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Yearend Briefng

January 19 - 20, 2012

N Center

Timog Avenue, Quezon City

kline: (632) 9277060 to 62

(632) 9292496

ail: [email protected]

site: http://www.ibon.org.

IBON

FOUNDATION

INC.

YEAREND 2011:

Beyond Political

Spectacle,

is Real Changein Sight?

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2 IBON Economic and Political Brieng 19 -20 January 2012

IBON Foundation

is an independent

development institution

established in 1978

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IBON Economic and Political Brieng 19 -20 January 2012 3

The Aquino administration started losing steam in 2011. The economy was

slowing, social pressure from high unemployment and poverty was mounting,

and even the governments agship public-private partnership (PPP) program wasa non-starter. There was little sign of a determined drive to hold former president Gloria

Macapagal-Arroyo and her cronies accountable, human rights were still being violated,

and the countrys Communist and Moro armed conicts remained unresolved.

The post-election Aquino euphoria was clearly fading and people were starting to

look for tangible results. There was an apparent growing public sense of listlessness,

indecisiveness and even incompetence in Malacaang itself. But then the administration

rallied in the closing months of the year with a political offensive that included the arrest

and detention of former president Arroyo and the impeachment of the Supreme Court

chief justice. It is by any measure a political spectacle involving heads, past and present,

of two of the three branches of government.

The momentum carried on into 2012 which started with a historic impeachment trial

placing not just the Chief Justice but in effect the highest court of the land under

unprecedented scrutiny. There is even more to come as the cases against the former

president, her husband and her cronies are brought to court. On one hand, there may yet

be real and important progress in holding the previous administration accountable for

its extensive crimes. This is long overdue. But the unfolding political show may also

divert the country from addressing its persistent social and economic problems. Worse,

they may even be used as a smokescreen to keep or make policies that exacerbate these

problems.

In some respects the Aquino administrations recent political offensive should not be

underestimated. Though not exactly an all-out effort the cases lodged against the

former president are still relatively minor, for instance it is still a considerable one. But

neither should the magnitude of the countrys problems be underestimated. The country

still needs fundamental changes in its agrarian reform, agricultural and industrial policies

to resolve long-standing poverty and inequities. The countrys oligarchic, patronage and

anti-nationalist politics are likewise deeply entrenched.

Measured against these problems the anti-Arroyo drive is important,undoubtedly popular

and can be quite a spectacle. Yet the country can still legitimately ask: has the process

for real change started?

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Beyond the political spectacle in 2011 a display of factional elite politics and short of delivering justice to

Arroyos victims are economic issues that are more relevant to the people.

The Philippine economy has taken another plunge, which may be perceived as not only in synchrony with the

global recession but also reects the lack of bold reforms on the part of the self-proclaimed reformist Aquino

government. The world economy is indeed becoming harsher and sinking into a now widely recognized

protracted depression, but this cannot alone cause the worsening plight of the Filipino people. The Philippines

has long-standing internal problems which will be aggravated by the crisis of the world economy as well as

the absence of decisive measures to address the domestic economys vulnerability. Such decisive measures are

yet to be seen even after 2011, the rst full year of the Aquino administration, and the Aquino administrations

handling of the peoples urgent economic woes are as belated and wanting as its political moves.

The global economy has already reached the limits of ctitious capital-driven growth. The solutions of

advanced capitalist power governments since 2008 of huge bailout funds and stimulus packages have been

counter-productive and have only brought the global capitalist crisis into an unparalleled public debt crisis. The

severe social unrest due to this global situation is also unparalleled historic unemployment, depressed wages,

austerity measures, wiped-out savings and pensions, diminishing social services, poverty and inequality, and

political turmoil with ordinary citizens frustrated with the system. The Philippines is receiving the brunt of the

global crisis in many meaningful ways.

The intensity of the global crisis is leading to a renewed corporate clamor for exploitation of natural resources

for cheap raw materials, foreign acquisition of lands, and cheapening of labor. During periods of recurring and

worsening crisis imperialist powers predictably go back to basics, which is to plunder poor countries to restore

protability. The imposition of globalization policies for decades has facilitated such agenda. There are two

aspects of the global crisis therefore that are particularly important for the Philippines: the profound impact of

the global crisis on the domestic economy which has sectors closely tied to the global capitalist system through

globalization policies; and the imperialist agenda to surmount the crisis, particularly of the US which is out toassert its hegemony in Asia-Pacic. How both aspects progress depends heavily on the policy direction of the

Aquino government.

Has it rejected the imperialist agenda of plunder and globalization policies, especially those inherited from the

Arroyo regime, and put in place nationalist economics? In one and a half years, the Aquino administrations

economic planning has centered on an over-reliance on private foreign capital, big infrastructure projects,

extraction of natural resources, short-term crisis measures and poverty palliatives. Even its response to the

disasters that have increasingly devastated the lives of the poor has been inadequate, even downplaying the

reality that the disasters are anthropogenic and the cumulative effect of centuries of natural resource plunder.

In one and a half years, the Aquino administration has shown that its economic policies are completely aligned

with the imperialist agenda.

Jobs crisis

Around 30 million job losses worldwide since 2007 have pushed global unemployment to a historic high of

210 million. The jobs crisis is not only about the unprecedented rise in joblessness but also the slow rate of

recovery of jobs lost. Figures are even understated as employment statistics include jobs that are insecure,

low-quality, low-paying and without benets. On the other hand, the gure on the jobs lost is based only on

employment in the formal sector and mainly in urban areas. Majority of jobs in poor countries are low-wage

and low quality while 60% of their labor force are in the informal sector and around 80% are in the rural areas.

Economy in 2011:Crisis and Lack of Reforms

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known for majority part-time work and unpaid family labor and in trading where jobs likewise are not secure.

(See Table 3) This explains why underemployment worsened to 19.3% or an additional 401,000 workers

seeking better job opportunities in 2011.

Table 3. Employed Persons By Industry, By Class of Worker and By Hours of Work, Annual Average

2010 and 2011 (in '000)

Indicator

Employed Persons

2010 2011

p Change

(2010-2011)

Total Employed Persons 36,035 37,191 1,156

By Industry

Agriculture, Fishery and Forestry 11,956 12,265 309

Agriculture, Hunting and Forestry 10,488 10,801 313

Fishing 1,468 1,464 (5)

Industry 5,399 5,530 131

Mining and Quarrying 199 211 12

Manufacturing 3,033 3,082 49

Electricity, Gas and Water 150 148 (2)

Construction 2,017 2,090 73

Services 18,682 19,395 713

Wholesale and Retail Trade 7,034 7,401 366

Hotels and Restaurants 1,063 1,118 55

Transport, Storage & Communications 2,723 2,776 53

Financial Intermediation 400 435 35

Real Estate, Renting & Bus. Activities 1,146 1,257 110

Public Administration & Defense, Compulsory Social Security 1,847 1,874 27

Education 1,176 1,199 23

Health and Social Work 451 452 1

Other Community, Social & Personal Service Activities 914 933 20

Private Households w/ Employed Persons 1,926 1,951 25

Extra-Territorial Organizations 2 2 -

By Class of Worker

Wage and Salary Workers 19,627 20,537 910

Private household 1,926 1,946 21

Private establishment 14,565 15,428 863

Government/govt corporation 3,025 3,049 24

With pay (family owned business) 111 116 5

Own Account 12,252 12,348 97

Self-employed Workers 10,858 10,993 135

Employers 1,394 1,356 (38)

Unpaid Family Workers 4,157 4,306 149

By Hours of Work

40 Hours and Over (Full-Time Employment) 22,905 23,258 353

Less than 40 Hours (Part-Time Employment) 12,654 13,448 794

Did Not Work 475 486 10

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

Sources: National Statistics Ofce (NSO) Labor Force Survey

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Not even the sectors touted by the Aquino government to drive economic growth and employment, such as

mining, business process outsourcing (BPO) specically call centers, or infrastructure projects could avert the

jobs crisis. There were only 12,000 additional mining jobs in 2011 which is less than half of the jobs created in

2010, while construction jobs increased by only 73,000 or 38% less than in 2010.

BPO jobs likewise contributed little to overall employment generation with the Business Processing

Association of the Philippines (BPAP) estimating only around 640,000 jobs in the sector (or barely 1.7% of

total employment). There were 100,000 BPO jobs in 2004 which means that only some 77,100 jobs have been

added yearly since then, assuming BPAP data are reliable. The Philippine Export Zone Authority (PEZA)however reports less jobs than the BPAP possibly because not all BPOs are registered in export zones. PEZA

reports 300,452 jobs in BPOs from January to November 2011, and a yearly average increase of 29,811 jobs

from 2007-2010. At any rate, BPOs still employ barely 1% of the labor force, and despite governments claim

that BPOs can benet workers with tertiary education, some 42% of the unemployed have actually reached colleg

and around 20% have actually graduated and have college degrees.

Last year, around 34% of the unemployed were high school graduatessupposedly already equipped and skilled

enough to get employed; in 2010, some 25% of underemployed were also high school graduates. But more than

four out of 10 (43%) of the jobs generated by the economy were for laborers and unskilled workers. This shows th

even an education is not a ticket to a better life for the countrys labor force highlighting the limited impact on

unemployment of the proposed K+12 program which adds two more years to primary and secondary education.

