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July 12-13, 2012Balay Internasyonal, UP Diliman, Quezon City

MIDYEAR 2012:

Exclusionary Economics,Elite Politics

Economic andPolitical BriefingBirdtalk

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2 IBON Economic and Political Briefng 12-13 July 2012

IBON Foundation114 Timog Avenue

Quezon City 1103 Philippines

Tel. Nos: +63 2 927-7060 to 62

Fax: +63 2 929-2496

www.ibon.org

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Is inclusive growth happening?

The government claims to seek inclusive growth in its development plan. In the last few months it has playedup rapid economic growth, positive outlooks or upgrades from credit rating agencies, and the countrysupposedly attaining creditor nation status with the International Monetary Fund (IMF). Yet while these may

boost investor condence they do not indicate that growth is inclusive or that conditions have improved on theground.

On the contrary, growth has been far from inclusive and the people have become more marginalized. There has

been relatively high growth but poor job creation, large infrastructure projects amid increasing demolitions of

communities, increased land grabbing in the middle of landlessness, and record-high corporate prots even as

the toiling people make do with poverty wages. Amid claims of sound economic fundamentals, fundamental

problems of backwardness and underdevelopment remain.

The poor development performance of the economy disproves claims to sound economic management ushering

in development and inclusive growth. The Aquino presidency is not yet in its midterm but the democratic

image it seeks to project and its claims to adhere to the straight path are already much diminished.

Shallow and Unsustainable Growth

Ofcial government statistics report 2012 rst quarter growth that was the fastest in a year-and-a-half. This has

made economic ofcials condent to say that full-year growth will be markedly improved from growth in 2011

which was well below target and a drastic drop from the year before.

Shallow sources

The gross domestic product (GDP) expanded 6.4% in the rst quarter of 2012 which is 1.5 percentage points

faster than the 4.9% growth in the same period last year. The sources of growth however do not indicate that

chronic weaknesses of the domestic economy have been resolved.

From the demand side, growth was apparently led by a surge in government spending and public construction.After 2011s lacklustre economic growth which was in part due to a contraction in government expenditures,

the Aquino administration implemented a catch-up plan which led to government consumption growing by 24%

from a 15.8% contraction in the same period last year.(See Table 1)

Public construction likewise increased greatly and grew 62.2% in the rst quarter of 2012 from a 37.9%

contraction in the same period last year. This was however not enough to offset the fall in private construction

which contracted by 9.9% from 23.0% growth last year and overall construction grew a tepid 0.3% in the rst

quarter of 2012. Durable equipment similarly slowed signicantly to 3.6% growth from 17.2% last year. Fixed

capital formation which shows the ow of investments in xed assets used repeatedly, or continuously, for at

least a year in the process of producing other goods or services then slowed to 2.8% in the rst quarter of 2012

from 12.5% in the rst quarter of 2011. (See Table 1)

Overall capital formation actually contracted signicantly by 23.5% in the rst quarter from 36.1% growthlast year. These contractions and slowdowns are more consistent with a cautious private sector rather than

widespread business condence.

Exports of goods and services grew at a faster 7.9% in the rst quarter of 2012, mainly driven by a recovery in

services exports with only slightly faster growth in goods exports. This is not a reliable source of growth though

and it will be recalled how exports fell for two straight years in 2008 and 2009.

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IBON Economic and Political Briefng 12-13 July 2012 5

By industrial origin, agriculture, shery and forestry and manufacturing slowed down in the rst quarter of

2012. Agriculture slowed down from a growth rate of 4.4% in the rst quarter of 2011 to only 1.0% in the rstquarter 2012. Industry also slowed down from 7.3% in the rst quarter of 2011 to 4.9% in the same period

in 2012. The manufacturing subsector slowed down from 8.1% to 5.7% over the same period; mining and

quarrying contracted by 11 percent. (See Table 2)

The share of agriculture in the economy continues to fall and was down to 11.6% of GDP in the rst quarter;

manufacturing was at 22.9% of GDP in the rst quarter of 2012 which is as small as its share in the 1950s.

Yet manufacturing and agriculture are important sectors for creating jobs, have the greatest potential for high

productivity, and should be the main drivers of economic growth. As it is, the domestic agriculture sector

remains largely backward and local manufacturing still grossly underdeveloped.

In contrast, the services sector was the fastest growing with the largest contribution to growth. Services as a

whole grew 8.5% in the rst quarter of 2012 from 3.6% in the same period last year. The biggest contributors

because of their rate of growth and their size were trade (8.9% growth), other services (10.5%), real estate,

renting and business activities (7.9%) and transport, storage and communication (9.0%). (See Table 2)

First quarter economic growth has not been broad-based the agriculture and most industrial sectors for

instance have slowed and has been concentrated in service sectors of generally low productivity and with

weak linkages to the rest of the domestic economy. The contraction in investment could auger even slower

growth in the future if there is no reversal in the rest of the year.

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Reliant on the global economy

The economy continues to rely on volatile external sources of growth amid a global economy currently

experiencing weak demand from a protracted economic and nancial crisis. The economic crisis of the global

capitalist system manifests in weak consumption, lackluster investments and retrenchments . For the Philippines

this means weaker exports, volatile foreign investments and more difcult prospects for overseas Filipino

workers.

Exports of commodities only grew by 5.5% in the rst three months of 2012 from 8.1% in the same period last

year. (See Table 3)

Moreover, remittances from overseas Filipinos are no longer growing as fast as before and are even falling

relative to the economy. Remittances only grew 5.4% in the rst quarter of 2012, compared to 5.9% in the same

period in 2011 and 7.0% in 2010. However they are falling as a percentage of gross national income (GNI)

down to 6.8% in 2011, from 7.1% in 2010 and a record high 8.3% in 2006. (See Chart 1 )

This may indicate how remittances will become less and less able to prop up the domestic economy in the

period to come as the crisis in the advanced capitalist countries worsens, opportunities for jobs abroad will

become tighter and overseas workers earnings may fall as wages are driven down. At the same time it remains

to be seen if declining average earnings are off-set by higher numbers of migrant workers willing to work for

lesser pay. The danger is that slowing remittances and, at worst, contracting remittances will lower the

spending capacity of remittance-receiving households individually and as a whole thus dampening domestic

consumption and demand for goods and services.

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Total approved investments, both local and foreign, fell by 73% in the rst quarter of the year (See Chart 2).

Net inows of foreign direct investment (FDI), meanwhile, grew in the rst four months but slower than the

growth rate in the same period in 2011. FDI inows were mostly in January though (US$778 million) with

investments drastically falling in consecutive months to a net outow of US$13 million in April indicating

that foreign investors still remained wary of the country at least over that period.

These recent remittance and investment trends highlight how chronically relying on sources of growth outside

of the domestic economy is problematic especially amid the worsening crisis of the global economy and poorprospects for recovery. Weak growth in the advanced capitalist countries impacts on the world economy through

lower imports and investments, aside from the threat of further nancial turmoil.

The economic outlook of the capitalist world economy is dim. Problems persist across Europe especially but not

only in the sovereign debt-ridden so-called PIIGS countries (Portugal, Italy, Ireland, Greece and Spain). Several

countries are in deep recession from as far south as Greece and Portugal to as far north as the Netherlands and

Belgium, which impacts on the world economy through lower imports and investments. Over 1 trillion in

European aid so far and drastic austerity measures have not been able to resolve the crisis in the Eurozone

growth is weak, industrial production is below pre-2008 levels, and unemployment is the highest in at least 15

years.

