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Yearend BriefngJuly 14 - 15, 2011

N Center Timog Avenue, Quezon City

nkline: (632) 9277060 to 62 (632) 9292496

ail: [email protected] site: http://www.ibon.org.

IBON FOUNDATION INC.

MIDYEAR 2011:

Failing Economy,

Growing Disenchantment

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2 IBON Economic and Political Briefng 14 -15 July 2011

IBON Foundationis an independent

development institutionestablished in 1978

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IBON Economic and Political Briefng 14 -15 July 2011 3

O ne year is long enough to evaluate the Aquino administration. Economic directions and political priorities have been set which can already be measured against the countrys long-standing problems and the needs of the people. Without expecting that the change Filipinoshope for will happen overnight, a year is more than enough time to see if the rst decisive stepstowards this have been taken.

Pres. Benigno Noynoy Aquino III promised change and so effectively sent this message that hewon the presidency by it. A year later, however, the countrys economic and political problems are asentrenched as ever. The snag is not merely of untangling a mess inherited from the previous Arroyoadministration the new administration itself has moved to the forefront of reproducing instead of resolving these problems.

The countrys troubles are undoubtedly considerable: tens of millions of poor Filipinos, severesocial inequality, manufacturing and agricultural decline amid global crisis, recurring scaltroubles, persistent political repression, weak and undemocratic institutions of governance, systemiccorruption, and lack of national sovereignty. The administration admits as much to justify its lack of tangible accomplishment so far and claims that its rst year was about creating the foundations for future progress.

Yet, especially in the realm of the economy, the policies and medium-term plan put in place actuallyundermine such progress. The Aquino administrations approach is identical to that of the previousArroyo government, though economic strategies should have been overhauled towards real social,agricultural and industrial development. Much of the poor economic performance in the rst year of the administration is certainly due to failed globalization policies of the past but in choosing thosesame policies, the Aquino administration has made this poor performance its own.

The political inadequacies are more fully the Aquino administrations and go far beyond the widely- perceived personal incompetence and favoritism. The administration has consistently played up its banner anti-corruption/anti-Arroyo drive yet even here there is scant movement. On the other hand,state-sponsored human rights violations clearly persist astride rising militarism. Also conspicuous isthe rapid subordination to United States (US) geostrategic interests at the expense of the countryssovereignty.

Any claim to a productive rst year will rest on a imsy case. The dole-out programs rolled out givetemporary relief for the countrys poor but alarmingly mask how the roots of their socioeconomicwoes are not being dealt with or, worse, being preserved. There are also narrow economic indicatorsmeaningful only for international nancial institutions, credit ratings agencies, investment managersand big business. And there are the tickling exposs of Arroyo-era corruption. These give theappearance of achievement but have not yet led to actual accountability and decisive action.

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What is weightier is the absence of real economic nationalism which upholds the rights of Filipinosto development and that asserts social justice. Dissatisfaction is already spreading rapidly among thevast majority who are poor and directly suffer persistent joblessness, low incomes and unaffordable or decrepit social services. Even those reached by massive cash dole-outs know that these will be short-lived. Also striking is how the countrys political troubles have been reduced to merely corruption

in particular the Arroyo governments corruption while there is stagnation or even backsliding onlarger concerns of human rights, national sovereignty and real democracy.

Working for genuine change in these vital areas is the continuing challenge for the people as thecountry enters the second year of the Aquino administration.

FAILING ECONOMY

W hen Pres. Aquino took of ce, the Philippine economy was suffering problems accumulated fromyears of failed policies. There were record numbers of jobless Filipinos, real incomes were falling, poverty was widespread, landlessness persisted, domestic manufacturing and agriculture were on thedecline, and the government was mired in debt. In short, there was much to be done. A year later it is fair to say that the situation has not improved and there has not been any headway against these problems.

The only thing the government can claim to have concretely done in the economy so far is to dispensea few billion pesos in conditional cash transfer (CCT) dole-outs and Pantawid public relations damagecontrol. Even its much-touted public-private partnership (PPP) program has apparently not yet taken off with the one project in a relatively advanced stage, the MRT-LRT contract, still being reviewed. It cannottake credit for the regular housekeeping and maintenance functions of government funded by its Php1.645trillion budget these are normal expenses every year. If anything, the administration can even be put totask for choosing to spend less on agriculture, agrarian reform, rural infrastructure, public hospitals, andstate universities and colleges.

While the lack of accomplishment is one thing the disturbing direction of economic policy is another. Interms of policy intent, the administration nally released its Philippine Development Plan (PDP) 2011-2016. However this disturbingly only recycles the failed globalization policies of previous administrations

with marked added emphasis on CCTs and PPPs and so cannot but have the same adverse results for the economy as before. These poor outcomes were already very much felt in the rst year of the Aquinoadministration. Particularly disquieting is how the plan con rms that the government will not take thecrucial steps needed to actively develop the domestic economy which are so urgent amid an increasinglyvolatile global environment. The administrations exposed attitude to such basic issues as wages and landalso plainly show the limits of its pro-people rhetoric.

Consequently, the prospects in the next ve years are that the situation will not improve and may evenget much worse depending on how quickly the global crisis intensi es. The administration will ensure a

steady stream of CCT and other dole-outs in a massive propaganda effort that poverty is being reduced.It is also possible for a few big foreign and domestic investors to make their pro ts especially with thegovernments efforts to give guarantees through its PPP program. Although, as it is, there are alreadysigns that implementation of these banner programs will be far from smooth. The persistent absence of nationalist economic policies however is of greatest consequence the peoples economic troubles willcontinue without real redistributive reforms, agricultural development and national industrialization.Growth will remain low and unstable, joblessness severe, incomes low and poverty fundamentallyunresolved if there are no substantial policy changes in the coming years.

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Peoples welfare

The prices of fuel, transport, water, power and food continue to rise and in many instances steeply .The prices of basic commodities and services are particularly signi cant given the generally low incomesof the largest number of Filipinos. Incomes are already so low that even slight price increases are

burdensome in coming on top of previous rounds of increases.

According to the National Statistics Of ce (NSO), the countrys headline year-on-year in ation rate(2006=100) went up signi cantly to 5.2% in June 2011 from 3.6% in July 2010; similarly, annual in ationin the National Capital Region (NCR) rose to 4.7% from 3.8% over the same period. (See Table 1 ) Theincrease in in ation in areas outside NCR was even larger and went up to 5.3% in June 2011 from 3.7% inJuly 2010.

Indicator and Commodity July 2010

Inflation (National; in %) 3.9% 4.6% (June)

Inflation (Outside Metro Manila; in %) 3.7% 5.3% (June)

Metro M anila

Inflation (in %) 3.8% 5.2% (June)Jeepney f are (minimum; in Php) 7.00 8.00 (July)Oil prices (in Php/liter, except LPG at Php/kg)

Diesel 32.50 44.50 (July 12)Gasoline 42.00 55.15 (July 12)LPG 558.00 - 625.00 662.00 - 735.00 (July 3)

Water r ates (All-in tariff; in Php/cu. m.)

MWCI (Manila Water) 29.98 33.57 (February)MWSI (Maynilad) 33.08 40.80 (February)Power r ates (in Php/kWh)

Meralco (basic rate) 9.32 9.60 (July)Residential bill (consuming 150 kWh/month) 1,571.46 1,609.52 (July)

Napocor (ERC-approved effective rates) 3.75 3.82 (June)Selected basic commodities (in Php)

NFA rice (per kilo) 25.00 27.00 (July 7)Galunggong (per kilo) 100.00 120.00 (July 7)Sitao (18-20 strings/bundle) 50.00 60.00 (July 7)Eggplant (8-10 pcs/kilo) 30.00 60.00 (July 7)Cooking oil (lapad bottle) 20.00 35.00 (July 7)

Sources: National Statistics Office (NSO), Department of Energy (DOE), Metropolitan Waterworks and SewerageSystem (MWSS), and Bureau of Agricultural Statistics (BAS)

Table 1. Selected Price Indicators, July 2010 and June 2011

2011 ( as of)

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The past year has in any case seen prices of essential items going up by lesser or greater amountscollectively due to anti-poor and anti-national policies of globalization. Price increases have been

particularly marked in the sectors subjected to deregulation (i.e. oil) and privatization (i.e. water, power,and transport).

Domestic pump prices of oil products have seen the highest increases as global monopolization of theindustry asserted itself once more with the prices of LPG, gasoline and diesel rising from 18% to 37%in the rst year of the administration. (See Table 1 ) Domestically-based rms have moreover engaged in

brazen pro teering and not adjusted local pump prices commensurate to changes in the price of globalcrude and foreign exchange movements. They have also been charging the highest possible prices that theycan in provinces and regions outside the main urban centers.

The privatization of key utilities also continues to be felt through soaring water and power rates. In the past year, water rates have risen by 12% in the Manila Water service area and by 23% in Maynilads continuing a trend of rapidly rising rates over the last decade. (See Table 1) Power rates have only slightlyincreased since the middle of last year but these nonetheless come on top of high power rates in the pastdecade under the implementation of the Electric Power Industry Reform Act of 2001 (EPIRA) with therates paid by Meralco residential consumers for instance having more than doubled as of last year. More

power rates are in any case looming with pending applications for even more increases.

Food price increases have been mixed, although the prices of some basic sh and vegetable items havenoticeably increased. (See Table 1 ) The continued push to privatize the National Food Authority (NFA)however raises the prospect of higher and volatile rice prices.