In reality, the economy has lost the capacity to generate meaningful and productive jobs. Manufacturing was

able to generate only 49,000 jobs in 2011, further shrinking its share to total employment to 8.3% and still

failing to recover even to just the 2008 crisis level of 8.6% (which itself was a drop from an annual average of

9.5% share in 2001-2007). Meanwhile, 1.088 million overseas Filipino workers (OFWs) were deployed in the

rst three quarters of 2011, which by the sheer size relative to population (OFW stock has reached 10.1% of

population as of 2010) is yet another indicator of the economys inability to create jobs. An average of3,906

OFWs havebeen deployed daily since Pres. Aquino took overuntil September 2011. The intensity of the domesti

jobs crisis indicatesthe deep-seated fundamental problems of the domestic economy and the aggravation by the

global crisis and the Aquino governments continued disregard of the need for national industrialization.

Low wages and high prices

Mass unemployment has had deationary impact on wages and reinforced low pay standards especially in theunderdeveloped countries. Worldwide, growth in average monthly nominal wages slowed from 2.8% in 2007,

to 1.5% in 2008 and 1.6% in 2009. Real wages, or taking ination into account, have practically attened out

since 2001 especially in the capitalist countries. The combination of high unemployment, prolonged recovery

of employment and decline in real wages is resulting in stagnation of demand, a deationary spiral never before

seen in the history of global capitalism.

In the Philippines, the current nominal wage of Php426 in the National Capital Region (NCR) is worth just

Php249 in real terms (based on 2000 prices) which is only Php10 higher than the real wage a decade ago. And

unlike in the capitalist countries where low pay is not absolute, the gap between the mandated minimum

wage and the family living wage or what is needed for decent living standards is incredible, even with the

token increase of Php22 (Php13 in real terms) in the cost of living allowance (COLA) granted by the Aquino

administration in May 2011. The new mandated minimum wage of Php426 in the NCR is just 42.3% of the

Php1,008 estimate for a family of six to live decently. (See Table 4)

Wage shares in the national income, especially of developed economies, have declined steadily over the past

30 years while the share going to prots in contrast has increased over time, which manifests the growing

inequalities under globalization. The starkest contrast was recorded in 2006 when wage share reached its

lowest level on record (51.6%) with data going back to 1929 while the share of corporate prots (13.8%) was

the highest in history. The situation has been worse in the underdeveloped countries, because while the share

of wages in the national income in the developed countries is around 60% of gross domestic product (GDP),

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according to the UN, it is only between 35% and 50% in the underdeveloped countries. In the Philippines, the

share of wages in the GDP had hovered around 28.1% in 2007-2009 while the share of prots had been around

53.6% of the national income. (See Table 5)

An even more glaring contradiction is the fact that Filipino workers productivity has increased to Php239,387as of 2010, considering that the mandated minimum wage only amounts to roughly Php132,000 a year. Labor

productivity increased by 9.1% in 2010, led by construction (12.2%) and manufacturing (7.9%), while the

nominal wage increased by only 5.5% and then only in 2011. In contrast, combined prots of the Top 1000

corporations rose by 11.6% in 2010 to recover to pre-crisis levels of protability. And unlike in the capitalist

countries, this contrast can be deliberately reinforced by the governments cheap labor policy in order to attract

foreign investments.

Table 4. Daily Minimum Wage, Family Living Wage and Wage Gap, March 2009-November 2011

(in Php)

Year and Month Daily Minimum Wage Family Living Wage Wage Gap

2009

March 382 912 526

June 382 922 536

September 382 934 541

December 382 945 557

2010

March 382 951 565

June 404 958 549

September 404 962 551

December 404 985 564

2011

March 404 994 584

June 426 998 572

September 426 1,000 574November 426 1,008 582

Note: IBON computed these family living wage (FLW) estimates by inating the last FLW estimates released by the NWPC

for September 2008. The NWPC reports that its FLW estimates are under review.

Sources: Wage data and family living wage estimates from National Wages and Productivity Commission (NWPC) and

ination data from Bangko Sentral ng Pilipinas (BSP)

Table 5. Gross Domestic Product By Factor Shares, 2007-2009 (in million Php)

Transaction Item 2007 2008 2009

Compensation of Employees 1,850,894 2,057,707 2,196,334

Depreciation 763,653 839,976 860,544

Net Operating Surplus 3,538,695 4,012,007 4,098,467

Indirect Taxes including

Import Duties and Taxes543,332 565,270 588,543

Less: Subsidies 47,954 65,590 64,971

Gross Domestic Product 6,648,619 7,409,371 7,678,917

Source: National Statistical Coordination Board (NSCB) Income and Outlay Accounts

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The worlds working people have been battered further by soaring prices. Global ination has been phenomenal

since 2008, with food prices increasing steeply in 2008 (by 74% from end of 2006 to June 2008), falling

momentarily in 2009 but only to shoot up again in 2010. In 2011, global food prices have surpassed the 2008

peak and reached their highest since 1990. What is also phenomenal is that global food prices are increasing

along with the prices of oil and metals in what has been described as the longest and broadest price boom

after the Second World War.

The causes of the phenomenon continue to be the subject of great debate. On one hand, governments of

capitalist countries particularly the Organization of Economic Cooperation and Development (OECD) plus theUN and international nancial institutions such as the International Monetary Fund (IMF) and the World Bank

are citing slowing production, low stocks and reserves, climate change, increased demand of China and India,

among others. On the other hand, supply-demand data do not validate these claims and cannot fully explain the

dramatic rise in prices. The situation thus has sparked a controversy on the role of nancial speculation.

In the Philippines, however, although price movements have generally reected the global trends including

the impact of nancial speculators, they have been made more burdensome by monopolies and policies of

liberalization, privatization and deregulation. Food ination was phenomenal indeed in 2008, but general

ination has been mainly pushed by oil price hikes and increases in the costs of water and electricity. Even

the rise in the services commodity group has been pushed by transportation, the main consumer of fuel in the

country. (See Chart 1 and Table 6)

Ination rate continues to pick up as of November 2011 from a slowdown in 2009. The services commodity

group registered the highest change in ination rate at 1.6 percentage points (4.5% in 2010 to 6.1% in 2011).

In particular, transportation ination moves from 2.6% to 6.6% (based on 2006 prices, which provides the

breakdown of services commodity group), or a 4 percentage point change. Food is next with a movement of 1.4percentage points. Although fuel, light and water are slowing from an ination rate of 13.2% in 2010 to 9.6%

in 2011 it is still by far the highest among all commodity groups.

Domestic oil prices moved 44 times on the average in 2011 (or almost once a week), resulting in net increases

of Php4.45 for gasoline and Php5.50 for diesel. The price of gasoline went up by another 11% and that of

diesel by 18.1% compared with their prices in December 2010, nearly surpassing peak prices in mid-2008. The

global price of crude oil at US$106.20 per barrel by end-2011 has indeed already exceeded the level in 2008

Chart 1. Ination Rate By Commodity Group,

November 2010 and 2011 (2000=100; in %)

14.0

12.0

10.0

8.0

6.0

4.0

2.0p

x x

Nov 2010 Nov 2011

Source: National Statistics Ofce (NSO)

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(US$93.78 per barrel) when it rose 91% from 2005. But local pump prices have been adjusted to levels that arefar beyond what can be justied by the movements in the global price as well as the peso-dollar rate. The global

price of oil is already questionable as it is since a huge part of it has been suspected to have been brought about

by speculation. But local pump prices are worse off, since they do not only carry the cost of speculation but also

the monopoly pricing by the local subsidiaries of the global oil cartel. And this situation could only be allowed

by the governments maintained policy of oil industry deregulation.

Likewise, water and power rates in the Philippines are notorious worldwide for being the highest and most often

to rise despite slumps in industrial activity. It may be recalled that the privatization of the countrys water utility

Manila Waterworks and Sewerage System (MWSS) in 1997 was the largest deal in the world and only three

years later was being cited as one of the ascos of privatization due to atrocious rates yet inefcient service.

It may also be recalled that the liberalization of the power sector in 2001 through the Electric Power Industry

Reform Act (EPIRA) landed the country a decade later to have the highest power rates in Asia.

Water rates have gone up further by 25% in the Manila Water service area and 35.2% in Maynilads since

Pres. Aquino took over. Maynilad in particular is citing expansion for its rates increases in order to service the

people better, in effect frontloading its prots. The people have had no reprieve from power rate hikes either,

as generation charges of the National Power Corporation (Napocor) increased by 14.2% in Luzon under

Aquinos watch so far. This does not yet include the petition for a 39-centavo increase per kilowatt-hour in the

universal charge by the Power Sector Assets and Liabilities Management (PSALM) to pay for Napocors debts.