The United States (US) economy likewise remains deeply troubled despite massive bailouts and government

attempts at pump-priming. There is slow growth, a severe jobs crisis and employment levels no better than adecade ago, and still rapidly growing public debt. The Japanese economy remains stagnant with virtually zero

growth amid steadily rising government debt. Growth is slowing even in China which is facing lower exports to

Europe, the US and Japan, weakening public investment, and the end of a long real estate boom. Consumption

meanwhile has been repressed by decades of low wages, depressed agricultural earnings and diminished

benets for hundreds of millions of the Chinese working class. Other supposed alternative growth centers like

India and Brazil are also already facing slowdowns and poor medium-term outlooks.

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But the Eurozone is a key ashpoint to watch and an unexpected collapse of the Euro will have repercussions

far beyond Europe. There will be an impact on the Philippines beyond our direct trade, investment and

remittance ties with European countries. An outright collapse of the Euro, if not managed well, will at the very

least greatly dampen demand and in a worst case scenario trigger a re-intensication of global economic turmoil

even worse than in 2008 and 2009. It could be worse because unlike in 2008 and 2009 the global economy

will be facing crisis in all its main growth centers covering the US, Japan, and now Europe. The nancial

implications are also worrying inasmuch as European banks reportedly have US$8.4 trillion in debt securities

outside Europe.

There are a number of scenarios for the Euro with different implications. The worst case is of a dramatic

collapse of the Euro as a currency triggered for instance by a sudden exit of Greece from the Euro. This would

be worse to the extent that Spain and Italy are also brought into turmoil. There is also a more moderate scenario

of an expected or planned exit of Greece from the Euro over a year or so. In which case this would be expected

and, if factored into by various nancial and economic actors, could be much less disruptive than a sudden

exit. The third scenario which for now seems very unlikely is that the European Union (EU) is actually able to

manage the nancial problems of its weaker economies.

All these are signs of the deep problems of the world capitalist system. Measures taken so far to resolve these

have involved bailouts to banks and big corporations amid austerity programs that hit working class populations

the worst. Nevertheless, the prot of the worlds largest 500 corporations even increased by 70% since 2009.

Yet the deep cuts in social spending only aggravate the problem aside from making the conditions of people

deteriorate further.

The impact of the capitalist crisis continues to be felt domestically. In June, Ford Philippines announced the

closure of its Laguna plant which would lay off some 250 workers. Weak global as well as local demand and

greater uncertainty have taken their toll on the export-oriented and foreign investment-dependent sectors of the

domestic economy.

Good economics?

The government has set moderate targets for revenue and tax collections even as it seeks increased

infrastructure spending towards high economic growth. As it is the national government (NG) had a decit

of Php2.9 billion in the rst four months of 2012 which reverses the small Php61 million surplus in the same

period last year.

Revenues increased by 11.5% in the rst quarter of 2012 compared to the same period last year primarily due

to increase in tax collections. However, the government has set targets of only 14.4% revenue effort (revenues

as share in GDP) and 13.2% tax effort (tax collections as share in GDP) for 2012, which are quite far from a

decade high of 17.1% (2007) and 14.3% (2006), respectively. As it is, tax effort is posted at 12.5% in the rst

quarter of the year compared to 11.8% in the same period last year while revenue effort is at 14.9% in the rst

quarter of 2012 up from 14.4% in the same period last year. These are likely boosted by the deadline in April of

tax ling and payments for the year.

On the other hand, NG expenditures increased by 12.1% in the rst quarter of 2012. The increase in

expenditures is largely attributed to increase in interest payments by 12.2 percent. Interest payments are the

single largest expense item of the government accounting for 22.2% of expenditures in the rst quarter of 2012.

(See Table 4)

Social spending is evidently not a priority of the Aquino government which has implemented deep cuts

in components of social services. In education for example, the budget of State Universities and Colleges

(SUCs) was cut by Php146.6 million to Php21.9 billion for scal year 2012 from Php22.0 billion in 2011. The

government did not allocate budget for capital outlay, reduced the budget for maintenance and operations of 45

SUCs by Php250.9 million, and cut the budget for employees salaries. In health, there was a Php80.6 million

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1 0 IBON Economic and Political Briefng 12-13 July 2012

cut in the personal services of ve specialty hospitals of the Department of Health (DOH) in the National

Capital Region (NCR) and a Php29.2 million cut in that of 16 local hospitals nationwide. The special fund for

enhancement of health facilities was cut by Php2.1 billion; the subsidy to indigent patients has zero allocation;

and allocation for immunization was cut by Php618 million.

There is diminishing access to social services by the poor as these are increasingly being commercialized. In

academic year 2012-2013, 267 private colleges and universities increased their tuition, with an average per unit

increase of Php76.25 in Metro Manila schools. SUCs such as Polytechnic University of the Philippine (PUP)

and Mindanao State University (MSU)-Marawi and six SUCs in the Cordillera Administrative Region (CAR)

also increased their tuition and/or miscellaneous fees by as much as 300 percent.

Debtor nation

The Aquino government hyped the countrys supposed creditor nation status upon a US$1 billion loan to the

International Monetary Fund (IMF) which was a contribution to the IMFs Financial Transactions Plan (FTP), a

facility that lends to other members of the IMF to solve their crises. The reality however is that the Philippinesand the national government remain deeply indebted despite this.

The countrys external debt still totalled US$62.9 billion as of March 2012 US$79.1 billion if other debt

monitored by the Bangko Sentral ng Pilipinas (BSP) but relegated to a footnote are included. Up to 77% of this,

or US$48.3 billion, is owed by the government including the BSP. And while the country stopped being a net

borrower from the IMF in 2006, it still has US$11.7 billion in multilateral debt including US$3.3 billion to the

World Bank and US$6.0 billion to the Asian Development Bank (ADB).

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Outstanding NG debt meanwhile has reached Php5.1 trillion as of April 2012 and Php2.1 trillion of this, or

41% of the total, is foreign debt. This huge debt is among the reasons why debt service is chronically the single

largest expense of the government, for instance reaching Php738.6 billion in interest and principal payments in

2012.

Moreover the international reserves are not really funds that the government has earned and can lend or spend in

the same way as, for instance, its projected Php1.8 trillion in revenues for 2013. The international reserves are

foreign exchange assets accumulated by the economy from various foreign exchange inows but which are not

like money held by the treasury.

The Philippines has actually been lending to the IMF for decades now with an interest-earning reserve position

that, for instance, rose from US$113.4 million in 2000 to US$516.83 in May 2012. There has likewise been

billions of dollars in other lending to foreign entities. The BSP has long had interest-earning deposits in foreign

banks and held interest-earning foreign securities including from the US. This lending rose from US$12.4

billion in 2000 to US$64.1 billion in May 2012.

These have sensibly not been played up in the past because such lending of foreign exchange is a normal

occurrence in the management of any countrys international reserves and are not equivalent to lending of

surplus government cash.

Exclusionary Economics

The poor socioeconomic condition of most Filipinos worsened in the rst semester especially upon their

increasing marginalization from resources and entitlements. The conditional cash transfer (CCT) program has

given a few temporary relief even as it has many serious implementation problems. President Aquinos so-called

anti-poverty CCT continues to fail to uplift the people from conditions of hunger and poverty. Corporations on

the other hand have been seeing rising wealth creation.

Poor job creation

An additional 1.02 million jobs were created in April 2012 or a 2.8% increase from the same period last year.