The jobs crisis continues with double-digit real unemployment and underemployment despitegrowth . There has not been any meaningful improvement in the employment situation. The governmentof cially reports the unemployment rate falling to 7.2% in April 2011 from 8.0% in the same period lastyear; this corresponds to just 2.9 million unemployed Filipinos. (See Table 2 ) IBON estimates seekingto correct for the changed employment de nition in April 2005 however indicate that the unemploymentrate is rather at 10.9% with 4.5 million unemployed Filipinos, while likewise seeing a slight drop in theunemployment rate (by 0.7 percentage points) and levels (by 184,000).

There are at the same time clear indications of a decrease in the quality of jobs. The underemploymentrate rose to 19.4% in April 2011 from 17.8% the year before which is a very large 829,000 increase in thenumber of Filipinos not earning enough from their jobs and seeking additional work to 7.1 million. This

brings the total number of real unemployed and underemployed Filipinos to a considerable 11.6 millionor 28% of the labor force. (See Table 2 ) Alternatively, there were 21.1 million Filipinos jobless or ininsecure, low-paying and even hazardous work, equivalent to around 52% of the labor force consistingof the 4.5 million unemployed, 4.3 million unpaid family workers and 12.2 million own account workers.(See Tables 2 and 3) There are also the 1.8 million Filipinos working as generally poorly-paid householdhelpers earning the lowest among wage and salary workers at just Php130/day.

In principle, the 969,000 additional wage and salary jobs and 783 million additional full-time work arewelcome, especially after many years of new jobs disproportionately going to own account and unpaidfamily workers, or to part-time work. (See Table 3 ) However, a large portion of the 969,000 net jobscreated since last year were in among the economys lowest-earning sectors (by wage and salary) agriculture (639,000 jobs at Php155/day) and trade (369,000 jobs at Php272/day).

It is notable though how manufacturing jobs have only grown by a very small 67,000, despite supposed8.6% growth in the rst quarter, which af rms its failure to serve as the countrys main driver of employment. (See Table 3 ) The sector only accounted for 8.5% of jobs which is still among the lowestin decades. The scant 9,000 additional mining and quarrying jobs despite relatively rapid 18.6% growth

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2010 April 2010 April 2011 2010 p April 2010 April 2011 p

Population 15 Years O ld a nd Over(in 000)

60,718 60,561 61,778 60,717 60,561 61,778

Labor Force 40,438 40,080 41,304 38,894 38,512 39,692

Employed 36,044 35,413 36,821 36,035 35,413 36,821Underemployed 6,758 6,297 7,126 6,762 6,297 7,126

Unemployed 4,394 4,667 4,483 2,859 3,099 2,871

Not in the Labor Force 20,280 20,481 20,474 21,823 22,049 22,086

Labor Force P art icipation R ate(in %)

66.6 66.2 66.9 64.1 63.6 64.2

Employment rate 89.1 88.4 89.1 92.6 92.0 92.8Underemployment rate 18.8 17.8 19.4 18.8 17.8 19.4

Unemployment rate 10.9 11.6 10.9 7.4 8.0 7.2

Table 2. Key Employment Indicators, Annual Average 2010, April 2010 and 2011

IBON Estimates Officially R eported aIndicator

Sources: National Statistics Office (NSO) Labor Force S urvey and IBON estimates

Note: Since figures according to the old LFS unemployment definition since 2008 are unavailable even from the NSO, IBONmade rough estimates for labor force an d correspondingly unemployment by assuming a labor force pa rticipation rate (LFPR)of 66.1% in 2008, 66.5% in 2009 and 66.6% in 2010. These assumed LFPR figures were derived by applying the changes inofficial reported annual average LFPR in 2008, 2009 and 2010 to the LFPR in 2007 that was s till computed using the oldunemployment definition i.e., 0.4 percentage point reduction in 2008, 0. 4 increase in 2009, 0.1 increase in 2010. A similarexercise was done to estimate the April round figures.

a - bas ed on new LFS definitions since April 2005 (official data based on old definition unavailable)

p - preliminary, totals may not add up due to rounding

in turn re ects the intrinsically low job-generation in this sector. The 228,000 increase in real estate jobs parallels the marked increase in foreign investment in this sector and may be driven by this; but it isuncertain how these jobs will fare if this re ects a growing bubble.

The pro le meanwhile of the unemployed remains disturbing with alarmingly high rates of jobless highschool- and college-educated Filipinos. Almost nine out of ten (87.7%) of reported unemployed havereached a high school or college education, with over four out of ten (43.5%) even having college-levelschooling. (See Table 4 ) This strongly indicates that the unemployment problem is not so much the lack of education per se but rather the lack of employment opportunities in the economy to begin with. Half of

jobless Filipinos are young at between 15-24 years old, and nearly two-thirds (64.0%) are male.

Poor employment and income prospects at home continue to force more and more Filipinos to work

abroad. Some 4,030 Filipinos left the country every day in 2010, according to Philippine OverseasEmployment Administration (POEA) data, which is slightly higher than the 3,897 leaving per day in 2009.

The wage increase granted was far less than how much workers needed and employers could afford .The Aquino administration granted a Php22 cost of living allowance (COLA) increase in May 2011

bringing the mandated minimum wage in the NCR to Php426 per day. The meager wage hike, the rstunder the new administration, indicates the limits of the administrations pro-poor rhetoric.

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April 2010 April 2011 pChange

(2010-2011)

Total Employed Persons 35,413 36,821 1,408

By I ndustry 308 4.9

Agriculture, Fishery and 11,512 12,151 639 155 4.2 Agriculture, Hunting and Forestry 10,073 10,678 605 152 6.2Fishing 1,439 1,510 71 193 (3.7)

Industry 5,487 5,634 147 nda 7.2Mining and Quarrying 212 221 9 272 18.6Manufacturing 3,063 3,130 67 310 8.6Electricity, Gas and Water 137 147 10 515 (0.4)Construction 2,075 2,136 61 291 4.0

Services 18,414 19,036 622 nda 3.7Wholesale and Retail Trade 6,885 7,254 369 272 0.8Hotels and Restaurants 991 1,031 40 276 7.3Transport, Storage & Communications 2,741 2,688 (53) 378 5.5Financial Intermediation 383 405 22 504 5.4Real Estate, Renting & Bus. Activities 1,061 1,289 228 458 5.9Public Administration & Defense, CompulsorySocial Security

1,959 1,952 (7) 452 (4.6)

Education 1,156 1,178 22 566 6.7Health and Social Work 447 442 (5) 440 8.6Other Community, Social & Personal Service

Activities984 957 (27) 332 nda

Private Households w/ Employed Persons 1,804 1,841 37 130 ndaExtra-Territorial Organizations 3 - - 356 nda

By C lass of Worker

Wage and Salary Workers 19,283 20,252 969 308Private household 1,804 1,841 37 130Private establishment 14,226 15,244 1,018 294Government/govt corporation 3,157 3,093 (64) 508With pay (family owned business) 97 74 (23) 235

Own Account 11,950 12,188 238 -Self-employed Workers 10,686 10,899 213 -Employers 1,264 1,289 25 -

Unpaid Family Workers 4,179 4,382 203 -

By Ho urs of Work40 Hours and Over (Full-Time Employment) 21,715 22,498 783 -Less than 40 Hours (Part-Time Employment) 12,959 13,661 702 -

Did Not Work 738 663 (75) -

nda - no data available

Sources: Employment data from National Statistics Office (NSO)Labor Force S urvey and GDP data from National StatisticalCoordination Board (NSCB)National Acco unts o f the Philippines

Average DailyBasic Pay(Jul 2010,in P hp)

1st Qtr 2011GDP Growth

(in % ; constant2000 prices)

Table 3. Employed Persons, Average Daily Basic Pay of Wage and Salary Workers, and GrossDomestic Product Growth By Industry

Employed Persons ( in '000)

Note: For purposes of comparability, "Financial Intermediation" in theNational Acco unts o f the Philippines (NAP, source of GDP data) isconsidered equivalent to "Finance" in theLabor Force S urvey (LFS, source of employment data), "Ownership of Dwellings & RealEstate" to "Real Estate, Renting & Bus. Activities", "Public Administration & Defense, Compulsory Social Security" to "Government",and "Health and Social Work" to "Medical and Health".

p - preliminary, totals may not add up due to rounding

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Taking away the effect of in ation, the new NCR minimum wage of Php426 is worth Php245 in real terms(measured in 2000 pesos). This real value is even less than what the Arroyo government was able to givein February 2002 when the Php280 mandated minimum wage was equivalent to Php258 in real terms. (SeeChart 1 ) A higher Php25 wage hike was also even given on two other occasions in June 2005 and July2006. If only by these standards, the current administration, ironically, is so far doing even less than the

previous Arroyo government.

The end result is that real wages have not broken from the trend of being basically at over the last decade.The gap between the mandated minimum wage and the family living wage also continues to rise, reachingPhp572 in June 2011. (See Table 5 ) As it stands, the minimum wage is just 43% of the Php998 estimateneeded for decent living by a family of six in the NCR. The living wage is the amount of family income

needed to provide for a familys food and non-food expenditures with suf cient allowance for savings for social security to enable the family to live and maintain a decent standard of human existence beyond meresubsistence level, taking into account all of the familys physiological, social and other needs.

Small and large employers can evidently afford a much larger wage hike if only they accept a cut in their already considerable pro ts. The bene ts for workers and their families are unambiguous and the wagehike will substantially improve their welfare even if not yet necessarily bringing all of them up to a decentstandard of living. The economy has more than enough pro ts to support for instance a Php125 wage hike.