Power rates in Metro Manila and other areas covered by Meralco have gone up by 6.8% post-2010 elections

Table 6. Selected Price Indicators, 2010 and 2011

Indicator and Commodity 2010 a 2011 (as of)

Ination (National; in %) 3.1% 4.2% (Dec)

Ination (Outside Metro Manila; in %) 2.8% 4.5% (Dec)

Metro Manila

Ination (in %) 3.4% 3.0% (Dec)

Jeepney fare (minimum; in Php) 7.00 8.00 (Dec)Oil prices (in Php/liter, except LPG at Php/kg)

Diesel 38.00 44.89 (Dec)

Gasoline 48.50 53.83 (Dec)

LPG 710.00 - 759.00 654.00 - 715.00 (Dec)

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

MWCI (Manila Water) 30.12 33.57 (Feb)

MWSI (Maynilad) 37.40 40.80 (Feb)

Power rates (in Php/kWh)

Meralco (basic rate) 9.99 10.67 (Dec)

Residential bill (consuming 150 kWh/month) 1,499.03 1,600.35 (Dec)

Napocor (ERC-approved effective rates for Luzon) 4.65 5.02 (Dec)

Selected basic commodities (in Php/kg)

Regular Milled Rice 30.00 30.00 (Nov)

Galunggong 119.58 127.43 (Oct)

Sitao 49.00 77.38 (Oct)

Eggplant 31.15 32.23 (Oct)

a - all as of December, except for water rates that are as of October.

Sources: National Statistics Ofce (NSO), Department of Energy (DOE), Metropolitan Waterworks and

Sewerage System (MWSS), Manila Electric Company (MERALCO), National Power Corporation (NAPOCOR),

and Bureau of Agricultural Statistics (BAS)

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(as of December 2011), raising the bills of residential consumers of 100-200 kilowatt-hours by Php52.66 up

to Php135.12. Meralco has increasingly purchased its power from its own generation companies as well as the

EPIRA-innovation Wholesale Electricity Spot Market (WESM), whose prices are higher than Napocors and

passed this on to its consumers.

Food prices have increased as well, with double-digit ination for corn (14.5%) and fruits and vegetables

(13.4%) and the prices of sh going up by 8.3% in November 2011 compared to a year ago. The rest of

food commodities registered price increases ranging from 2.3% to 5.5%, which no matter how minimal are

unimaginable for people with no increased incomes. The continued rise in the prices of petroleum products ofcourse has dire consequences on food and other basic commodities. On the other hand, the food and agricultural

markets are so narrow that an increase in the price of one food commodity can also affect another, say corn and

rice, since one can be a substitute for the other.

Also, high food prices tend to stay in the country even if global prices have already fallen. For instance, global

food prices in October 2008 were already almost the same as the level in October 2007, but domestic food

prices were still 15% more expensive. Rice, which relative to other cereals has stabilized globally, is still 37%

more expensive locally compared to the prices before the 2008 crisis. This irony is only reective of the impact

of imposing trade liberalization despite the continued backwardness of farmers production, land monopoly, and

the existence of local trading cartels.

Growing poverty and inequalityThe economic crisis worsened poverty round the world, which unfortunately however is being addressed by

capitalist governments as well as the Aquino government by re-dening poverty and by a lot of merely

statistical manipulation. Global poverty had declined, according to the World Bank, from 46% of global

population (around 1.8 billion) in 1990 to 27% (1.4 billion) in 2005. The World Bank, like the Aquino

government, is upbeat that the goal of poverty reduction in the UN Millennium Development Goals (MDGs)

would be achieved substantially in 2015. The World Banks estimates, however, are based on a low poverty

threshold of US$1.25 a day. Applying a US$2-a-day threshold would double the poverty incidence to 54% and

the number of poor people to 2.8 billion. And that was even before the 2008 explosion.

In the Philippines, ofcial poverty estimates as of 2009 show that there has only been a slight increase in the

number of poor Filipinos since 2006. According to the survey, only 970,000 more Filipinos fell below the

poverty threshold, from 22.17 million in 2006 to 23.14 million in 2009. Moreover, some 58,000 families or290,000 were lifted out of hunger in 2009. (See Table 7)

But the estimates are based on a revised methodology of measuring poverty the third revision to date which

also subsequently lowered the 2003 estimate to 19.8 million from 23.8 million (difference of 4 million) and the

2006 estimate to 22.2 million from 27.6 million (difference of 5.4 million). The differences have been effected

apparently by revising the menus in the estimation of the food threshold using provincial food bundles that are

least cost. The use of least cost food bundles is the signicant difference of the Philippine methodology from

other countries that use food bundles. (See List)

This has effectively reduced the standards of diet and nutrition of the Filipinos. For instance, the revised food

bundle has removed milk as a separate item for children and instead has combined milk and coffee for both

adult and children for breakfast. Fried sh or sh as a separate viand for lunch has also been removed and dilis

has replaced small shrimps for the munggo and malunggay dish. The option for pork for dinner, as well as theserving of banana, has also been removed. Thus, arbitrarily the poverty threshold has been reset to an incredibly

low level.

Poverty has been dened at subsistence level the barest physical existence without outside help and does not

provide for social needs such as access to education, health and nutrition instead of decent standards. Based

on the revision of methodology, a Filipino with Php32.02 can survive a day with complete dietary requirements

for only Php10.70 per meal. With a monthly income of Php1,403.42 or Php46.10 per day (which should have

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List of Old and Rened Food Bundles

NCR Food Bundle (Old Methodology)

Meal Time Viands

Breakfast Tomato Omelette

Coffee for adults

Milk for children

Fried rice

Lunch Fried Galunggong

Munggo guisado with

malunggayleaves andsmall shrimps

Boiled rice

Banana latundan

Dinner Pork adobo

Pechay guisado

Boiled rice

Banana latundan

Snacks Pandesalw/ margarine

National Food Bundle (Rened Methodology)

Meal Time Viands

Breakfast Scrambled egg

Coffee with milk

Boiled rice

Lunch Boiled ginataangmunggo

with malunggayleaves

and dried dilis

Boiled riceBanana

Dinner Fried sh/boiled pork

Vegetable dish

Boiled rice

Snacks Bread or broiled rootcrop

NCR Food Bundle (Rened Methodology)

Meal Time Viands

Breakfast Scrambled egg

Coffee with milk

Boiled rice

Lunch Boiled munggo with

malunggayleaves

and dried dilis

Boiled riceBanana latundan

Dinner Fried tulingan

Boiled kangkong

Boiled rice

Snacks Pandesal

u u

Table 7. Annual Per Capita Food Threshold and Subsistence Incidence, 1985-2009

Indicator 1985 1988 1991 1994 1997 2000 2003 2006 2009

Annual Per Capita Food Threshold (in Php)

2003 Methodology 3,992.0 7,707.0 8,149.0 10,025.0 12,716.0

2011 Methodology 3,983.0 7,577.0 9,257.0 11,686.0

Daily Per Capita Food Threshold (in Php)

2003 Methodology 10.9 21.1 22.3 27.5 34.82011 Methodology 10.9 20.8 25.4 32.0

Monthly Per Capita Food Threshold (in Php)

2003 Methodology 332.7 642.3 679.1 835.4 1,059.7

2011 Methodology 331.9 631.4 771.4 973.8

Subsistence incidence (in %)

Family

1992 Methodology 24.4 20.3 20.4 18.1 16.2 16.7

2003 Methodology 13.2 12.3 10.2 11.0 10.3

2011 Methodology 13.3 8.2 8.7 7.9

Population

1992 Methodology 28.4 24.3 24.3 21.8 19.9 21.0

2003 Methodology 16.4 15.8 13.5 14.6 13.9

2011 Methodology 16.5 11.1 11.7 10.8

Magnitude of subsistence poor (in million)

Family

2003 Methodology 1.9 1.7 1.9 1.9

2011 Methodology 1.4 1.5 1.5

Population

2003 Methodology 12.2 10.8 12.2 12.2

2011 Methodology 8.8 9.9 9.4

Source: National Statistical Coordination Board


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been Php52.30 under the old methodology), he or she, according to the government, can cover for dietary needs,

minimal mobility and transportation, sanitation, and some form of cover from natural elements during the night.

Even with the governments understated income levels it appears that 12.9 million families or 70% of the

population are struggling to survive on Php104 or less per day. The income range of the poorest half is from as

low as Php22 to Php67 per day. The rise in food prices alone can push additional people to poverty or deeper

into poverty. For instance, a 10% rise in food prices applied on the 2009 Family Income and Expenditure

Survey (FIES), and considering that wages were at in 2009, would increase the percentage of families with

dissavings from 20 to 40 percent. According to a recent study by the Asian Development Bank (ADB), a 10%increase in the price of rice makes some 660,000 Filipinos transit to poverty or become poorer, while a 10%

increase in food prices adds 2.72 million poor.

The irony of the capitalist crisis (the inherent reason why it is indeed a crisis) is that only the poor get poorer, in

bad times and in good times. To illustrate, the combined prots of the companies in Fortune 500 (the list of the

worlds top 500 corporations) increased by 81% in 2010 (or by US$318 billion), the third highest increase in the

history of Fortune 500 while majority of the global population reeled in the worst jobs crisis, sank deeper into

poverty and experienced the highest incidence of hunger. In the Philippines, the top 20% of families accounted

for 52% of the total family income, based on the 2009 FIES. Their combined income saw another 24% increase

at that time.

Global inequality that is acutely replicated in the country only shows that the crisis has deep-seated,

fundamental causes. In the Philippines, the economic crisis has features that directly manifest in the existence of

unequal and oftentimes exploitative relations, where only few rich families control the bulk of the income pie as

well as the resources and capital for rent-seeking and prot-making activities while the majority do not have the

means and are poor. It takes genuinely good governance to eradicate this injustice, not the Aquino governments

empty slogan of daang matuwid and myopic interpretation of poverty being caused simply by corruption. It

takes structural overhaul indeed, and any democratic government may start by rejecting globalization and

prioritizing the peoples worsening condition.