There was an increase of some 752,000 wage and salary workers in April 2012 or a growth of 3.7% from last

year. The biggest increase in wage and salary workers comes from private establishments with an additional

993,000 jobs created or 6.5% growth. However, there is also an increase in those who are self-employed by

183,000 and an increase in unpaid family workers by 134,000. (See Table 5)

By number of hours worked, the number of fulltime workers decreased by 1.6 million to 20.9 million in April

2012. On the other hand the number of part-time workers or those who worked for less than 40 hours per

week increased by 2.5 million over the same period to 16.2 million. The share of part-time workers in total

employed then increased substantially to 42.8% of total employed from 37.1% in April 2011. Mean hours

worked decreased by 2.4 hours weekly, at 39.2 hours in April 2012 compared to 41.6 hours in April 2011. This

indicates less work hours and, in all likelihood, lesser earnings and pay.

By occupation group, the biggest increase was in technicians and associate professionals (11.9%) and machine

and plant operators (9.5%), but these sectors only accounted for some 9% of the employed. Meanwhile, the

number of laborers and unskilled workers increased by 506,000 in April 2012 from the same period last year, or

an increase of 4.2 percent. Laborers and unskilled workers accounted for 33.2% of the employed.

Thus, jobs creation in this period while largely in wage and salary may be surmised as mainly part-time and

unskilled work. There is also the matter of increasing numbers of unpaid family workers and those who are self-

employed which may be low- or non-paying and likely with no security. The Aquino administration surpassed

its target of creating one million jobs annually but the quality of jobs still leaves much to be desired.

By industry, the fastest growing sectors in job creation in April 2012 are in the Services sector posting net

creation of 405,000 jobs. In particular Other Community, Social and Personal Services grew by 54.5%, Hotels

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and Restaurants by 16.1%, and Mining and Quarrying by 15.2 percent. In absolute terms, the sectors withhighest job generation are Other Community, Social and Personal Services with 521,000 jobs created in April2012 from the same period last year; Agriculture, Hunting and Forestry with 349,000 jobs; TransportationStorage and Communication with 217,000 jobs; and Construction with 185,000 jobs. (See Table 6)

Jobs in agriculture are oftentimes unpaid family work, seasonal and low-paying. The construction sector is

also notorious for low-paying and highly seasonal work. These jobs are mostly insecure and with little or no

benets. Mining and Quarrying, Hotels and Restaurants, and Other Services while being the top growers in

jobs generation in April 2012 actually accounted for a small share in employment generation. At any rate, theservices sector which has been absorbing increasing numbers of workers in the past decade or so has actually

been slowing since 2009. On the other hand, the share of agriculture and manufacturing in employment has

remained virtually stagnant since April 2010 at 33% and 8.4%, respectively.

The number of jobs created by the supposedly growing economy barely lifted the employment rate from92.8% in April 2011 to 93.1% in April 2012. Top sources of growth such as Electricity Gas and Water, Tradeand Repair, and Financial Intermediation did not create jobs as fast as they grew in the rst quarter of 2012.Electricity, Gas and Water grew by 9% but jobs creation only grew by 5.9% in the rst quarter of 2012; Tradeand Repair grew by 8.9% but jobs in Trade even contracted 2.6%; Financial Intermediation grew by 8.8% butjobs created only grew 2.2 percent. The sources of record-high economic growth failed to create jobs and reectthe shallowness and unsustainability of jobs generation. Essentially, there is unreliable and poor jobs generationin the economy because of the underdevelopment of the sectors with the most potential for jobs generation and

increase in productivity.

Even the lack of jobs keeps Filipinos with higher level of education from being productive members of

society. The number of unemployed college graduates increased by 300,000 from April 2011 to April 2012

and their share in the unemployed increased. Three out of ve jobless have college level education. In fact,

two of 10 college graduates are unemployed. More than a skills mismatch which the Department of Labor and

Employment (DOLE) offers as an explanation, the problem lies in the economys lack of ability to create quality

and meaningful jobs. What the government does now is facilitate the search for employment opportunities in

other countries instead of harnessing the countrys human resources to develop the economy.

Ofcial government estimates show a small improvement in the employment rate. But this is still not enough to

indicate a turnaround from historically high unemployment rates. In April 2012, there were ofcially 2.8 million

unemployed with an unemployment rate of 6.9% compared to 2.9 million (7.2% unemployment) in April 2011.

This however does not reect the true state of unemployment, the denition of which has been changed in April2005. This has caused a reduction in the number of unemployed by some 1.5 million and the unemployment

rate by around 3.4 percentage points. (See Table 7)

Still, and not taking into account this discrepancy, there are actually some 20.02 million who are unemployed

and in poor quality work that may be low- or non-paying, with little or no benets and insecure (i.e. those who

are self-employed, in private households and in unpaid family work).

The Philippines has the highest unemployment rate among its neighbor countries in Asia, such as Malaysia,

Indonesia, Thailand, Singapore. In 2010, the Philippines registered an unemployment rate of 7.33% while

Malaysia was at 3.31%, Indonesia at 7.14% and Thailand at 1.04 percent.

The exodus of Filipinos to nd jobs abroad is the worst ever under the Aquino administration. This only

highlights how the jobs crisis has unfolded and remained unaddressed. In 2011, the average number of Filipinosleaving daily reached 4,559, the highest deployed on record and 17% higher than President Arroyos labor

export record of 3,898 daily in 2009. (See Table 8)

The nature of jobs being pushed by the DOLE also reects what the government perceives as solutions to the

chronic jobs crisis. In the DOLE fair in May this year, out of the reported 361,000 vacancies available, 284,000

were overseas-based jobs.

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Wages

Wage levels in the country are far below what is needed to support decent living. Nominal daily wages in the

country currently range from as low as Php199 in agricultural areas in Region IV-B (MIMAROPA) to Php446

in the NCR as of June 2012.

In May this year, the National Wages and Productivity Commission (NWPC) approved a Php30 additional Cost

of Living Allowance (COLA) in the NCR and integrated the Php20 COLA given last year into the minimum

wage. The increase is being implemented in two tranches: Php20 of the additional COLA was implemented inJune while the remaining Php10 will be given in November.

Wage increases are happening in the NCR while in the regions, wages are kept low. Aside from NCR, there are

increases in the minimum wage in CAR, Region II, Region IV-A, Region V, Region VI, Region XI, and Region

XII in 2012, but these are mostly paltry increases which are as little as Php2 to only as much as Php23. Any

wage increase is welcome, including the incremental Php20 increase in the COLA last year, which nonetheless

came too late to have cushioned the poor from the price spikes that have been happening since 2008.

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Even the wage increases are still not enough to meet the living wage that the government itself denes.

IBON estimates the family living wage, which the NWPC had stopped computing in September 2008, to be

at Php1,017 in May 2012 in NCR. This means that the current minimum wage covers only 44% of the family

living wage. This is even worse than in 2001 under President Arroyo when the minimum wage was 52% of the

family living wage. (See Table 9)

Wage increases have not kept pace with price increases. From 2001 to 2011, the nominal minimum wage

increased by 61% but prices of commodities increased by 67 percent. Average daily basic pay increased by 45%

while prices increased by 67% which eroded the value of wages by 11 percent. As a result, real wages are still

basically at in the last decade. In real terms, or taking away the effect of ination, the minimum wage in NCR

is only worth Php361.43. (See Chart 3)

Wage increases have also not kept up with the increase in productivity. From 2001 to 2009, NCR workers

productivity increased from Php343,000 to Php676,000 or an increase of 97 percent. However, wages only

increased by 44% in the same period, from Php265 in 2001 to Php382 in 2009. The Philippines, among its

peer Asian countries, has the slowest increase in wages and the biggest gap between productivity and wages,

according to a study by the ADB.

