
of a relatively rapid pace draws attention to the economys still unsound fundamentals. Severe
inequities still stifle it and there is still no solid base in domestic production, incomes and demand.
Unemployment and poverty persist because government policies avoid the politically difficult but
nonetheless necessary structural changes. Slowing growth and these other problems will continue
through 2015 and, absent the necessary radical change in the countrys politics, carry over into the
next administration.
Slowing growth
Economic growth is the administrations banner indicator of progress and development. However
the decelerating economy in 2014 points to how the recent episode of rapid growth is artificial and
unsustainable. The main sources of above-average growth of real estate and construction started to
play themselves out without having laid any foundations for future continued expansion or, much less
national socioeconomic development.
There are new short-term drivers of growth in 2015: mainly cheaper oil, some increased public
infrastructure spending, and ripples from the United States (US) economy. Overseas remittance and
business process outsourcing (BPO) inflows will continue but will be slower than before with a lessened
impact on the economy. All told, the growth slowdown from its peak in 2013 will most likely continue in
2015 with growth drivers more than offset by the steady inhibiting influence of economic backwardness.
There will likewise be little improvement in the socioeconomic indicators that matter most to the people.
Economic growth slowed because the main sources of growth are playing themselves out.
The governments preferred indicators of progress have been growth in the gross domestic product
(GDP), moderating public deficits and debt, corresponding ratings upgrades, and growing foreign
investment. The administration particularly favored economic growth, which increased from 3.7%
(2011) to 6.8% (2012) and then 7.2% (2013). This slowed to 5.8% in the first three quarters of 2014,
which will result in a full year figure much less than in 2013 and government targets for the year.
(See Table 1) The latest Development and Budget Coordination Committee (DBCC) projected growth
in 2015 of 7-8% is also unlikely to be achieved.
IBON Economic and Political Briefing
23 January 2015
Table 1. National Accounts of the Philippines By Industry Group and By Type of

Expenditure, 2012 - 2013 and 2014 Q1-Q3 (growth rates; at constant 2000
prices; in %)
Industry Group / Expenditure Share
2012
2013
2014 Q1-Q3
2.8
3.6
(0.4)
7.3
2.2
5.4
18.2
5.3
7.4
8.1
1.1
1.2
0.7
9.3
1.2
10.3
9.6
4.9
7.2
5.6
0.6
1.1
(1.7)
6.9
5.6
8.4
4.3
2.4
6.1
6.7
b. Trade and Repair of Motor Vehicles, Motorcycles,

Personal and Household Goods
7.6
5.7
6.1
c. Financial Intermediation
d. Real Estate, Renting and Business Activities
8.2
6.4
12.6
8.7
6.5
8.0
e. Public Administration and Defense:

Compulsory Social Security
5.7
3.8
1.3
f. Other Services
7.6
7.1
5.3
6.6
15.5
(5.3)
10.8
17.4
7.0
1.4
17.5
8.5
10.3
2.1
4.9
3.0
13.0
5.7
7.7
29.9
11.9
10.4
15.5
(4.0)
16.4
(1.1)
0.1
(5.7)
5.4
4.2
10.3
5.6
(0.2)
4.2
8.6
5.4
12.1
(2.8)
22.3
11.1
11.1
11.4
6.2
2.7
20.8
Gross Domestic Product
6.8
7.2
5.8
Gross National Income
6.4
7.5
6.5
By Industry Group
1. Agriculture, Hunting, Forestry and Fishing
a. Agriculture, Hunting, Forestry
b. Fishing
2. Industry Sector
a. Mining and Quarrying
b. Manufacturing
c. Construction
d. Electricity, Gas and Water Supply
3. Service Sector
a. Transportation, Storage, and Communication
By Expenditure Share
1. Household Final Consumption Expenditure
2. Government Final Consumption Expenditure
3. Capital Formation
a. Fixed Capital
i. Construction
ii. Durable Equipment
iii. Breeding Stock and Orchard Development
iv. Intellectual Property Products
4. Exports of Goods and Services
a. Export of Goods
b. Export of Services
5. Less: Imports of Goods and Non-Factor Services
a. Import of Goods
b. Import of Services
Source: Philippine Statistics Authority-National Statistical Coordination Board National Accounts of the Philippines
4
23 January 2015
The economys main growth drivers for the last 4-5 years have been real estate and construction
and also business process outsourcing (BPO), trade, tourism, and overseas Filipino-related inflows.
These interact with each other where BPOs increased demand for commercial real estate,
remittances increased demand for residential property, tourism drove construction of restaurants and
accommodation, and so on.
The slowdown is happening in the absence of any major economic or political shock, which tends
to indicate that the problem is not exogenous but rather in the nature of the growth sources
themselves specifically, in how despite growing rapidly for a relatively long period they did not build
momentum for the economy and instead are tapering off on their own.
The slowdown will have the effect of making the pattern of economic growth under the Aquino
administration broadly similar to those of recent administrations growth picking up at the start of
the term, peaking somewhere mid-term, and then slowing as the end of the term approaches.
(See Chart 1) The end of the Corazon Aquino, Ramos and Arroyo terms were each marked by external
economic shocks with the 1990-1991 global recession, 1997 Asian financial crisis, and the 2008 global
financial and economic turmoil. The absence of a similar adverse shock last year and so far even in
2015 is additional support for the notion that the growth sources are tapering off on their own.
Chart 1. Growth Rate of Gross Domestic Product and

Average Per Administration, 1986-2013 and 2014 Q1-Q3 (at constant prices; in %)
9.0
Corazon Aquino
3.6%
Fidel Ramos
3.7%
7.0
(Q1 1986-Q2 1992)
(Q3 1992-Q2 1998)
6.0
Benigno Aquino III

6.0%
Gloria Arroyo
4.7%
8.0
(Q3 2010-Q3 2014)
(Q1 2001-Q2 2010)
Joseph Estrada
2.7%
(Q3 1998-Q4 2000)
5.0
4.0
3.0
2.0
1.0
-
1986
1990
1995
2000
2005
2010
(1.0)
Year
2014
Q1Q3
The undue hype around growth and sovereign creditworthiness distracted attention from how other
mainstream economic indicators are not moving as favorably. Since 2010, savings rates have fallen
(from 32.7% of gross national income or GNI to an average of 30.2%over the period 2011-2013)
and capital formation has fallen (from 17.3% of GNI to an average of 17.0% over the period 20112013, and then 16.9% in the first three quarters of 2014). Revenue effort and tax effort have been
slowly rising since 2010 but they are still below recent peaks under the previous administration the
revenue effort of 14.9% of GDP in 2013 is lower than the 16.5% achieved in 2007, and the tax effort of
13.3% in 2013 is lower than the 13.6% in 2008. Growth in per capita GDP also slowed last year despite
slowerpopulation growth.

23 January 2015
The real estate and construction boom, which has been the biggest growth driver of recent years,
is showing signs of winding down. The real estate and construction boom appears to have started
to unwind as the market for residential and office space tapers off, as overseas remittances slowed, as
the Bangko Sentral ng Pilipinas (BSP) takes measures to prevent a real estate bubble, and as interest
rates start to rise. Overseas worker- and BPO-related demand continues but not at its previous pace.
The economys rapid growth has been mainly driven by the real estate and construction boom
including its knock-on effects in a few related manufacturing subsectors. Up until as late as 2013,
the fastest growing sectors driving the most growth in the economy were real estate, renting and
business activities, construction, and manufacturing; financial intermediation including in real estate
products also grew rapidly.
Four manufacturing subsectors are particularly real estate- and construction-related: chemical and
chemical products, basic metal industries, non-metallic mineral products, and furniture and fixtures.
The chemicals subsector produces chemical-based products such as paint, wood and cement
additives, insulation and other such items used in construction. Similarly, the basic metal subsector
produces steel products used as structural materials, while the non-metallic mineral products
subsector produces concrete, cement, plaster, glass and other like materials.
The apparent winding down of the real estate and construction boom is reflected in the marked
slowdown in most of these sectors in 2014. (See Table 1) The real estate, renting and business
activities subsector slowed in each of the first three quarters of 2014 to a lower 8.0% in the first nine
months from 9.1% in the same period the year before; BPOs are counted under business activities
but the signs are that the slowdown was more in real estate than in BPOs. Construction meanwhile
slowed to 4.3% in the first nine months of 2014 from 16.0% in the period before. Much of this was
due to the drop in public construction but private construction also slowed significantly.
Up to four-fifths of manufacturing sector growth in gross value-added has been coming from its
real estate- and construction-related subsectors. Growth in most of these dropped substantially in
the first nine months of 2014 from the same period in 2013: chemical and chemical products (from
84.2% to just 2.4%), basic metal industries (from 65.5% to negative 2.2%), and non-metallic mineral
products (from 13.5% to negative 8.7%). Growth in furniture and fixtures increased (from 24.8% to
43.8%) along with 15 other manufacturing subsectors, but these still could not offset the slowdown
in those three real estate- and construction-related subsectors. The entire manufacturing sector still
slowed from 9.6% to 8.4 percent.
The slowdown will likely be most felt in the National Capital Region (NCR), Central Luzon and
Calabarzon where the boom has been most heavily concentrated. The latest available gross regional
domestic product (GRDP) data for 2013 shows that a considerable 73.6% of the value of real estate,
renting and business activities in GDP and 48.4% of construction are found in just these three
regions. The NCR alone accounts for 52.9% of real estate, renting and business activities and 23.4%
of construction.
GRDP data also confirmed the uneven distribution of recent growth. NCR, Central Luzon and
Calabarzon (with Central Visayas, and slightly, Caraga) all increased their share of GDP between 2009
and 2013. This was at the expense of the other 12 regions of the country which all saw their respective
shares decrease over the same period.
The real estate and housing market may already be coming up against the wall of the countrys income
pyramid and geographical inequity. The market for housing development has largely been the middleand upper income classes with the disposable income for this or the some 25% of families (around
6
23 January 2015
4.7 million) with monthly incomes of about Php27,000 or more. After years of the boom, it is possible
that most of the potential buyers from within this class have already entered the market; there are, for
instance, already reports that the luxury or high-end of the market may have already peaked.
The remaining 14 million poorer low-income families do have considerable housing needs. As a group
however, they do not have the purchasing power to make their housing needs felt on the market even
with the low interest rates and low down payment requirements. There is also decreasing housing
support forthcoming from the government where the national budget for housing and community
development has dropped from Php32.2 billion in 2013 to just Php10.3 billion for 2015. Low household
incomes outside NCR will likely hinder real estate expansion in other regions. NCR had a per capita
GRDP at current prices of Php342,170 in 2013. There is a big gap between NCR and the countrys
second richest region Calabarzon whose per capita GRDP of Php135,579 is just 40% of NCRs and
especially with the countrys poorest region ARMM whose per capita GRDP of Php29,608 is barely 9%
of that in NCR.
The BSP reported Php751.3 billion in residential and commercial real estate loans of universal and
commercial banks in June 2014, which was 9.1% higher than at the start of the year. Record-low
interest rates have spurred the real estate and construction boom by reducing the cost of financing
for developers and by making property cheaper for buyers or leasers. Interest rates remain low but
started to rise incrementally in 2014, which may have already made marginal developments and
properties more expensive. (See Chart 2) Total loans continued to rise in 2013. (See Chart 3)
Chart 2. Selected Domestic Interest Rates, 1986-November 2014

(in %)
30.0
25.0
20.0
15.0
10.0
5.0
1986
1990
1995
2000
2005
2010
2014
Year
Bank Average
Lending Rates
RRP Rates
(Overnight)
Interbank Call
Loan Rates
RRP - reverse repurchase rate

Source: Bangko Sentral ng Pilipinas
23 January 2015
Chart 3. Philippine Loans, 1986-2013* (in million Php)

5,000,000
4,500,000
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Year
Total Bank Loans
Total UKB Loans Outstanding
Of Which for Production
Of Which to Real Estate
* - 2013 data for Total UKB Loans Outstanding, Of Which for Production, and Of Which to Real Estate are as of November
UKB - Universal and Commercial Bank
There is pressure for the trend of higher interest rates to continue. Overseas, the US Federal Reserve
is expected to increase interest rates in line with the improving US economy. Domestically, the BSP is
taking measures to discipline real estate lending. These started with so-called stress tests announced
in July 2014 to assess banks real estate exposure and their vulnerability to adverse movements in the
sector. The BSP will this year also mandate banks to cap real estate loans at 60% of their collateral
values from the current 80-90% range. Banks will moreover be required to have higher minimum
capital as additional protection from real estate-related problems. Universal banks and commercial
banks with over 100 branches will for instance be required to have a minimum of Php20 billion and
Php15 billion, respectively. Rural banks, thrift banks and cooperative banks will likewise have higher
minimum capital requirements. A major countervailing factor to higher rates though will be the
expected lower inflation due to cheaper oil.
The slowdown in overseas remittances eventually translates into weaker property demand. Overseas
Filipinos sent US$22.0 billion in cash remittances in the first 11 months of 2014. While the absolute
amount remains high, its growth is notably slowing. Monthly year-on-year remittance growth since
the start of 2014 has been slower compared to the previous year in nine out of the first 11 months,
and cumulative remittance growth of 5.8% as of November is the lowest year-on-year growth since
2009. (See Chart 4) The remittance slowdown is also consistent with the reported slowing growth in
compensation inflows (under net primary income) in the national accounts.
Remittance growth has markedly slowed to single-digit levels from its double-digits before the onset
of the global financial and economic crisis in 2008-2009. (See Chart 4) Remittances remain large and
will continue to account for a substantial and disproportionate portion of household consumption
expenditure. They were for instance equivalent in value to, even if not strictly accounting for, 11.9% of
household consumption expenditure in the first three quarters of 2014. The slowing growth however
does indicate its limits and points to the need to more aggressively develop domestic sources of
employment, incomes and demand. This is underscored by how the equivalent share of overseas
remittances in GDP continues to fall after peaking in the latter half of the 2000s.
8
23 January 2015
45
40
35
30
25
20
15
10
5
(5) 1991
(10)
(15)
(20)
15
10
5
2001
2011
2014
2014
Q1-Q3
Q1-Q3
Overseas Remittances
Equivalent Share in GDP (in %)
Overseas Remittances,
Growth Rate (in %)
Chart 4. Overseas Remittances Growth and

Equivalent Share in Gross Domestic Product, 1991-2014* (in %)
Year
Overseas Remittances, Growth Rate (in %)
Overseas Remittances Equivalent Share in GDP (in %)
* - 2014 data based on 1st-3rd quarters only

Production slowed in all major sectors and most subsectors. First to third quarter GDP growth
slowed in the major sectors of agriculture, hunting, forestry and fishing (slowing to 0.6% growth from
the same period last year), industry (6.9%) and services (6.1%), and specifically in eight subsectors
representing over two-thirds (67%) of total GDP. (See Tables 1 and 2) These subsectors include fishing
(negative 1.7%), manufacturing (8.4%), construction (4.3%), electricity, gas and water supply (2.4%),
financial intermediation (6.5%), real estate, renting and business activities (8.0%), public administration
and defense (1.3%), and other services (5.3%).
The slowdown in agriculture and manufacturing has the most significant implications for national
development and is consistent with long-term trends. The initial 2014 annual data confirms that these
vital sectors lack innate dynamism and remain in long-term decline.
Domestic final consumption, capital formation and exports all slowed. Domestic demand is
ultimately limited by widespread poverty and low incomes. Against this basic backdrop, growth in
household final consumption expenditure, government final consumption expenditure, and capital
formation all slowed in the third quarter from the start of the year. By the third quarter: household
final consumption expenditure was slower by 0.7 percentage points, government final consumption
expenditure by 4.5 percentage points (actually going into negative growth), and capital formation by
5.9 percentage points.
Taking the first three quarters of 2014 as a whole sees growth in household final consumption
expenditure unchanged from the previous year at 5.6%, government final consumption
expenditure actually shrinking 0.2% (from 9.8% growth previously), and capital formation slowing
drastically to 4.2% (from 33.7% in the same period last year). Household consumption accounted
for 67.7% of GDP by expenditure, government consumption for 11.1%, and capital formation for
20.4 percent. (See Table 2)
23 January 2015
Table 2. National Accounts of the Philippines By Industry Group and By Type of