Landlessness and landgrabbing

Looking at how the Aquino government handles key social justice issues, however, is telling where its priorities

and interests lie. The Aquino government has marginalized the issue of agrarian reform and reduced it to

asset reform, which is simply in accordance with globalizing agricultural production and the market-orientedland reform being peddled by the World Bank. Pres. Aquino has carried on with the extension of the awed

CARP (Comprehensive Agrarian Reform Program) initiated by his late mother Cory Aquino, called CARPer

(Extension and Reforms), despite the injustice brought about by the bogus land reform program from the

beginning.

When CARP was supposed to expire in June 2008, it had only achieved 87% of its vastly reduced scope an

achievement that was even questionable since the government had included public lands not identied for

distribution. CARPer is aimed at distributing the remaining 1.093 million hectares under the Department of

Agrarian Reform (DAR) by 2014, but like insult to injury the Aquino government had proposed an additional

Php10 billion budget for agrarian reform in 2012 meant for landlords compensation. From 1988 to December

2010, the government had already allocated Php207 billion for agrarian reform, but seven out of 10 Filipino

peasants to this day remain landless.

Since CARPers implementation, 198,688 hectares have been distributed by DAR, the biggest portion (30.5%)

being voluntary land transfers and only 5.8% under compulsory acquisition, which only shows the continued

lack of political will and good governance. CARPer should distribute a yearly average of 218,648 hectares if the

government intends to conclude it on schedule however at the rate the CARPer is going it appears that another

ve and a half years would be needed to end this long-drawn-out saga of injustice. (See Table 8)

Pres. Aquino has the lowest monthly average distribution of land of the countrys ve administrations since

CARP which displays the lack of urgency and priority of his administration and the continued denial of justice

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to the tillers and the general population. (See Table 9) This poor performance is not inconsistent with Pres.

Aquino's landlord origin and his critics have already been quick to point out that developments in the case ofthe familys hacienda, Hacienda Luisita Inc. (HLI), are also not encouraging. Since Pres. Aquino took overit

appears that the Cojuangco family hasbeen emboldenedto take steps to ensure that the dispute over the 6,453

hectare hacienda be settled in their favor.

In August 2010, the HLI submitted an unauthorized compromise agreement to the Supreme Court (SC) to

overturn a temporary restraining order (TRO) issued by SC on the anti-farmer stock distribution option (SDO).

The TRO had been in effect since the Hacienda Luisita Massacre in 2004. The SC created a special panel the

following month, which would mediate between the Cojuangco family and the farmer beneciaries to resolve

the dispute through amicable settlement. Then, in July 2011, the SC ordered the DAR to hold a referendum

to allow Luisita farmers to choose between owning shares of HLI stocks or getting parcels of the hacienda. In

short, court decisions have not directly addressed the question on the constitutionality of the SDO and only

reinforced the ongoing process of intimidation and violence for farmers to surrender. The farmers responded to

the referendum by launching their bungkalan campaign, i.e. cultivating portions of the 300-hectare land sold byHLI to the Rizal Commercial Banking Corporation, which the farmers assert should not have been sold.

Then again, in November 2011 while former president Gloria Macapagal-Arroyo was being besieged by

charges and attempting to leave the country, the SC modied its ruling in a dramatic 14-0 vote to distribute

4,916 hectares of Hacienda Luisita to the original 4,296 farmer beneciaries. The Aquino government quickly

insisted, evoking the CARP, that the landlord should get just compensation and farmers should amortize

the land for 30 years. And then, in a swift move by the House of Representatives, obviously initiated by

Table 8. Department of Agrarian Reform Land Distribution Accomplishment under RA 9700,

July 2009-September 2011 (in hectares except where indicated)

Land Type and Mode of Acquisition Area

Total Land Acquisition and Distribution (LAD) 198,688

Privately-owned Land (PAL) 102,141

Operation Land Transfer (OLT) 9,623

Government Financial Institutions (GFI) 2,155Voluntary Offer to Sell (VOS) 18,368

Compulsory Acquisition (CA) 11,481

Voluntary Land Transfer (VLT) 60,513

Non-PAL 96,548

Settlement Areas 24,050

Landed Estates 180

Government-owned Lands/Kilusang Kabuhayan

at Kaunlaran (GOL/KKK)

72,318

Target vs Implementation at Current Rate of Distribution by Aquino Administration

Target RA 9700 Distribution (June 2009-June 2014) 1,093,240

Balance as of September 2011 894,552

Aquino Average Monthly LAD (July 2010-September 2011) 8,957 a

Estimated Balance by June 2014 598,960 b

Estimated additional time needed to distribute remaining balance as of

June 2014

"66.9 months

(5.6 years)"

a - 134,360 hectares divided by 15 monthsb - Balance as of September 2011 less estimated LAD from October 2011 to June 2014 (295,591 hectares, or 33

months at Aquino average monthly LAD of 8,957)

Source: Department of Agrarian Reform

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Malacaang, the Arroyo-appointed Chief Justice Renato Corona was impeached. It has been a sad spectacle ofelite politics indeed the scramble for resources, spoils and legitimacy where neither faction, the Cojuangco-

Aquino or Arroyo and her clique in the SC cares about agrarian reform and giving social justice.

As if on cue, right after Pres. Aquinos assumption to power, land grabbing and re-concentration of lands has

intensied in more overt and aggressive ways than ever before. Perhaps gaining condence from a newly-

installed landlord presidency and the precedent of the HLI, the countrys landlords have renewed their claims

over vast tracts of lands that have been otherwise tilled by peasants for generations. Some of these lands are

even covered by certicates of land titles or land ownership given to farmers under the inutile land reform

program and grabbed nonetheless. The cases of Hacienda Yulo, Hacienda Looc, APECO (Aurora Pacic

Economic Zone), and numerous other land grabbing cases nationwide are proof that the economic ruling elite

are re-aligning themselves with the Aquino presidency.

The Aquino governments land use plan is in reality in line with the imperialist agenda of opening up vastfrontiers of foreign land for investment and nancial speculation. There were already 46.6 million hectares

of land acquired worldwide (in 81 countries) between October 2008 and August 2009, the size of the United

Kingdom and a 10-fold increase in a decade. Involved in foreign land grabs are food-insecure nations like the

oil-producing Gulf states, agri-business transnational corporations (TNCs) like the South Korean Daewoo and

Japanese Marubeni, agri-chemical TNCs such as Dow Chemical, and nancial corporations such as Morgan

Stanley and Goldman Sachs. Most of these foreign land grabs are facilitated by high-level bilateral deals, even

Table 9. Total Land Distribution Accomplishment Per Administration, July 1987-September 2011

(in hectares)

Land Type and

Mode of Acquisition

Aquino

Jul 1987-Jun 1992

Ramos

Jul 1992-Jun 1998

Estrada

Jul 1998-Dec 2000

Arroyo

Jan 2001-Jun 2010

Aquino

Jul 2010-Sept 2011

Department of Agrarian Reform 848,515 1,900,039 333,389 1,031,403 134,360

Privately-owned Land (PAL) 471,621 955,243 228,622 709,214 58,505

Operation Land Transfer (OLT) 358,915 142,847 18,708 40,079 5,994

Government Financial Institutions(GFI)

22,938 105,498 11,906 26,330 884

Voluntary Offer to Sell (VOS) 55,079 257,373 76,896 219,383 11,455

Compulsory Acquisition (CA) 13,952 120,828 47,767 105,080 8,950

Voluntary Land Transfer (VLT) 20,737 328,697 73,345 318,339 31,223

Non-PAL 376,894 944,796 104,767 322,190 75,854

Settlement Areas 208,792 356,763 35,276 104,749 21,372

Landed Estates 25,781 41,201 971 2,125 107

Government-owned Lands/

Kilusang Kabuhayan at Kaun-

laran (GOL/KKK)

142,321 546,832 68,520 215,318 54,375

Department of Environment andNatural Resources

874,139 862,461 447,572 942,024 72,918

Public Alienable & Disposable

Lands539,086 489,069 113,383 942,024 72,918

Integrated Social Forestry/Com-

munity Based Forest Manage-

ment (ISF/CBFM) Areas

335,053 373,392 334,189

Total 1,722,654 2,752,500 780,961 1,973,427 207,278

Land Distribution

Average Per Month28,711 38,229 26,032 17,311 13,819

Sources: Presidential Agrarian Reform Council (PARC) and Department of Agrarian Reform (DAR)

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to the extent of changing national land laws and policies as well as constitutions. Reluctant countries, on the

other hand, will have to deal with the pressure of the World Bank.

In the Philippines, a road show made by the Arroyo administration facilitated a US$300-million 10,000-hectare

banana export project in Davao del Norte between NEH of Bahrain and the local private corporation AMA

Group. There was also the US$50-million deal with the United Arab Emirates to set up a banana plantation

in Mindanao, sh and cereals farms in Central Luzon, and a pineapple cannery in Camarines Norte under the

Arroyo government-funded program, the halal industrial policy.