2010 p April 2010 April 2011 p 2010 p April 2010 April 2011 p

Total Unemployed Persons 2,859 3,099 2,871 100.0 100.0 100.0

By Sex

Male 1,809 1,936 1,837 63.3 62.5 64.0Female 1,051 1,163 1,034 36.7 37.5 36.0

By Age G roup15-24 years old 1,460 1,584 1,436 51.1 51.1 50.025-54 years old 1,293 1,400 1,329 45.2 45.2 46.355 years old and over 106 114 103 3.7 3.7 3.6

By Highest Grade C ompletedNo Grade Completed 14 15 14 0.5 0.5 0.5Elementary 374 415 339 13.1 13.4 11.8

Undergraduate 174 191 152 6.1 6.2 5.3

Graduate 201 224 187 7.0 7.2 6.5High School 1,293 1,380 1,269 45.2 44.5 44.2

Undergraduate 363 407 336 12.7 13.1 11.7Graduate 930 973 936 32.5 31.4 32.6

College 1,178 1,290 1,249 41.2 41.6 43.5Undergraduate 621 682 663 21.7 22.0 23.1Graduate 557 608 586 19.5 19.6 20.4

Source: National Statistics Office (NSO)Labor Force S urvey

Population (in '000) Share to Total (in %)

Table 4. Summary Statistics on Unemployment, Annual Average 2010, April 2010 and 2011

Note: Based on the new official unemployment definition p - preliminary

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1 0 IBON Economic and Political Briefng 14 -15 July 2011

In 2008, establishments in the country with total employment of 20 and over had combined pro ts of Php895.2 billion and 2.74 million employees, according to the preliminary results of the 2008 AnnualSurvey of Philippine Business and Industry (ASPBI) of the NSO. Granting an across the board wage hikeof Php125 means workers will receive an additional Php3,802 per month, and that employers will spend anadditional Php49,427 per employee per year (assuming 13 months of pay). The total cost of the proposed

wage hike will only be Php135.6 billion which, subtracted from total pro ts, will still leave establishmentswith Php759.6 billion in pro ts. This is only a 15.1% cut in their pro ts.

Giving a Php125 wage hike in NCR in particular will cost employers Php61 billion and reduce their pro ts by only 17.3%, from Php352.1 billion to Php291.1 billion. Average pro t per establishment in the NCR will only fall by Php6.8 million and still leave them with an average of Php32.2 million in pro ts each. Alarge wage hike will be bene cial not just for workers and their families but also the economy. The transfer of money from rich to poor households will increase aggregate demand and stimulate the economy. High-income households have a higher propensity to save and low-income households, so deprived even of

basic necessities, a higher propensity to consume.

The administration gives low priority to agrarian reform and is among the poorest performing in

terms of land distribution. The Aquino administrations low priority for land reform can be gleaned fromits policy moves and, more importantly, its actual practice. It continues with Comprehensive AgrarianReform Program with Extension and Reforms (CARPer) which merely extends the failed ComprehensiveAgrarian Reform Program (CARP) as well as relegates land reform to an Asset Reform sub-section in theSocial Development chapter of its new medium-term Philippine development plan.

Chart 1. National Capital Region Daily Minimum Wage, 1986-June 2011(in Php; 2000=100)

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Realities on the ground however provide the strongest con rmation of the administrations biases againstland reform. In its rst nine months, and under CARPer, it has distributed an average of 19,901 hectaresmonthly. While this is slightly more than the 17,311 hectares per month under the Arroyo government itis far less than the average rates tallied by the Ramos government (38,229 hectares per month), CorazonAquino (28,711 hectares), and Estrada (26,032 hectares). (See Table 6 ) Distribution under CARPer in

particular at an average of 16,461 hectares per month is also considerably slower than the 26,030 hectaresmonthly average since 1987.

Justi cations that the land covered now involves more dif cult private land, or that it is just theadministrations rst year, or that the program is in any case nearing completion are of little signi cance.Again, similar to the governments handling of the wage hike, this is not a performance consistent with therhetoric of change.

Such a conclusion also nds support with how the Hacienda Luisita Inc. (HLI) controversy is playingout. The Supreme Court (SC) in July ruled with a 6-4 decision to uphold the Department of AgrarianReforms (DAR) revocation of the HLI stock distribution option (SDO) and called for a referendum for the haciendas agricultural workers to decide if they want shares, again, or for the land to be distributedto them. For one, the SC decision used legal obfuscations to avoid deciding on the constitutionality of theSDO and the giving of land to its tillers the heart of the controversy and emblematic of elite resistance toland reform nationwide. The decision rather endorses a process that since the beginning has been biased infavor of the Cojuangco-Aquino clan through its feudal control, economic threats and outright violence.

Yearand M onth

Daily M inimumWage

Family L ivingWage

Wage Gap

2009

March 382 912 526June 382 922 536September 382 934 541December 382 945 557

2010March 382 951 565June 404 958 549September 404 962 551December 404 985 564

2011

March 404 994 584June 426 998 572

Table 5. Daily Minimum Wage, Family Living Wage and WageGap, March 2009-June 2011 (in Php)

Sources: Wage data and family living wage estimates from National Wages andProductivity Commission (NWPC) and inflation data from Bangko Sentral ngPilipinas (BSP)

Note: IBON computed these family living wage (FLW) estimates by inflating the lastFLW estimates released by the NWPC for September 2008. The NWPC reportsthat its FLW estimates are under review.

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T a

b l e 6

. L a n d

D i s t r i b u

t i o n

A c c o m p

l i s

h m e n

t P e r

A d m

i n i s t r a

t i o n ,

J u

l y 1 9 8 7 - M a r c

h 2 0 1 1 ( i n

h e c

t a r e s

)

A q u i n o

R a m o s

E s t r a d a

A r r o y o

A q u i n o

T o t a l

J u l 1 9 8 7 - J u n 1 9 9 2

J u l 1 9 9 2 - J u n 1 9 9 8

J u l 1 9 9 8 - D e c 2 0 0 0

J a n 2 0 0 1 - J u n 2 0 1 0

J u l 2 0 1 0 - M a r 2 0 1 1

J u l 1 9 8 7 - M a r 2 0 1 1

D e p a r t m e n t o f A g r a r i a n R e f o r m

8 4 8 , 5 1 5

1 , 9 0 0 , 0 3 9

3 3 3 , 3 8 9

1 , 0 3 1 , 4 0 3

1 0 6 , 1 9 0

4 , 2 1 9 , 5 3 6

P r i v a t e l y - o w n e d L a n d ( P A L )

4 7 1 , 6 2 1

9 5 5 , 2 4 3

2 2 8 , 6 2 2

7 0 9 , 2 1 4

n d a

O p e r a t i o n L a n d T r a n s f e r ( O L T )

3 5 8 , 9 1 5

1 4 2 , 8 4 7

1 8 , 7 0 8

4 0 , 0 7 9

n d a

G o v e r n m e n t F i n a n c i a l I n s t i t u t i o n s

( G F I )

2 2 , 9 3 8

1 0 5 , 4 9 8

1 1 , 9 0 6

2 6 , 3 3 0

n d a

V o l u n t a r y O f f e r t o S e l l ( V O S )

5 5 , 0 7 9

2 5 7 , 3 7 3

7 6 , 8 9 6

2 1 9 , 3 8 3

n d a

C o m p u l s o r y A c q

u i s i t i o n ( C A )

1 3 , 9 5 2

1 2 0 , 8 2 8

4 7 , 7 6 7

1 0 5 , 0 8 0

n d a

V o l u n t a r y L a n d T r a n s f e r ( V L T )

2 0 , 7 3 7

3 2 8 , 6 9 7

7 3 , 3 4 5

3 1 8 , 3 3 9

n d a

N o n - P A L

3 7 6 , 8 9 4

9 4 4 , 7 9 6

1 0 4 , 7 6 7

3 2 2 , 1 9 0

n d a

S e t t l e m e n t A r e a s

2 0 8 , 7 9 2

3 5 6 , 7 6 3

3 5 , 2 7 6

1 0 4 , 7 4 9

n d a

L a n d e d E s t a t e s

2 5 , 7 8 1

4 1 , 2 0 1

9 7 1

2 , 1 2 5

n d a

G o v e r n m e n t - o w n e d

L a n d s / K i l u s a n g K a b u h a y a n a t

K a u n l a r a n ( G O L

/ K K K )

1 4 2 , 3 2 1

5 4 6 , 8 3 2

6 8 , 5 2 0

2 1 5 , 3 1 8

n d a

D e p a r t m e n t o f E n v i r o n m e n t a n d

N a t u r a l R e s o u r c e s

8 7 4 , 1 3 9

8 6 2 , 4 6 1

4 4 7 , 5 7 2

9 4 2 , 0 2 4

7 2 , 9 1 8

3 , 1 9 9 , 1 1 4

P u b l i c A l i e n a b l e

& D i s p o s a b l e

L a n d s

5 3 9 , 0 8 6

4 8 9 , 0 6 9

1 1 3 , 3 8 3

9 4 2 , 0 2 4

7 2 , 9 1 8

I n t e g r a t e d S o c i a

l

F o r e s t r y / C o m m u n i t y B a s e d F o r e s t

M a n a g e m e n t ( I S

F / C B F M ) A r e a s

3 3 5 , 0 5 3

3 7 3 , 3 9 2

3 3 4 , 1 8 9

T o t a l

1 , 7 2 2 , 6 5 4

2 , 7 5 2 , 5 0 0

7 8 0 , 9 6 1

1 , 9 7 3 , 4 2 7

1 7 9 , 1 0 8

7 , 4 1 8 , 6 5 0

L a n d D i s t r i b u t i o n

A v e r a g e P e r M o n t h

2 8 , 7 1 1

3 8 , 2 2 9

2 6 , 0 3 2

1 7 , 3 1 1

1 9 , 9 0 1

2 6 , 0 3 0

n d a - n o d a t a a v a i l a b l e

S o u r c e s :

P r e s i d e n t i a l A g r a r i a n R e f o r m

C o u n c i l ( P A R C ) a n d D e p a r t m e n t o f A g r a r i a n R e f o r m

( D A R )

L a n d T y p e a n d

M o d e o f A c q u i s i t i o n

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For another, and notwithstanding a belated reaction by Malacaang to appeal the SC decision, theadministration is evidently not going to devote any political capital to ensure that Hacienda Luisita, owned

by Pres. Aquinos family, is going to be distributed among its farmers. The loss to the Cojuangco-Aquinowould be considerable as various government infrastructure and other projects steadily drive up CentralLuzon land values including of the hacienda. Indeed, the way the family has been acting is illustrative of the urgency of land reform leaving such vast tracts of lands in the hands of landlords is tantamount toinstitutionalizing backward agricultural production and foregoing dynamic rural development. The clanhas merely settled for sugar production (apparently unpro table) and land speculation (pro table, butunproductive) in the haciendas thousands of hectares.