Expenditure, 2012 - 2013 and 2014 Q1-Q3 (share in GDP; at constant 2000
prices; in %)
Industry Group / Expenditure Share
2012
2013
2014 Q1-Q3
11.1
9.0
2.1
32.2
1.1
22.1
5.5
3.4
56.7
7.6
10.4
8.5
1.9
32.8
1.1
22.7
5.6
3.3
56.8
7.5
9.6
7.9
1.7
33.0
1.2
22.8
5.6
3.4
57.4
7.6
16.7
16.5
16.2
6.8
10.8
7.1
10.9
7.4
11.4
4.4
4.2
4.3
10.5
10.5
10.6
70.4
10.6
18.3
20.4
8.4
9.9
1.6
0.5
48.4
38.4
9.9
47.6
38.3
9.4
69.4
10.7
22.1
21.3
8.6
10.7
1.4
0.6
44.6
35.9
8.7
46.8
37.2
9.7
67.7
11.1
20.4
21.7
8.6
11.2
1.3
0.6
50.3
40.7
9.6
48.6
37.9
10.7
100.0
100.0
100.0
By Industry Group
1. Agriculture, Hunting, Forestry and Fishing
a. Agriculture, Hunting, Forestry
b. Fishing
2. Industry Sector
a. Mining and Quarrying
b. Manufacturing
c. Construction
d. Electricity, Gas and Water Supply
3. Service Sector
a. Transportation, Storage, and Communication
b. Trade and Repair of Motor Vehicles, Motorcycles,
Personal and Household Goods
c. Financial Intermediation
d. Real Estate, Renting and Business Activities
e. Public Administration and Defense:
f. Other Services
By Expenditure Share
1. Household Final Consumption Expenditure
2. Government Final Consumption Expenditure
3. Capital Formation
a. Fixed Capital
i. Construction
ii. Durable Equipment
iii. Breeding Stock and Orchard Development
iv. Intellectual Property Products
4. Exports of Goods and Services
a. Export of Goods
b. Export of Services
5. Less: Imports of Goods and Non-Factor Services
a. Import of Goods
b. Import of Services
Gross Domestic Product
Exports on the other hand seemed to recover strongly with 11.1% growth in the first three quarters
of 2014 compared to a contraction of 2.2% in the same period the year before. Looking at the
quarterly performance however shows what had been rapid export growth of 13.5% in the first
quarter slowing as the year progressed to 9.8% in the third quarter. The first quarter growth was in
any case starting from a low base. The impact of an export slowdown on the economy is moderated
by the largest part of exports actually being in low value-added enclaves hardly integrated with the
rest of the domestic economy.
Foreign demand is particularly dragged down by the protracted global economic crisis. In the first
three quarters of 2014, some 85% of exports went to the countrys top 10 trading partners including
Japan (22.9% of total exports), US (14.1%), China (13.3%), Hong Kong (8.7%) and Singapore (7.3%),
10
23 January 2015
among others. This trade profile should be interpreted cautiously though, because exports to these
and other countries especially in the Association of Southeast Asian Nations (ASEAN) is actually
just trade in intermediate goods along a global assembly line or value chain as it is currently
fashionable to call with final goods still destined for the slow-growing major US, European and
Japanese markets representing 61% of the global economy. (See Charts 5 and 6)
Most of the worlds biggest economies are still facing major problems of weak demand, investment,
employment and growth. Global growth was barely better in 2014 from the year before in the
countries making up the largest share of the world economy.
The European Union grew a little faster at an estimated 0.8% in 2014 but is fettered by high
unemployment and large sovereign debt so is seen to hardly grow in 2015. Japan slipped into recession
again in the third quarter of 2014, grew at an estimated 0.1% in the whole of 2014, and is seen to
barely improve to 0.6% this year. Chinas economy continued to slow to 7.4% in 2014 much below the
sustained double-digit rates of previous years and is facing growing domestic asset bubbles. Among
the biggest advanced economies, only the US is seeing some improvement, however slight, with 2.4%
growth in 2014 projected to increase to 3.6% in 2015, which is at least the fastest growth since 2005. The
situation in Europe, Japan and China may however yet stifle this seeming US turnaround.
Unemployment in the Organisation for Economic Co-operation and Development (OECD) countries
remains high and well above pre-crisis levels. Meanwhile the so-called BRICS (Brazil, Russia, India,
China, and South Africa) continued to collectively slowdown and this year are projected to grow at
their slowest pace in six years. The BRICS were for a time seen as an alternative growth center to the
advanced capitalist powers.
Chart 5. Real GDP Growth Rate of Selected Countries, 2013 (in %)
10.0
8.0
Real GDP (in %)
6.0
4.0
2.0
Viet Nam
Thailand
Singapore
Philippines
Myanmar
Malaysia
Lao PDR
Indonesia
Cambodia
Brunei Darussalam
Brazil
India
Russia
China
Japan
South Africa
(2.0)
European
Union
United
States
(4.0)
Country
Source: World Bank World Development Indicators
23 January 2015
11
Chart 6. Share in Global GDP of Selected Countries, 2013 (in %)
United States
25.6%
European Union
26.9%
The rest of the world

21.1%
Association of
Southeast Asian Nations
2.4%
South Africa Brazil India Russia
0.6%
2.1% 2.6% 1.8%
China
8.6%
Japan
8.5%
Source: World Bank World Development Indicators
The most recent forecast of the International Monetary Fund (IMF) in its World Economic Outlook
(WEO) Update of January 2015 revised global growth estimates downward to 3.5% for 2015, which is
only a very marginal increase from the expected 3.3% growth in 2014. This already factors in the net
benefit of cheap oil, which is seen as offset by other adverse factors mainly related to the persisting
internal economic problems of many countries. Rather than recovering, the world capitalist economy
is at the very least stagnating and may yet slide into a new downturn.
Lackluster government spending is not the main reason for the slowdown. While the
government argued that lower than expected public spending was the culprit behind the slowing
growth, this was a secondary and at most merely aggravating factor. This means that even if rampedup government spending in 2015 boosts growth it will still not necessarily be addressing the main
reasons for the slowdown. Agriculture for instance may still continue to slide especially if scant
government resources continue to be directed to the sector.
The public sector factor is not enough to explain what has been a generalized economic slowdown
felt across the economy including in sectors and subsectors hardly connected with government
spending. (See Table 1) The idea may have been played up to divert from underlying problems as
well as to indirectly assign blame to critics of the Priority Development Assistance Fund (PDAF),
Development Acceleration Program (DAP) and presidential pork barrel.
The public sector is also not so dominant in the economy that a small drop in spending in the first three
quarters of 2014 would have such repercussions. On the supply side, public administration and defense
whose growth slowed to 1.3% only directly accounted for 4.3% of GDP. (See Tables 1 and 2) On the
demand side, government final consumption expenditure which shrank by just 0.2% only accounted for
11.1% and public construction which shrank 3.5% accounted for just 1.6% of total expenditure.
12
23 January 2015
All things equal, the slight uptick in projected government spending next year will contribute to
growth in 2015. The national government budget increases by 15.1% to Php2.61 trillion in 2015
(compared to a 13.3% increase in 2014); less interest expenses, it increases by 16.8% to Php2.33
trillion (compared to a 14.2% increase in 2014). Assuming that the budget can be managed to be
spent as proposed, national government disbursements will increase slightly to a projected equivalent
of 18.5% of GDP in 2015 from a programmed 17.8% in 2014.
Most of the impact will be from the additional spending on transport infrastructure including on
public-private partnership (PPP) projects. Though certainly necessary for a modern economy, the
focus on big-ticket projects mainly in and around NCR can be questioned as reinforcing existing
regional and urban infrastructure biases. There is also supposed to be spending for post-disaster
reconstruction in Yolanda-affected Eastern Visayas and other disaster-struck areas. These are partial
countervailing factors to the dampening effect on construction of a weaker real estate market.
The increased dependence of the Philippine economy on external sources of demand has to
be rectified and domestic sources of demand prioritized and developed. Economic growth
essentially reflects production in response to demand, so in this sense, it is demand that is the
most proximate driver of an economy. The amount of effective demand and purchasing power is
in turn determined by the level of production and how the gains from this are distributed. Gains
are distributed in various ways: between workers and capitalists, between nearby and distant local
economies, between domestic and foreign providers of inputs, and others.
Understanding economic growth in this way explains why domestic production from farms and Filipino
industry is particularly important as the ultimate driver of demand and why services or externally driven
sources are insufficient. The most important recent sources of growth need to be understood in this
way. Real estate and construction, BPOs, trade, tourism and finance spurred growth in varying degrees
as well as created wealth for a few. But they are poor quality sources of growth and still undesirable as
main drivers of the economy in being circumstantial, self-limiting and not working for the poor.
They have weak multiplier effects. A growth source will be inclusive if it involves many workers and
other sectors as providers or as recipients of goods and services. However, as had been discussed
in more detail in the 2013 Yearend Birdtalk,the recent growth sectors are minimally connected with
and do not build significant linkages with other parts of the domestic economy. Real estate and
construction is geographically concentrated in Metro Manila and its surrounding provinces. BPOs are
import-dependent activities with the main domestic value-added being cheap young Filipino labor
and office space. Tourism generates local incomes but is still essentially a low productivity and lowinput service activity.
They are also reliant on external factors rather than on a vibrant local economy. The problem with
overseas remittances is not just its dependence on the availability of work abroad but also that
remittances will never be an income flow higher than the salaries paid by foreign employers. This is
very different from domestic production, which contributes to the economy not just the salaries paid
but also the rest of the value of the good or service produced, the technology used to make these, and
employment. It is a similar situation with overwhelmingly foreign capital-dominated BPOs whose only
essential difference is that the operation is physically located in the Philippines rather than abroad.
The most fundamental weakness of recent growth sources however is that they did not contribute to
building domestic agriculture or industry and if anything actually substituted for these. Such domestic
production is necessary to create jobs and raise incomes, to develop Filipino technological capacity,
and to strengthen internal sources of demand as the main drivers of growth. These are what extend
the growth impulse and make it more sustainable.

23 January 2015
13
Table 3. Average Daily Basic Pay, 2012 and April 2014 (in Php)
At current prices
Industry Group
2012
All Industries
Agricultural
Agriculture, Hunting and Forestry
Fishing
Change,
2012-Apr 2014
2012
2014 April
Change,
2012-Apr 2014
333.82
166.74
165.27
191.68
328.46
317.21
330.03
553.79
310.65
383.48
365.89
181.53
180.96
192.48
338.57
294.41
345.39
502.58
323.61
422.82
32.07
14.79
15.69
0.80
10.11
(22.80)
15.36
(51.21)
12.96
39.34
256.59
128.16
127.03
147.33
252.47
243.82
253.67
425.66
238.78
294.76
263.44
130.70
130.29
138.59
243.77
211.98
248.68
361.86
233.00
304.43
4.16
2.54
3.26
(8.74)
(8.70)
(31.84)
(4.99)
(63.80)
(5.78)
9.67
282.05
299.68
17.63
216.79
215.77
(1.02)
280.86
449.88
579.26
320.66
498.37
638.57
39.80
48.49
59.31
215.88
345.80
445.24
230.88
358.83
459.77
15.00
13.03
14.53
522.50
563.42
40.92
401.62
405.66
4.04
533.66
588.58
54.92
410.19
423.78
13.59
677.62
484.73
750.33
520.56
72.71
35.83
520.85
372.58
540.24
374.80
19.39
2.22
275.91
291.41
15.49
212.08
209.81
(2.27)
114.41
123.25
8.84
87.94
88.74
0.80
1,185.61
334.78
(850.83)
911.31
241.04
(670.27)
Industry
Mining and Quarrying
Manufacturing
Electricity, Gas and Water Supply a
Construction
Services
Wholesale and Retail Trade, Repair of
Motor Vehicles, Motorcycles and
Personal and Household Goods b
Hotels and Restaurants c
Transport, Storage and Communications d
Financial Intermediation e
Real Estate, Renting and Business
Activities f
Public Administration and Defense,
Education
Health and Social Work g
Other Community, Social and Personal
Activities h
Private Households with Employed
Persons i
Extra-Territorial Organizations and Bodies j
2014 April
At 2006 prices
Notes:
1. Excludes those paid on commission basis, honorarium and boundary as in the case of jeepney/bus/tricycle drivers.
2. Industry grouping is in accordance with the 1994 Philippine Standard Industrial Classification (PSIC) for 2001-2011 and 2009 PSIC for 2012 and 2013.
However, average daily basic pay for certain industry groups for 2012 and 2013 were either computed or compared for the purpose of annual comparison:
a
- Electricity, Gas and Water Supply = "Electricity, Gas, Steam and Air Conditioning Supply" and "Water Supply; Sewerage, Waste Management and
Remediation Activities"
- Wholesale and Retail Trade, Repair of Motor Vehicles, Motorcycles and Personal and Household Goods = "Wholesale and Retail Trade; Repair of Motor
Vehicles and Motorcycles"
- Hotels and Restaurants = "Accommodation and Food Service Activities"

- Transport, Storage and Communications = "Transportation and Storage" and "Information and Communication"
e
- Financial Intermediation = "Financial and Insurance Activities"
f
- Real Estate, Renting and Business Activities = "Real Estate Activities", "Professional, Scientific and Technical Activities" and "Administrative and Support
Service Activities"
d
- Health and Social Work = "Human Health and Social Work Activities"
- Other Community, Social and Personal Activities = "Arts, Entertainment and Recreation" and "Other Service Activites"
i
- Private Households with Employed Persons = "Activities of Households as Employers; Undifferentiated Goods and Services-producing Activities of
Households for Own Use"
h
- Extra-Territorial Organizations and Bodies = "Activities of Extraterritorial Organizations and Bodies"

3. Annual data are averages of the four survey rounds of the Labor Force Survey.
Sources: Philippine Statistics Authority-National Statistics Office Labor Force Survey as cited in Philippine Statistics Authority-Bureau of Labor and
Employment Statistics December 2013 Current Labor Statistics
14
23 January 2015
Such a process certainly takes time and requires a strategic view, but there are also immediate
growth-inducing measures. Given political will, immediate measures like free land distribution, farmer
support and large wage increases can be implemented in a fairly short period of time. These will
directly and indirectly expand the purchasing power of the countrys over 28.3 million farmers, wage
and salary workers, low-paid employees and informal sector workers.
Low wages stifle domestic demand. There were over 21.4 million wage and salary workers in the
country last year, according to the National Statistics Office (NSO). This is a potentially very large
market whose demand for and consumption of various goods and services could spur economic
activity. However this considerable potential is stifled by how the average daily basic pay in the
country as of April 2014 is just Php365.89. (See Table 3) Such low pay greatly inhibits workers
effective demand.
The government maintains a low-wage policy on various specious arguments such as maintaining
competitiveness for foreign investors, that wage hikes are necessarily inflationary and that employers
cannot afford a substantial wage hike. This low-wage policy is efficiently implemented by keeping the
mandated minimum wage low to the point of not even being enough for workers and their families to
live decently.
The NCR minimum wage is the highest minimum wage in the country but can still be taken as an
example. (See Table 4) The minimum wage is to begin with less than half the estimated family living
wage. This is aggravated by how wage hikes are so few and small that the minimum wage is barely
even able to keep up with the rising cost of living for instance even falling in real value since 2012.
Unfortunately the government has not only resisted meaningful wage increases but is actually taking
steps to lower the received minimum wage through the shift to a so-called two-tier wage system,
composed of a basic floor wage and a productivity-linked tier. This sets the floor wage too low at
somewhere between official poverty thresholds (which are grossly underestimated) and average
pay actually received (which only reflects what employers are willing to give); employers meanwhile
can choose to forego the productivity tier. Implementation of the system advanced in 2014 with the
Department of Labor and Employment (DOLE) reporting that 92 of 107 minimum wage rates in eight
of 17 regions nationwide are Tier 1-compliant with the remainder due in 2015 and 2016.
Table 4. Daily Wage Indicators for the NCR, December 2012-2014
Indicator
Dec 2012
Dec 2013
Dec 2014
Daily NCR minimum wage (in Php)
456.00
466.00
466.00
Real minimum wage

(2006=100; in Php)
363.64
362.36
356.54
1,033.17
577.17
1,059.53
593.53
1,076.84
610.84
44.14
43.98
43.27
Estimated family living wage (in Php)