The Aquino government opposes a wage increase because it argues that the Philippines has the highest wage

rates in Asia. However, the countrys legal minimum wage is just average or even below average compared toother countries in Asia and the Pacic. As it is, a 2012 study of the International Labor Organization (ILO) has

placed the countrys wage as the third lowest among 72 countries. The ILO has pegged average monthly wage

in the Philippines at US$279 or only 19% of the worlds average.

Workers long-time demand for a Php125 across the board, nationwide and legislated wage increase is just if

only to cope with ination and increased productivity. The economy can easily absorb the proposed wage hike

if rms collectively accept a 12% decrease in their prots. This will not translate to increases in the prices of

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commodities nor result in retrenchments if the wage hike is absorbed by rms from their prots rather than

passed on to consumers or to workers. Further, a Php125 wage increase would increase the workers purchasing

power which could increase demand in the domestic economy.

High prices aggravating

High prices of basic commodities continue to burden the people. In fact, price monitors from the Department of

Trade and Industry (DTI) reveal more price increases for basic goods in the rst three months of the year. Prices

of food being consumed by the ordinary Filipino increased, such as sardines by an average of 5%, coffee by

12%, bread by 5%, and condiments by up to 10 percent.

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Utilities rates increases continue unabated. The largest electricity distributor, Meralco, implemented power

rate hikes, apparently due to an increase in generation charges from its own power plants. Meralco hiked its

generation charges in April by 33 centavos from Php5.33 per kilowatt-hour (kWh). On average, in the rst ve

months of 2012, Meralco rates increased by 30 centavos per kWh or at least an additional Php47 per month for

those consuming 150 kWh.

In Mindanao, households have been burdened by rates increases 50-80 centavos in April and May because of

the rates increases of privately-owned barges to supply electricity. This translated to at least Php100-Php160

increase in bills for those consuming at least 200 kWh.

The ination rate for household essentials, such as housing, electricity, gas and other fuels is high at 4.8 percent.

This has implications in the prices of the rest of the commodities. Transport costs likewise are directly affected

by increases in petroleum prices, which while experiencing rollbacks in the second quarter (these have recently

been recouped in all-time big-time oil price hikes) have seen the pump prices increasing 29 times in the rst

semester. At any rate, IBONs computations of price movements of Dubai crude versus the local pump price

indicate that gasoline is overpriced by anywhere from 6%-53% over the January 1999 to January 2011 period.

Poverty and hunger

Existing poverty estimates a lower gure than the previous one, are one of the bases of the Aquino

governments condence in achieving its inclusive growth target.

Government estimated that in 2009 there were only 23.14 million Filipinos or a poverty incidence of only 25.6

percent. These estimates are based on a revised methodology, the third to date, of measuring poverty beginning

December 2011 by revising the menus in the estimation of the food threshold. The revision has brought

down the standards of diet and nutrition of Filipinos by removing several viands and items in the menu, thus

arbitrarily resetting poverty at subsistence levels. Poverty estimates in the Philippines are dened at the barest

physical existence without outside help and without providing for social needs such as education, health and

nutrition. Thus, according to the Philippine government, a Filipino with Php32.02 can complete all his or her

dietary requirements in a day, or with Php46.10 can complete all his or her dietary requirements with enough for

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

Thus, lower poverty levels under the Aquino administration have been achieved not by doing something

meaningful to alleviate poverty but by setting incredibly low parameters so that many who are poor would be

excluded from the list.

Still, the poverty of basic sectors worsened and was most noticeable among the youth, formal and migrant

sector workers, and people residing in urban areas. The sherfolk and farmers have the highest poverty

incidence at 41% and 37%, respectively. (See Table 10)

The magnitude of poor in basic sectors increased by 969,291 in 2009 compared to the number in 2006. Migrants

and formal sector workers and women registered the highest increases in the number of poor.

Those with no jobs saw worsening poverty. Poverty incidence of the unemployed increased by 6.6%, or

an increase of 93,044 in magnitude. But the irony is that a bigger number of those who have jobs are also

considered poor. The number and incidence of working poor have also increased. The number of employed who

are considered poor grew from 7.26 million in 2006 to 7.88 millionin 2009, or an increase of 625,925. Poverty

incidence for the working poor increased from 22.1% in 2006 to 22.4% in 2009.

An overwhelming share or 71% of the poor lives in rural areas. Rural poverty is entrenched because of lack of

rural development where agriculture remains small-scale, non-mechanized and backward and aggravated by

globalization and government neglect.

The impact of the CCT as the banner poverty-alleviation program remains to be seen. After almost four years

of its implementation, the government continues to increase the budget of the Department of Social Welfare

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and Development (DSWD) for the programs implementation without the benet of an assessment on poverty

alleviation gains. Even then, the DSWD seeks to increase the budget for CCT next year by Php4.8 billion to

Php44.3 billion in 2013 to cover 3.8 million households.

For whom?

Sources of economic growth have not delivered in terms of job generation. Also, growth has not translated to

meaningful increases in wages and reduction in poverty. However, there is noticeable increase in the wealth of

the rich and prots of the biggest corporations.

Net worth of the 40 richest families in the Philippines increased by 40% from 2011 to 2012. Combined net worth

in 2012 is US$34 billion which, for comparison, is equivalent to 27% of the countrys gross national income

in 2011. In 2012, the number of Filipino billionaires increased from 11 to 15. This shows that there is extreme

wealth concentration. Interestingly, the corporations of most of these billionaires have also beneted from greater

opportunities in government contracts especially those in relation to public-private infrastructure projects. Their

corporations have also beneted by capturing water, electricity and oil thus practicing monopoly pricing.

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Net income of top 1000 corporations in 2010 further increased by 6.4% from 2009 to Php804.1 billion. Total net

income of said corporations actually increased 591% since 2001 or in a span of just one decade. Interestingly,

the sources of economic growth which failed to create jobs are also the most protable sectors of the economy.

(See Table 11) In 2010, net income of top corporations in Finance, Insurance, Real Estate and Business Services

posted growth of 36.1%; in Electricity, Gas and Water posted growth of 33.1%; and Wholesale and Retail Trade

posted growth of 40.6 percent.

The top performing corporations in 2010 are also under the sector which posted highest growth rates in the

economy. Meralco, the top corporation in the Philippines in 2010 by gross revenues and the largest electricitydistributor, which holds the franchise for Metro Manila and neighboring areas, for example saw its prots rise

as a result of increased distribution, supply and metering charges. Meralcos net income increased by 66.2%,

from Php5.6 billion in 2009 to Php9.24 billion in 2010. Petron Corp., the second largest corporation in 2010,

increased its net income by 104.4%, from Php4 billion in 2009 to Php8.1 billion in 2010.

Average daily basic pay in the sectors which are the top sources of growth have not increased as fast as how the

average daily net income of top corporations belonging in these sectors have increased. (See Table 12)

Meanwhile, the larger percentage of the population share a small portion of the income pie. In 2009, for

instance, the combined average income of the poorest 80% of families (13,923 families) was even smaller than

the combined average income of the 20% richest families (3,481 families).