As it is, landowners continue to evade land distribution so having their own land to till remains elusive for farmers and farmworkers of various haciendas nationwide including those in Bulacan, Tarlac, Batangas,Laguna, Bicol and Negros. At the same time agricultural lands nationwide remain up for grabs in landdeals with businesses and foreign companies, threatening local food security and undermining peasantscenturies-old struggle for land. For instance, six million hectares of idle lands have been allocated for the production of sugarcane, coconut, cassava, jatropha, oil palm and other cash crops and two millionhectares for agribusiness development. Expecting little from the administration, organized peasantsespecially under the Kilusang Magbubukid ng Pilipinas (KMP) are at the forefront of waging determinedagrarian struggles.

The relief from massive cash dole-outs and other smaller subsidies is only temporary and is beingused as a smokescreen for further globalization . The CCT program is reported to already cover 79

provinces and to have reached 2.1 million bene ciaries, with an additional 300,000 by the end of theyear and 700,000 by 2012. The program is claimed by government as an investment in the future of theFilipino people but, in the context of unreformed economic policies that do not create enough jobs andkeeps incomes low, it will amount to little more than a hugely expensive effort that temporarily gives theimpression of poverty reduction.

The welfare gains for bene ciaries genuinely reached by the program are welcome and arguably longoverdue. But even as poor families are bene ting does not necessarily mean that headway is being madeagainst poverty, even if this seems commonsensical. The economics of the household are very differentfrom the economics of the country and it is only at the economy-wide level that progress against povertywill be far-reaching and sustainable. Is the economy as a whole creating jobs? Have the prospects for decent work and incomes for everyone in the country improved or does the CCT program only give anincome, health and education edge to its recipients in the scramble for limited work in the country?

The CCT program is not implemented in a vacuum and should not be assessed as if it were. This is themain limitation of the usual CCT assessments. It is certainly important to look at the speci cs of programimplementation and to track any improvements in the welfare of recipients but this is not the entiretyof the effect of CCTs nor, indeed, a correct way of seeing if there are gains in national poverty reduction.Indeed, the sheer size of the program with a Php22 billion budget in 2011 and Php35 billion in 2012,and supposedly 4.6 million bene ciaries after ve years demands that the program be looked at in itsentirety.

And the reality is that beyond the welfare gains for individual bene ciaries the program is being usedas a smokescreen to keep on implementing the policies that have stunted the domestic economy, causedmassive joblessness, suppressed incomes and kept people poor. The targeted 4.6 million bene ciaries,assuming they are all reached, are going to be used to claim that poverty is being reduced and to justifycontinued free market globalization policies. Meanwhile, the tens of millions of Filipinos jobless,landless or forced abroad by these policies will still have to contend with an economy of generally poor

prospects.

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At best, the CCT program will be continued inde nitely as an arti cial trickle-down mechanism. Yet itis uncertain how the huge resources for this could be regularly raised. At worst, and more likely, is thatthe program and the welfare gains for its recipients will be merely temporary as the government restrictsits spending to maintain its creditworthiness. There is good reason to doubt the sustainability of the CCT

program. They were implemented most extensively and for the longest time in Latin America but this wasduring the 1990s and 2000s which was a time of relatively rapid global growth, high commodity prices,

booming exports and better government revenues. The current global crisis has ended these favorableconditions so their continuation and indeed their supposed poverty-reducing effect will be put to thetest.

And then there are the various implementation-speci c problems on the ground which are unsurprisinggiven that the multi-billion peso expansion was done without bene t of a comprehensive assessment of

previous CCT implementation especially regarding distribution and effectiveness. Problems are occurringacross the country, at every stage of the process, and in being so widespread may conceivably involvehundreds of millions of misspent pesos. These include cash transfers going to non-deserving and non-

poor bene ciaries, non-complying bene ciaries, anomalously-chosen bene ciaries and non-existent bene ciaries. There are also reports of disbursements being lower than they should be and of bene ciariesunjusti ably being dropped from lists.

There are also concerns apart from the leakages and loss of funds. Bene ciaries have complained of cash transfers being made conditional not just on the programmed health and education conditions buton following orders from local government and social welfare of cials. Residents in the Bicol, SouthernTagalog, Eastern Visayas and Western Visayas regions for instance have complained of threats that theywould be disquali ed if they were found to be joining community activist organizations attributing theseto the program being used for counterinsurgency purposes.

The fastest reduction in poverty has been through changes in statistical methodologies . While strictlyspeaking beyond the rst year of the Aquino administration, it is important to look at of cial povertystatistics inasmuch as the next two scheduled national poverty rounds, in 2012 and 2015, both fall duringits term. There is reason to suspect that much of the supposed improvement in countrys of cial reported

poverty is due more to consecutive changes in poverty methodologies than real poverty reduction. This ison top of concerns that the of cial poverty line is too low and underestimates the true extent of poverty.

The National Statistical Coordination Board (NSCB) released of cial poverty gures in February based onadjustments on the poverty estimation methodology. According to the new methodology, there were 23.1million poor Filipinos in 2009 and the previous estimate for 2006 was also lowered to 22.2 million (fromthe original count of 27.6 million). (See Table 7 )

The latest revision means that there are in effect three separate estimates for poverty in the last twoand a half decades using 1992, 2003 and 2011 methodologies. Genuine improvements to scienti cmethodologies are welcome but the new methodology raises some concerns. First is that it seemsunresponsive and detached to everyday realities. The of cial poverty threshold, or the amount supposedlynecessary for a tolerable standard of living, is pegged at just Php46 per person per day. This implies that aFilipino on average needs just Php46 a day to meet all of his or her food and non-food needs. Basic needsinclude food, education, clothing and footwear, medical care, transportation and communication, fuel, lightand water, housing, housing maintenance, furnishings, household operations, personal care and effects,and rental.

Second is that it could create the impression that poverty is being reduced when, in fact, its incidence isnot changing. Yet, on the contrary, it is possible that the actual poverty trend over the decade-and-a-half since the mid-1990s is essentially unchanging with poverty incidence implying, that with population

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growth, the absolute number of poor Filipinos is rising. Putting the various estimates side-by-side raises

some questions about recent supposed poverty reduction. (See Chart 2 ) Abstracting from breaks indata sets due to changes in methodologies, it appears that poverty trends indicate little change from themid-1990s if the at movements according to the two most recent methodologies (2003 and 2011) areconnected to poverty incidence according to the 1992 methodology.

Table 7. Poverty Incidence and Magnitude of Poor Population, 1985-2009

Indicator 1985 1988 1991 1994 1997 2000 2003 2006 2009

Magnitude of poor(in '000)

1992 Methodology 26,675 25,388 28,554 27,373 26,769 30,850

2003 Methodology 25,473 23,836 27,617 2011 Methodology 19,797 22,173 23,142

Poverty i ncidence(in %)

1992 Methodology 49.2 45.4 45.2 40.6 36.9 39.52003 Methodology 33.0 30.0 32.9 32.62011 Methodology 24.9 26.4 26.5

Source: National Statistical Coordination Board (NSCB)

Chart 2. Poverty Incidence and magnitude of Poor Population, 1985-2009

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Given the basically at trend in poverty incidence since the late 1990s, it is for instance plausible for of cial poverty incidence in 2009 to still be around the some 40% level of 1994. If so, this would implythat the number of poor has increased by over 7.5 million, by a rough approximation, from 27.4 millionin 1994 to perhaps around 35 million in 2009. But even this may be grossly underestimated with, in2009, some 65 million or 70% of Filipinos living on Php104 or much less per day with the poorest half of the population desperately poor and struggling with Php22, Php35, Php45, Php55 or Php67 per day.Unfortunately with consecutive changes poverty estimates over time are going to be incomparable and,

perhaps intentionally, will likely give the impression that poverty has been markedly decreasing.

False positives

The economy is already slowing from a year ago and is hobbled by weak internal sources of growth .The government has attributed the slow growth to external factors such as sluggish global trade and even

political turmoil in the Middle East and North Africa. While these may be proximate causes it is well-established that the global environment is chronically uncertain, with periods of great volatility, so the realcause of low growth must be found internally. It also cited government underspending and the absenceof election-related stimulus. More than external factors, the low growth in the country is due to peasantlandlessness and lack of rural modernization, a low value-added and delinked manufacturing sector, andhousehold consumption dampened by low domestic wages and incomes.

The government reported 4.9% growth in real gross domestic product (GDP) in the rst quarter of 2011which was markedly slower than the 8.4% rate in the same period last year. (See Table 8 ) Consecutivequarters are not strictly comparable but it can still be noted that the rst three quarters of the Aquinoadministration has seen progressively slower growth year-on-year from 8.9% in the second quarter of 2010, 7.3% in the third quarter, and 6.1% in the fourth quarter followed by the 4.9% in the rst quarter of this year.