Wage gap (in Php)
Daily NCR minimum wage
as Percentage of
Estimated family living wage (in %)
Sources of basic data: National Wages and Productivity Commission, and Philippine
Statistics Authority-National Statistics Office
23 January 2015
15
A substantial wage hike that will improve the welfare of workers, spur domestic demand and partially
reduce inequality is possible. The countrys largest labor center, the Kilusang Mayo Uno (KMU), last
year led various labor groups in launching an all-workers unity campaign for a Php16,000 national
minimum wage. The minimum wage is a national wage counterposed to the current regionalized
system that is seen to have facilitated rather than counter low wages.
IBON estimates that a Php16,000 minimum wage is, like the Php125 nationwide across-the-board
wage hike demand it replaces, within the capacity of employers to give. Implementing this will
only mean on average 17.1% cut in the profits of firms, which still leaves them with a considerable
profit. (See Table 5) Accepting this slight reduction and not passing the slightly higher labor costs to
consumers also means that the wage hike need not be inflationary.
Table 5. Estimated Cost of a Php16,000 National
Table 5. Minimum
EstimatedWage
Cost of a Php16,000 National
Minimum
Wage
Indicator
Amount
Indicator
Total number of establishments
Amount
36,699
Total number of establishments

employees
36,699
4,022,101
Total
number
of employees
Proposed
wage
hike (in Php)
4,022,101
168.78
Proposed
hike (in Php)
Additional wage
per employee
per month
(computed
by
EMR)
Additional per employee per month
(computed
by EMR)
Additional per
employee per year
(13
months)
Additional per employee per year
(13 months)
Total
profit (in billion Php)
Total profit
billion Php)
cost of(inproposed
wage hike
(in billion
Php)
Total
cost of
proposed wage hike
(in billion
Total
profitPhp)
less cost of proposed wage hike
(in
billion
Php)
Total profit less cost of proposed wage hike
168.78
5,133.73
5,133.73
66,738.43
66,738.43
1,573
1,573
268
268
1,304
(in billion
Php)
Cut
in profits
(in %)
1,304
17.1
Cut in profits (in %)
17.1
*EMR
-Equivalent
Monthly
Rate Statistics Authority-National
Source
of basic data:
Philippine
Statistics
OfficePhilippine
2012 Census
of Philippine
Business and
Source of
basic data:
Statistics
Authority-National
Industry
Statistics Office 2012 Census of Philippine Business and
Industry
The impact was estimated using establishment revenue/cost and employment data from the NSO
Census of Philippine Business and Industry (CPBI) 2012 and latest available daily basic pay figures
from the Labor Force Statistics. (See Table 5) Specifically, the impact was estimated by computing
the needed increases in respective regional average daily basic pay to achieve a Php16,000 monthly
rate and then weighting these by the distribution of wage and salary workers in 2013, resulting in
a weighted average increase of Php168.78. This increase was then applied to total employment of
establishments with employment of 20 or over according to the CPBI.
Higher wages are among the most effective means to improve the welfare of workers and their
families and to make growth more inclusive. A meaningful wage hike moreover has dynamic and
16
23 January 2015
multiplier effects on the economy. Transforming a portion of profits to higher wages is a concrete
shift to domestic demand and wage-led growth, which is an internal and more sustainable source of
economic growth than external markets, especially amid the protracted global crisis.
The transfer of money from rich to poor households increases aggregate demand and stimulates the
economy. High-income households have a higher propensity to save and low-income households,
which are lacking even in basic necessities, a higher propensity to consume. A peso will more likely be
spent (and spent locally) than saved if this goes to a poorer household instead of a wealthier one.
This beneficial effect is further magnified by how low-income households have a greater tendency
to purchase goods and services from the informal sector. This means that much more of every peso
of additional wages going to low-income families will go to the informal sector of vendors, sari-sari
stores, small eateries, jeepney and tricycle drivers, and others than if this peso were spent by highincome households on imported luxury goods, vacations abroad or the like. The informal economy
especially in worker communities will then also benefit from a wage hike.
Micro, small and medium enterprises (MSMEs) will gain to the extent that they produce goods
and services for the domestic market. The government could even complement this increased
wage-driven demand by providing small producers with cheap and easy credit, giving marketing
support, nurturing locally-integrated supply chains, and improving their scientific and technological
capabilities. Over time, this will increase local production, generate jobs and enable higher wages in a
virtuous and dynamic spiral.
The slowdown will be softened by the fortunate circumstance of low oil prices. Cheap global
oil prices will temporarily boost the Philippine economy and partially allay its underlying weaknesses
in 2015. The lower oil prices are expected to persist this year, which will be moderating the domestic
slowdown, before rising marginally in 2016. Still, this support to economic growth is from an external
and temporary factor rather than from the fundamentals of an improving domestic economy.
Oil is the Philippines single biggest source of energy and provides some 32% of its energy needs,
according to the Department of Energy (DOE); over 95% of the countrys oil is imported, mainly from
the Middle East and largely from Saudi Arabia and United Arab Emirates. Lower fuel prices, energy
and transport costs will lessen inflationary pressures. The BSP will be more restrained with interest
rate hikes, which helps domestic credit from becoming more expensive. A modest boost in traderelated sectorsis also possible to the extent that exports to our major trading partners increase. The
government will however lose a portion of its oil-related tax and other revenues, which could mean
somewhat increased public debt.
Global oil prices have dropped steeply since September 2014. The price of Philippine benchmark
Dubai crude for instance fell by some 45% from being US$108.01 per barrel in June to an almost
six-year low of US$60.39 per barrel by December; benchmark crude prices continued to fall in the
opening weeks of 2015. The Aquino administration had previously projected a much higher US$90110 per barrel for 2015.
Oil prices are falling from a confluence of factors. There is still weak demand from a sluggish global
economy (including by China, the worlds biggest net importer of oil) even as supply increases
especially from the US (now the worlds biggest oil producer). The resulting tendency for falling
global oil prices materialized and was affirmed with the decision in November by the Organization
of Petroleum Exporting Countries (OPEC), the worlds largest oil cartel, to maintain oil production
and supply at current levels.The OPEC decision has been interpreted as Saudi Arabia seeking to
keep market share by stifling the US oil and gas production boom. However it has also been seen as

23 January 2015
17
geopolitically motivated to undermine major oil producers unfriendly to the US in particular Russia,
Venezuela and Iran. These big oil exporters are adversely impacted by falling oil export earnings and
oil-related government revenues. Less foreign exchange means additional pressure on domestic
currencies and interest rates which weakens growth, such as in Russia. Less government revenues
means less funding for domestic programs such as social spending in Venezuela or fuel subsidies
in Iran, which is an opportunity for any political opposition. Russia has been reported to rely on oil
revenues for up to 45% of the government budget. A notable beneficiary from the cheaper oil is
China the worlds largest or second-largest economy, depending on how this is measured which
will get some stimulus from the correspondingly cheaper energy.
The impact of cheaper oil on the global economy as a whole should not be overstated though. It is
likely only temporary while high production and supply is maintained. More importantly, among the
major underlying reasons for the lower oil prices is sluggish global economic growth and demand
from economic problems that will not be fixed merely by cheaper oil. Unexpected oil price shocks are
also still possible such as from worsening conflict in the Middle East. And while it is also too early to
tell it is possible that investment in new exploration and development especially in unconventional
and more expensive oil sources such as deep sea oil fields, shale and tar sands will be affected
which would increase price pressures in the future
The effect of pre-election spending on growth is uncertain and, if anything, previous preelection years show that a slowdown despite such spending is more likely. The possibility has
been raised that pre-election spending will boost growth in 2015 (and later in the first semester of
2016). There will certainly be additional election-related spending for various private campaignrelated expenses above the normal level of spending for media, printing, transport, food,
accommodation, communication and the like as well as greater public spending by the incumbent
to leverage its anointed successor.
Yet while this additional spending will contribute to growth, all things equal, it is a different matter to
conclude that this necessarily means that growth will be faster in 2015 than in 2014. On the contrary,
the experience in the last four presidential elections in 1992, 1998, 2004 and 2010 has more often
been of a slowdown in the pre-election year rather than an uptick in growth. Real GDP growth was
slower in 1991 (negative 0.6%) than 1990 (3.0%), slower in 1997 (5.2%) than in 1996 (5.8%), and slower
in 2009 (1.1%) than in 2008 (4.2%); the only exception was when growth was faster in 2003 (5.0%)
than in 2002 (3.6%).
This is not to say that election spending did not contribute to growth only that whatever additional
election-related spending contributed to growth, this has not been enough to ensure that growth
accelerates in the pre-election year from the year before it. Other factors at play that may be more
dominant include investor uncertainty before a change in administration a factor heightened by
how personalistic ties to political elites still matter so much for businesses or exogenous shocks
like global economic conditions and natural disasters. On the other hand, election years per se are
generally more positive in terms of growth with 1992, 2004 and 2010 exhibiting faster rates than their
respective previous years; 1998 was an exception with the Asian financial crisis inducing not just a
slowdown but actually a contraction.
The country remains among the poorest performers in Southeast Asia. Philippine development
performance still compares poorly with its ASEAN neighbors despite its growth being the fastest in
the region. Recent trends in unemployment, poverty reduction and the human development index
(or HDI, which is a composite of health, education and income indicators) are not comparatively
exceptional, which is consistent with longer historical trends. (See Table 6)
18
23 January 2015
Table 6. Key indicators of ASEAN countries, 2009-2013

Indicators and
ASEAN country
Real Gross Domestic Product
growth rates (in %)
Brunei Darussalam
Cambodia
Indonesia
Lao PDR
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam
Unemployment Rates
(% of total labor force, ILO estimates)
Brunei Darussalam
Cambodia
Indonesia
Lao PDR
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam
Poverty Gap at National Poverty Lines
(in %)
Brunei Darussalam
Cambodia
Indonesia
Lao PDR
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam
Poverty rates at US$2 per day
(PPP, in %)
Brunei Darussalam
Cambodia
Indonesia
Lao PDR
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam
2009
2010
2011
2012
2013
(1.8)
0.1
4.6
7.5
(1.5)
1.1
(0.6)
(2.3)
5.4
2.6
6.0
6.2
8.5
7.4
7.6
15.2
7.8
6.4
3.4
7.1
6.5
8.0
5.2
3.7
6.1
0.1
6.2
0.9
7.3
6.3
8.0
5.6
6.8
2.5
7.7
5.2
(1.8)
7.4
5.8
8.5
4.7
nda
7.2
3.9
1.8
5.4
3.5
7.9
1.4
3.7
3.5
7.5
4.3
1.5
2.6
3.7
0.4
7.1
1.4
3.4
3.5
7.3
3.1
1.0
2.6
3.7
0.3
6.6
1.4
3.1
3.4
7.0
2.9
0.7
2.0
3.8
0.2
6.1
1.4
3.0
3.3
7.0
2.8
0.7
1.8
3.8
0.3
6.3
1.4
3.2
3.4
7.1
2.8
0.7
2.0
5.3
2.5
0.8
5.4
-
4.7
2.2
5.9
4.2
2.1
-
3.1
1.9
5.5
5.1
4.5
1.8
-
11.2
0.2
13.6
-
10.6
14.3
0.6
4.2
10.3
13.0
-
22.4
14.1
2.9
0.844
0.566
0.665
0.543
0.766
0.507
0.647
0.868
0.715
0.622
0.844
0.571
0.671
0.549
0.768
0.514
0.651
0.894
0.716
0.629
0.846
0.575
0.678
0.560
0.770
0.517
0.652
0.896
0.720
0.632
0.852
0.579
0.681
0.565
0.773
0.520
0.656
0.899
0.722
0.635
Human Development Index (HDI)

Brunei Darussalam
Cambodia
Indonesia
Lao PDR
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam
0.852
0.584
0.684
0.569
0.773
0.524
0.660
0.901
0.722
0.638
Sources: World Bank World Development Indicators and United Nations Development Programme Human
Development Reports
23 January 2015
19
Indonesia, Thailand, Vietnam, Singapore and Malaysia for instance already had lower unemployment
rates to begin with but percentage point-wise reduced these by even more. In terms of poverty,
the partial information at hand indicates that Indonesia, Cambodia and Vietnam have been able to
reduce their poverty rates by more than the Philippines. A higher HDI indicates progress, and by this
measure the Philippines is a lagging seventh in terms of improvement in Southeast Asia followed only
by Malaysia, Brunei and Thailand (which all had much higher HDI values to start with). This relative
performance of ASEAN countries that have generally been less enthusiastic about globalization than
the Philippines should give the Aquino administration pause with its globalization and free market
policies.
Worsening backwardness
The adverse turn in 2014 needs to be interpreted against long-term economic trends for a better
understanding of why the country remains so underdeveloped. Over the last 60 years, measured
economic growth has more or less moved around a trend rate of 5%, thus the recent growth
slowdown in that direction is in a sense more normal than sustained or rising above-trend growth.
The recent episode of relatively rapid consecutive above-trend growth lasted just three years so far,
over the period 2012-2014, which is too short from which to conclude that the economy has settled
on a new trend rate. On the contrary, looking at a wider range of macroeconomic indicators beyond
aggregate growth does not indicate that any positive structural transformation is happening.
This leads to the point that beyond the specific circumstances for the growth slowdown mentioned
earlier is the more powerful underlying factor of a lethargic economy lacking a solid base in
agricultural and industrial production. This is most of all what hampers urban and rural job
generation, stifles incomes and livelihood opportunities, fetters local science and technology, and
hinders economy-wide dynamism.
Neoliberal free market policies of globalization and greater integration in the global economy have
adversely shaped the Philippine economy. Trade and investment liberalization, privatization and
deregulation have been implemented for some three decades now and are even being deepened.
But rather than bring development, these policies repressed agriculture, hindered national
industrialization, and bloated a mixed but largely ineffective services sector. Public utilities and
services have also become increasingly unaffordable. These trends are reflected in the patterns of
business activities in the country of foreign corporations and oligarchic Filipino elites.
The decline in 2014 is consistent with the economys long-standing problems. The slowing
economy is surprising only if it had been thought that the country is already and decisively on a new
and higher growth path. Yet looking beyond the growth rates on the contrary shows little change in
the production fundamentals of the economy that would cause such growth to be sustained. This
makes the slowdown expected and only a matter of time.
Producers, consumers, businesses, firms and farmers respond to the opportunities and incentives
defined by the government through its macroeconomic policies. Globalization policies have been the
norm in the three decades since the 1980s. The economy has responded by putting the Philippines
on a trajectory of deteriorating industry and agriculture astride an abnormally growing service sector.
(See Chart 7) Liberalization, privatization and deregulation fostered the growth of consumerism
and wholesale/retail trade, telecommunications and transport, power and water services, banking
and finance, and real estate the economys fastest growing sectors at the same time eroded the
economys fundamentals in agriculture and manufacturing.
20
23 January 2015
Chart 7. Gross Domestic Product By Industry Share, 1946-2014*