Still, some 65 million or 70% of Filipinos live by on Php104 or lower per day according to IBON estimates.

The daily income of the poorest half of the population ranges from Php22 to Php67. But the government in

2009, using an incredibly low poverty threshold of Php46 per day, estimated the number of poor at only about

23.1 million.

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Intensied Marginalization

In the past six months, the heightening peoples marginalization, in contrast with drawing the majority to the

mainstream, has become increasingly noticeable both in rural and urban areas.

Landlessness

Even as the Aquino administration persistently tries to convince farmers that they will get land, it does not

perform even the minimum requirement for land distribution. Data shows that the Department of Agrarian

Reform (DAR) only accomplished 23% of its national LAD (land acquisition and distribution) target as of

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December 2011. As of the said period, there are 961,974 hectares of land still targeted to be distributed by July

2014. (See Table 13)

The Aquino administration is second to the Arroyo administration among all post-Martial Law governments

for having the lowest land distribution average. At the current rate of DAR land distribution, the Aquino

administration is already over ve years behind schedule from the June 2014 target of the extended agrarian

reform program, CARPer.

The Aquino government, like its predecessors, is not decisively confronting landlord and big business interests.

Starting with his own hacienda, Hacienda Luisita, President Aquino has not shed off its landlord image when

his administration has continued to refuse to recognize the farmers as the legal and historical owners. Land

distribution under CARPer is circumvented further by using the aws of the CARP.

In the case of Hacienda Luisita, the Cojuangco-Aquino family claimed just compensation while it managed

to insert a beneciary verication to maneuver the distribution process. The verication strategy is apparently

being used to come up with a different set of beneciaries from those who signed the stock distribution option

more than two decades ago. Its insistence of just compensation or simply put payment at market rates, for

land to be distributed is contrary to the ideals of a genuine agrarian reform. The Cojuangco family is demanding

Php9.75 billion, based on the 2006 real estate rate of Php2.5 million per hectare, as just compensation. The

just compensation clause, being in the CARP, does not really transfer the control of resources and break land

monopoly in the country.

Numerous cases of landgrabbing and land re-concentration, some involving the countrys big haciendas,

immediately ensued. This has been noticeable especially after the Cojuangco family claimed payment for use

of right of way in Hacienda Luisita to build a portion of the Subic-Clark-Tarlac Expressway (SCTEx) and with

the start of construction works for the Tarlac-Pangasinan-La Union Expressway (TPLEx) interchange, covering

barangays located inside Hacienda Luisita.

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As it is now, there are more than 200,000 hectares of land which remain undistributed in Southern Tagalog,

including haciendas such as Hacienda Yulo in Laguna and Hacienda Looc in Batangas. These landholdings are

also current sites of real estate development, leading to the displacement of tenant farmers. In Central Luzon,

farmers continue to face the threat of being ejected from their farms due to various infrastructure projects in

the region. A recent study on reconcentration of sugarcane land found that 41% of agrarian reform beneciaries

who are sugar workers lost their awarded land through various land transfer schemes.

To date, some 270,000 hectares of agricultural land are being claimed by foreign biofuel and food companies

and their local partners such as Hassan Group (Bahrain), Itochu (Japan), Far Eastern Agricultural InvestmentCompany (Saudi Arabia), Jeonnam Feedstock (South Korea), San Carlos Bio-Energy (United Kingdom), and

the government of South Korea for energy and food export. In January 2012, it was reported that a US$50

million deal with Bahrains Nadir and Ibrahim Sons of Hassan Group was inked by AMA Group Holdings of

the Philippines. The deal was seen as part of the US$300-million land lease deal that the Aquino government

entered into with Bahrain in the rst months of his administration.

Meanwhile, farming communities are further marginalized to make way for so-called development projects. The

farmers in Opol, Misamis Oriental have been treated as trespassers in their own land by an oil palm plantation

which was granted permit in 2011 to develop a contested land of the indigenous people, the Higaonons. The

farming community of Tungkong Mangga in Bulacan are now facing the construction of metro rail transit line

7 (MRT-7) under the PPP program which would run through some 300 hectares of farm lands encroached by

Aquino ally, the Roxas-Araneta family. It is about to displace more than 300 farmer-families in the 311 hectares

of land and some 40,000 residents in Tala and Pangarap Village in Caloocan City (in dispute with GreggyAranetas Carmel Development). In Saranggani, farmers will be driven out of their land for a castor and oil

palm plantation which a foreign company has inked with the local government. On February 20, farmers who

tilled a portion of the 184-hectare idle land being claimed by the Rizal Commercial Banking Corporation in

partnership with the administrators of Hacienda Luisita were dispersed and charged with trespassing.

Mining

In the countryside, the sources of livelihood for communities in mining areas have greatly diminished.

Meanwhile in Cagayan Valley, Ilocos, Bicol, Eastern Visayas and other regions, the offshore, foreshore and

erstwhile common areas near the coast are being mined for magnetite, which is altering the coastal areas and

destroying livelihoods of shing communities. Magnetite mining has substantially degraded the commons to

mine black sand to be exported to other countries such as China for iron production.

Magnetite mining in Northern Luzon has threatened sh catch on rivers and seas. The Bureau of Fisheriesand Aquatic Resources (BFAR) in June 2012 is closing the Cagayan River to shing because of the declining

population of Ludong, a very expensive sh in the Cagayan River largely due to magnetite mining. This will

marginalize the shing households in the area and will affect their livelihood. In Negros Occidental province,

productive agricultural lands and shing grounds are also being threatened after some 28,000 hectares of land

was granted to Mozart Minerals to mine magnetite. Prime agricultural lands are also threatened in Batangas

province as Crazy Horse Ltd. and subsidiary Asian Arc Mining will mine copper, gold, lead, limestone and clay

deposits, according to peasant group Kilusang Magbubukid ng Pilipinas (KMP).

In coal and mineral-rich Andap and Zapanta valleys in CARAGA region, indigenous communities are forcibly

displaced to clear the area for exploration of companies such as Minimax Gold Exploration and SR Mining Inc.

In the CAR, there is continuous militarization of indigenous communities to stem the peoples opposition to,

and in order to clear the area for, the exploration of large-scale mining companies such as Cordillera ExplorationCo., Inc. (CExCI)/ Nickel-Asia Corporation in Abra and Kalinga provinces and Freemont-McMoran/Phelps

Dodge in Kalinga.

In Leyte province, Chinese corporation Nicua Mining may have been the cause of shkills in Lake Bito,

according to the Mines and Geosciences Bureau (MGB). The rst wave of sh kill was on March 14 to April 15

and this was followed on May 12, 2012. Nicua Mining has been operating in MacArthur and Javier since 2010.

Landlords have leased their farms to the mining company, leaving tenants without land to till. Nicua exports all

magnetite it has mined to China.

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The Aquino administration released in July this year Executive Order (EO) 79, stipulating its mining policy. The

mining EO in essence is about making large-scale mining and the much-discredited liberalization of the sector

look responsible. It is an effort to make the economic activity more efcient through regulation of small-scale

mining, creation of inter-agency forum, one-stop shop application, and the primacy of national government laws

over local legislations. But it does not in any way correct the basic aw of the Philippine Mining Act of 1995

which allows foreign plunder of the countrys natural resources.