On the other hand, the picture appears better using seasonally-adjusted quarterly growth rates which arecomputed to allow comparison between consecutive quarters (which cannot be done with the quarterlyyear-on-year gures). By this measure, the economy has been growing since mid-2010 with 0.3% growthin the third quarter, 0.5% in the fourth quarter, and 1.9% in the rst quarter of 2011. While showing anupward trend these are still lower than the 3.8% and 1.9% rates in the rst and second quarter of 2010,respectively. While at least showing better performance this is unlikely to be sustained since, historically,seasonally-adjusted growth has never been on an uptrend for more than four straight quarters. For one,there are no signs of any change in the underlying economic structure in the last year and, for another, theglobal environment will only become more adverse.

On the industry side, the agriculture sector grew by 4.2% in the rst quarter of 2011 which continues animprovement that begun in the fourth quarter of last year after consecutive quarterly declines. (See Table8) Aside from being erratic this remains low, however, and indicates a large untapped potential for ruralgrowth. Manufacturing grew by 8.6% and while higher than the growth registered in the second semester of last year, it is still a marked slowdown from previous double digit rates. The continued dependence of this sector on exports, especially of electronics, which are under threat is a matter of medium- to long-term concern. Much more sustainable over the long-term is if these two sectors were fundamentally driven

by high domestic demand. Meanwhile, the contraction in public spending by 4.6% is consistent with thede facto austerity measures being implemented by the administration under the guise of anti-corruptioncampaign and being discerning as to its spending.

A particular point of concern though, and which will be taken up more below, is the at 0.0% growth innet primary income (previously called net factor income from abroad). The compensation received byoverseas Filipino workers (OFWs) not, as is commonly misunderstood, their remittances is recordedunder this item. While net primary income as a whole is at at 0.0%, the sub-item of compensation

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1st Qtr 2 nd Qtr 3 rd Qtr 4 th Qtr

Percen t Distribution t o G DP

1. Agriculture, Fishery, Forestr y 11.6 12.3 10.2 10.8 13.1 12.2a. Agriculture and Fishing 11.6 9.8 7.8 8.7 10.6 9.9b. Forestry 0.0 2.5 2.4 2.2 2.5 2.3

2. Industry S ector 32.6 31.9 33.7 32.4 32.4 32.6a. Mining and Quarrying 1.2 1.0 1.6 1.0 1.0 1.2b. Manufacturing 22.2 22.4 21.1 21.7 23.4 23.2c. Construction 5.7 4.9 7.3 5.7 4.9 4.9d. Electricity, Gas and Water Supply 3.6 3.6 3.6 4.0 3.1 3.4

3. Servi ce S ector 55.8 55.8 56.1 56.8 54.5 55.2a. Transport., Storage, and Communication 7.5 8.0 7.8 6.8 7.4 8.0b. Trade and Repair of Motor Vehicles,

Motorcycles, Personal and Household Goods16.6 15.5 15.6 17.7 17.7 14.9

c. Financial Intermediation 6.6 6.5 6.7 6.7 6.3 6.6d. Real Estate, Renting and Business Activities 10.3 10.4 10.6 10.9 9.5 10.5e. Public Administration & Defense:

Compulsory Social Security4.5 4.7 4.9 4.6 3.7 4.3

f. Other Services 10.2 10.7 10.5 10.0 9.9 10.9Gross D omestic P roduct 100.0 100.0 100.0 100.0 100.0 100.0

Growth R ates

1. Agriculture, Fishery, Forestr y (0.2) (1.8) (2.0) (2.0) 4.1 4.2a. Agriculture and Fishing 0.0 (1.9) (2.1) (3.1) 5.4 6.2b. Forestry (31.3) (1.1) (0.2) 2.8 (1.4) (3.7)

2. Industry S ector 11.6 15.4 15.7 9.8 6.5 7.2a. Mining and Quarrying 11.4 2.4 24.4 6.8 6.9 18.6b. Manufacturing 11.2 18.3 13.2 8.4 6.5 8.6c. Construction 14.3 9.7 24.7 15.6 4.6 4.0d. Electricity, Gas and Water Supply 9.9 9.8 10.2 10.1 9.4 (0.4)

3. Servi ce S ector 7.2 7.2 7.3 7.8 6.4 3.7a. Transport., Storage, and Communication 1.0 (2.2) 2.2 3.0 1.4 5.5b. Trade and Repair of Motor Vehicles,

Motorcycles, Personal and Household Goods8.4 11.6 6.8 11.0 5.0 0.8

c. Financial Intermediation 10.1 8.3 5.8 13.1 13.6 5.4d. Real Estate, Renting and Business Activities 7.5 5.2 8.6 6.6 9.4 5.9e. Public Administration & Defense:

Compulsory Social Security5.8 7.5 9.6 6.5 (0.8) (4.6)

f. Other Services 8.4 9.8 10.9 4.4 8.7 6.8Gross D omestic P roduct 7.6 8.4 8.9 7.3 6.1 4.9Net Primary I ncome 10.0 21.2 10.0 5.7 3.9 0.0Gross N ational Income 8.2 11.5 9.2 6.9 5.6 3.6

Industry Sector 20102010 2011

1st Qtr

Table 8. Gross National Income and Gross Domestic Product By Industrial Origin,

2010-1 st Quarter 2011 (in %; constant 2000 prices)

Source: National Statistical Coordination Board (NSCB)

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referring to overseas workers income has actually declined by 3.9% in the rst quarter of 2011 (from18.5% growth in the same period in 2010). This indicates falling real incomes received abroad by OFWs.This was just offset by another sub-item, out ow of property expenses which declined 35.2%, hence theoverall gure of 0.0% growth.

On the expenditure side, the drop in public spending is clear with a 17.2% decline in governmentconsumption. (See Table 9 ) Also notable is the dramatic slowdown in exports to just 3.3% in the rstquarter of 2011 after consecutive quarters of double-digit, albeit slowing, growth. Household consumptionthough picked up with 4.9% growth which is generally higher than in 2010. Also looking favorable is the37.0% increase in capital formation which is generally higher than in 2010. The government has portrayedthis is due to domestic investor con dence upon the administrations supposed good governance yethistorical trends and recent developments suggest that, while welcome, this is a temporary spurt thatwill not be sustained. The domestic market remains constricted while the global market is becomingincreasingly listless.

There are signs that the limits of overseas work and remittances as a major lifeline for the economyhave been reached. Overseas work has for decades been a major source of jobs and OFW remittanceshave, correspondingly, been a major source of consumption for households and foreign exchange for the economy. The continued slowdown in remittances, however, increasingly suggests that this lifelinefunction has reached its limits. This will lower the welfare of individual OFWs and their families as wellas create greater problems for the economy as a whole. Latest of cial estimates record 8.6 million overseasFilipinos as of 2009 composed of 4.5 million temporary/irregular workers and 4.1 million permanentresidents.

Remittances growth is growing but at ever slower rates. Monthly year-on-year growth in April 2011 was at6.3% which continues a general downtrend, despite month-to-month variations since 2005. (See Chart 3 )Growth rates in remittances are considerably down from the earlier double-digit rates reaching as much as30% (June 2008) to over 37% (December 2006). The slowing growth in remittances also parallels slowinggrowth in deployments of land-based and sea-based workers which slowed to 3.4% in 2010 (1.47 milliondeployed) from 15.1% in 2009 (1.42 million deployed) and 14.7% in 208 (1.24 million).

Remittances in 2010 were reported at a record US$18.8 billion. Remittances had been rapidly rising andincreasing in size relative to GDP since the 1980s: ranging between 1.3-2.7% in the period 1981-1990,more or less steadily rising each year after to 9.8% in 2004, and then appearing to reach some sort of

plateau in the 6-year period since then and varying just between 9.5-10.9 percent. These calculations areaccording to GDP estimates using 1985 as the base year. (See Chart 4 )

The national income accounts were rebased from 1985 to 2000 recently slightly reducing the size of remittances relative to GDP but the plateau in the last six years remains clear. (See Chart 4 ) Using therebased GDP gures, remittances as a share of GDP averaged 9.9% of GDP in the 7-year period 2004-2010 during which time it stayed within the narrow range of 9.4% (2004 and 2010) to 10.4% (2005 and2006).