(at constant 2000 prices; in %)
60
57.4 Services
50
40
33.0 Industry
30
22.8 Manufacturing
20
9.6 Agriculture,
Fishery and
Forestry
10
1946 1950
1960
1970
1980
1990
2000
2010
2014
Q1-Q3
-13
Year
* - 2014 data based on 1st-3rd quarters only
Source: Philippine Statistics Authority-National Statistical Coordination Board National Accounts of the Philppines
These trends are reflected in recent economic performance. The share in GDP of the trade sector rose
from 15.8% in 2000 to 16.2% in the first three quarters of 2014, of transport, communication and
storage from 6.1% to 7.6%, of financial intermediation from 5.2% to 7.4%, and of real estate, renting
and business activities (which includes BPOs) from 9.3% to 11.4% while that of agriculture decreased
from 14.0% to 9.6% and the share of manufacturing fell from 24.5% to 22.8 percent. Leaps in wealth of
the countrys super-rich, rising incomes and conspicuous mall consumption by a higher-income slice
of the middle class, and a burst of infrastructure and building projects actually obscured the steady
erosion of the national economy.
These are also reflected in trends in corporate revenues, according to data from Business Worlds Top
1,000 corporations. The share in gross revenues of the Top 1,000 corporations of the trade sector rose
from 13.1% in 2001 to 18.8% in 2013, of transport, communication and storage from 7.3% to 8.1%,
and of finance, real estate and business activities (which includes BPOs) from 14.0% to 19.2 percent.
Manufacturings share fell from 49.8% to 36.9% while that of corporate agriculture (not reflective of
the overall agricultural sector) rose from 1.0% to 1.7 percent.
The growing services sector relative to the other productive sectors is more than anything an indication
of the economys worsening backwardness. This is despite how BPOs, high-end retail, visible real estate,
telecommunications, and finance have conjured an illusion of capitalist modernization. These are
however only small parts of the economy and in any case services by their nature do not create as much
employment and incomes as industry and agriculture. (See Table 2) They are also much less integrated
or directly encouraging of the economy in terms of using domestic resources, purchasing local goods,
and developing Filipino science and technology. The BPO and telecommunications sectors for instance
are wholly dependent on imported equipment and technologies.
The recent growth episode is due to the confluence of lower interest rates, overseas remittances from
labor export, and foreign investment in BPOs rather than any resurgence in farm or industrial output.
This is why their momentary impact has not been enough to offset the inertia of underdevelopment
reflected in moderate trend growth and in backward production, high unemployment and deep poverty.
23 January 2015
21
In contrast the advanced capitalist, newly industrialized and socialist countries all took a trajectory of
industrial growth in their economic development seen in an increasing share of industry, especially
manufacturing, in total output and employment. Among others, there was a programmed weaning
from wholly imported products and technologies. Agricultural growth often also both spurred and
developed alongside industry. No country has been able to sustain growth or develop without such
production and only on the basis of services.
The countrys service-led economy increased the wealth of a few but is a development trap. The
deterioration of the countrys economic fundamentals is obscured by the conspicuous expansion and
accumulation of assets and wealth by the countrys biggest few oligarchs and their foreign partners.
A handful of conglomerates have accumulated massive profits from the economys fastest growing
sectors. These are however essentially services and moreover overly dependent on foreign capital,
technology and products.
More to the point they are commercial operations, utilities and services that do not build domestic
productive capacity that maximizes local human, natural and financial resources hence the
unending dependence on and payments for foreign capital, technology and products. From a
strategic perspective this is the principal reason for the countrys slow trend growth and chronically
high unemployment and poverty. The Philippines natural resources as well as large labor force and
potential domestic market are not being used to build a national economy with a strong agricultural
and manufacturing base.
The profile of the countrys largest corporations and its oligarchs sources of wealth reflect the
debilitating impact of three decades of globalization. A few dozen large conglomerates and families
dominate the economy. Although strictly not comparable, some indication of this is how the US$74.2
billion aggregate wealth of just the countrys 50 richest is equivalent to over a quarter (27%) of the
countrys US$272.1 billion GDP in 2013 covering a population of 100 million Filipinos. There is also a
concentration even among the 50 richest in the conglomerates built around and between the Sy, Tan,
Gokongwei, Consunji, Ty, Aboitiz, Ayala, Zobel, Lopez and a few other families.
More significant from a structural perspective is the marked dominance and concentration of
business interests in services, utilities and other non-production activities rather than in agriculture
or manufacturing. The countrys biggest capitalist enterprises and biggest fortunes are largely in
retailing and trade, real estate and construction, hotels and restaurants, transport and storage,
telecommunications, water and power, and extractive mining. The recent real estate construction boom
has made residential, office and infrastructure construction, malls and banking particularly profitable.
Some manufacturing industries have developed in food, beverage and tobacco although these are
all light consumer industries and still heavy users of foreign intermediate and producer goods. There
are still no Filipino medium- and heavy-industries. Although there are scattered firms in electronics,
automobiles, petrochemicals, cement, pharmaceutical and others, these are generally low valueadded and foreign capital-dependent operations. The repressed domestic market in any case prevents
local economies of scale. The agricultural sector meanwhile remains generally backward as indicated
by its volatility and undue vulnerability to weather conditions with low productivity and widespread
rural poverty.
There is not just deindustrialization but also denationalization of manufacturing. National income
accounts show manufacturing at some 22.8% of GDP in the first three quarters of 2014, which
continues a decline since the 1980s that has reduced the sector to as small as its share of the
economy in the 1950s.
22
23 January 2015
But domestic manufacturing sector is even overstated by national accounts data which does not
distinguish between Filipino manufacturers and foreign firms merely located in the country. As it is
some 71% of supposed Philippine manufacturing is actually by foreign transnational corporations
(TNCs) approximated by using the share of TNCs in manufacturing revenues among the countrys
Top 1,000 firms over the decade 2004-2012. This is important because foreign firms will have a
tendency to import most of their inputs, protect their technologies, and avoid developing local
manufacturing which would be a potential competitor. Electronics exports for instance which are
produced mainly by TNCs are estimated to have an import content of at least 80-90% of their value.
The economys character as a source of cheap labor, cheap raw materials and captive market
for foreign goods and services has worsened. Three decades of neoliberalism and capitalist free
market globalization has intensified the economys character as providing resources and profitable
opportunities for foreign capital. This is a long-standing structural problem especially in the absence
of national industrialization.
The Philippines provides cheap labor mainly through labor export, export enclave manufacturing and
BPO service exports. Depending on the data sources used, this includes anywhere from 6.7 million to
over 13 million Filipino workers who earn salaries for their families but nonetheless directly contribute
more to foreign economies and corporations than to the Philippines.The Commission on Overseas
Filipinos (COF) latest estimate of the stock of overseas Filipinos is 10.5 million as of December 2012
consisting of 4.9 million permanent, 4.2 million temporary and 1.3 million irregular workers. This is a
huge part of the Philippine labor force whose work contributes far more to their host economies than
they get paid in low migrant salaries. Poor job prospects in the country continue to force Filipinos
abroad where the 1.10 million deployed overseas Filipino workers in the first seven months of 2014
was equivalent to a record 5,201 leaving daily; this rate is slightly more than the 5,031 leaving daily in
2013 (with 1.84 million deployed for the year).
The Philippine Economic Zone Authority (PEZA) in turn reports 1.2 million employees in 306 economic
zones nationwide as of end-November 2014 working in electronics and semiconductors, fabricated
metals, transport equipment and parts, electrical machinery, precision instruments, rubber and plastic,
chemical products, and information technology services. They are overwhelmingly employed by
foreign capital. PEZA reports that 77.8% of locator investments in economic zones are foreign, with
64.6% accounted for by Japan (30.7%), the US (16.5%), Netherlands (10.0%), and UK (7.5%). There
is virtually no domestic market for the intermediate goods these zones produce especially in the
absence of Filipino industry.
The Information Technology (IT) and Business Process Association of the Philippines (IBPAP)
meanwhile estimated direct employment of 1.0 million in BPO sector entering the fourth quarter of
2014; it is not clear how much of this reported figure is also reflected in the PEZA estimate. They are
likewise overwhelmingly employed by foreign capital. The BSPs most recent data for IT-BPO services
reported that the US$7.0 billion in foreign direct investment accounted for 95% of total equity in the
industry. The US is the single biggest investing country accounting for 37.3% of foreign equity. The
US, UK, Netherlands, Switzerland, Germany and Japan together account for 88.6% of foreign IT-BPO
investment with the balance from India, Australia, Singapore, Malaysia, Hong Kong and South Korea.
The country is also a significant provider of mineral and agricultural raw materials. The mining sector
serves foreign industry more than the Philippines. The Mines and Geosciences Bureau (MGB) reported
US$3.6 billion (Php153.8 billion) in exports of minerals, non-metallic minerals and mineral products
versus Php157.1 billion gross production value in mining referring to the total value or gross output
of minerals extracted in 2013. This implies that the value of mineral exports was equivalent to some
98% of mineral production, which is a rough indication of how much of the countrys raw mining
23 January 2015
23
resources are exported for mainly foreign gain. The figures are not strictly comparable but can
be interpreted in this way because of the verified lack of domestic processing and manufacturing
facilities (with just three copper and nickel plants in 2013).
The mining industry is quantitatively a small part of the national economy at just some 0.70.8% of GDP and accounting for just 0.6-0.7% of total employment since 2013. The loss of finite
mineral resources with minimal gain for the national economy is qualitatively significant however
in meaning a loss of Filipino resources for future national industrialization. There is an adverse
trend under the Aquino administration: MGB data reports annual mining investment increasing
from US$1.05 billion in 2010 to US$1.31 billion in 2013; the number of operating metallic mines
correspondingly increased from 28 to 41 over the same period (rising further to 46 by the third
quarter of 2014). The number of approved and registered mining applications grew from 679 in
2010, to 698 in 2013, and to 999 by the third quarter of 2014. The government is unfortunately
willing to forego the future use of national mineral resources merely for some current taxes, fees
and royalties.
Growing foreign investment is not contributing to national development. The economys
neocolonial character also establishes the context for assessing foreign investment. Foreign
capital can contribute to development but only if there is corresponding state regulation and
control. The government needs to ensure local content and linkages, technology transfer,
domestic reinvestment and other such gains for the domestic economy; equity and ownership
restrictions give the leverage to achieve these.
Net foreign direct investment (FDI) notably increased last year growing 64.1% to US$5.3
billion in the first 10 months of 2014 from US$3.2 billion in the same period the year before.
(See Table 7) Equity capital investments with identifiable sectors went mainly to financial
and insurance activities (US$830.8 million), manufacturing (US$244.9 million), and real estate
(US$140.3 million) which collectively accounted for 90% of equity investments.
Table 7. Total Net Foreign Direct Investments and Net Portfolio Investments,
2010-2013 and 2013-2014 January-October (in million US$)
Indicator
Total Net Foreign Direct Investments
Total Net Portfolio Investments
p
2010
2011
2012
2013
2013
Jan-Oct
2014
Jan-Oct p
1,070.4
4,610.4
2,007.2
4,077.6
3,215.4
3,911.3
3,663.9
4,224.5
3,242.0
3,597.9
5,320.1
(1,077.2)
- preliminary
Source: Bangko Sentral ng Pilipinas (BSP)
The governments contrary position of a liberal foreign investment regime however prevents the
country from getting any net benefits from these inflows. It also takes an excessively pro-Western
(especially pro-US) approach which preempts more creative economic opportunities with nontraditional powers such as the BRICS countries or Latin American economies assertive of national
independence.
Overall economic growth has been slowing despite FDI generally increasing since the start of
2014 and it remains to be seen how much of a boost the lag effect, or the delay between the
time of an intervention or economic action and the subsequent effect, will be. It is still unclear
24
23 January 2015
for instance which sectors of the economy, if any, will benefit from the equity and debt inflows.If
the investment goes largely to very import-dependent operations like enclave manufacturing, for
instance, then the multiplier effects on the domestic economy will be low.
The historical record of FDI in the Philippines and the absence of a more strategic attitude by
the government to foreign capital in any case do not give confidence that this record inflow
will be any more productive. Indeed the domestic sectors where foreign capital has flowed in
for decades especially manufacturing, utilities and mining remain as underdeveloped and
foreign-dependent as before.
Exclusionary economics
The countrys long-standing structural problems cause the countrys chronically poor
socioeconomic outcomes. Genuinely inclusive growth will have to mean a pattern of production
that systematically creates jobs, raises incomes, reduces inequality and keeps prices low.
The employment situation is not improving and the jobs crisis continues. The economy is
still in the middle of its worst crisis of joblessness in history: unemployment rates have stayed at
a record sustained high of between around 10-12% since 2000 or at an average of 11.0% over
the last 15 years. These are estimated by IBON adjusting for the official change in methodology
since 2005 that prevented comparability with previous years.
The Philippine Statistics Authority (PSA) officially reported 2.7 million unemployed, 6.9 million
underemployed and an unemployment rate of 6.8% in 2014. (See Table 8) PSA data for Region
VIII (Eastern Visayas) has been excluded since 2014 after super-Typhoon Yolanda for logistical
reasons; among others this removes some 100,000 unemployed from the figures. Again adjusting
officially released PSA data, IBON on the other hand estimates 4.3 million unemployed, the
same 6.9 million underemployed and an unemployment rate of 10.2%, for a total 11.2 million
unemployed and underemployed Filipinos in 2014.
Employment reportedly increased by 1.02 million in 2014, which was more than double the
456,000 increase the year before. The underemployment rate also improved to 18.4 percent.
The 1.02 million increase in employment however is actually of poor quality. In terms of hours
worked, part-time work (worked less than 40 hours) accounted for 918,000 or 90% of the
increment including 605,000 or 60% which was for less than 20 hours and those classified as
with a job but not at work for 108,000. (See Table 9) There was a slight albeit possibly statistically
insignificant decrease in full-time work.
By class of worker, the employment increase included 407,000 self-employed workers and
292,000 who worked without pay meaning that 699,000 or 68% of employment created was in
informal sector or unpaid family work, with only an additional 329,000 in wage and salary work.
These resulted in the number of self-employed workers increasing to 10.5 million and those who
worked without pay to 4.0 million in 2014. The largest part of the increased employment was also
not in production sectors with 48% in construction, trade, and accommodation and food services
and 7% in administrative and support services.
It can be argued that any additional work is better than none in giving an income stream for the
workers and their families. While this is true, the deeper point is to highlight that employment
trends in 2014 still confirmed the inability of the economy to create enough stable and
sufficiently remunerating jobs for the labor force. Moreover, 77% of the additional employment
23 January 2015
25
was created in agriculture, manufacturing, construction, trade, hotel and restaurants, and domestic
help which are all sectors whose average daily basic pay is less than the already low national average
of Php365.89 as of April 2014. (See Table 10)
Table 8. Labor Force Population*, 2012-2014 (levels in thousands; rate in%)
IBON Estimates a
Officially Reported
Indicator
Population (in thousands)
Total 15 years old and over
Labor Force
Employed
Underemployed
Unemployed
Not in the Labor Force
Rates (in %)
Participation Rate
Employment Rate
Underemployment Rate
Unemployment Rate
2012
2013
2014 p
2012
2013
2014 p
60,044
38,558
35,830
7,072
2,729
21,486
61,177
39,088
36,286
6,912
2,802
22,089
62,189
40,050
37,310
6,870
2,740
22,139
60,044
40,042
35,830
7,072
4,198
20,002
61,177
40,599
36,286
6,912
4,293
20,578
62,189
41,587
37,310
6,870
4,262
20,602
64.2
92.9
19.7
7.1
63.9
92.8
19.0
7.2
64.4
93.2
18.4
6.8
66.7
89.5
19.7
10.5
66.4
89.4
19.0
10.6
66.9
89.7
18.4
10.2
* - labor force population used here excludes Region VIII (Eastern Visayas) for comparability.
a
- IBON computes estimates on the labor force according to the old LFS unemployment definition for the purposes of comparison.
This is done by computing substitute labor force participation rates (LFPR) where changes in official reported annual average LFPR
are applied to the LFPR in 2007 that was still computed using the old labor force (and correspondingly unemployment) definition.
p
- preliminary
Source: Philippines Statistics Authority-National Statistics Office Labor Force Survey
Table 9. Employed Persons by Number of Hours Worked*, 2012-2014
2012
2014 p
2013
Indicators
(in thousand)
(in %)
(in thousand)
(in %)
(in thousand)
(in %)
Total Employed
35,380
100.0
36,286
100.0
37,310
100.0
At work
Part-time workers (worked less than 40 hours)
Full-time workers (worked 40 hours and over)
With job, not at work
35,388
13,101
22,288
441
98.8
36.6
62.2
1.2
35,898
12,442
23,457
388
98.9
34.3
64.6
1.1
36,814
13,360
23,454
496
98.7
35.8
62.9
1.3
Mean hours worked
41.3
41.9
* - Number of employed person used here excludes Region VIII (Eastern Visayas) for comparability.
p
- preliminary
Estimates based on the 2000 Census of Population Projections.
Details may not add up to total due to rounding off.
Source: Philippine Statistics Authority-National Statistics Office Labor Force Survey
26
23 January 2015
40.9
Table 10. Average Daily Basic Pay of Wage and Salary Workers by Major Industry Group, 2012-April 2014 (in Php)
Industry Group
2012
2013
April 2014
All Industries
333.82
349.16
365.89
Agricultural
Agriculture, Hunting and Forestry
Fishing
Non-Agricultural
Industry
Mining and Quarrying
Manufacturing
166.74
165.27
191.68
366.90
328.46
317.21
330.03
553.79
310.65
383.48
170.34
169.22
189.48
383.04
337.11
302.13
343.97
518.75
319.07
403.00
181.53
180.96
192.48
395.75
338.57
294.41
345.39
502.58
323.61
422.82
282.05
293.01
299.68
280.86
449.88
579.26
522.50
533.66
677.62
484.73
275.91
114.41
1,185.61
295.20
469.63
599.05
556.68
559.79
714.67
523.55
288.47
122.55
735.72
320.66
498.37
638.57
563.42
588.58
750.33
520.56
291.41
123.25
334.78
Electricity, Gas and Water Supply a

Construction
Services
Wholesale and Retail Trade, Repair of Motor Vehicles, Motorcycles and Personal
and Household Goods b
Hotels and Restaurants c
Transport, Storage and Communications d
Financial Intermediation e
Real Estate, Renting and Business Activities f
Public Administration and Defense, Compulsory Social Security
Education
Health and Social Work g
Other Community, Social and Personal Activities h
Private Households with Employed Persons i
Extra-Territorial Organizations and Bodies j
Notes:
1. Excludes those paid on commission basis, honorarium and boundary as in the case of jeepney/bus/tricycle drivers.
2. Industry grouping is in accordance with the 1994 Philippine Standard Industrial Classification (PSIC) for 2001-2011 and 2009 PSIC for 2012 and 2013.
However, average daily basic pay for certain industry groups for 2012 and 2013 were either computed or compared for the purpose of annual comparison:
a
- Electricity, Gas and Water Supply = "Electricity, Gas, Steam and Air Conditioning Supply" and "Water Supply; Sewerage, Waste Management and
Remediation Activities"
- Wholesale and Retail Trade, Repair of Motor Vehicles, Motorcycles and Personal and Household Goods = "Wholesale and Retail Trade; Repair of Motor
Vehicles and Motorcycles"
- Hotels and Restaurants = "Accommodation and Food Service Activities"

- Transport, Storage and Communications = "Transportation and Storage" and "Information and Communication"
e
- Financial Intermediation = "Financial and Insurance Activities"
d
- Real Estate, Renting and Business Activities = "Real Estate Activities", "Professional, Scientific and Technical Activities" and "Administrative and Support
Service Activities"
- Health and Social Work = "Human Health and Social Work Activities"
- Other Community, Social and Personal Activities = "Arts, Entertainment and Recreation" and "Other Service Activites"
h
i
- Private Households with Employed Persons = "Activities of Households as Employers; Undifferentiated Goods and Services-producing Activities of
Households for Own Use"
- Extra-Territorial Organizations and Bodies = "Activities of Extraterritorial Organizations and Bodies"

3. Annual data are averages of the four survey rounds of the Labor Force Survey.
Source: Philippine Statistics Authority-National Statistics Office Labor Force Survey as cited in Philippine Statistics Authority-Bureau of Labor and
Employment Statistics December 2013 Current Labor Statistics
23 January 2015
27
Poverty remains deep and spread nationwide. The governments latest Family Income and
Expenditure Survey (FIES) of 2012 officially reported a family poverty incidence of just 19.7% (with
23.7 million Filipinos), including just 2.6% incidence in NCR. (See Table 11) These figures use per
capita poverty thresholds of Php18,935 (around Php52 per day) on average in the Philippines and
Php20,344 (around Php56 per day) in NCR. These are however self-evidently very low. IBON, using the
same official data sets, estimates that some 66 million Filipinos or 68% of the population live off some
Php125 or much less per day. This is more consistent with the results of IBONs October 2014 survey
where 71% of respondents rated themselves as poor.
Table 11. Annual Per Capita Poverty Threshold, Poverty
Incidence and Magnitude among Families by Region,
2012
Regions
Annual Per Capita