There is lip service to full enforcement of environmental standards and exemption of prime agricultural lands

and ecologically-sensitive areas to mining while it allows non-compliance to environmental standards by

mining companies and massive land grabbing prevail. Placing a moratorium on the approval of new mining

permits and the planned crafting of legislation to amend revenue-sharing schemes and value-added

activities does not change the Aquino governments stance to allow and even promote irreversible resource

depletion and plunder in exchange for miniscule benets. More importantly, while this moratorium is in effect,

the EO allows exploration to continue, at which stage, according to the Mining Act of 1995, most incentives are

given to mining corporations for seven years of exploration up to the entire duration of mining.

Demolitions, strikes

In urban poor communities, the past six months saw violent demolitions to make way for PPP projects and other

projects of big business. In January 2012, houses of residents of Corazon de Jesus in San Juan were violently

razed to the ground. In April 2012, the violent demolition of houses in Silverio compound in Paranaque, MetroManila by members of the Special Weapons and Tactics (SWAT) team of the Philippine National Police and

the Paraaque City Civil Disturbance Management Unit (CDMU) killed a minor and injured many others by

gunshot wounds or when they were truncheoned, kicked and forced to the ground, even when they were not

resisting. The city government is apparently planning a medium-rise housing project under PPP, which would

accommodate only 1,900 residents, and which they would have to amortize. The national government has

eventually handed down a moratorium on demolition in the last week of April as damage control in response to

public indignation.

Since 2010, there has been a trend of res breaking out in urban poor communities with pending government

development plans. In May, Isla Puting Bato, a community of almost 6,000 people, located within the reclaimed

area being planned for the North Harbor modernization project, was razed to the ground when a re broke out

after receiving arson threats from men reportedly from the Philippine Ports Authority (PPA), the agency tasked

to clear the area. The residents were also reportedly barred by the PPA from rebuilding their shanties.

There have also been harsher response in the labor front. In 2012, union members of the Aboitiz-owned and

second largest electricity distributor in the country, the Visayan Electric Company (VECO), have been served by

the management with notices of administrative hearing for participating in a rally in their uniforms. The workers

of Co Ban Kiat, supplier of hardware materials to major hardware stores such as Ace Hardware, were met with

a deployment of more than 70 policemen and SWAT team and a re truck in the strike area to dismantle their

picket in May. The companys practice of non-regularization and unjust termination has been going on for

years.

Discredited Globalization Policies

Despite economic growth being exclusionary as well as exclusive, the Aquino government continues with amuch-discredited model of development - the push for globalization policies.

PPPs

The Aquino government has made PPP its centerpiece in development and has been aggressive since 2010.

Following a tepid investor response since the beginning, the Aquino government has upped the ante by

spending more on it, fast-tracking the regulatory risk guarantees and being stricter on protecting investments.

The Aquino administration allocated a bigger budget for PPP in the 2012 NG budget, which is its counterpart

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equity for PPP projects. The education, health, agriculture, and transportation and communications departments

all received allocation in the NG budget which has to be spent within the budget year.

In mass transportation, the US$1 billion MRT-7 project which was an unsolicited proposal by Universal LRT

San Miguel in 2007 is now being undertaken by Marubeni-DMCI consortium from a contract with Universal

LRT. Universal LRT is owned by San Miguel Corp. It is the original proponent of the project. The mass

transport and highway project will run through Tungkong Mangga, San Jose del Monte City, Bulacan to SM

City North EDSA. The project will run through disputed lands (Roxas-Araneta) in Bulacan and Caloocan,

as already mentioned. The PPP Center is also bidding out the Php35 billion Light Rail Transit line 1 (LRT 1)extension including the privatization of operation and maintenance.

There are 22 PPP projects for rollout in 2012. PPPs in mass transportation and roads are the rst to be rolled

out. Only the smallest project, the Daang Hari-SLEX, has been bid out last December 1, 2011 to Ayala Corp.

The other projects in various stages of implementation are: LRT Line 1 Cavite Extension and the MRT-7

unsolicited proposal. (See Annex)

The main feature of an Aquino-brand of PPP is the granting of regulatory risk guarantees, which ensures the

private proponent of its prots. Regulatory risk guarantees make sure that the government would pay the private

sector in case external problems arise, which include even public or customers clamor to regulate. What is

more alarming is how these guarantees undermine the remaining powers of government to stop projects that

it may deem as not benecial to the Filipino people. The Aquino government is currently working to nalize

the terms and the legal framework for regulatory risk guarantees. This controversial component of the Aquino

governments PPP program is being fast-tracked to convince investors to bid for PPP projects.

The second feature of an Aquino-brand of PPP is the inclusion of social services in PPP projects. Social services

are the only means by which the State at this point can offer a semblance of wealth redistribution by taxing the

haves to deliver services to the have-nots in society, yet are now being passed on to the private corporations.

In social services

This year, the education and nance departments are getting ready to bid out the rst tranche of PPP classroom

construction packages worth Php10.4 billion. The project entails the design, nancing and construction of

some 9,300 one-storey and two-storey classrooms, including furniture and xtures, in various sites in Regions

I, III, and IV-A. As of May, there are eight corporations that qualied in the pre-bid, all of which are largeconstruction corporation such as Citicore Holdings Investment, Inc.-Megawide Construction Corporation Inc.,

D.M. Consunji Inc. and Makati Development Corporation-First Balfour, Inc.

Only the largest construction corporations will be able to bid for the projects as they can take the nancial risks

such as the possible disapproval of Congress. There are also risks related to nancing costs such as the private

proponent asking for a higher rate of return given the extended payment period. Private nancing has been

proven to be more expensive than government borrowing because of commercial rates and terms of borrowing.

There is only one PPP project in health currently being prioritized by the Aquino government, from originally

10 PPP projects in 2010. The Php453 million Vaccine Self-Sufciency Project Phase 2, which entails the local

formulation, lling, labeling, and packaging of Pentavalent Vaccine for diphtheria, pertussis, tetanus toxoid,

Single hepatitis B, and Haemophilus inuenza B. The government does not have project for research and

development (R&D) in health.

A bill seeking to corporatize 26 public hospitals was led and immediately passed by House Committee on

Health on May 21, 2012.The modernization and corporatization of government-owned hospitals is reected

in some PPP projects and is meant to cater mainly to medical tourists taking advantage of skilled manpower,

state-of-the-art technologies, and relatively lower cost of health services. This has implications in the price of

hospital services and the quality of services especially to indigent patients.

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Energy

The controversial Angat Hydroelectric Power Plant (HEPP) has also been put in the list of PPP priority

projects. It may be recalled that under the privatization of energy generation, political, nancial and regulatory

guarantees are not included, thus the PPP program can correct this shortcoming. The privatization of the Angat

HEPP and running it for prot poses risks to how the Angat Dam, the main source of water supply for Metro

Manila, will be managed.

The countrys experience in energy privatization is not encouraging. The countrys power sector has beencaptured by a narrow section of the elite, or around three to four families or conglomerates. The Cojuangco,

Lopez, and Aboitiz families are leading in terms of subsidiaries and assets. These are among Asias billionaires.

From 2001 to 2009, top 25 revenue-making corporations in generation, collection and distribution of electricity

saw their net income jump by 902 percent.

Meanwhile, residential customers have been shouldering increasing prices of electricity because of power

privatization as all the costs of doing business, debt and the risks that come with privatization are being passed

on to the consumer through the universal charge, environmental charge, and charge for foreign exchange

uctuations.

Rates for residential customers have increased more steeply than those of commercial and industrial customers.