Two other huge projects were established and are ongoing. One is the Central Luzon Bioenergy Corporation

owned by South Korean investors, which cultivates a 50,000-hectare sugarcane plantation in Pampanga, Nueva

Ecija and Tarlac to feed a 150-million-liter bioethanol processing plant and 24-megawatt biomass power plant

using bagasse as raw materials. The other is Global Biomass PLC (United Kingdom), 24,000 hectares of arundo

donax (giant reed) plantation spread out in Nueva Ecija, Panay island, and Pangasinan.

It may be recalled that there were also 18 frustrated deals with China for Chinese companies to access 1.24

million hectares of land, which included aquaculture projects and the corruption-ridden ZTE deal. The Aquino

government has not only failed to actively prosecute Arroyo on the ZTE, it has also yet to make an effort in

taking back the lands subjected to foreign acquisitions by its predecessor. In fact, Pres. Aquino himself has

made his own road shows, and his trip to Japan for instance has resulted in the US$120-million 54-million-liter

ethanol plant in San Mariano, Isabela with sugarcane feedstock to be sourced from a nearby 11,000-hectare

sugarcane plantation. The company, Green Future Innovations Inc., is a venture between Japanese companies

Itochu Corp. and JGC Corp., joined in by the Philippine Bioethanol and Energy Investments Corp. and a

Taiwanese company GCO. The project shall displace more than 1,000 farmers and indigenous people.

CARPer has been an appropriate response to this global trend as it allows in principle the re-concentration of

land to commercial operators. The Aquino governments Philippine Development Plan (PDP) 2011-2016, with

its reliance on infrastructure projects, extractive industries and tourism, has also been designed to abrogate

genuine agrarian reform. On top of this, the central theme of the PDP, the public-private partnership (PPP),

which is a more vicious form of privatization, is perfect for the manner by which lands are being acquired by

foreign private investors. Beginning in 2011, the Aquino government has also started picking up the unnished

business of the Arroyo presidency, which is to change the Philippine Constitution but this time overtly starting

with the real agenda of Charter change (Cha-cha), which is to remove barriers to foreign trade and investments,

including restrictions to 100% foreign ownership of land.

Demolitions

Numerous cases of displacement and demolitions of communities have marked the administration of Pres.

Aquino. But these are happening not only because of foreign land acquisitions to build food complexes,

plantations for biofuels and other high-value export crops or economic zones. The PPP-focused development

that relies heavily on infrastructure projects is displacing both rural communities and the urban poor. The Center

for Trade Union and Human Rights (CTUHR) is monitoring this increasing frequency of demolitions since they

are not only marked with violations of economic and social rights but also with intensifying state brutality.

There have been 29 incidents of demolitions under Pres. (more than one demolition per month on the average)

in 19 cities nationwide, affecting more than 29,000 families or almost 107,000 individuals. This does not yet

include cases where families were ordered to leave and self-demolish lest be forcibly evicted. (See Table 10)

Most of the incidents (18 out of 29) took place in Metro Manila. Half of the number of demolitions were

undertaken allegedly to give way to government projects, certainly a reason that is hard to argue, but the

government did not give any option or resettlement plan to the residents. Demolitions for government projects

recorded the highest number of affected families and were the most violent. Three persons were killed, some

205 individuals including minors were injured, 101 individuals were arrested and detained without reason or

due process, and several people were slapped with charges, according to the CTUHR monitoring up to January

2012.

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Table 10. Reported Incidents of Demolition Under President Aquino, July 2010 to January 2012

Date Place of Incident Injured Arrested DeadNumber of Affected --

Reason for DemolitionFamilies Individuals

Aug. 11, 2010 Bgy. Mariana, New Manila, Quezon City 17 180 540Private property

(previously a relocation site)

Aug. 13, 2010 Bataan National Park, Dinalupihan, Bataan 400 1200 Illegal structures in a protected area

Sept. 23, 2010 Bgy. San Roque, Quezon City 14 16,000 48,000Gov't project(Quezon City Business District)

Nov. 23, 2010 Bgy. Tebag, Sta. Barbara, Pangasinan 2 50 150Private property

(cancelled CLT)

Jan. 25, 2011 Bgy. Corazon de Jesus, San Juan City 68 20 103 515LGU project

(New City Hall of San Juan)

Feb. 21, 2011Ceres South Terminal, Lopez Jaena St., Bacolod City,

Negros Occidental29 100

Gov't project

(Rehabilitation of Bus Terminal)

Feb 23-28, Mar 2,

May 5-6, and May

11, 2011

Interior Dama de Noche, Kadiwa, Bgy. San Roques,

Navotas City22 1 466 3,000 Gov't project

Feb. 25, 2011 Reclamation Area, Bacolod City, Negros Occidental 20 60 Private property

Mar. 30, 2011Cherry East Cul de Sac, Bgy. Sun Valley, Paraaque

City1 nda nda Private property

Apr. 28, 2011

Bgy. 182, Zone 16, Pangarap Village, Caloocan City 6 2 8,000 40,000Private property

(Land allocated for housing projects)

Laperal Compound, Guadalupe Viejo, Makati City 19 5 2,000 10,000 LGU resolution(danger zone)

Jun. 6, 2011 Bgy. Sta. Lucia, Pasig City 10 16 174 500Gov't project

(Rehabilitation of Floodway)

Jul. 1, 2011 Soliman, Agdao District, Davao City 10 300 1,085 Contested property ownership

Aug 5, 2011 San Pedro, Laguna 384 ndaGov't project

(Phil. Nat'l Railways Southrail project)

Aug 29, 2011 Sitio Camarin, Bgy. Bonbon, Aloguinsan, Cebuundeter-

mined #39 nda nda Contested property ownership

Aug. 31, 2011 Sitio San Rafael, Bgy. Old Balara, Quezon Cityundeter-

mined #2 300 nda

Private property

(Madrigal-Susana Real State Corp.)

Sept 6, 2011urban poor community along Commonwealth Ave.,

Quezon Citynda nda

Gov't project

(National Center Eastside Dev't Project)

Sept. 21, 2011 Reparo St., Bgy. 161, Baesa, Caloocan City 2 nda nda Private property

Oct 5, 2011 Sit io Fatima, Bgy Don Bosco, Paraaque City 45 nda nda

Oct. 17, 2011Nueve de Pebrero St., Bgy. Addition Hills, Mandaluy-

ong City52 260 Contested property ownership

Nov. 11, 2011 Sitio Lower Malibu, Bgy. Subangdaku, Mandaue City nda nda Private property

Nov. 28, 2011 BIR Road, East Triangle, Quezon City 1 1 100 500Gov't project

(Quezon City Business District)

Nov. 28, 2011Bgy. Kaligayahan, Sitio Looban, Novaliches, Quezon

City

undeter-

mined #

undeter-

mined #

at least

300"nda

LGU project

(Land allocated for housing projects)

Dec. 12-13, 2011 Dypac compound, Juan Luna St., Tondo, Manila 300 1,000 Private property

Jan. 3, 2012 Sitio Kitchen, Bgy. Pajo, Lapu-Lapu City 50 ndaPrivate property

(of Mandaue-Cebu Trade Center)

Jan., 11, 2012 Bgy. Corazon de Jesus, San Juan City 33 18around

50nda

LGU project

(New City Hall of San Juan)

2010 total 4 incidents 33 - - 16,630 49,890

2011 total 23 incidents139 +

undeter-

mined #"

83 +undeter-

mined #

3 12,573 57,020

2012 total 2 incidents 33 18 - 100 -

Total 29 incidents

205 +

undeter-

mined #

101 +

undeter-

mined #

3 29,303 106,910

Sources: Center for Trade Union and Human Rights (CTUHR), Kalipunan ng Damayang Mahihirap (KADAMAY) and various news reports

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The latest incident in Brgy. Corazon de Jesus in San Juan City, which the Alyansa Kontra Demolisyon describes

as the most violent demolition to date, opened 2012 with this grim reality that the Aquino government shall

continue to push for its anti-people development plan and to tolerate injustice. More than 300 families lost their

homes, 33 were hurt including young children as well as youth and students who went to the site to support the

community, and 18 were arrested including 5 minors. Apparently, the local government plans a grander city

hall, and the now vacant lot where the 300 families used to live according to rumors would be the parking lot of

the new city hall. San Juan City it seems is expecting a busier year.

Meanwhile, it may be expected that huge demolitions, such as the one of Brgy. San Roque at North Trianglein Quezon City to give way to the partnership of the National Housing Authority (NHA) and Ayala Land for

a commercial estate and to build the Quezon City Business District, shall be replicated nationwide as the

Aquino government embarks on its ambitious PPP program. It may also be expected that demolitions shall be

more aggressive and violent since the development plan remains not people-centered, not even with minimum

compensation for sacrices made by the people for developments sake.