Poverty Threshold
(in Php)
18,935
20,344
19,483
18,373
19,125
20,071
19,137
17,292
18,257
18,029
18,767
18,076
18,054
19,335
19,967
18,737
19,629
20,517
Philippines
NCR
CAR
Region I
Region II
Region III
Region IV-A
Region IV-B
Region V
Region VI
Region VII
Region VIII
Region IX
Region X
Region XI
Region XII
Caraga
ARMM
Poverty
Incidence
(in %)
19.7
2.6
17.5
14.0
17.0
10.1
8.3
23.6
32.3
22.8
25.7
37.4
33.7
32.8
25.0
37.1
31.9
48.7
Magnitude
of poor
4,214,921
76,530
65,516
154,712
130,965
240,079
256,839
150,486
375,974
365,040
405,694
337,221
259,749
320,113
268,957
366,169
169,522
271,355
Source: Philippine Statistics Authority-National Statistical Coordination Board
Despite the low poverty thresholds, the official results can still be used to give an idea of the relative
extent and spread of poverty. (See Table 11) Poverty incidence is lowest in NCR and in neighboring
Central Luzon and Calabarzon and then markedly higher in the 14 other, mainly rural, regions. In
particular, it is highest in Eastern Visayas and Southern Mindanao regions including erstwhile areas
of Moro armed conflict. In terms of absolute numbers, the regions with the most number of poor
households are Bicol, Western Visayas, Central Visayas, Northern Mindanao, SOCCSKSARGEN and
ARMM cumulatively accounting for half of poor households in the country.
The profits and wealth of a few continue to grow or remain high. Economic growth is most
clearly seen in the high and generally rising wealth of the countrys biggest corporations and richest
28
23 January 2015
Filipinos since 2010. (See Table 12) The net worth of the 40 richest Filipinos rose to US$72.2 billion in
2014 from the year before, the net income of the Top 1,000 firms was at Php1,013.4 billion in 2013,
and the net income of the 306 Philippine Stock Exchange (PSE)-listed firms was already at Php311.6
billion by mid-2014. This prosperity tracks trends in the neocolonial economy and are concentrated in
commercial operations, utilities and low value-added manufacturing.
Table 12. Net Income of PSE-Listed Firms and Top 1,000 Firms in the Philippines and Net
Worth of 40 Richest Filipinos, 2010-2014 (net income in billion Php; net worth in
billion US$)
Indicator
Net income of PSE-listed firms (billion Php)
Net income of Top 1,000 firms (billion Php)
Net worth of 40 richest Filipinos (billion US$)
2010
2011
2012
438.1
804.1
27.8
439.6
868.1
34.0
512.6
1,080.9
47.4
2013
275.5
1,013.4
64.2
2014
a
311.6
nda
72.3
PSE - Philippine Stock Exchange

nda - no data available
a
- data for January-June only
Sources: Philippine Stock Exchange website (www.pse.com.ph), Business World Top 1000 Corporations in the Philippines
and Forbes website (www.forbes.com)
The implied concentration of economic power has implications for the countrys policy landscape.
These large foreign and domestic business interests are in intense competition with each other for
the profitable opportunities created by the neoliberal policy regime in commerce, utilities and other
services. This is for instance evident in the maneuvering, counter-maneuvering, alliances and feuding
for PPP contracts and in how business groups nurture linkages with political elites and work to ensure
that their particular allies have and retain political power. Connections with particular administrations
are essential to get favored deals and contract terms.
However they are at the same time a coherent and potent lobby group for the maintenance and
expansion of this profitable policy regime. Globalization policies are fundamentally about using the
policy powers of the state to expand the opportunities for profit and consolidate the economic power
of foreign and domestic capital. The growing domination of capital in general and foreign capital in
particular over the domestic economy upon three decades of neoliberalism has shifted the economy
in their favor with adverse implications for policy-making and on the welfare of the people.
The prices of basic goods and services continue to rise. Inflation last year was accelerating until
the third quarter and slowed upon falling global oil prices since September. (See Chart 8) This will
exert a dampening effect on interest rates in 2015. But although inflation is slowing, the effect on
prices has still been cumulative and the prices of basic commodities have consequently still risen
significantly, especially of rice and some vegetables, which exerts pressure on the real incomes of the
countrys poorest households. (See Table 13)
Cheaper global oil has been translating into lower prices of local petroleum products. Last year saw
the most number of rollbacks in recent years with 33 rollbacks in the price of diesel, 26 rollbacks in
the price of gasoline, and 11 rollbacks in the price of LPG; conversely, there were also the least hikes.
(See Table 14) There is nonetheless some indication that oil product prices have not gone down by
as much as they could have. The price of benchmark Dubai crude in Philippine pesos was Php2,699
per barrel in December 2014 (US$60.39 per barrel at an average exchange rate of Php44.69 per US$1)
23 January 2015
29
Chart 8. Monthly Inflation Rate, January 2012-December 2014 (in %)

6.0
5.0
4.0
3.0
2.0
1.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2012
2013
2014
Year
Source: Philippine Statistics Authority-National Statistics Office
which was close to its Php2,728 price per barrel in May 2009. The DOE however reported a common
pump price for diesel of Php31.40 in mid-December, which was slightly higher than its Php30.46
price in May 2009; gasoline in turn at Php42 was priced higher than its price of Php36.25. While only
an approximation, this discrepancy can be interpreted against long-standing criticisms of oil firms
domestic overpricing.
Pro-elite and anti-poor policies

The countrys historical and continuing poor development performance is self-evident and has driven
a resurgence of protests by peasant, worker and other peoples organizations as well as progressive
civil society groups. The Aquino administration however appears to be more responsive to the
demands of business elites for continued and increased globalization policies than to the interests of
the larger public.
It is advancing the privatization agenda through PPPs, consolidating trade and investment
liberalization through various internal measures, and seeking to complete the opening up of the
economy through further trade deals and especially Charter change. The good governance hype has
in effect even been used as a smokescreen to entrench and deepen neoliberal and market-driven
policies in agriculture, manufacturing, education and health, banking and finance, foreign trade and
investment, and mass transport and public utilities. Unchanged from previous administrations policy
thrusts, these have hardened the countrys backwardness and made its prospects even worse.
Privatization including the administrations PPP program drastically raises the cost of essential
public services. The Philippine government has been implementing privatization, or the handing
over of control and even ownership of public operations to private companies, since the 1980s. The
process was jump-started by initially focusing on Marcos-era government-owned and -controlled
enterprises created with direct government investment to benefit the late dictators cronies. Soon
after, however, it expanded to also cover vital public infrastructure, utilities and services, such as roads,
power, water, railways, telecommunications, oil, and even hospitals. Private capital has taken over
these sectors with corresponding increases in fees, rates and charges for the public.
30
23 January 2015
Table 13. Prices of Selected Basic Food Commodities,

December 2013-2014 (in Php)
Commodity
Canned sardines
Instant noodles
Loaf bread
Pan de sal
Regular milled rice
Well milled rice
Refined sugar
Brown sugar
Cooking oil
Egg (medium)
Pork ham/kasim
Pork liempo
Chicken
Beef rump
Beef brisket
Bangus
Tilapia
Ampalaya
Cabbage
Carrots
Tomato
Eggplant
Unit
Php/155 g can
Php/50-55 g pouch
Php/450 g
Php/250 g
Php/kg
Php/kg
Php/kg
Php/kg
Php/lapad
Php/pc
Php/kg
Php/kg
Php/kg
Php/kg
Php/kg
Php/kg
Php/kg
Php/kg
Php/kg
Php/kg
Php/kg
Php/kg
Dec 2013
Dec 2014
12.15 - 14.50
6.00 - 7.10
37.00
22.50
36.00
38.00
45.00
38.00
25.00
4.50
180.00
190.00
130.00
260.00
200.00
120.00
90.00
50.00
40.00
80.00
50.00
50.00
12.25 - 13.75
6.30 - 7.10
36.50
22.25
40.00
43.00
50.00
42.00
26.00
5.50
190.00
200.00
140.00
260.00
200.00
120.00
100.00
70.00
40.00
60.00
40.00
50.00
Sources: Department of Trade and Industry, and Philippine Statistics Authority-Bureau of

Agricultural Statistics
Privatization and its attendant deregulation were implemented with assorted laws in
telecommunications (1993 and 1995), power (1993, 1994 and 2001), shipping and airlines (1994 and
1995), oil (1996 and 1998), water (1995) and hospital corporatization (1999). The Build-OperateTransfer (BOT) law of 1990 (as amended in 1994 and 2012) is particularly significant in creating the
legal framework for government to privatize infrastructure provision. Foreign ownership of public
utilities and BOT projects is supposedly limited to 40%, but this has been bypassed or set aside
through various legal and stratagems and maneuvers.
Power privatization has meant that generation, transmission, distribution and supply are now almost
entirely controlled by the private sector. Generation costs are the largest component in the electricity
bill. Wholly or majority foreign-owned power plants now account for around half of installed capacity
in the country. Foreign ownership in power generation is mainly from Japan (Marubeni, Sumitomo,
Tokyo Electric Power, Kansai and others), Korea (KEPCO), and the US (AES, Berkshire Hathaway,
Blackstone, and PMR) with some Australian, UK, Italian, Taiwanese, Singaporean and Thai investors.
The biggest Filipino producers are San Miguel Corp., the Aboitiz group, and the Lopez group with
growing interest by the diversifying Sy, Ty, Consunji and Ayala groups. The government firm National
Power Corporation (NPC) only generates a negligible percentage of installed capacity.

23 January 2015
31
Table 14. Oil Price Movement and Price Range By Petroleum Product, 2010-2014
Petroleum Product
2010
2011
2012
2013
2014 *
40
(22 hikes,
18 rollbacks)
41
(23 hikes,
18 rollbacks)
4
(1 hike,
3 rollbacks)
46
(29 hikes,
17 rollbacks)
42
(25 hikes,
17 rollbacks)
12
(5 hikes,
7 rollbacks)
42
(20 hikes,
22 rollbacks)
40
(19 hikes,
21 rollbacks)
12
(8 hikes,
4 rollbacks)
40
(26 hikes,
14 rollbacks)
36
(25 hikes,
11 rollbacks)
11
(5 hikes,
6 rollbacks)
44
(18 hikes,
26 rollbacks)
49
(16 hikes,
33 rollbacks)
12
(1 hike,
11 rollbacks)
Gasoline
46.55 - 47.89
47.79 - 55.70
39.50 - 42.45
49.15 - 55.30
37.85 - 43.95
Diesel
37.20 - 39.35
42.54 - 46.13
47.60 - 53.95
41.35 - 45.75
29.20 - 32.55
662.00 - 753.00
654.00 - 715.00
670.00 - 814.00
842.00 - 965.00
570.00 - 711.00
Number of Oil Price

Movements
Gasoline
Diesel
Liquefied
Petroleum
Gas (LPG)
Price Range as of
End-Period (Php)
Liquefied
Petroleum
Gas (LPG)
* - price range as of the last release of the DOE (December 16).

Source: Department of Energy Oil Monitor
After power privatization the country now has the most expensive electricity rates in Asia, as reported
by the Japan External Trade Organization (JETRO) in their latest survey of investment costs in Asia. The
marginal decrease in power rates this January is only temporary though with the distributor Manila
Electric company (Meralco) likely increasing its rates with collection of the disputed feed-in tariff (FIT)
in February and upon the summer season starting March.
Telecommunications privatization and deregulation has resulted in the sectors monopolization by
the Philippine Long Distance Telephone Co. (PLDT), with for instance 63.4% of the mobile market, and
by Globe Telecom (36.6%). PLDT remains the dominant fixed-line provider as well. There has been
considerable activity, investment and profits since the 1990s. As an indicator of service however the
Philippines still has the slowest Internet speeds at among the most expensive costs in Asia.
The large hikes in the Light Rail Transit (LRT) 1 and 2 and Metro Rail Transit (MRT) 3 fares and the
looming increases in Manila water rates (by concessionaires Maynilad and Manila Water) are
particularly emblematic. First, these hikes come from the application of the user pays principle in
service pricing by private firms and the government. This is based on the idea that the cost of a
service must be recovered entirely, or at least as much as possible, from those who directly use and
benefit a service (usually a monopolistically-provided or otherwise essential service). Second, the rate
hikes are contained explicitly or in principle in the contracts that the government enters into in its PPP
projects. Indeed it is seen as essential to ensure the commercial viability and attractiveness of projects
for profit-seeking firms.
32
23 January 2015
The LRT hike is being implemented as part of the governments contractual and perceived
commitment to the private firms that will operate and maintain the LRT system mainly
the Pangilinan group Metro Pacific Investments Corporation (MPIC) and Ayala group AC
Infrastructure in the case of LRT-1, and as yet undetermined private firms for LRT-2. The MRT-3
hike will go to paying onerous contractual obligations with private Metro Rail Transit Corporation
(MRTC) as well as make up for DOTC-mismanagement of the railway.
The revised rail fares will mean increases of as much as 50% (LRT-1), 66% (LRT-2) and 87%
(MRT-3) in the maximum fares charged on each rail line. (See Table 15) Using these increases
in maximum fares as a benchmark illustrates the greatly increased burden on commuters
the annual rail expense of the average commuter on LRT-1 will increase from Php10,797 to
Php16,195 (i.e. increasing by Php5,398), on LRT-2 from Php9,753 to Php16,190 (i.e. increasing
by Php6,437), and on MRT-3 from Php9,413 to Php17,603 (i.e. increasing by Php8,190). IBON
estimates that these additional costs will be borne by families with monthly incomes of just
Php11,583-Php29,250.
The Manila water rate hikes meanwhile are among contractual obligations with the duopoly
water concessionaires. The increase due to the foreign currency differential adjustment (FCDA)
already previously criticized as double-charging of foreign exchange (forex)-related costs by
the firms is actually only the tip of the iceberg. (See Table 15) Rate hikes upon decisions by
a corporate-biased international commercial tribunal will be much higher. West Zone-provider
Maynilad, apparently prematurely, announced an arbitration decisionof a Php3.06 increase in its
2013 basic water charge of Php31.28 per cubic meter. The decision in the case of Manila Water in
the East Zone is expected around February. As it is, since water privatization in 1997 water tariffs
have increased nearly seven-fold (559%) in the case of Maynilad and nearly nine-fold (859%) in
the case of Manila Water. These rate increases far outpaced inflation over the same period.
The supply and pricing of these vital public services is now largely determined by what ensures
profits for the private capitalist providers rather than the greater public interest and welfare. This
is particularly burdensome given the widespread poverty and low incomes in the country. Their
impact is also cumulative and come on top of likewise rising prices of food, schooling, housing
and health care. In 2015, consumers are facing drastically rising privatization-driven prices in
2015: electricity rates, LRT and MRT fares, water tariffs, and even toll fees.
Government privatization policies and PPPs prioritize private profits at the expense of public
service. The Aquino administration is seeking to become more aggressive with PPPs. It has
already identified 61 major PPP projects including airports, railways, mass transport, roads and
bridges, ports, water utilities, hospitals, schools and others with combined indicative project costs
for 30 projects so far of Php1,212.3 billion. (See Table 16) Eight contracts have been awarded
so far with another 14 already in the bidding stage. Foreign and domestic capital are the main
beneficiaries.
23 January 2015
33
Table 15. Summary of LRT/MRT and Maynilad Rate Hikes
Previous
Rate
New/
Proposed Rate
% Increase
LRT and MRT fare

LRT 1, From Baclaran to:
EDSA
Libertad
Gil Puyat
Vito Cruz
Quirino
Pedro Gil
UN Avenue
Central Terminal
Carriedo
Doroteo Jose
Bambang
Tayuman
Blumentritt
Abad Santos
R. Papa
8th Avenue
Monumento
Balintawak
Roosevelt
LRT 2, From Recto to:
Legarda
Pureza
V. Mapa
J. Ruiz
Gilmore
Betty Go-Belmonte
Araneta-Cubao
Anonas
Katipunan
Santolan
MRT 3, From North Avenue to:
Quezon Avenue
GMA-Kamuning
Cubao
Santolan
Ortigas
Shaw Boulevard
Boni Avenue
Guadalupe
Buendia
Ayala Avenue
Magallanes
Taft
Water rates (in Php/cu. m.)
12.00
12.00
12.00
12.00
13.00
13.00
13.00
13.00
14.00
14.00
14.00
14.00
15.00
15.00
15.00
15.00
15.00
19.00
20.00
12.00
13.00
13.00
14.00
15.00
16.00
17.00
18.00
19.00
19.00
20.00
21.00
21.00
22.00
23.00
24.00
25.00
27.00
29.00
8.33
8.33
16.67
15.38
23.08
30.77
38.46
35.71
35.71
42.86
50.00
40.00
46.67
53.33
60.00
66.67
42.11
45.00
12.00
12.00
12.00
13.00
13.00
13.00
14.00
14.00
14.00
15.00
12.00
14.00
15.00
16.00
17.00
18.00
19.00
21.00
22.00
24.00
16.67
25.00
23.08
30.77
38.46
35.71
50.00
57.14
60.00
10.00
10.00
11.00
11.00
12.00
12.00
12.00
14.00
14.00
14.00
15.00
15.00
13.00
13.00
16.00
16.00
20.00
20.00
20.00
24.00
24.00
24.00
28.00
28.00
30.00
30.00
45.45
45.45
66.67
66.67
66.67
71.43
71.43
71.43
86.67
86.67
Manila Water, All-in tariff

(because of Php0.36 in FCDA)
37.30
38.51
3.24
Maynilad, All-in tariff

(because of Php0.38 in FCDA)
47.00
47.51
1.09
Maynilad, Basic tariff

(Php3.06 proposed as a result of
rate rebasing arbitration with the
International Chamber of
Commerce)
33.97
37.03
9.01
Sources: Light Rail Transit Authority, Department of Transportation and Communications, and
Metropolitan Waterworks and Sewerage System
34
23 January 2015
Table 16. Status of Awarded and Bid-out Projects and Projects in Advanced Stage, as of January 9, 2015
Project Name
Daang Hari-SLEX Link Road Project
Estimated Cost
(in billion Php)
Implementing
Agency
PPP Structure
Winning Bidder / Bidders /

Pre-qualified Bidders
Status
2.0
DPWH
BTO
Awarded
AC Infrastructure (Ayala Corp.)
PPP for School Infrastructure Project (PSIP)

Phase I
16.3
DepEd
BLT
Awarded
1. Citicore Holdings Investment, Inc.-Megawide

Construction Corp.
2. Consortium of BF Corp.-Riverbanks Devt Corp.
Ninoy Aquino International Airport (NAIA)

Expressway (Phase II) Project
15.5
DPWH
BTO
Awarded
Optimal Infrastructure Development Corporation

(SMC)
PPP for School Infrastructure Project (PSIP)

Phase II
3.9
DepEd
BT
Awarded
1. Megawide
2. Consortium of BSP & Co. Inc. and Vicente Lao
Construction
Modernization of the Philippine Orthopedic Center
5.7
DOH
BOT
Awarded
Megawide-World Citi Consortium
Automatic Fare Collection System
1.7
DOTC
Awarded
AF Consortium (Ayala Corp.-MPIC)
Mactan-Cebu International Airport Passenger

Terminal Building
17.5
DOTC
BROT
Awarded
GMR Infrastructure (India) and Megawide

Consortium
LRT Line 1 Cavite Extension and Operation and

Maintenance
64.9
DOTC
BTO
Awarded
Light Rail Manila Consortium (Ayala Corp.- MPIC)
Metro Rail Transit (MRT) 7
69.3
DOTC
BGTOM
Awarded
Universal LRT Corp. Ltd. (SMC, DMCI-Marubeni)
Skyway Stage 3 Project (NLEX-SLEX Connector)
26.7
TRB
JV via STOA
Awarded
Citra Central Expressway Corp.