From 2001-2010, residential customers suffered an increase in electricity rates of 80% as against the increasesof only 53% for commercial customers and 37% for industrial customers. In 2010, the Philippines, with tariffs

at US$18.1 cents per kWh had the highest residential electricity rates in Asia and had overtaken industrialized

Japan, according to the study of Australia-based International Energy Consultants.

Mass transportation

In January 2011, the Aquino administration proposed to increase MRT fares to stop government subsidies to

MRT fares. The fare hike was approved in May 2011 but was suspended until further decision.

The MRT was built through a build-lease-transfer agreement, a privatization scheme, between the government

and Metro Rail Transit Corp. (MRTC) and MRT Development Corp. (MRT DevCo), a consortium of private

local and Japanese corporations. The government incurred huge debts because of the lopsided terms of the

contract. The government was forced to buy out 76% of the MRTC through the Land Bank of the Philippines

(LBP) and the Development Bank of the Philippines (DBP) to the tune of US$800 million. Also questionablewas the extremely expensive maintenance deal worth US$2 million per month with TES Philippines, a

subsidiary of Sumitomo Bank, one of the banks which provided the investment loan for the project.

Amid the widespread opposition to the fare hikes, the Aquino administration prioritizes the privatization of

the MRT and LRT which will further increase the fares and burden commuters. Big business groups such as

Metro Pacic Investments Corp. (MPIC), of Manuel Pangilinan and Malaysian partners, Optimal Infrastructure

Development, Inc of Ramon Ang; Ayala Corp.; DM Consunji, Inc.; and First Balfour, Inc. of the Lopez Group

have already expressed their interest in bidding for the projects.

PPP as a globalization policy being peddled by the World Bank is not new and has had tremendous impact even

in capitalist countries. It has caused governments to shell out more and place the burden on the people so that

the prots of corporations are ensured. PPPs in health in Canada and health and education in UK have reduced

access to services, deteriorated the quality of services, and made people pay more.

PPPs are not the solution to peoples problems nor the panacea to underdevelopment as the Philippine

experience in privatization has already shown and experiences of other countries with PPPs have proven. As

a development framework, meaningful growth does not lie in mega infrastructure projects that do not solve

the chronic crisis of agrarian backwardness and pre-industrial industry. Privatization through PPPs will reduce

access to social services and public utilities and make the people bankroll the nancial risks that the government

agrees to undertake in behalf of the corporation.

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CCTs

The CCT program, despite supposedly being only a social safety net, is the governments full-edged anti-

poverty program. It is the governments main strategy in addressing poverty, and it is by injecting additional

money into some households. However, it is being implemented without complementary economic policies

to create jobs and genuinely address poverty, such as land distribution, support for agriculture and building

domestic industry. Social infrastructure does not support conditions of cash transfer. In rural areas, the lack of

education and health services and facilities does not facilitate the assumed context of cash transfer.

Allocation for the implementation of the CCT program accounted for a big share in the government budget in

lieu of social services. The DSWD is seeking a Php645-billion budget in 2013 to support more beneciaries.

The number of CCT beneciaries will peak in 2013 and those who will graduate from the program will still

face poor prospects of jobs and incomes in the economy. But more importantly, the CCT program has twisted

the meaning of poverty alleviation from genuinely addressing the roots of poverty through broad-based

growth and job creation to expensive dole-outs that would not even make a dent on inequality and lack of

inclusive growth in the country. Poverty is structural and not at the household level. Thus household level cash

distribution will not solve poverty.

The CCT program has recently been praised by the World Bank and the ADB as having provided social

protection for the poor amid slow trickling down of economic benets. The World Bank and the ADB will

earn from interest payment of their estimated US$1.007 billion loan to the Philippines to implement the CCT

program.

Already, there have been documented anomalies in the implementation of the program and proofs that the

CCT is failing to alleviate poverty. Still, the government has not come up even with a mid-term assessment of

program impacts even as it continues to inject government resources into this palliative solution.

Bilateral free trade deals

The Aquino government has not only reafrmed its loyalty to globalization but also intensied its allegiance

to the US and other advanced capitalist countries through deals, such as the EU-RP Free Trade Agreement

(FTA) and the US-led Trans-Pacic Partnership Agreement (TPPA). The forging of bilateral and regional free

trade deals under the Aquino administration has taken some developments in the last six months and how these

developments will play out spells the future of the negotiations. The EU-RP FTA is the most advanced and thepriority in forging bilateral free trade agreements. The government has increased efforts to clinch the EU-RP

FTA by conducting a second round of sectoral scoping studies, roadshows and seminars to start talks in the third

quarter.

This renewed call by the EU follows the eruption of the crisis in EU countries beginning late last year. The EU

is currently negotiating and expects to clinch an FTA with three Asian countries soon: India, Singapore and

Malaysia after the EU-ASEAN negotiations have been stalled. According to the Philippine government, the

sticky issue would be in agriculture because the countrys agriculture sector will nd it hard to compete with the

advanced agriculture sector of the EU.

Meanwhile, the Philippines prospects for the TPPA lies heavily on changing the Philippine constitution to

suit USs economic agenda. The TPPA is USs tool in asserting economic dominance in Asia and the Pacic

and leveraging China. In early July, Mexico and Canada have been invited to the TPPA negotiations fornearly completing the changes in its domestic procedures. This invitation was taken as a positive cue by the

Philippine government to also be able to enter the negotiations. The change in the economic provisions of the

1987 Constitution (legislative and even constitutional reforms necessary before [the Philippines] can be part

of the TPP) has always been key to the Philippines standing in the US-led TPPA. At any rate, constitutional

changes particularly those of proposed economic amendments have been raised time and again in the recent

period.

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Globalizations 99%

President Aquinos globalization policy is a much-discredited policy. It has been proven to have caused poverty

and misery to peoples of the Third World and the working class of capitalist countries, thus the heightened

peoples struggles against globalization.

Globalization has created the wealthiest families and companies while it has caused untold misery to the people

around the world. The number of hungry people is now at over one billion for the rst time in history. Over

half of these live in Asia and the Pacic and a quarter live in Africa. Most of the countries in these regions

where poverty and hunger are high are former colonies that have been implementing globalization policies fordecades. After three decades, 1.4 billion in poor countries are considered poor, three out of four poor people live

in rural areas, and 22,000 children die each day due to poverty.

In 2012, protests against the greed and the unsustainability of the global capitalist system have escalated.

Protests in different countries strike at the heart of capitalisms failure to bring about development for the

greater people. In many parts of the world, unsustainable production systems of capitalism and its imposition

on poor countries through globalization are being discredited, with some countries even rolling back some

of the functions surrendered to the private, corporate sector in the name of deregulation, privatization and

liberalization.

Nationalist Economics

Globalization policies have not ushered in inclusive growth and development. At this juncture, it is imperative

that nationalist economics should challenge the existing paradigm.

Nationalist economics is the embodiment of the ideas, policies and principles for the economy that is biased

for nationalist aspirations. In seeking development, there may be several components that can be advanced by

the people. First is by rejecting globalization as the framework for development. There is a need to expose the

impacts of globalization on the domestic economy and peoples livelihoods and discard it as a development

framework. Reversal of globalization policies can be done immediately and moreso in the long term. This

requires responsible government intervention to build local industry and agriculture. It is also inevitably focused

on protecting ecology for the kind of development that takes in consideration the needs of future generation.

Second is by advancing economic policies that place the interests of the people rst over corporations, elite and

powers-that-be. Putting peoples interests rst entails the provision of just wages, meaningful land distributionwith strong state support in pricing, credit and nance and R&D, and the preeminence of public education,

health and housing. Wages should be seen as sufcient to attain a decent standard of living for the entire family.