Inadequate budget

Such neglect is much reected in the national budget, which should also be a tool for wealth redistribution. The

Aquino administration allocates more for economic and social spending in the 2012 budget, but this is generally

meant to make the economy look attractive to investors and to push for the pro-foreign, pro-prots PDP 2011-

2016. Even its higher allocation for a poverty program is part of the entire package of burnishing a growthplan as being inclusive while deodorizing the failure of globalization to alleviate the people. There is also a

marked increase in the allocation for military spending, notably the counterinsurgency program. (See Table 11)

Only the allocation for debt service interest payments decreased in the 2012 budget, which looks positive for a

country that has been chronically enslaved to debt. But including principal amortization, debt servicing is still

2.4 times larger than the allocation for education and 15 times larger than health, which remains a burden for an

impoverished nation. Economic services got the largest increase of Php76.9 billion, led by power and energy

(563% increase), agrarian reform and environment (50%), and trade and industry (45%). There is a Php54.3-

billion increase in the budget for social services for 2012, but its share in the national budget remains at 31.7%

as in 2011. Non-debt spending increased by 11% in real terms but is still small at 13.3% as percent of GDP, in

keeping with the historically prudent non-debt spending. (See Chart 2)

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Table 11. Sectoral Allocation of National Government Expenditures, Obligation Basis, 2010-2012

SectorAmount (in bilion Php) Percentage Change (in %)

2010 2011 2012 p 2010-2011 2011-2012

Economic Services 381.3 361.9 438.9 (5.1) 21.3

Agriculture, Agrarian Reform and Natural Resources 100.6 79.1 119.3 (21.4) 50.9

Trade and Industry 5.6 4.5 6.5 (19.0) 45.0

Tourism 1.7 1.8 2.3 8.3 22.9Power and Energy 2.4 1.8 11.8 (26.8) 563.6

Water Resources Dev't. and Flood Control 18.5 14.6 16.7 (21.0) 14.6

Communications, Roads and Other Transportation 146.4 145.3 167.5 (0.8) 15.3

Other Economic Services 13.1 14.4 19.1 10.5 32.7

Subsidy to Local Government Units 93.0 100.4 95.7 8.0 (4.8)

Social Services 415.8 521.4 575.8 25.4 10.4

Education, Culture, and Manpower Development 225.1 271.5 309.0 20.6 13.8

Health 31.0 38.4 49.9 23.9 30.0

Social Security, Welfare and Employment 48.7 94.1 104.5 93.1 11.0

Land Distribution (ARF) 4.0 4.0 2.5 (1.5) (37.0)

Housing and Community Development 7.1 5.7 7.1 (19.7) 23.4

Other Social Services 1.4 1.6 1.8 10.3 11.2


Defense 91.5 101.4 113.1 10.8 11.5

Domestic-Security 91.5 101.4 113.1 10.8 11.5

General Public Services 280.8 288.1 332.1 2.6 15.3

General Administration 88.9 79.5 109.4 (10.6) 37.6

Public Order and Safety 107.1 118.4 130.1 10.6 9.9

Other General Public Services 10.4 9.8 16.1 (5.5) 63.7


Net Lending 9.3 15.0 23.0 62.0 53.3Debt Service 294.2 357.1 333.1 21.4 (6.7)

Interest Payments 294.2 357.1 333.1

Total NG Expenditure 1,473.0 1,645.0 1,816.0 11.7 10.4

p - proposed

Source: Department of Budget and Management (DBM) Budget of Expenditures and Sources of Financing

At a glance, it appears that the Aquino government is spending more for development. Looking closer

where the increases are placed, however, reveals the anti-people and deceptive character of the Aquino

administration. More than a third (Php18.3 billion) of the Php54.5 billion increase in social services goes

to the anti-poverty program inherited from the Arroyo administration, the Pantawid Pamilyang Pilipino

Program (4Ps), specically its conditional cash transfer (CCT) component. Budget for the CCT has increased

tremendously even without the benet of an assessment of its effectiveness since 2007 because it is the onlypoverty program that the Aquino government has that suits its PPP-led PDP.

Increase in social services also goes to the PPP component in the budgets of the Department of Education

(DepEd) for school buildings and the Department of Health (DOH) for PPP equity, in short to pump-prime the

inow of private capital into these sectors. The budget for the National Health Insurance Program (Philhealth)

is also being increased ostensibly to pay for the premiums of indigents, which is practically a default on social

responsibility to provide health services. Social insurance is biased for workers in the formal sector, specically

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those in the urban areas and in high-income brackets. In fact, based on the 2008 National Demographic and

Health Survey, some 2.6% of the richest 20% of the respondents were under Philhealths indigent program.

Another questionable increase is inserted in the social services sector, for the Payapa at Masaganang Pamayanan

(Pamana), which is under the Ofce of the Presidential Adviser for the Peace Process (OPAPP), involves the

National Anti-Poverty Commission (NAPC), and meant for conict-affected communities. Pamana budget

also appears under economic services. A closer look, however, reveals that Pamana is actually a signicant

component of the counterinsurgency program Oplan Bayanihan where winning the peace requires socio-

economic and infrastructure projects and where its so-called civil-military operations involve line agencies suchas the Department of Social Welfare and Development (DSWD), Department of Interior and Local Government

(DILG), DAR, and local government units (LGUs).

Meanwhile, the Php77-billion increase in the allocation for economic services is mostly for PPP as well

for transportation and communications, irrigation development as counterpart for a World Bank-funded

management training for irrigation associations (a vital prerequisite for privatization), roads to tourist spots,

and a PPP strategic support fund for the departments concerned on the aforementioned. Increased budget

for economic services is actually meant for the sectors that the Aquino government is promoting for foreign

investments export processing zones and special economic zones, BPOs, tourism, and agribusiness. This could

lead to more, and more violent,demolitionsin the coming months.

The reality behind the results-based budget, as the President calls the 2012 budget, towards the road to

straight spending, direct to the people, and other rhetoric, is that numerous cuts in vital components of

social services have been done, which is only following the global trend of austerity measures, but at the same

time opening up the economy to private foreign capital. Cuts have been applied on the salaries and benets of

health personnel in specialty hospitals and local hospitals; health facility planning, operations and infrastructure

development; and teachers salaries and maintenance expenses in State Universities and Colleges (SUCs). In

fact, only SUCs (along with the advisory council of Malacaang) get zero capital outlay while the rest of the

departments, notably public works and highways, energy, transportation and communications, including the

Ofce of the President, get increases. (See Table 12)

The 2012 budget does not only reveal government neglect but several ironies. Cuts are being implemented

in the face of growing shortages of classrooms, textbooks, teachers, hospitals, beds, and health personnel.

Ironically still, Pres. Aquino is hyping the Php141.79 billion his administration would allegedly infuse to pump

Table 12. Proposed 2012 Capital Outlay of Selected Government Ofces and Agencies

(amount in Php)

Government Ofce/Agency Proposed Capital Outlay Amount Increase

Department of Public Works and Highways 109.4 billion 18.7 billion

Department of Energy 7.4 billion 7.3 billion

Department of Transportation and Communication 21.4 billion 3.3 billion

Department of Interior and Local Government 4.6 billion 1.3 billion

Department of National Defense 5.8 billion 718.0 million

Congress of the Philippines 146.3 million 91.0 million

Department of Budget and Management 93.1 million 61.5 millionOfce of the President 150.6 million 42.6 million

Presidential Communications Ofce 35.5 million 3.1 million

Source: Department of Budget and Management (DBM) Budget of Expenditures and Sources of Financing

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prime the economy while no meaningful reforms are being put in place for long-term development. Ironically

still, the increase in social services does not translate anyway to signicant increases in the shares of social

services to the GDP education budget remains at a low 2.8% of the GDP in real terms while healths share is

at 0.45 percent. The other irony relates to Pres. Aquinos own daang matuwid hype. The budget is focused on

big infrastructure projects, which do not only benet foreign capitalists and big local corporations because of

the policy of privatization but have also been historically the major sources of large-scale corruption.

These ironies have infuriated students, teachers, academics, medical practitioners, health workers and the

basic sectors who launched nationwide protests that marked Pres. Aquinos 2011. Protests have replicatedthe global dissent against austerity measures amid historic joblessness and worsening poverty and inequality.

But particularly in the country, these protests are only continuing the long history of peoples struggles and

organized movement as the countrys economic crisis has progressed into decay.

Slowing economy

The domestic economy drastically slowed in the rst three quarters of 2011, from 8.2% growth rate in the

same period in 2010 to only 3.6% at constant prices. The third-quarter growth rate is only slightly higher than

the one recorded in the second quarter of 2011, which followed a downward trend in ve consecutive quarters

beginning in the rst quarter of 2010. (See Table 13) Seasonally-adjusted quarter-to-quarter growth rates also

show that the third quarter of 2011 (0.3%), although looking better than the third quarter of 2010 (0.1%), was a

slowdown from the rst quarter of 2011 (1.9%).