(SMC, PNCC, Citra Lamtoro Gung Persada)
Integrated Transport System Project - Southwest

Terminal
2.5
DOTC
BTO
Ongoing bid evaluation
Bidders: 1. D.M. Wenceslao and Associates Inc.,

2. SMC, 3. Metro Pacific Tollways Corp., 4. Ayala
Land Inc., 5. Ayala Corporation, 6. Vicente T. Lao
Corporation, 7. Robinsons Land, 8. Egis Projects
Philippines, 9. Filinvest, 10. Megawide, 11. State
Properties, 12. Expedition Construction Corp,
13. Altus San Nicolas Corp., 14. Megaworld Corp.,
15. Tutuban Properties Inc.
24.4
MWSS
BOT
For bid submission
Bidders: 1. Manila Water, 2. Marubeni (Japan),

3. Filinvest, 4. First Balfour, 5. Abengoa (Spain),
6. Megawide, 7. SMC, 8. Maynilad Water Services,
Inc., 9. New San Jose Builders, Inc., 10. Sojitz Corp.
(Japan), 11. Korea Water Resources Corp. (Korea),
12. Prime Water Infrastructure Corp, 13. Datem
Water, Inc., 14. Acciona Agua (Spain), 15. Aboitiz
Equity Ventures
Integrated Transport System Project - South

Terminal
4.0
DOTC
BTO
Pre-qualifying (PQ)
evaluation completed
Laguna Lakeshore Expressway Dike Project
122.8
DPWH
BOT
For PQ docs
submission
DOTC
O and M
Bidders: 1. Megawide Construction Corp., 2. SMC.,

3. Ayala Land Inc., 4. Datem Inc., 5. Robinsons
Land,
6. Filinvest
Bidders: 1. Muhibbah Engineering (Phil.)
Corporation,
2. GT Capital Holdings, Inc., 3. Ayala Land, 4. Egis
Projects S.A. Tam-Yap and Law Offices,
5. Megaworld Corporation, 6. Metro Pacific Tollways
Corp., 7. Minerales Industrias Corp., 8. Leighton
Contractors (Philippines) Inc., 9. JV Power and
Wealth Corporation, 10. LT Group, Inc., 11. Laguna
Lakeshore Consortium, 12. Filinvest Land, Inc.,
13. Macquarie Capital Securities (Phil.) Inc.,
14. SMC, 15. Megawide Construction Corporation,
16. Aboitiz Equity Ventures, Inc., 17. JG Summit
Holdings Inc., 18. PT Star Line, 19. State Properties
Corporation, 20. MTD-Hanshin_VistaLand
Consortium, 21. IL & FS Tranportation Networks
Ltd.,
Bidders: 1. Light Rail Manila Consortium (LRMC),
2. SMC, 3. GT Capital Holdings, Inc., 4. Marubeni
Philippines, Corp., 5. D.M. Consunji, Inc., 6. RATP
Development, 7. APT Global Inc., 8. Globalvia,
9. Aboitiz Equity Ventures, Inc.
18.7
MWSS
BT
For PQ docs
submission
2.3
DOTC
OAT
For PQ docs
submission
14.6
DOTC
OAT
For PQ docs
submission
5.8
DOTC
OAT
For PQ docs
submission
40.6
DOTC
OAT
For PQ docs
submission
Bulacan Bulk Water Supply Project
Operation and Maintenance of LRT Line 2
New Centennial Water Source Project - Kaliwa Dam

Project
New Bohol (Panglao) Airport Operations,

Maintenance & Development Project
Laguindingan Airport Operations, Maintenance &
Development Project
Puerto Princesa Airport Operations, Maintenance &
Development Project
Davao Airport Operations, Maintenance &
Development Project
No Capex
For submission of PQ
docs.
Bidders: 1. Prime Metroline Holdings Inc. 2. San

Lorenzo Ruiz Builders and Developers Group, 3.
Obrascon Huarte Lain S.A., 4. Abengoa Abeinsa
Business Development, 5. DM Consunji Inc., 6. San
Miguel Holdings Corp., 7. Filinvest Development
Corp., 8. Megawide Construction Corp.
23 January 2015
35
Table 16. Status of Awarded and Bid-out Projects and Projects in Advanced Stage, as of January 9, 2015 (continuation)
Project Name
Estimated Cost
(in billion Php)
Implementing
Agency
PPP Structure
Bacolod Airport Operations, Maintenance &

Development Project
20.3
DOTC
OAT
For PQ docs
submission
Iloilo Airport Operations, Maintenance &

Development Project
30.4
DOTC
OAT
For PQ docs
submission
Davao Sasa Port Modernization Project
19.0
DOTC
BTO
For issuance of ITPB
Regional Prison Facilities through PPP
50.2
DOJ
BTM
For issuance of ITPB
Cavite-Laguna (CALA) Expressway
35.4
DPWH
BTO
For NEDA Board

Approval
NLEX-SLEX Connector
25.6
DPWH
JV
For NEDA Board

approval b
Motor Vehicle Inspection System Project
19.3
DOTC
BTO
For ICC approval
1.2
PSA
BOM
For ICC approval
Civil Registry System - IT Project (Phase II)

Makati-Pasay-Taguig Mass Transit System Loop
374.5
DOTC
North-South Railway Project (South Line)
177.2
DOTC
San Fernando Airport
TBD
BCDA
LRT-1 Extension to Dasmarias Project
TBD
PNOC
Ongoing preparation of
feasibility study
Batangas-Manila (BatMan) 1 Natural Gas Pipeline

Project
TBD
PNOC
feasibility study
Manila Bay - Pasig River - Laguna Lake Ferry

System Project
TBD
DOTC
feasibility study
feasibility study
feasibility study
BTO
TBD
DOTC
TBD
DOTC
Integrated Transport System - North Terminal

Project
TBD
DOTC
feasibility study
NAIA Development Project
TBD
DOTC
feasibility study
Trimedical Complex
TBD
DOH
feasibility study
Sta. Mesa - Ortigas - Angono Rail Line
TBD
DOTC
Joint Sludge Treatment Plant
TBD
DPWH
Plaridel Bypass Toll Road
TBD
DPWH
For procurement of
consultants to conduct
pre-investment studies
Road Transport IT Infrastructure Project (Phase II)
TBD
DOTC
feasibility study
DOJ - Department of Justice

DOTC - Department of Transportation and Communications
DPWH - Department of Public Works and Highways
ICC - Investment Coordination Committee
ITB - Invitation to bid
ITPB - Invitation to prequalify and bid
JV - Joint venture
LRT - Light Rail Transit
MPIC - Metro Pacific Investments Corp.
MPTC - Metro Pacific Tollways Corp.
MWSS - Metropolitan Waterworks and Sewerage System
NLEX - North Luzon Expressway
- SMC's Optimal Infrastructure Development Inc. was disqualified after MPCALA Holdings Inc. questioned the bid security requirement.
- A complaint was filed before the DOJ questioning the legality of MPTC and PNCC's joint venture.
Source: Public-Private Partnership Center
Bidders: 1. San Miguel Corporation, 2. Korea

Expressway Corporation, 3. Alloy MTD Philippines
Inc., 4. Macquarie Infrastructure Holdings
(Philippines) Pte. Limited, 5. Megawide Engineering
Excellence, 6. Leighton Contractors, Inc., 7. Makati
Development Corp., 8. AC Infrastructure Holdings
Corp., 9. EGIS Projects Developer of Infrastructure
& Services, 10. Metro Pacific Tollways Development
Corp., 11. Aboitizland, Inc., 12. Tokwing Construction
Corp./STX Enterprises (J.V.), 13. E.F.C. Enterprises
MPTC-PNCC
feasibility study
C-5 Transport Service Development Project
Winning Bidder / Bidders /

Pre-qualified Bidders
For ICC approval
Clark International Airport Project
Legend:
BCDA - Bases Conversion Development Authority
BGTOM - Build-Gradual Transfer-Operate-Maintain
BLT - Build-Lease-Transfer
BOM - Build-Operate-Maintain
BOT - Build-Operate-Transfer
BROT - Build-Rehabilitate-Operate-Transfer
BT - Build-and-Transfer
BTM - Build-Transfer-Maintain
BTO - Build-Transfer-Operate
Capex - Capital expenditure
DepEd - Department of Education
DOH - Department of Health
36
Status
23 January 2015
O and M - Operate and Maintain

OAT - Operate-Add-Transfer
PNCC - Philippine National Construction Corporation
PNOC - Philippine National Oil Company
PQ - Pre-Qualifying
PSA - Philippine Statistics Authority
SLEX - South Luzon Expressway
SMC - San Miguel Corp.
STOA - Supplemental Toll Operation Agreement
TBD - To Be Determined
TRB - Toll Regulatory Board
In the first instance, PPP projects will directly benefit the foreign firms that design, construct, finance,
operate and maintain these infrastructure projects. The necessary aerospace, railway, water and
medical equipment, hardware and technologies used in these projects will also be wholly imported.
Application of the user pays principle after construction in turn ensures a steady revenue stream over
the coming decades of the contract period, commonly 25 years or more.
The administration has also ensured that big foreign and domestic business interests are covered
in the 2015 national government budget. There is at least Php59.1 billion set aside in 2015 for PPPs
consisting of Php57.2 billion in the regular budget and Php1.9 billion in a supplemental budget. The
main beneficiaries will be the countrys biggest oligarchs the conglomerates of the Sy, Cojuangco,
Ang, Ayala and Pangilinan groups and their foreign equity partners and creditors.
Specifically, the budget allocation will cover: Php30 billion risk management program (the financial
and regulatory risk guarantee promised by Pres. Aquino as early as his first state-of-the-nationaddress in 2010); Php1.6 billion for amortization and lease payments to the private firm for school
building PPP projects; Php10.9 billion for right of way acquisition in six expressway projects; Php2.7
billion for right of way acquisition for the Integrated Transport System; Php7.4 billion for LRT-1/
LRT-2 extension and privatization; Php723 million for LRT-1/LRT-2 rehabilitation; Php4.7 billion for
committed payments to MRTC; and Php1.2 billion for MRT-3 rehabilitation.
The government can raise financial resources for SXEOLFLQYHVWPHQW with a progressive tax
system. The most common justification for PPPs is that they overcome the governments handicap
of not having the financial resources or technical capacity for infrastructure and social services.
However significant additional revenues can be raised with some basic reforms in the countrys
regressive and pro-elite tax system.
Initially, we can begin with a conservative approximation of the tax burden that the economy can take.
The countrys highest tax effort (i.e. tax revenues as a percentage of GDP) in the post-Marcos period
was 17% in 1997. If this had also been reached in 2013, tax revenues would have been Php1,796
billion instead of actual collections of Php1,535 billion implying fiscal space of effectively Php261
billion. It is then not unrealistic to expect the government to be able to earn at least another Php261
billion to bring the tax effort to what had already been achieved in 1997. The administration targets a
tax effort of 15.1% for 2015.
The tax system needs to be reoriented to give much greater emphasis on collecting taxes from large
corporations and high-income individuals/families. This is the most rational and sustainable way of
ensuring that there are resources for social and economic spending biased for the needs of the poor
majority of Filipinos.
Some key general possibilities for additional tax revenue generation can be considered for illustrative
purposes (all of which assume determined collection and that all other things remain equal). Restoring
the corporate income tax to 35% should increase revenues by at least Php25 billion. Increasing the tax
burden on the income of the richest decile of families such as through higher personal income taxes
so that an additional 10% of their cumulative income (Php1,532 billion in 2012) is collected should
increase revenues by another Php153 billion. This also means steps towards reducing inequality in the
country.
Trade liberalization has drastically reduced tariff revenues. Increasing import duties to achieve its
peak of 4.8% of GDP in 1996 should increase revenues by Php250 billion. This corresponds to
the 2.1 percentage point difference between peak import duties as a percentage of GDP of 4.8% in
1996 to actual import duties of 2.6% of GDP in 2013. Applying the peak rate to 2013 GDP implies

23 January 2015
37
total collection of Php554 billion versus actual collections of some Php305 billion. Undetermined
amounts can also be raised by increasing taxes on luxury goods and services, wealth and property,
and even on hot money financial transactions.
Nor is the technical constraint absolute. The private sector is not inherently and always better at
delivering services especially if better is construed as both efficient and affordable. With the correct
orientation and mechanisms for performance, transparency and accountability there is no reason
for the public sector to not build its technical capacity on the widest range of essential utilities and
services.
Pro-people economic policies

The administrations damaging trade and investment liberalization policies should be replaced
with pro-people structural reforms. The Aquino administration is building on the neoliberal promarket policy errors of previous governments, which has kept the Philippines on its trajectory of
underdevelopment. There is an urgent need to shift from the current anti-development strategy to
one that is responsive to the immediate and long-term interests of Filipino workers, peasants, lowpaid employees, and national entrepreneurs.
The administrations medium-term Philippine Development Plan 2011-2016 (including its mid-term
update) remains within the globalization policy paradigm. It is taking an assortment of measures
to make pro-foreign capital trade and investment liberalization even easier: smoother customs
processes, less bureaucratic investment procedures, and greater incentives. Many of these are
implemented within the framework of Asia Pacific Economic Cooperation (APEC) mechanisms.
New trade deals are also being pursued especially the US-centric Transpacific Partnership (TPP)
Agreement but also with Europe. Removing the Philippine Charters nationalist economic provisions
remains an agenda to be pushed as political circumstances allow. The Aquino government has
allowed the full entry of foreign banks. It has railroaded the K to 12 program most of all to provide
foreign capital and economies the kind of workforce that they can profit from. It is also unrepentant
with PPPs and privatization aside from allotting billions of pesos in public funds it is even seeking
to legally protect PPP projects from local government interventions and to prohibit temporary
restraining orders and injunctions on these projects.
The contours of a pro-people development strategy are however well-established, drawing on the
varied experiences of many countries including the advanced capitalist powers, newly industrialized
countries and socialist states. There are a few key reform areas. Economic policy has to be focused on
completing agrarian reform, developing agriculture and building Filipino industry. Domestic science
and technology must be aggressively developed. These will require a genuinely sovereign trade and
investment policy.
Gross inequities are the starting conditions of poverty and backwardness and not resolving these
means continued inequity, poverty and backwardness. Income, wealth and assets have to be radically
redistributed through free land distribution, substantial wage increases, and a progressive tax system.
The fiscal base of a responsible and development-oriented state must be built. This will also enable
the required public provision of essential utilities and vital social services.
Significant political changes are needed to effect major economic change. The current period
of crisis and upsurge of peoples movements may yet herald the requisite democratic political
advances in the country.
38
23 January 2015
A Defensive Regime
conomic policies that oppress the poor and ordinary income earners, criminal neglect of disaster
survivors, human rights violations, sell-out of national sovereignty in particular to US imperialism,
and lack of genuine reforms to curb corruption including lack of accountability of administration
officials and allies involved in anomaliesthese have fuelled the widespread and growing social
discontent and public disenchantment with the Aquino regime.
These peoples issues have been steadily eroding the legitimacy of the Aquino regime even before
the pork barrel controversy broke out. But the pork barrel scam, in particular the Disbursement
Acceleration Program (DAP), served as the spark that gathered and further intensified public anger
and rejection of the elite governance and trapo politics of Pres. Aquino and his ilk. This jeopardized
the regimes plan to stay in power beyond 2016, especially that its likely standard bearer Interior
Secretary Mar Roxas apparently remains unpopular.
2014 thus saw the Aquino regime launch an aggressive campaign to demolish its perceived strongest
opponents in the 2016 elections. Such apparent early electioneering could be the direct result of how
the regime was shaken by the pork barrel and the DAP scandal.
For the Aquino regime, the DAP controversy was an adverse turning point. After harboring the illusion
of stability and legitimacy in the first half of its term, the Aquino regime now finds itself in a defensive
position. The imagined consolidation of power and through Pres. Benigno Aquino IIIs supposed
popularity is now being exposed as shallow, if not illusory altogether.
Thus, the defensive Aquino regime responded with a systematic effort to recover from the suddenly
difficult political situation it is facing. Since the second half of 2014, it has zeroed in on its perceived
strongest electoral foe Vice-President Jejomar Binay. It has launched a prolonged Senate probe (13
hearings since August last year and counting) on various corruption charges against Binay, with some
complaints also lodged at the Ombudsman. Allies, supporters and the family of the VP are suddenly
facing tax evasion cases, their companies investigated and their old corruption cases revived.
Prior to Binay, the Aquino administration also neutralized Senators Jinggoy Estrada and Ramon Bong
Revilla, both of whom were once seen as strong competitors in 2016, along with Sen. Juan Ponce
Enrile. They are now under detention facing plunder charges at the Sandiganbayan due to alleged
kickbacks from the Janet Napoles pork barrel operations. Like Binay, the three were systematically
discredited in nine televised Senate hearings that lasted seven months, greatly weakening their
political viability in the process.
Meanwhile, the Aquino camp quickly dismissed the three cases of impeachment against the President
at the administration-controlled House of Representatives (HoR). The complaints stemmed from Pres.
Aquinos alleged violation of the Constitution for implementing the DAP and for signing the Enhanced
Defense Cooperation Agreement (EDCA) with the US. For the weakened Aquino regime, EDCA is an
assurance of continued US support and patronage, which is crucial in perpetuating itself beyond
2016. Binay and his party United Nationalist Opposition (UNA), despite the obvious demolition job by
the ruling party, did not support the impeachment led by the Makabayan bloc of progressive partylist
groups. Binays camp said it was out of delicadeza, i.e. Binay would directly benefit if Aquino was
convicted. However, it was simply political opportunism on the part of Binay who does not want to
lose the support of Aquinos relatives and some funders. Binay, in fact, does not openly and directly
criticize the President as he would prefer to keep for as long as he can his Cabinet posts as housing
czar and OFW adviser that bolster his political ambition.