Two factors appear to be at play. The main reason appears to be a tightening of labor markets abroaddue to the global crisis as well due to more countries sending, in accordance with a decade of migrationand development hype, increased numbers of their citizens abroad for work especially from India,China, Mexico, Bangladesh, Pakistan, Vietnam and Indonesia. These may have had the effect of loweringincomes and bene ts and of making job opportunities scarcer. For instance, remittances from the US which accounts for around half of remittances to the country actually contracted 6.4% in 2009 after the

nancial meltdown there with barely a recovery to previous levels in 2010. From all countries, remittancegrowth slowed to 5.6% in 2009, again upon the onset of crisis, after 13.7% growth in 2008. The second

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1st Qtr 2 nd Qtr 3 rd Qtr 4 th Qtr

Percent D istributi on to GDP

1. Household Final Consumption Expenditure 69.2 69.2 67.3 66.8 73.1 69.32. Government Consumption 10.0 11.8 11.5 9.3 7.7 9.33. Capital Formation 20.8 18.4 20.1 17.4 26.5 24.0 A. Fixed Capital 20.3 21.0 20.6 19.7 20.0 22.4

1. Construction 8.6 7.5 10.4 8.6 7.8 7.72. Durable Equipment 10.0 11.5 8.6 9.7 10.2 12.73. Breeding Stock & Orchard Development 1.7 2.0 1.5 1.4 2.0 2.0

B. Changes in InventoriesC. Intellectual Property Products 0.4 0.4 0.3 0.6 0.4 0.4

4. Exports 50.6 49.9 53.7 60.5 39.4 49.2 A. Exports of Goods 41.5 38.5 44.2 51.9 32.3 40.4

B. Exports of Services 9.1 11.4 9.5 8.6 7.2 8.75. Less : Imports 50.6 48.9 52.2 53.7 47.7 50.8 A. Imports of Goods 40.9 37.9 43.7 44.0 38.0 41.0

B. Imports of Services 9.7 11.0 8.6 9.7 9.7 9.8Gross D omestic P roduct 100.0 100.0 100.0 100.0 100.0 100.0Growth Rates

1. Household Final Consumption Expenditure 3.4 4.0 1.9 2.4 4.9 4.92. Government Consumption 4.0 21.4 7.4 (6.5) (6.6) (17.2)3. Capital Formation 31.6 31.9 38.0 34.5 25.7 37.0 A. Fixed Capital 19.5 19.0 27.1 16.0 16.1 12.0

1. Construction 17.5 11.4 25.2 17.1 14.0 7.22. Durable Equipment 25.5 29.2 35.9 17.6 21.6 16.7

3. Breeding Stock & Orchard Development 0.3 (0.2) 1.0 (0.3) 0.7 3.6B. Changes in InventoriesC. Intellectual Property Products 2.9 14.2 4.1 (1.1) (0.7) 10.0

4. Exports 21.0 18.8 24.0 23.1 16.8 3.3 A. Exports of Goods 24.7 27.1 28.6 26.6 15.3 10.1

B. Exports of Services 6.5 (2.7) 6.2 5.5 24.3 (19.5)5. Less : Imports 22.5 24.2 22.1 22.1 21.9 8.8 A. Imports of Goods 23.4 26.4 23.8 21.0 23.1 13.3

B. Imports of Services 18.9 17.3 14.1 27.6 17.4 (6.6)Gross D omestic Product 7.6 8.4 8.9 7.3 6.1 4.9Net Primary I ncome 10.0 21.2 10.0 5.7 3.9 0.0Gross National Income 8.2 11.5 9.2 6.9 5.6 3.6

20111st Qtr

Type of Expenditure 20102010

Source: National Statistical C oordination Board (NSCB)

Table 9. Gross National Income and Gross Domestic Product By Expenditure Share,

2010-1 st Quarter 2011 (in %; constant 2000 prices)

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Chart 3. Monthly Overseas Filipino Remittance Growth, January 2000-April 2011(year-on-year; in %)

Chart 4. Overseas Filipino Remittances, 1998-2010, 1st Quarter 2011(in million US$ and % of Gross Domestic Product)

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reason has to do with the domestic economy which, if only through steady population growth, continues toincrease in size.

These tendencies are likely to intensify. For instance the Saudi Arabian government recently adopted a policy of Saudization or Nitaqat which requires greater hiring of Saudi nationals in a bid to create onemillion new jobs to address domestic unemployment. Yet the measure is not new Spain, Italy, SouthKorea and Australia all drastically reduced various quotas for foreign workers while the UK and Canadaimposed stricter requirements for certain occupations as early as 2009.

The implications are considerable. This trend highlights how relying on jobs abroad and overseasremittances to boost private domestic consumption is increasingly untenable. In the past, these remittanceshave substantially covered up for internal economic decay by boosting consumption, increasing thewelfare of recipient households, and considerably boosting foreign exchange reserves. Of course theyhave still been insuf cient to compensate for crisis-induced problems in export- and foreign investment-dependent sectors and more fundamentally, for the decline of domestic agriculture and industry.

Trends in foreign trade and investment are consistent with the need to aggressively refocuson developing domestic sources of demand and capital . Recent short-term data show export andinvestment slowdowns that, in the context of global economic developments, are likely re ective of anoverall long-term trend of poorer prospects for foreign trade and investment.

According to the NSO, export earnings in the month of May fell 3.2% to US$4.10 billion from US$4.24 billion in the same period last year. While exports have been growing for 17 consecutive months after the last decline of 8% in October 2009 the last twelve months have for instance seen export growth ratesslowing rapidly until actually going negative in May. (See Chart 5 )

46.8

(3.2)

(10.0)

-

10.0

20.0

30.0

40.0

50.0

2010Jan

Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 2011Jan

Feb Mar Apr

Chart 5. Philippine Export Annual Growth Rates, January 2010-May 2011 (in %)

Source: National Statistics Office (NSO)

Chart 5. Philippine Expor t Annual Growth Rates, January 2010-May 2011 (in %)

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Total receipts from merchandise exports in the rst ve months of 2011 totalled US$20.6 billion whichis for now still up 7.5% from US$19.2 billion last year. Low-value-added electronics products remainthe countrys biggest export accounting for half of total exports at US$10.2 billion although a 9.1%decline was recorded in January-May 2011 from the same period last year. Exports of the next biggestitem, coconut oil, increased 63.8% to US$780 million but this only accounted for 3.8% of total exports.Exports of the third biggest export earner, articles of apparel and clothing accessories (3.7% of exports),meanwhile increased by 15.5% to US$756.8 million.

According to the NSO, the US$3.3 billion in outward shipments of manufactured goods whichaccounted for 79.8% of total export receipts in May 2011 was an 11.4% decline from the US$3.7 billionrecorded in May 2010. Earnings from agro-based products which comprised 8.3% of total exports revenuein May 2011 rose 40.2% to US$339.3 million, from mineral products (5.8% of exports) increased by81.2% to US$237.4 million, and from petroleum products (2.8% of exports) rose by 441.4% to US$114.3million.

The US was the largest export market in May accounting for 17.1% of exports followed by Japan (15.2%),China (11.9%), Singapore (9.2%), Hong Kong (7.8%) and South Korea (4.9%) cumulatively accountingfor two-thirds or 66.1% of total exports. With slight month-to-month variations between them, these have

been the countrys top export destinations in recent years.

Foreign direct investments (FDI) meanwhile have fallen 15.1% to US$552 million in the period January-April 2011 from US$650 million in 2010 and US$872 million and 2009, respectively, over the same

period. This continues a general slowdown in foreign investment since 2009 that has apparently notchanged even upon the new Aquino administration. (See Chart 6 ). Investments in the rst four monthscame largely from the US (74.6% of total equity invested), Singapore (12.3%), Hong Kong (7.4%),

Netherlands (4.4%) and Japan (4.1%). Foreign equity investments in this period went largely to real estate(42.5%), mining and quarrying (22.0%), manufacturing (10.1%), utilities (6.0%), construction (5.2%) andwholesale and retail trade (2.3%).

Chart 6. Foreign Direct Investment, January 2009-April 2011 (in million US$)

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The Bangko Sentral ng Pilipinas (BSP) played up that net FDI in ows were still positive due to strongmacroeconomic fundamentals and favorable growth prospects although could not but acknowledgethe generally listless growth in the advanced capitalist economies, particularly Japan and the US, amidheightened global economic uncertainties.

In contrast, foreign portfolio investments in the rst ve months of 2011 recorded US$2 billion in in owswhich was 160.3% higher than the US$772 million in the same period in 2010. There was US$4.0

billion worth of investments in Philippine Stocks Exchange - (PSE) listed shares, much higher than theUS$2.5 billion recorded in 2010. These went to holding rms (US$1.0 billion), banks (US$679 million),telecommunication companies (US$520 million), utility companies (US$509 million), and property rms(US$497 million). Out ows, according to the BSP, rose from US$2.8 billion last year to US$5.8 billionconsisting mostly of withdrawals from interim peso deposits (IPDs).

These recent export and investment trends re ect a protracted global economic crisis that could quicklydeteriorate even further in the coming years. Overall, it is clear that the world economy after the 2008crisis cannot go back to the relatively high levels in the 1990s and 2000s when massive debt and ctitiouscapital served to arti cially drive growth. In particular, sovereign debt defaults appear imminent in weaker Eurozone economies despite ever more drastic austerity measures which, if anything, are fomenting ever greater political unrest. Japan in turn which has been more or less stagnant for well over a decade now hasto deal with its recent earthquake and tsunami disasters. The US is still the worlds largest economy andthe most advanced capitalist power but, even here, unemployment and government debt are at historically-high levels.

In short, the world economy is well into an era of high uncertainty and lower economic activity.Emergency stimulus programs are no longer viable and, indeed, governments now have to deal with theaftershocks of huge debt and drastic austerity. These suggest further distress for the economy down theroad if the government remains overly focused on export markets and on foreign investments.

National government de cit reduction has been through spending cuts more than improved revenuecollection . The Aquino administration has been using its apparent gains on the scal front as proof of itsanti-corruption successes and of rational frugality. The reality however is more basic and the governmenthas made a policy decision to reduce the budget in the interest of creditworthiness even at the expense of

public education and health services, infrastructure and other economic services. Also, there is as yet noreason for the Aquino administration to claim that it has signi cantly addressed the problem of revenueleaks due to corruption.

There has been a striking turnaround in the national governments (NG) scal position. Its de cit of just Php9.5 billion in the rst ve months of 2011 is 94.1% smaller than the Php162.1 billion recordedin the same period in 2010. (See Table 10 ) However this was due more to severe spending cuts where

NG expenditures fell 10.7% or by Php71.1 billion. Tax revenues from the internal revenue and customs bureaus on the other hand only increased by Php46.9 billion with most of this 10.3% increase likely justattributable to increased collections in line with the nominal GDP growth of 9.3% in the rst quarter of 2011.