Table 13. National Accounts of the Philippines By Industrial Origin, Growth Rates, 2010-2011

(at constant 2000 prices; in %)

Industry Group1st-3rd Quarter Per Quarter

2010 2011 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3

1. AGRI.FISHERY,FORESTRY (1.9) 4.7 (1.9) (2.0) 4.1 4.3 8.2 1.8

a. Agriculture and shing (2.4) 7.1 (2.1) (3.1) 5.4 6.2 11.5 3.7

b. Forestry (0.1) (3.8) (1.6) 2.8 (1.4) (3.1) (2.4) (6.1)

2. INDUSTRY SECTOR 13.6 1.4 15.7 9.8 6.5 7.3 (2.3) (0.2)

a. Mining & Quarrying 12.9 7.1 24.4 6.8 6.9 19.8 3.0 1.1

b. Manufacturing 13.1 5.5 13.2 8.4 6.5 8.8 4.7 3.1

c. Construction 17.6 24.7 15.6 4.6 3.5 (23.3) (12.2)

d. Electricity, Gas and Water Supply 10.1 (1.9) 10.2 10.1 9.4 (1.2) (3.4) (1.0)

3. SERVICE SECTOR 7.4 4.7 7.3 7.8 6.4 3.2 5.4 5.3

a. Transport., Stor., and Comm. 0.9 4.4 2.2 3.0 1.4 4.2 4.2 4.9

b. Trade and Repair of Motor Vehicles,

Motorcycles, Personal and Household

Goods

9.8 2.1 6.8 11.0 5.0 0.3 1.9 3.8

c. Financial Intermediation 8.9 7.3 5.8 13.1 13.6 6.4 11.6 3.6

d. R. Estate, Renting & Bus. Actvt 6.9 6.9 8.6 6.6 9.4 6.1 6.9 7.6

e. Public Administration & Defense:

Compulsory Social Security7.9 2.2 9.6 6.5 (0.8) (4.6) 5.4 5.4

f. Other Services 8.4 6.1 10.9 4.4 8.7 5.4 5.9 7.0

GROSS DOMESTIC PRODUCT 8.2 3.6 8.9 7.3 6.1 4.6 3.1 3.2

GROSS NATIONAL INCOME 9.2 2.1 9.2 6.9 5.6 3.3 1.5 1.6


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The PDP 2011-2016 is aiming for an annual growth rate of 7-8 percent. It is unclear how the Aquino can

turn the current pace of the economy around to achieve such an ambitious target over such a long period,

considering that the global economy is slipping further into depression and the internal weaknesses of the

domestic economy remain. The third quarter growth was also lowest among Southeast Asian countries, such as

Indonesia (6.5%), Vietnam (6.1%), Singapore (6.1%), Malaysia (5.8%) and Thailand (3.5%), which only shows

how globalized the Philippine economy is (thus how much battered) compared to its neighbors.

Agriculture grew by 1.8% in the third quarter of 2011, which was a rebound from a two-year decline but

remained low for a population growth rate of 2.3% based on the latest census. The share of agriculture ineconomic value continued its shrinkage from its highest of 34.5% in 1950 (based on constant 1985 prices)

to its lowest of 11.2% in the rst three quarters of 2011. The share of agriculture was even a little higher at

12.3% only three years ago. The trend is indicative of how agricultures chronic crisis, which been subjected

to the onslaught of trade liberalization, privatization of land and natural resources and government neglect, has

intensied the underpricing of farmers produce.

Palay production is said to have boosted the recovery of agriculture from a contraction the previous year. Itincreased by 139,000 metric tons (MT) or 6.0% in the rst nine months of 2011 while there were 165,000additional hectares (ha.) planted to palay. Yet, productivity declined further from 3.75 to 3.64 MT/ha. Pres.Aquino had repeatedly hyped the decline in rice importation when he took over the presidency, when in factwarehouses are still teeming with rice stocks from 2008 to 2010 importations, being sold at a discount to big-time rice traders via sale through market-determined price (SMDP). Still, despite alleged decrease in rice

importation, farmers price remains at Php12.00 to Php14.00 per kilo while retail prices are still expensivefor the working people. In reality, agricultural and food production has been in chronic crisis due to landlordmonopoly, monopoly pricing and government neglect, which has been exacerbated by globalization.

Manufacturing, on the other hand, slowed substantially to only 3.1% growth in the third quarter of 2011 as

against a seemingly robust yet election-spending pushed 8.4% growth in the same period in 2010. The sector,

which is mainly exports production, largely electronics, as well as food manufacturing, had been undoubtedly

battered by the global crisis. Food manufacturing declined anew by 15.2% in the third quarter of 2011 while

electronics slowed from 22.5% growth to 6.7% and overall exports plunged 14.8% in the same period. (See

Table 14) The share of manufacturing in the GDP remained at a decades-low 22.1% in the rst three quarters of

2011. Like agriculture, this trend is also an indication of the undervaluation of the countrys exports production

which is otherwise dominated by foreign corporations and markets.

The Aquino government is promoting mining to reach world-class status as measured by a 5% contribution tothe GDP. The sector was almost at a standstill and grew by only 1.1% in the third quarter of 2011, a complete

reversal from its double-digit growth rates in the same period in 2009 and 2010. In the rst three quarters of

2011, it had outpaced manufacturing with the highest growth rate of 7.1% among industry subsectors and

second highest among the rest of the economic sectors, next only to nance. But its share in the GDP remained

at one percent, again going against the Aquino governments ambitions.

Construction plunged, specically dragged down by a 46.4% decline in public construction as also reected

in the substantial slowdown of public administration to only 2.2% and the 1.7% contraction of government

consumption in the rst three quarters of 2011. The Aquino government, although not ofcially admitting as it

continues to banner its anti-corruption drive and watchful spending, is actually on austerity mode.

The Aquino government, like its predecessor, is banking heavily on BPOs as well as on tourism to propel

the country to sustained growth. According to the National Statistical Coordination Board (NSCB), from2000-2010, tourism contributed a yearly average of 5.8% to the GDP at current prices. It may be under other

services in the national income accounts, according to the NSCB in response to an IBON inquiry, specically

recreational, cultural and sporting activities, which slowed from 25.4% in the rst three quarters of 2010 to

3.3% in the same period in 2011. It may also be gleaned from travel under imports of services, according to

the NSCB, which took a plunge from 23.7% growth rate in 2010 to negative 3.5% in 2011.

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BPOs, on the other hand, which the BPAP claims to be contributing 5% to the GDP and to have grown by

26% last year, form part of the real estate, renting and business activities under the services sector. Contrary

to BPAPs optimism, however, the gross value added of the subsector where BPOs belong slowed from 9.9%

in the rst three quarters of 2010 to 8.5% in the same period in 2011. It contributed only 4.3% to the GDP, of

which BPOs are only a portion.

Lower exports and investments, slower remittances

The most notable on the expenditure side is the decline of goods exports as already mentioned, specically

the plunge of semiconductors, communications equipment, computers and other manufactured products from

consigned materials. The economy showed growth in capital formation, albeit slower, which was driven by the

recovery of the re-classied intellectual property products. Otherwise, growth in durable equipment slowed

while construction, as already cited, plunged. There was a seeming recovery of government consumption in the

third quarter, but this was mainly propped up by the massive cash transfers for CCT.

Net primary income, which includes the compensation of overseas Filipino workers (OFWs), declined 3.4% in

the third quarter of 2011, following a downward trend beginning in the rst quarter of 2010, and it was the third

quarter in a row that it actually declined. Specically, OFW income went down by 3.4%, which dragged downthe total inow of income from abroad.

OFW remittances, which have somehow kept aoat the otherwise weak and foreign-exchange dependent

economy, decreased the pressures of mass unemployment and propped household spending for decades, slowed

further to 7.1% in the rst three quarters of 2011 from 8.5% growth in the same period the previous year.

Remittances growth has been slowing since 2005 with slight acceleration in 2010 but slowing further as of last

count. The last slowdown also reected the 6.2% decline in OFW deployment in the rst three quarters of 2011.

(See Chart 3)

Table 14. National Accounts of the Philippines By Expenditure Shares, Growth Rates, 2010-2011

(at constant 2000 prices; in %)

Expenditure Group1st-3rd Quarter Per Quarter

2010 2011 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3

1. Household Final Consumption

Expenditure2.8 5.9 1.9 2.4 4.9 5.3 5.5 7.1

2. Government Consumption 7.1 (1.7) 7.4 (6.5) (6.6) (17.2) 4.3 9.4

3. Capital Formation 34.9 18.1 38.0 34.5 25.7 42.3 (7.7) 24.5A. Fixed Capital 20.3 0.9 26.6 15.4 15.7 12.7 (9.9) 0.5

1. Construction 18.6 (10.0) 25.2 17.1 14.0 7.4 (21.0) (10.6)

2. Durable Equipment 27.0 10.4 35.9 17.6 21.6 18.7 1.0 9.9

3. Breeding Stock & Orchard

Dev't

0.2 0.4 1.0 (0.3) 0.7 0.3 0.7 0.2

4. Intellectual Property

Products

4.3 7.6 4.1 (1.1) (0.7) 3.5 9.0 9.4

4. Exports 22.1 (3.7) 24.0 23.1 16.8 2.0 1.4 (13.1)

A. Exports of Goods 27.4 (3.9) 28.6 26.6 15.3 7.0 (0.3) (14.8)

B. Exports of Services 2.5 (3.1) 6.2 5.5 24.3 (14.7) 9.2 (2.5)

5. Less : Imports 22.7 3.7 22.1 22.1 21.9 11.3 0.4 0.5A. Imports of Goods 23.5 5.5 23.8 21.0 23.1 16.9 1.1 0.6

B. Imports of Services 19.4 (3.7) 14.1 27.6 17.4 (7.8) (3.2) 0.2

GROSS DOMESTIC PRODUCT 8.2 3.6 8.9 7.3 6.1 4.6 3.1 3.2

GROSS NATIONAL INCOME 9.2 2.1 9.2 6.9 5.6 3.3 1.5 1.6


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1,472

1,971

1,744

1,185 1,244

(37)%

(15)%

2005-2007average

2007 2008 2009 2010

Source: United Nations Conference on Trade and Development

(UNCTAD) FDI/TNC database (www.unctad.org/fdistatistics)

tt

Chart 4. Global FDI Inows, Average 2005-2007

and 2007-2010 (in billion US$)

Chart 5. Growth Rate of Exports Volume of Developing Countries,

1993-2010 (in %)20

15

10

5

0

-5

-10

-15

Source: International Monetary Fund World Economic Outlook

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Chart 6. Philippine Export Annual Growth Rates, January 2010-November 2011

(in %)60.0

50.0

40.0

30.0

20.0

10.0

(10.0)

(20.0)

(30.0)

(40.0)

Source: National Statistics ofce (NSO)

46.8

(26.8)

(19.4)

2010 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 Feb Mar Apr May Jun Jul Aug Sep Oct NovJan Jan

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manufacturing (US$53.1). In contrast, inows of portfolio investments, or those usually coming in the money

and stock markets and move in speculative, unproductive manner, grew by 26.8%, from US$13 million in 2010

to US$16.5 million in 2011. Outows grew faster at 47.8%, from US$12.4 million to US$8.4 million.