23 January 2015
39
Indeed, the only true and consistent opposition to the Aquino regime and its flawed policies and
programs is the peoples movement that pushes for long-term reforms in the countrys economy
and government that will truly serve the national interest and the rights and aspirations of the great
majority of Filipinos. Thus, while the Aquino regime is trying to weaken the other factions of the
ruling elite that threaten to replace it in 2016, it reserves its most vicious attacks to the Left and the
progressive national democratic organizations of the people.
Nonetheless, as the factional conflict within the ruling elite intensifies towards 2016 and the
contradiction between the ruling faction and the people sharpens, opportunities develop to raise and
successfully carry on the various issues of the people, push for genuine reforms and make the Aquino
government accountable.
Pro-elite governance and trapo politics

Pres. Aquinos five years in power have been characterized by a brand of politics that is
unmistakably pro-elite and anti-people. Despite all the publicity about good governance, Pres.
Aquino is as trapo as his predecessors, if not even worse. Like all bureaucrat capitalists that represent
big business and landlord interests, Pres. Aquino has effectively used the vast powers of the state to
guarantee the profits of local oligarchs and foreign corporations.
This has been in full display in his PPP initiative, the centerpiece of the Aquino governments
economic program wherein big business groups that have close ties with Pres. Aquino are making
a killing. Case in point is the privatization of the LRT 1, which the government gave to MVPAyala tandem. The concession agreement reeks of crony capitalism with Aquino providing private
operators the regular and automatic fare adjustment schemes, regulatory risk guarantee (i.e. losses
from unimplemented fare hikes will be paid for by peoples taxes), exemption from payment of real
property taxes estimated at Php64 billion, and a start-up subsidy of Php5 billion. As part of the
deal, Aquino also rewarded Ayala with the so-called common station (which will link LRT 1 with MRT
3) that was originally located in front of rival SM North EDSA but was suddenly moved to Trinoma.
As expected, SM disputed the transfer so the DOTC now plans to have two common stations to
accommodate both Henry Sy and the Ayalas.
But for many, it was the handling of the challenge to its legitimacy and political consolidation
that fully displayed the elitist and trapo hallmark of the Aquino presidency and bared its good
governance rhetoric. Faced with the unfavorable SC decisions on pork barrel and the DAP, Aquino
implied impeachment against the High Courts justices and later hinted that he was open to Charter
change (Cha-cha) to clip the Judiciarys powers and for his term extension. These were immediately
shot down by strong public opinion, which only further confirmed Aquinos increasing isolation
from the people.
Like all regimes that relied on the rotten system of patronage politics and systemic corruption to
sustain itself, Aquino is unwilling to give up precious pork barrel funds especially that 2016 is just
around the corner. Thus, through Liberal Party (LP) members and allies in Congress, the Aquino
presidency maneuvered to retain almost Php486 billion in discretionary and lump sum funds (based
on Bayan Munas estimates) that are essentially presidential pork barrel in the 2015 national budget.
To circumvent the SC decision, it redefined the meaning of savings to allow it to easily realign
spending to suit its agenda and interests. Given the key role that local government units (LGUs) play
in presidential elections, it allocated significant amounts that are discretionary and lump sum to buy
the political loyalty of local government officials.
40
23 January 2015
The Aquino administration has transformed the Php2.6-trillion budget into a bottomless election
war chest with mammoth increases in its planned lump sum spending for LGUs, many of which
will be directly handled by Roxas as head of the Department of Interior and Local Government
(DILG). A glaring example is the huge 80% increase in lump sum allocations for LGUs from the
current Php17.3 billion to Php31.1 billion next year. The amount includes Php27.9 billion in LGUs
Special Shares in Proceeds of National Taxes and Php3 billion in Local Government Support Fund
(LGSF), including Php2.8 billion under the controversial Grassroots Participatory Budgeting (GPB)
scheme and Php200 million for financial assistance to support various priority programs and
projects. The balance is comprised of a death benefit fund for barangay officials worth Php50
million and shares in proceeds of fire code fees pegged at Php200 million. The Php31.1-billion LGU
allocations is part of the Php48.1 billion that Department of Budget and Management (DBM) Sec.
Butch Abad has admitted as lump sum in the 2015 National Expenditure Program. The remaining
Php17 billion is composed of Php14 billion in disaster fund, Php1 billion in rehabilitation fund, and
Php2 billion as presidential contingent fund.
Using the power, influence and public resources at its disposal, the Aquino regime launched a wellorchestrated and apparently well-funded demolition job against its political foes to weaken them
in time for 2016. Vice-President Binay, widely seen as the strongest presidential bet, has been the
target of such campaign that started early last year but became all-out in the second half of 2014
with the filing of plunder cases at the Ombudsman and the launching of Senate investigations on
the alleged overpricing of the Php1.56-billion Makati City Parking Building and Php1.33-billion
Makati City Science High School building. In the course of the probes, other controversies were also
raised such as the alleged overpriced birthday cakes given to Makatis senior citizens and the socalled Hacienda Binay, a 350-hectare property in Batangas that Binay supposedly owns through
dummy businessman Antonio Tiu. Sen. Antonio Trillanes, who is leading the Senate probe with
Senators Alan Peter Cayetano and Koko Pimentel, at the start of year resumed the investigations,
this time focusing on alleged anomalies related to Binays position as housing czar and even as the
president of the Boy Scouts of the Philippines. The new round of probe on Binay is expected to last
until May, or even longer.
UNA and Binay claimed it is LP, in particular Roxas and Senate President Franklin Drilon, who are
behind the anti-Binay campaign purportedly called Oplan Stop Nognog in 2016. Allegedly, it
was the helicopter of businessman and Roxas-backer Buddy Zamora that was used to probe the
Hacienda Binay to gather evidence for the Senate and the media. It was not actually easy to see
how the machinery of the Aquino regime is being used against Binay and even his supporters.
As an offshoot of the Senate probe, the Bureau of Internal Revenue (BIR) has filed tax evasion
cases against Antonio Tiu (Php73.34 million); his brother businessman and Binay campaign donor
James Tiu and wife (Php39 million); and even the supplier of the Makati birthday cakes (Php46.6
million). Meanwhile, Antonio Tius companies, which are publicly listed, are being monitored by
the Philippine Stock Exchange (PSE) and probed for inconsistent disclosures by the Securities
and Exchange Commission (SEC). The Department of Justice (DOJ), for its part, has also started
its separate investigation of the cases against Binay even as the Senate and the Ombudsman are
already looking into the alleged anomalies.
To be sure, all the allegations against Binay and even the pork barrel senators could be true. Given
how deeply ingrained bureaucrat capitalism is in the countrys system of governance, Binay and
company may have indeed used their position of power to enrich themselves and plunder the
peoples money. They should be investigated and be held to account for their crimes against the
country and the people. But the problem is they are being pinned down by the Aquino regime in the
context of advancing its vested and narrow political agenda.
23 January 2015
41
Consequently, while it aggressively pursues Binay and other electoral contenders, the Aquino
government is also protecting its own officials and allies who are similarly facing allegations of bigtime corruption. The pork barrel and DAP scandal, for instance, did not only involve Estrada, Revilla
and Enrile but also prominent LP officials and administration allies like Butch Abad (whom Napoles
claimed was her mentor in the pork barrel racket), Agriculture Sec. Proceso Alcala, TESDA Director Joel
Villanueva, and Reps. Neptali Gonzales II and Niel Tupas Jr.
Just recently, Alan Purisima, a long-time Aquino friend (his mother Corys ex-Presidential Security
Guards official whom he appointed as chief of the Philippine National Police or PNP), was accused of
forging an anomalous contract with a courier service as well as having unexplained properties (e.g.
a rest house in Nueva Ecija) not reflected in his statement of assets and liabilities (SALN). Despite
strong public clamor for Purisimas resignation, Aquino did not a lift a finger until the Ombudsman
suspended the PNP head for six months due to cases filed against him. Despite the suspension,
Aquino is still keen on keeping Purisima and refuses to appoint a new police chief. Another case is
the Iloilo Convention Center (ICC) funded by Drilons pork barrel under the DAP. While the Senate
Blue Ribbon committee was forced to initiate a probe on allegations of overpricing, it did not do so
as aggressively as it does in the Binay investigations. This despite the revelation that Megaworld of
tycoon Andrew Tan may have obtained special favors from the government and commercial benefits
because of the ICC project.
These key political developments that further bared the trapo and elitist nature of the Aquino
regimecoupled with the persistent and worsening economic exclusion of the peoplefeed the
growing public discontent and continued erosion of Aquinos legitimacy. IBONs national survey
last October 2014 showed that the net satisfaction on Aquinos performance as President in the past
three months is at negative 25.2% and there are no indications that he can recover lost ground in the
remaining months of his presidency.
Deepening neocolonial ties

The signing of the Enhanced Defense Cooperation Agreement (EDCA) in April has raised the
subservience of the Philippine government to the US to greater heights. The EDCA seems to crown
the Aquino administrations entire efforts in the last five years in deepening neocolonial ties with the US.
Negotiated in secrecy, the EDCA is a treaty that allows the US military to build facilities or agreed
locations in existing camps or bases of the Armed Forces of the Philippines (AFP) effectively giving
it a permanent and nationwide presence in the country. The agreement is in line with the military
aspect of the USs declared pivot or rebalancing to the Asia-Pacific because of the regions growing
importance to the economy and geopolitics of the US.
The signing of the controversial EDCA was met with strong criticism. Petitioners questioned the treaty
before the SC for the treatys violation of the Constitution and Philippine sovereignty. The Constitution
requires that military agreements like EDCA should be ratified by the Senate and recognized
as a treaty by the US. The petitions at the SC, however, have not stopped the US and Philippine
governments from detailing its plans to implement the agreement.
Calls to junk the lopsided EDCA and terminate the Visiting Forces Agreement (VFA) were underway
when the brutal killing of transgender Jennifer Laude shocked the public. The suspect is US Private
First Class Joseph Scott Pemberton, who was in Subic for bilateral military exercises involving 4,000
US troops. Subic Bay, a former US military base, is one of the areas to be used as agreed locations
under EDCA.
42
23 January 2015
To temper public reaction, Pemberton was transferred from the USS Peleliu to Camp Aguinaldo.
But here it was discovered that the US serviceman was not in Philippine custody but in a US facility
of the Joint US Military Advisory Group (Jusmag) inside the Armed Forces of the Philippines (AFP)
headquarters. Critics called this a de facto US military base within Philippine territory, which is illegal
under the Constitution.
The brutal crime resulted in public indignation and underscored again the unequal relations of the US
and the Philippines in agreements like the VFA and Mutual Defense Treaty (MDT). Through the VFA
and MDT, the US military has established its permanent presence in the country. The Laude killing
offered an opportunity for the Philippine government to assert its sovereignty and mutual beneficial
relations with the US, or at the minimum to support the call of some sectors to review these grossly
unfavorable treaties. But the Aquino administrations reaction displayed its height of puppetry to
the US. It showed greater concern with defending the countrys unequal treaties with the US than
bringing justice or upholding sovereignty. A few days after the crime, Pres. Aquino stated that the VFA
is not the culprit but a necessity in national security, and that the incident is an isolated case. The
AFP chief of staff was also quick to assure that the killing will not affect our relationship with the US.
There were efforts to appease the mounting calls to bring Pemberton to Philippine custody, but these
were visibly half-hearted, such as the foreign affairs secretarys offer to write a diplomatic note to
Washington but with a notice that the US may not necessarily agree to it. Indeed after refusing to
turn over the US soldier to Philippine jurisdiction after the local court indicted him, it was found out
that Pembertondespite his implication in the brutal slaywas even promoted to lance corporal.
Human rights violations and abuses perpetrated by US troops have intensified under the VFA. In
fact, the latest crime brought back to light the case of Nicole, who was raped by US Lance Corporal
Daniel Smith in 2005. Smith was convicted by a Makati regional court, but the Court of Appeals later
overturned the ruling.
There are other cases of abuses involving US troops that are less prominent, such as the shooting of
Buyong-buyong Isnijal by US soldier Reggie Lane in 2002 and Arsid Baharon in 2004. The involved
soldiers in these cases were not prosecuted but whisked back to the US, all signalling the surrender
of the countrys sovereignty and criminal jurisdiction. Around the world where there are US military
bases, incidents of violations have been increasing. In Japan, for instance where there are 26,000 US
soldiers based in Okinawa, criminal cases involving US troops have reached 5,584. In South Korea
where 28,500 soldiers are stationed, 11 cases of rape by US soldiers have been recorded.
The human rights abuses and impunity in the cases against US troops give more urgency and stress
to terminate the countrys lopsided agreements with the US. But the Philippine government is
considered a strategic ally of the US in facilitating its pivot toward the Asia-Pacific region. The Aquino
government uses the VFA, MDT and now EDCA to justify the increasing US military forces and socalled exercises in the country.
Beyond the military aspect, the Aquino administration is allowing a larger extent of US policy
interventions in the Philippines. US intervention in the countrys affairs reached a new level under
the Partnership for Growth (PFG), an initiative that started in 2011. Under the PFG are various US
agencies working with the Philippine government such as the US State Department, US Agency
for International Aid (USAID), the Millennium Challenge Corporation (MCC), among others.
Together they draw up and implement various efforts to further push US agenda in the Philippine
economy, including more trade and investment liberalization, public-private partnerships, free trade
agreements, and other policy reforms.
23 January 2015
43
One of the initiatives being supported by the PFG is Cha-cha, which is being peddled by the Joint
Foreign Chambers of Commerce led by the American Chamber of Commerce (AmCham). In 2013,
the USAID and AmCham launched The Arangkada Philippines Project (TAPP), which lobbies for the
removal of what they see as restrictive provisions in the Constitution. Given the full backing of US
agencies and foreign chambers in amending the Constitution for their favor, it is not surprising that
the moves for Cha-cha in Congress refuse to go away.
As seeming testament to the Aquino governments deepening neocolonial relations with Washington,
foreign aid from the US continues to increase. At US$1.9 billion for the years 2001-2014, US aid
to the Philippines is one of largest in Southeast Asia. Almost 40% of this amount was for military
and security assistance. Meanwhile, the US has exceeded Japan as the largest donor of official
development assistance (ODA). Total ODA from the US from 1999 to 2013 reached US$1.39 billion or
25% of all ODA to the Philippines.
Calls for justice and accountability mount