The most remarkable revenue increase in this period was actually very speci c and not even due toimproved tax collections: a large one-off Php23.8 billion in income of the Bureau of the Treasury (BTr)from collections of dividends on shares of stock in January 2011 (part of the Php48.5 billion in Btr income). (See Table 10) These collections in just one month were more than double the amount collectedfor this item in the whole of 2010 (Php12.0 billion).

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2010 2011 in million Php in %

Revenues 1,207,926 500,009 581,501 81,492 16.3

Tax Revenues 1,093,643 456,585 503,519 46,934 10.3Bureau of Internal Revenue 822,623 344,103 391,092 46,989 13.7Bureau of Customs 259,241 107,473 106,894 (579) (0.5)Other Offices 11,779 5,009 5,533 524 10.5

Non-tax Revenues 113,877 43,149 77,979 34,830 80.7Bureau of Treasury Income 54,315 21,467 48,476 27,009 125.8Privatization 914 95 677 582 612.6Others 58,648 21,587 28,826 7,239 33.5

Grants 406 275 3 (272) (98.9)

Expenditures 1,522,384 662,116 591,041 (71,075) (10.7)

Surplus/(Deficit) (314,458) (162,107) (9,540) 152,567 (94.1)

Table 10. National Government Fiscal Position, 2010 - January-May 2011(in Php million except rates in %)

Indicator January-May Change

2010

Source: Bureau of Treasury (BTr)

That spending cuts account for most of the improved de cit situation can also be seen by looking at thescal situation relative to GDP. The NG de cit was reduced 1.2% of GDP in the rst quarter of 2011 from

6.5% in the same period in 2010 or by a signi cant 5.4 percentage points. (See Table 11 ) However, NG expenditures clearly accounted for two-thirds of this with a 3.5 percentage point drop compared to just a 1.5 percentage point increase in revenues. As it is, revenues being equivalent to 14.4% of GDPin the rst quarter is only a very slight improvement from 14.2% for the whole of 2010 and less thanwhat was achieved in over two decades since 1989 where revenues ranged from 14.5% (2004) to asmuch as 19.9% of GDP (1994). It is also still smaller than the average 15.3% of GDP under the previousArroyo administration covering the period 2001-2010 (which averaged 15.1% even if revenues fromunprecedented privatization are removed).

Revenue leaks can only be said to have been decisively addressed once the improvements in revenue performance are more uniform and sustained. It may also be recalled that the previous Arroyoadministration allegedly window-dressed its revenue collection in 2006 by seeking advanced tax paymentsfrom big corporations, which subsequently showed up in lower collections from large taxpayers.

Debt service and the public debt stock in any case continue to rise. The Aquino administration has paidPhp634 billion in debt service between July 2010 and April 2011, which is Php8 billion more than whatwas paid by the Arroyo government in the period July 2009-April 2010. These payments over its rst ten

months also already exceed payments for the whole year of 2007 (Php614 billion), 2008 (Php613 billion)and 2009 respectively, and of the rst two years combined of the Arroyo administration (Php632 billion).Yet the NG debt stock has still gone up from Php4.58 trillion in June 2010 to Php4.71 trillion in April 2011

consisting of Php2.69 trillion in domestic debt and Php2.03 trillion in foreign debt. This increase in thedebt stock of Php129.5 billion was at least smaller than the Php209.4 billion increase during the equivalent

period under the previous administration.

Source: Bureau of the Treasury (BTr)

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Aquinomics: A Philippine Development Plan (PDP) without development

The Aquino administration has chosen the same decades-old economic policies behind low growth, joblessness, falling incomes and increasing poverty . The administrations rst year con rms its lack of vision for national and nationalist development. The Philippine Development Plan (PDP) 2011-2016it released in May 2011 is its blueprint for implementing its declared Social Contract with the FilipinoPeople. The plan sums up the administrations chosen economic direction and de nes its strategies and

programs for the next six years. It recycles the market-based, foreign investment-led, foreign market-dependent globalization of previous governments despite the countrys poor experience with these in thelast three decades.

The plan speci cally targets [globally] competitive industries and services: foreign tourism, cheap labor business process outsourcing (BPO), low value-added electronics for export, extractive mining, export-oriented agri-business and forestry, and foreign-dominated ship building. It can be noted that these priorityareas of development are conspicuously similar to the Seven Big Winners pushed by the Joint ForeignChambers of the Philippines (JFC) in 2009 and again in 2010. The plan moreover gives a central roleto PPPs and CCTs both programs that have been aggressively pushed by the World Bank and AsianDevelopment Bank (ADB) especially in the last decade.

IBON has separately released a critique of the PDP with the following main points:*

1. The PDP 2011-2016 does not offer anything new in terms of strategies for more genuinelyinclusive economic growth . The plans main problem is that it dogmatically stays the course of theneoliberal free market policies of globalization that have been so destructive for the country. Thismeans the government foregoing strategic economic planning and letting the market and privatesector decide on economic activity in the country national development is then expected to moreor less spontaneously happen. The plan builds on the accumulated globalization policies of previousadministrations including the Arroyo government.

20102010

1st Qtr2011

1st Qtr2010

20101st Qtr

20111st Qtr

Revenues 1,207,926 265,824 323,078 21.5 14.2 13.0 14.4

Tax revenues 1,093,643 237,660 265,652 11.8 12.8 11.6 11.9of which --BIR 822,623 173,892 199,549 14.8 9.7 8.5 8.9BOC 259,241 60,581 62,618 3.4 3.0 3.0 2.8

Non-tax revenues 113,877 27,979 57,425 105.2 1.3 1.4 2.6Grants 406 185 1 (99.5) 0.0 0.0 0.0

Expenditures 1,522,384 400,003 349,275 (12.7) 17.9 19.5 15.6

Surplus/(Deficit) (314,458) (134,179) (26,197) (80.5) (3.7) (6.5) (1.2)

Total debt serviceas % of revenues

689,799 339,340 332,065 (2.1) 57.1 127.7 102.8

Interest payments 294,244 108,898 90,720 (16.7) 24.4 41.0 28.1Principal payments 395,555 230,442 241,345 4.7 32.7 86.7 74.7

Indicator

Table 11. National Government Fiscal Position and Debt Servicing, 2010-1 st Quarter 2011(in million Php and in %)

Source: Bureau of Treasury

in million Php % Change(2010 1 st Qtr -2011 1 st Qtr)

as % of GDP

Source: Bureau of the Treasury (BTr)

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2. The plan is more concerned about a stable and pro table environment for big business, especiallyfor foreign investors, than strategic Filipino-oriented development or ensuring the well-being of the people . On one hand, the plan is preoccupied with global competitiveness indicators because thecountrys capacity to attract trade and investments is affected by its poor international rankings. Onthe other hand, measures for real national development such as greater regulation of foreign capital andmore protectionist trade policies are actually avoided for undermining this competitiveness.

3. The plan further relinquishes government responsibility to provide essential public goods andsocial services . Using as justi cation that reducing the scal de cit is an absolute priority, the planeven promotes further privatization as a win-win solution for the country. The Aquino administrationhas adopted PPPs as a major strategy where government shall rely on the public-private partnershipscheme to implement the bulk of its infrastructure program. This means that the private sector should

be supported and allowed to pro t from providing public goods and services.

4. The plan uses CCTs as income-boosting window-dressing to cover up how millions of Filipinoshave been marginalized by globalization policies . The plan cannot but acknowledge the adverseimpact of globalization policies even if it says this in a roundabout manner. Yet instead of correctingthis, it merely proposes so-called social protection particularly CCTs. These are inherently limitedthough and cannot possibly cover the tens of millions of Filipinos economically and socially displaced

by the free market.

5. The plan plays up misplaced bene ts from big infrastructure projects and diverts from themore meaningful but politically more dif cult socioeconomic reforms needed . There is no doubtthat building physical infrastructure in transport, water, power and elsewhere is vital for a strongeconomy. But it is important to ask if this infrastructure will have the desired effect as in, be broadlydevelopmental in the speci c inequitable conditions of the Philippine economy. It is clear how big

rms participating in PPPs will bene t from guaranteed pro ts, and how export-oriented corporationsusing the improved infrastructure may reduce their costs of doing business. Established foreign,corporate and landed elites will then likely gain. But it is less clear how the mass of underpaid workers,landless farmers and unemployed across the country will bene t especially if the infrastructure isconcentrated in the countrys usual centers of economic activity.

6. The plans intensi ed privatization of health, education and housing will make these servicesavailable only to those who can afford them . The government is systematically turning vital socialservices into opportunities for private pro t-making rather than directly providing these so that they areaccessible to everyone including the countrys poorest.

7. The plan seeks to increase taxes paid by the poor while avoids taxing the rich. It has an imbalancedscal policy. The plan argues that the government faces de cit problems. Hence, it will tighten

public spending and reduce outlays for domestic development in terms of public infrastructure, socialinvestments and welfare spending. These will have adverse effects on the poor and on the economy.Yet the government judiciously avoids taxing the rich to raise resources such as direct taxes on high-income individuals and corporate pro ts, or indirect taxes on non-essential luxury goods and services.

The administrations centrepiece PPP program is discriminatory in favor of big pro t-seeking players andforeign investors over building a domestic economy providing for its constituents needs. The program

plays up the role of pro t-seeking private and foreign parties in infrastructure building and providing public goods and services. Instead of putting an end to the ills of privatization and other free marketmeasures, the Aquino government is further opening up the economy for big businesses and pro ts at theexpense of the people. (See Table 12 ) More expensive public facilities will aggravate Filipinos alreadyserious problem with making ends meet. There are 12 priority rail, road and airport projects lined up thisyear worth Php157 billion although none have yet been successfully bid out, much less started.