Defcits and debt

The global crisis is adverse indeed, and since the Aquino government has resisted to explore possibilities

outside the global capitalist system, it has to raise the prospects of the domestic economy by making its scal

position look favorable to creditors. Pres. Aquino is expecting another credit ratings upgrade at the start of

2012 after his government had dramatically turned around its scal position into a more manageable decit.

The Php96.2 billion decit in January-November 2011 was 128.6% smaller than the Php269.8 billion decit

recorded in the same period in 2010. (See Table 15)

Chart 7. Net Foreign Direct Investments, Total Equity,

2000-2001 January-October (in million US$)

Source: Bangko Sentral ng Pilipinas (BSP)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Jan-Oct

2011

1,949

24993

2,500

2,000

1,500

1,000

500

Table 15. National Government Fiscal Position, January-November 2010 and 2011 (in Php million

except rates in %)

IndicatorJanuary-November Change

2010 2011 in million Php in %

Revenues 1,104,754 1,249,772 145,018 13.1

Tax Revenues 998,277 1,104,952 106,675 10.7

Bureau of Internal Revenue 753,325 849,515 96,190 12.8

Bureau of Customs 233,500 242,960 9,460 4.1

Other Ofces 11,452 12,477 1,025 9.0

Non-tax Revenues 106,104 144,768 38,664 36.4

Bureau of Treasury Income 50,469 75,021 24,552 48.6

Privatization 552 704 152 27.5

Others 55,083 69,043 13,960 25.3

Grants 373 52 (321) (86.1)

Expenditures 1,374,574 1,346,026 (28,548) (2.1)

Surplus/(Decit) (269,820) (96,254) 173,566 (64.3)

Source: Bureau of the Treasury (BTr)

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But this feat was achieved not because the anti-corruption campaign was working, which may be reected

in better revenue collections. Revenue effort remained at 13% of the GDP and tax collections increased by

only 10.7% in the rst 11 months of 2011. The reversal of trends was achieved because of a 2.1% cutback in

expenditures, specically public investments and lower interest payments only due to lower foreign exchange

rates.

Relative to economic production, the national government decit was reduced from 4% of the GDP to 0.95% in

the rst three quarters of 2011, clearly pushed by the signicant drop in the share of expenditures from 17.8% to

15.3% of the GDP as against the minimal percentage increase of the share of revenues from 13.8% to 14.5% ofthe GDP. Not only has the Aquino government under-spent contrary to its hyped thrust of pump-priming, but his

anti-corruption drive has also failed to improve revenue collections. The ratio of revenues to the GDP was even

higher in a decade under Arroyo with an annual average of 15.1 percent.

But the Aquino administration remains condent, that even if the national government debt stock is rising and

standing at Php4.898 trillion as of October 2011, it is stable relative to the GDP. The countrys foreign debt is at

US$62.4 billion, and it is already US$2.3 billion higher since Pres. Aquino assumed ofce. But the lower debt

service is making the Aquino administration condent as it requires less revenues and allows spending for other

services. Even this source of condence is not stable, however, as interest rates and prices are volatile globally.

This is why this early, the Aquino government is already oating the idea of raising further regressive taxes,

particularly sin taxes or those applied on alcohol and tobacco, instead of increasing corporate taxes, going

after tax evaders and genuinely cracking down on large-scale corruption.

Underdevelopment planning

The Aquino governments bright stars are dimming one by one even before its development plan has taken

off. This is rst of all coming from the grim prospects of the world economy as it slips into what could be its

worst depression. Yet, there is also something fundamentally wrong with pinning hopes on extractive, shallow

and unsustainable sectors such as mining and natural resources, BPOs, tourism and foreign investments in

these without laying strong economic foundation, except for pump-priming infrastructure projects. The Aquino

administration has not even spent much for these projects, because the intention is to turn over these lucrative

projects to foreign private capitalists and to burnish the scal picture for creditworthiness and maintain a debt-

driven economy. If ever the Aquino government has shelled out for its pump-priming, it has been at the expense

of social welfare.

Had the economy been independent of the moribund global capitalist system and with strong foundation for

economic and social development, specically real agrarian reform and the focused thrust towards national

industrialization, it would not be much affected. But it has remained in chronic crisis rooted out in existing

monopolies, inequalities and exploitative relations in production, which have made it most vulnerable

to declines in outputs and livelihoods. The state of the economy will not improve because the Aquino

administration has persisted with globalization policies implemented since the 1980s and is now covering up the

adverse impacts of such policies with a short-term palliative anti-poverty program.

The idea of Pres. Aquinos PDP is that development shall take place upon massive investments in physical

infrastructure, giving short-term cash outlays, fostering business condence, and ensuring transparent and

responsive governance. The PDPs thrust is straighforward: stick to economic liberalization, deregulation,

export-orientation and free trade, deepen and broaden privatization through PPP, and implement target social

protection programs especially CCT. It is no different from its predecessors and programs continue to rely heavilyon private investments, foreign debt and ofcial development assistance (ODA).

Reading through the document is like dj vu. The Aquino administration has continued to rely on worn-out

formulas of development. It will build economic zones and parks focusing on information technology (IT)-

enabled clusters, spread out BPOs in identied Next Wave Cities, build tourism economic zones, and promote

exports by pursuing multilateral, regional or even bilateral free trade agreements (FTAs). Apart from electronics

and semi-conductors, the PDP hopes to prioritize the products of mining, forestry and agribusiness for export.

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The plan is even looking at utilizing the OFW remittances to fund domestic micro enterprises also geared

towards tourism and exports. The PDP thus is a laid-out plan of facilitating increased foreign plunder of the

semi-feudal economy.

The Aquino government is close to sealing a partnership cooperation agreement (a prerequisite for an FTA) with

the European Union (EU) that, among others, commits to liberalizing trade and investments and loosening rules

on intellectual property rights (IPRs). The proposed EU-RP FTA is a practical surrender of national sovereignty

as the Aquino government has given up economic protection needed for self-reliance and national development.

IPRs extend to data protection, plant variety protection and geographical indications, which will have

implications on farmers access to and control of seeds, peoples access to medicines, peoples access to cheap

technology, among others. The EU-RP FTA will also allow foreign corporations to seek national treatment, or

to be treated like Filipino nationals, enjoying equal privileges. The EU will also be allowed to participate in

medical services and provision of expertise, which edges out local medical practitioners and health workers. An

EU-RP FTA will bind the Philippine government and disallow it from reversing policy decisions in the future.

It will also bind the Philippine government to give to the EU whatever privileges it gives to other countries.

The fact that the Aquino government is seeking to enter into such an unequal relationship sends signals to other

capitalist countries, particularly its number one patron, the US, that the Philippines is more than willing to forge

other FTAs and be the launching pad for other FTAs in the ASEAN and the entire region.

Mining, which is already open to 100% foreign control by virtue of the Mining Act of 1995, is being

aggressively promoted to foreign investments, to the extent that Chamber of Mines and industry players are

actively involved in a media blitz to promote the sector and to put off the social debate on the impact of mining.

The Aquino government is aiming for more investments in mining and mineral processing and mineral-based

manufacturing industries to double mineral exports by 2016. Mining and mineral processing shall be promoted

to establish industrial zones in identied areas with substantial mineral deposits.

There are 27 operating metallic mines and 66 tenements in the country; 57.3% of gross production value is

coming from large-scale metallic mining. Mining contributed only 1.2% to the GDP and 0.6% to employment

in the rst three quarters of 2011, 5.7% to merchandise exports in November 2011, and 1.3% to tax revenues

in 2010. Of all sectors, mining may be considered the most graphic in illustrating plunder the irreversible

environmental destruction, displacement of communities, health hazards, non-renewable depletion of raw

materials for industrialization for the benet of other countries and the exporters, and the low (if not canceled

out) value-added to the domestic economy. There were numerous cases of community struggles against miningin 2011, including an armed attack by the New Peoples Army in Surigao del Norte, which had only been an

indication that the communities were not gaining anything.

In agriculture, priorities are high-value crops and marine products for export. Lands adequate for certain

agricultural products will be identied. The PDP shall rehash the strategic agriculture and sheries development

zones (SA

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