The use of political repression against grassroots movements is intensifying as the Aquino
regime faces growing discontent and opposition. Independent human rights group Karapatan has
observed not only an increase in violations but also in the brutality and violence that these were done.
It noted that in the past year, there were at least 15 victims who were tortured to death, beheaded
and dumped in shallow graves.
From July 2010 to December 2014, the group recorded a total of 229 victims of extrajudicial killings,
225 cases of frustrated killings, 26 victims of enforced disappearance, 106 cases of torture, and 700
persons arrested and detained. (See Table 17)
It is notable that the more than half of the victims of extrajudicial killings were peasants (138
victims) followed by indigenous people (55). Karapatan reported the main perpetrators of these
violations to be elements from the AFP, PNP, Citizen Armed Force Geographical Unit (CAFGU) and
other paramilitary forces and private armies. The human rights group also reported that the number
of political prisoners continues to rise. There are currently 504 political prisoners nationwide, 208 of
them arrested under Pres. Aquinos term. According to Karapatan, many of these political detainees
face fabricated charges, some based solely on dubious witnesses accounts.
The latest report of the Center for Trade Union and Human Rights (CTUHR) shows that cases of
violations on labor rights, housing, and civil liberties have affected 19,475 workers in 2014. These
included violations in collective bargaining agreements, deaths due to unsafe working conditions,
illegal dismissal of workers, union-busting and harassment, demolition of urban poor communities,
among others. (See Table 18)
Meanwhile, the climate of impunity continues. For instance after five years since the Ampatuan
massacre that killed 58 people including 32 journalists, majority of the suspects remain at large and
witnesses were killed while the trial is locked in prolonged bail proceedings. Just recently, Sajid Islam
Ampatuan, one of the accused, was granted bail despite evidence showing that Sajid was present
when the attack was planned. The Ampatuan massacre is a key ground in the peoples campaign
against impunity; a favorable decision will encourage more killings and embolden perpetrators to
commit more human rights violations.
Similarly, 2014 marked the 10th anniversary of the Hacienda Luisita massacre, where seven farm
workers were killed when police opened fire at the picket line. After a decade, no arrests have been
made and justice remains elusive for victims. Even as the Hacienda Luisita farmers won the case when
44
23 January 2015
Table 17. Violation of Civil and Political Rights Under the

Aquino Administration, July 2010-December 30,
2014
Violations
Extrajudicial Killing
Enforced Disappearance
Torture
Rape a
Frustrated Extrajudicial Killing
Illegal Arrest without Detention
Illegal Arrest and Detention
Illegal Search and Seizure
Physical Assault and Injury
Demolition
Violation of Domicile
Destruction of Property
Divestment of Property
Forced Evacuation
Threat/Harassment/Intimidation b
Indiscriminate Firing
Forced/Fake Surrender
Forced Labor/Involuntary Servitude
Use of Civilians in Police and/or Military Operations as
Guides and/or Shield
Use of Schools, Medical, Religious and Other Public
Places for Military Purpose
Restriction or Violent Dispersal of Mass Actions, Public
Assemblies and Gatherings
a
b
No. of Victims
229
26
106
5
225
293
700
294
420
20,745
544
12,696
367
46,861
91,381
11,228
59
174
582
149,134
27,129
- all victims are minors

- mostly communities in militarized areas
Alliancefor
forthe
theAdvancement
Advancementfor
of People's
PeoplesRights
Rights
Source: Karapatan
KARAPATAN Alliance
the SC declared the distribution of the hacienda, maneuvers are still being done by the CojuangcoAquino clan through the Department of Agrarian Reform (DAR). Peasant families are being harassed
and driven away, while the land that should be distributed continues to be exempted.
Building peace
Exclusive economics and undemocratic policies continue to deny the public of basic rights,
and these are conditions that strengthen the armed movements in the country. The number of
monitored encounters between the New Peoples Army (NPA) of the Maoist Communist Party of the
Philippines (CPP) and government forces remained high at 159 incidents. There were 268 casualties
(killed and injured) on the government side. (See Annex)
23 January 2015
45
Table 18. Trade Union-Related Human Rights Violations, 2014
Case Title
No. of Cases
No. of Victims
Civil and Political Rights Violation
39
353
Extrajudicial Killing
Physical Assault/ Injury (includes mauling)
Threat, Harassment, Intimidation (includes surveillance, coercion and other forms)
Grave Threat
Arbitrary Arrest/ Detention
Fabrication of Criminal Charges due to political acts/belief or labor dispute
Divestment of Property
Destruction of Property
2
5
5
2
12
11
1
1
2
78
138
8
40
49
-
Economic, Social and Cultural Rights (ESCR) Violations a
67
19,182
4
11
6,382
767
11
2
7
10
2
8
640
3,934
2,125
2,160
296
2
5
54
243
4,407
9,425
13
1,942 families/
9,757 individuals
84
9,718
106
19,475
Violation of the right to security of tenure

Illegal dismissal
Retrenchment / Closure
Dismissal due to labor dispute
Unsafe working condition
Death due to unsafe working condition
Violation of the right to freedom of association (FOA) and collectively bargain
Non-recognition of union
Union-busting
Harassment of unionists inside the workplace
Interference on trade union affairs
Anti-Union Discrimination
Collective Bargaining Agreement (CBA) violations and issues
Non-implementation of CBA
Bargaining in bad faith / Refusal to bargain
Total ESCR-FOA Violations on Workers
Other ESCR Violations
Demolition of urban poor communities
Total Trade Union-Related Human Rights Violations (Labor and Civil Liberties)
Total Human Rights Violations (Labor, Housing Rights and Civil Liberties)
Note: Number of victims will not add up to total due to multiple reporting.
a
- labor and housing rights; victims are affected workers unless stated
Source: Center for Trade Union and Human Rights
46
23 January 2015
Despite the rampant human rights violations by the Aquino government, the National Democratic
Front of the Philippines (NDFP) remains open to peace negotiations after more than three years of
impasse. The Philippine government (GPH) and NDFP panels have started holding informal talks
and drafted a joint agreement for the resumption of talks, which awaits the approval of Malacanang.
The draft gives priority to the signing of the Comprehensive Agreement on Social and Economic
Reforms (CASER), the next substantive agenda in the stalled peace negotiations. The agreement will
move substantially after this has been signed, as the CASER recognizes that the basis for a lasting
peace is addressing the socioeconomic problems of society, such as poverty and inequality.
Meanwhile, even as the Bangsamoro Basic Law (BBL) has been submitted to Congress in
September 2014, critics point out that the agreement between the government and the the Moro
Islamic Liberation Front (MILF) does not address the roots of armed conflict in Mindanao. The
BBL implements the Comprehensive Agreement on the Bangsamoro (CAB), which the MILF and
the Aquino government signed in March last year. It lays down the framework of establishing an
autonomous political entity for the Bangsamoro and is hyped as an agreement that will finally bring
peace to Mindanao.
Several Moro groups believe that the BBL compromises the rights of the Moro people and restricts
the powers of the proposed Bangsamoro government. Moreover, the agreement is not expected to
stop the national government nor business investors from exploiting natural resources in Moro areas
for profitable ventures.
Armed Moro forces have already declared their disagreement to the peace deal. The Moro National
Liberation Front (MNLF), for one, has declared that it will fight the implementation of the BBL because
the peace deal between the MNLF and the government has yet to be enacted. As such, the BBL,
despite the hype, does not guarantee that peace will reign in Mindanao.
Even as the MILF is seen as giving up its decades-long armed resistance, groups that adhere to
the goal of having an independent Islamic state remain. The Bangsamoro Islamic Freedom Fighter
(BIFF), for one, believes that the only way to resolve the decades-long Moro rebellion is to continue
asserting their right to self-determination in their ancestral domain.
Peoples movement remains the genuine force

The increasing discontent of the people and growing public pressure for real reforms continue
to seriously challenge the legitimacy and consolidation of the Aquino regime. Sectors who have
suffered the worst effects of the administrations policies, such as peasants, workers and disaster
survivors, have intensified calls for the Presidents ouster. In contrast to the instability clouding the
Aquino administration, the peoples movements remain unwavering in their fight for meaningful
reforms.
The broad struggles of the peoples movement against the discredited policies and embedded
corruption further pushed the Aquino administration to be increasingly defensive this year. Clearly
this has shown that the peoples movement remains the only genuine opposition pushing for genuine
reforms. Although this was an underlying and consistent force against the regime, there were several
significant campaigns and struggles in 2014.
The SCs indefinite extension of the temporary restraining order (TRO) against Meralcos Php4.15 per
kilowatt-hour rate increase for the second time in April may not have kept Meralcos captive market
unprotected from gradually increasing bills, but it prevented a radical spike in power rates that would
23 January 2015
47
have hurt consumers pockets even more. Behind this is the urgent motion of petitioners including
progressive partylist representatives, youth, teachers and womens groups. They argued that the
absence of a TRO would immediately lead to inflation, and rebutted a Meralco warning of power
outages should it fail to collect generation costs from customers. Throughout the year, peoples
sectors also remained vigilant about the arbitration between private water concessionaires and
the MWSS as the former challenged the latters decision of cutting water rates as opposed to the
companies petitions for a water rate hike. Water rights advocates also continued tackling the issue of
mega-dams as well as the pending privatization of several water cooperatives nationwide.
Nationalists, religious leaders, prominent academicians and lawyers joined various sectors in filing
a petition urging the SC to stop the implementation of the EDCA and terminate the VFA. This move
adds to voices that encourage the Filipino people to continue the fight for sovereignty.
In August, members of various sectoral groups and church people launched the Peoples Initiative,
a signature campaign that aims to gather six million signatures nationwide to pass the Pork Barrel
Abolition Act. The proposed act abolishes the presidential and congressional pork barrel, mandates
line item budgeting, criminalizes the use of lump sum discretionary funds, among others. Beyond
being a legal process, the campaign most of all is a means to make the public aware of the systemic
corruption that pervades in government. At present, there are already 224 out of 234 legislative
districts in 72 out of 82 provinces nationwide that have established volunteer networks gathering
signatures against the pork barrel.
In November, more than 300 Lumads, farmers, rights advocates travelled from Mindanao to Manila
to make known the worsening human rights situation in their region. Called the Manilakbayan,
the group demanded a stop to the escalating militarization in Mindanao that has caused hundreds
of residents to flee from their communities. The AFP is said to have deployed more than 50% of
its troops in Mindanao, primarily to protect large-scale foreign mining and logging firms. Mining
operations cover more than 311,000 hectares in Mindanao and most of these encroach in ancestral
lands of the Lumads. The Manilakbayanis determination to bring their issues to national attention
contributed largely not only to raising awareness about their plight but also to relating them with the
injustices and violence experienced by the rest of the Filipinos under neoliberal globalization.
Meanwhile the victory of the NXP workers for substantial wage hike and regularization of almost 200
workers was crucial because it underscores the strength of unionism in defending workers rights. The
union, one of the few remaining unions inside a special economic zone, also gathered the support
of other workers and sectors in pushing for their demands. This year, workers groups also launched
the campaign demanding for a Php16,000 minimum wage nationwide as a legitimate call against
repressed wages and unjust mechanisms like the two-tiered wage system.
Relatedly, teachers across the nation have taken a step to forging unity as at least 10 of all regions
now have regional teachers unions directly negotiating with the Department of Education in terms of
advocating for the rights of teachers as working people. Alongside this, teachers, youth and students
together with other educators groups have gradually advanced their study and engagement with
regard to K to 12, the institutionalization of which has only further exposed the Philippine education
system as being tied to the demands of the global market instead of being a fundamental tool for
shaping a people that will push for sovereign national development.
Organized peasants, on the other hand, fought against another extension of the Comprehensive
Agrarian Reform Program (CARPER) which expired in June 2014. This year, they also continued their
assertion over their land amid increasing cases of massive land-grabbing and land use conversion
such as in Hacienda Luisita and Clark Green City in Tarlac. The Kilusang Magbubukid ng Pilipinas
48
23 January 2015
(KMP) also persisted in its campaign to reclaim the coco levy fund and assert that small farmers
manage the funds. In January, the SC ruled on one of the coco levy cases involving Cojuangcos San
Miguel Corporation shares which will pave the way for the release of at least Php60 billion of funds to
benefit the millions of coconut farmers in the country.
A challenging and hopeful new year

2015 promises to further heighten the already sharp contradiction between the people and
the Aquino regime and the elite interests it represents. In just the first week of the New Year,
the double whammy of huge increases in LRT and MRT fares and water rates greeted the people as
the direct result of Aquinos neoliberal PPP program. The issue of PPP and privatization and other
neoliberal policies as well as issues of national sovereignty and patrimony and greater presence and
intervention of foreign interest especially of US imperialism are seen to become more prominent in
the coming months. Towards the end of the year, the Philippines will host the meeting of the Asia
Pacific Economic Cooperation (APEC) and its expected push of the neoliberal agenda in the region
along with the Trans-Pacific Partnership Agreement (TPPA) that the country hopes to join soon. The
push for more liberalization through Cha-cha and more privatization through the PPP is expected to
further intensify as proponents hope to achieve as much as they can before everyones focus, time
and resources turn to the 2016 polls.
However, the coming year also presents new opportunities to highlight, advance and achieve victories
for the pressing issues confronting the people. The recent visit of Pope Francis helped in making
more prominent how the collective rights of the people, especially the poor who comprise the great
majority, to live decently and with dignity are being systematically violated by the elitists regimes
flawed economic policies and programs and systemic corruption. The issue of scandalous inequality
and the accountability of government amid worsening poverty and exclusion and natural disasters,
have been further brought to the fore because of the Popes visit. This contributes to momentum
for reforms.
Meanwhile, the expected intensification of factional conflict and maneuverings among the political
elite as the 2016 polls draw near opens up additional avenues to highlight the peoples issues and
challenge those seeking elective posts to provide alternative programs and policies that will replace
those promoted by the Aquino regime. At the same time, the prospects of the peace talks between
the NDFP and GPH being revived this year also provide another platform to pursue social and
economic reforms that will truly address the chronic poverty and social injustice in the country that
are at the roots of the armed conflict. All these new opportunities will not only further strengthen the
peoples movement in their struggle for genuine change but will also increase their awareness
that such changed future is achieved through their collective and democratic processes.
23 January 2015
49
Annex
Armed Confrontations between the NPA and Government Forces Under the Aquino Administration, July 2010December 2014
Dead a
Wounded a
Captured
Number of
Incidents
NPA
AFP/PNP/
CAFGU
Civilian b
NPA
AFP/PNP/
CAFGU
Civilian b
NPA
AFP/PNP/
CAFGU
Civilian b
2010 Jul-Dec
142
43
171
21
127
13
25
25
2011 Jan-Jun
171
47
194
22
145
24
13
2011 Jul-Dec
176
61
179
39
187
15
16
12
2012 Jan-Jun
197
98
179
18
24
188
14
34
21
2012 Jul-Dec
126
45
145
25
121
45
15
36
2013 Jan-Jun
207
31
241
11
16
226
31
39
28
2013 Jul-Dec
165
50
200
10
181
27
24
2014 Jan-Jun
158
49
212
237
12
17
41
2014 Jul-Dec
159
54
124
144
19
Total
1,501
478
1,645
81
154
1,556
144
216
62
185
Date
a
b
- These figures do not include an additional undetermined number due to incomplete reports.
- These include civilians merely alleged or accused by the AFP as NPA members and supporters but still killed, wounded or illegally detained. Details can be
provided upon request.
AFP - Armed Forces of the Philippines

CAFGU - Citizens Armed Forces Geographical Unit
NPA - New People's Army
PNP - Philippine National Police
Source: Various publications monitored by IBON
50
23 January 2015
23 January 2015
51
52
23 January 2015

Birdtalk 2014 Yearend

Hochgeladen von

Dokumentinformationen

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Birdtalk 2014 Yearend

Hochgeladen von

Copyright:

Verfügbare Formate

Birdtalk

January 23, 2015

114 Timog Avenue

Fading Economic Miracle

IBON Economic and Political Briefing

Table 1. National Accounts of the Philippines By Industry Group and By Type of

Industry Group / Expenditure Share

b. Trade and Repair of Motor Vehicles, Motorcycles,

e. Public Administration and Defense:

Gross Domestic Product

Gross National Income

IBON Economic and Political Briefing

Chart 1. Growth Rate of Gross Domestic Product and

(Q1 1986-Q2 1992)

(Q3 1992-Q2 1998)

Benigno Aquino III

(Q3 2010-Q3 2014)

(Q1 2001-Q2 2010)

IBON Economic and Political Briefing

IBON Economic and Political Briefing

Chart 2. Selected Domestic Interest Rates, 1986-November 2014

RRP - reverse repurchase rate

IBON Economic and Political Briefing

Chart 3. Philippine Loans, 1986-2013* (in million Php)

Total UKB Loans Outstanding

Of Which for Production

Of Which to Real Estate

IBON Economic and Political Briefing

Chart 4. Overseas Remittances Growth and

Overseas Remittances Equivalent Share in GDP (in %)

* - 2014 data based on 1st-3rd quarters only

IBON Economic and Political Briefing

Table 2. National Accounts of the Philippines By Industry Group and By Type of

Industry Group / Expenditure Share

IBON Economic and Political Briefing

Chart 5. Real GDP Growth Rate of Selected Countries, 2013 (in %)

Real GDP (in %)

Source: World Bank World Development Indicators

IBON Economic and Political Briefing

Chart 6. Share in Global GDP of Selected Countries, 2013 (in %)

The rest of the world

Source: World Bank World Development Indicators

IBON Economic and Political Briefing

IBON Economic and Political Briefing

- Hotels and Restaurants = "Accommodation and Food Service Activities"

- Extra-Territorial Organizations and Bodies = "Activities of Extraterritorial Organizations and Bodies"

IBON Economic and Political Briefing

Daily NCR minimum wage (in Php)

Real minimum wage

Estimated family living wage (in Php)

IBON Economic and Political Briefing

Total number of establishments

Cut in profits (in %)

IBON Economic and Political Briefing

IBON Economic and Political Briefing

IBON Economic and Political Briefing

Table 6. Key indicators of ASEAN countries, 2009-2013

Human Development Index (HDI)

IBON Economic and Political Briefing

IBON Economic and Political Briefing

Chart 7. Gross Domestic Product By Industry Share, 1946-2014*

IBON Economic and Political Briefing

IBON Economic and Political Briefing

IBON Economic and Political Briefing