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The Aquino administration also clearly seeks to build on previous globalization policies and extend

these to as many areas of the economy as possible. The leaderships of the Senate and of the House of Representatives have already expressed their willingness to push for charter change particularly towardsopening up the economy to greater foreign investment. The government has also already launched anational campaign to promote free trade agreements (FTAs) as well as declared its intent to enter into asecond FTA this time with the European Union (EU). All these indicate how the Aquino administrationis relying mainly on foreign investments and foreign markets for economic development, rather than the

painstaking but more sustainable and equitable approach of focusing on the domestic economy.

GROWING DISENCHANTMENT

Amid deteriorating living conditions and apparent lack of decisive action from government to protectthe public from rising cost of living, Pres. Aquino saw the steady and steep decline in his performanceand satisfaction ratings. There is growing disenchantment especially among the masses, who were initiallyenthralled by Aquinos bold words about a presidency radically different from its predecessor one thatis not only honest and humble but most of all sensitive to the needs of the people. Pres. Aquino and hishandlers attempt to stem this trend by drawing public attention to the administrations banner issue of corruption thus the repeated tirades against the misdeeds of Gloria Macapagal-Arroyo. But whether or notArroyo will face actual legal cases led by the Aquino administration remains to be seen.

After all the posturing of being the alternative to the corruption-ridden, undemocratic Arroyo regime,the Aquino presidency has proven in a year that it is not about to turn around this crisis-battered nation.Pres. Aquino promised reforms without a concrete reform agenda. He promised change without departingfrom failed socioeconomic policies. He talked about good governance using the same patronage and elite

politics. One by one, the bubbles of expectations that he created burst as Pres. Aquino concluded his rstyear.

The Aquino presidency is turning out to be more of the same anti-people, pro-foreign and undemocraticgovernance that has been all too familiar to the Filipino people. Its rhetoric on poverty alleviation remainsthat an empty rhetoric and worse, just an afterthought to its economic planning, the central theme of

Family Corporation PPP-Related Interests

Aboitiz Aboitiz Equity Ventures (AEV) power, transport Ayala Ayala Corp. power, water, telecommunicationsCojuangco San Miguel Corporation (SMC) power, water, tollways and highways, rail, airport

Consunji D.M. Consunji, Incorporated (DMCI) power, water, constructionGokongwei JG Summit power, telecommunicationsLopez Lopez Holdings/First Balfour power, telecommunications, constructionPangilinan Metro Pacific Investments Corp. (MPIC) power, water, tollways, ports, telecommunications

RazonInternational Container TerminalServices, Inc. (ICTSI)

ports

Ty Metrobank power

Source: IBON

Table 12. Philippine Conglomerates w ith PPP-related Interests ( preliminary listing)

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which is the vigorous but not so novel promotion of privatization. The Aquino presidency has not beenradical to break away from the failures of its predecessor, nor has it been a reformist as its moderatesupporters had wanted it to be. The Aquino presidency has been simply lazy, rehashing old programs andstaying within the comfort zone of elite politics.

Such inertia to address the worsening plight of the population is already one of the distinguishing marks of Noynoy Aquinos leadership. His lack of vision, his lack of inspiration, even his lack of decency to have

purchased a multi-million-peso car (which he reportedly sold) while the people are reeling from poverty,has not helped reverse the peoples deteriorating perception of the Aquino administration. Instead, withoutefforts to be discreet about his coming from a ruling clan, Pres. Aquino has wasted no time to consolidateelite rule, continued militarist approach to sti e dissent, and up the ante for foreign investors. There hasalso been a strikingly increased puppetry to the US.

Kayo ang boss ko. (You are the boss) Pres. Aquino addressed the people in his inaugural speech,dramatizing his supposedly unassuming brand of leadership and overemphasizing that he would not abuse

power. Kayo pa rin ang boss ko, (You are still the boss) he said after a year when he marked the rstanniversary of his inauguration, trying to convince some more a disillusioned populace, or perhaps even

just his camp, that the worn-out sound byte would still work. But his appeal has waned. After havingestablished allegiance to elite and imperialist powers and servitude to the already discredited policies of globalization, which have only driven the people further down to hardship, Noynoy Aquino has clearlydemonstrated to everyone who his real boss is.

The Aquino presidency does not hold the path to real change, not with its overused slogans of daang matuwid (straight path) and ghting corruption in order to end poverty, as none of these is true. Its

politics has remained traditional, feudalistic, elitist and colonial, guided by the principles of free marketdemocracy, back to business as usual, and putting in place only cosmetic changes to maintain legitimacy.Real change can only happen through the long, arduous road of overhauling the system that hadentrenched the elite at the expense of the people and the countrys resources. Pres. Aquino could haveat least paved the way by instituting relevant policies and programs that have long-term bene ts to the

people. But in a year, the Aquino presidency has shown that in its remaining years it could actually be anobstruction to real change.

Consolidating elite rule

The Filipino people can dream again, Pres. Aquino had declared during his inauguration. It has been ayear of one nightmare after another for the Filipino people worsening joblessness, insuf cient incomes,rocketing prices of food and basic commodities, increasing transport fares, oil price hikes, increasesin water and electricity rates, more land grabbing stories, more demolitions, less social services. Therehas not been any respite from the crisis left behind by the Arroyo administration, while the Aquinoadministration has only continued to fuel the social unrest by doing nothing.

Pres. Aquino just allowed things to happen, especially the things that could have uplifted the people if onlyhe intervened. He could have used the political momentum driven by his large mandate to confront theoil companies on their pro teering or just to suspend any fare, rate or price increase until he had studiedthe workings of a liberalized economy and privatization. But he did not. Instead, in the classic trapo(traditional politician) fashion, Pres. Aquino has kept on blaming Gloria Macapagal-Arroyo for the messhe has inherited.

His visible, decisive actions have only been on matters that secure his position. He has af rmed the sameglobalization policies that have been implemented by Arroyo and presidents before her, which have eroded

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the Philippine economy to its current sorry state. The Aquino administration is even poised to conclude theneoliberal programs that the previous administration failed to nish, like privatized infrastructure projects,

privatizing hospitals and schools, signing bilateral deals for further trade and investment liberalization, andchanging the Constitution for unbridled globalization. Now, the Aquino regime has to establish the brandof politics needed to defend these moves from the brewing fury of a discontented constituency.

This is being done rst by consolidating his camp. Like any new commander-in-chief, Pres. Aquino

immediately secured the loyalty of the armed forces. He pushed the Arroyo-appointed chief-of-staff Gen. Del n Bangit to retire early and rather grudgingly, without any apparent reason except that he wasappointed by Arroyo. Pres. Aquino has had two chiefs of staff already since he sat as president: Gen.Ricardo David, Jr. who retired in March and was replaced by Lt. Gen. Eduardo Oban, Jr. who is due toretire as well in December. This could have implications to loyalties, and it remains to be seen if Pres.Aquino can install someone who is as loyal and will eventually last. But for now, it is enough that Pres.Aquino is making sure that the outgoing generals are rewarded with positions in government.

Then of course, he has to provide some sort of bene ts to the soldiers and policemen, such as the housinghe was crowing about in his rst anniversary speech. Finally, Noynoy Aquino, who used the issue of corruption to capture the presidency, has been markedly mum about the corruption in the military, evengiving retired general Angelo Reyes who was linked to such dishonorable activities full military honors on

his burial.

Aquino then moves to consolidate his circle. It is amazing how the new president has revealed in such ashort duration that he is not different from the ones before him when it comes to cronyism. Pres. Aquinohas appointed his kabarkada, kaklase, kabarilan (KKK, as the clique is called friends, classmates, targetshooting buddies) to juicy positions in his cabinet and in government. Even his kamag-anak (relatives)are dispersed in different of ces. Expectedly, the KKK is an easy target of allegations of irregularities,especially coming from the Arroyo camp that only knows such things too well. But all these are just theusual squabbles between two factions of the ruling elite, nothing earth-shaking, nothing fundamental.What is serious is the lack of delicadeza or nesse in governance that is characteristic of Philippine

politics. What is fundamentally wrong is how the ones currently holding the reins of power defend their clique to death and in the process neglect the more urgent issues of the people.

Even then, within Aquinos circle there is in ghting between the so-called Balay and Samar groups.Balay, the Bisaya for house, refers to the house in Cubao of Mar Roxas, Aquinos running mate.Samar is the street in South Triangle in Quezon City, the headquarters of those who instead supportedthe Aquino-Binay tandem. The Balay group refers to the Liberal Party, the so-called Hyatt 10 such asSocial Welfare and Development Secretary Corazon Dinky Soliman, Budget Secretary FlorencioButch Abad and Finance Secretary Cesar Purisima, including Strategic Planning Secretary RickyCarandang and Presidential Spokesperson Edwin Lacierda. The Samar group refers to the allies of theAquino and Cojuangco families including even Aquinos sisters plus Executive Secretary Ochoa, Senator Chiz Escudero and Presidential Communications Operations Secretary Herminio Coloma. The Samar group is said to also include Speaker Belmonte, National Defense Secretary Voltaire Gazmin, EnergySecretary Rene Almendras, and Interior Undersecretary Rico Puno.

It has been a year but the bitterness of the presidential race continues to be a moving force in the dailyoperations of the Executive Of ce an unprofessionalism never before seen in Malacanang, as someveteran senators have observed. As a result, Pres. Aquino has two communications of cers and two other of cers in the capacity to speak for him. When the possibility of appointing Mar Roxas as presidentialchief of sta

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