Social services should be considered social goods which must be made available regardless of the capacity

to pay. Free and compulsory land distribution and support for rural development have long been wanting and

should be implemented to reverse the control of the rural elite of resources in the countryside.

Third is putting in place progressive taxation to ensure that wealth is redistributed and inequality and inequity

are addressed. Policies that would redistribute income and wealth from the current concentration in the hands of

the few and reverse the trend of non-inclusive and unsustainable growth should be put in place.

Fourth is pushing for an independent foreign policy that rejects onerous debt conditionalities and ensuring

mutually benecial foreign investments for instance.

It is founded on the principle that the Philippines is a sovereign nation. It has natural and human resource

capacity to be self-reliant. With that capacity, it can craft and implement policies that are based on the

aspirations of a democratic economy and society, such as rescinding unequal bilateral trade agreements and

other agreements that impinge on economic sovereignty and start establishing international relations that are

free from the clutches of other countries.

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Where is daang matuwid leading to?

The second year of the Aquino administration, specically in the last six months, saw it wage and win amajor battle to oust former Chief Justice (CJ) Renato Corona from the Supreme Court (SC). This singularevent, and its aftermath, has grabbed public attention for most of the rst half of the year. Peoples interest

during the period has also centered on the still ongoing tension with China over the Panatag Shoal and SouthChina Sea.

Lack of real reforms with tangible economic benets for the people continues to undermine the presidency

of Benigno Noynoy Aquino III. Despite strong public opinion on the impeachment of Corona and so-called

Chinese intrusion, surveys indicated a steady decline in public satisfaction and approval in the Presidents

performance. More and more people are becoming dismayed over the administrations failure to address high

prices, poverty, job scarcity and low pay.

It appears that the mantra ofdaang matuwid (the straight path) is no longer as effective. Aquino has overused

the theme to rally and sustain popular support, serving as the anchor for most of his initiatives. But in the

face of record unemployment, hunger and poverty in the past two years, not only are the inbuilt limits of the

daang matuwidrhetoric beginning to showit is also being exposed bit by bit as a ruse to create the illusion of

reforms while continuing the same pro-foreign, anti-development policies and trapo practices of the past.

Direct assistance but band-aid responses like the conditional cash transfer (CCT) program are not enough to

prop up the sham of inclusive growth. While the CCT budget has grown massively under President Aquino, it

has been ineffective in pacifying public restlessness. The past months have seen sustained mass protests over

high and overpriced fuel, demolition of urban poor areas, low wages and lack of jobs, decient social services,

destructive large-scale mining, landlessness, etc. In the rst place, Aquinos overused daang matuwid or

ghting corruption will end poverty slogans and inclusive growth rhetoric are based on the principles of

free market democracy. This campaign for good governance has long been promoted by the World Bank and

other neoliberal apologists to mask the economic damages brought about by globalization. Washington is also

pushing the good governance campaign to help justify to the American public the funding and support that it

gives out to its puppet regimes.

In the countryside, the 43-year old peasant war being waged by the New Peoples Army (NPA) continues to

rage. In recent months, the NPA has targeted the operation of foreign-owned large-scale mining companies and

huge plantations in Mindanao due to alleged environmental destruction and unfair labor practices. The Moro

Islamic Liberation Front (MILF), on the other hand, continues to ex its muscle even as it engages government

in peace negotiations.

These social contradictions are being roused by the enduring global crisis as it weighs down on the backward

domestic economy. Competing for fewer opportunities to prot, the local elite and their foreign partners have

increasingly used state power to create an ever more favorable environment for private investors, often at the

expense of the people.

Public-private partnership (PPP) is creating such environment and providing more prot-making opportunities

for big business through further privatization of infrastructure, utilities, social services and other vital sectors.Another is the aggressive promotion of extractive industries including mining and oil and gas exploration.

Persistent talks by close Aquino allies on Charter change (Cha-cha) to, among others, allow foreign ownership

of land is also part of efforts to open up new areas for business.

This heightens the contradiction between the ruling elite and the people, who are further oppressed with higher

user-fees, deprivation of basic services, physical displacement to give way to PPP projects, marginalization

from the use of natural resources, land grabbing, etc. At the same time, it amplies the contradiction among the

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factions within the ruling elite as they jockey for position to grab the most protable PPP projects and mining

and energy contracts and other favors from government. More fundamentally, it unravels the heightened

allegiance of the Aquino government to foreign interest at the expense of nationalist aspirations.

Even Aquinos good governance campaign is more about instituting reforms to reduce business costs and risks

than going after big-time plunderers like Mrs. Gloria Macapagal-Arroyo. But Aquino and the Liberal Party

(LP) also rode on the strong anti-Arroyo sentiment to maintain the legitimacy of their rule and pursue the

immediate political objective of consolidating power.

In the past months, this took the form of ousting Corona behind the pretext of making Arroyo accountable. In

the coming months, this will take the form of appointing the new Chief Justice and at the minimum ensure a

cooperative SC, and maneuvering to dominate next years midterm polls.

A key component of political consolidation is solid US support, which Aquino has enjoyed from the onset.

Building on this, Aquino has played a willing part in the US scheme to pivot to Asia Pacic. Government,

abetted by uncritical reporting by mainstream media, fanned anti-China sentiment to justify increased US

military intervention in the Philippines. On top of sovereignty issues, the unprecedented presence of US forces

in the country in the post-US bases era is stoking greater instability in the region.

Corona impeachment and power consolidation

It was in the name ofdaang matuwidthat Aquino and the LP had sold to the people the impeachment of

Corona, riding on the strong anti-Arroyo public sentiment. The Aquino clique took advantage of the valid

and wide perception that Corona, a midnight Arroyo appointee, was using the SC to protect his patron. But

reviewing how the impeachment trial went would show how it was driven by trapo interests and won by the

administration through trapo maneuverings.

The issuance of a temporary restraining order (TRO) by the SC on the Department of Justices (DOJ)

travel ban on Arroyo and her husband gave LP members at the House of Representatives (HoR) the perfect

opportunity to initiate the impeachment of Corona. Thus, despite the hasty ling of the impeachment complaint

by the HoR, the public readily supported the move.

Meanwhile, the progressive mass movement, including its representatives in Congress under the Makabayan

bloc, supported the impeachment on the basis that it was one of the important arenas in the continuing

campaign to make Arroyo, her family and allies accountable for their many crimes and abuses against thepeople during their reign. This, even as the progressive groups prepared to counter the pitfalls of Coronas

ouster, particularly the Aquino clique consolidating its control over the entire bureaucracy.

Shock and awe

Apparently, the LP hoped to duplicate its quick victory in removing Ombudsman Merceditas Gutierrez by

applying a sort of shock and awe attack in impeaching Corona. Just within hours, the complaint containing

seven cases was signed by 188 congressmen (almost twice the minimum constitutional requirement of 95

signatories) and directly transmitted to the Senate.

Moreover, prior to the actual hearing, there was already a sustained anti-Corona propaganda campaign being

waged through the major media outlets perceived as supportive of Aquino. The LP hoped that in the face of

very wide public backing for the impeachment and relentless attack in the media, Corona, like the formerOmbudsman, will be overwhelmed and quit his post even before the trial could actually start.

But Corona opted to go through the whole impeachment trial and even engaged Malacaang in a propaganda

war. He stressed Aquinos personal grudge against him due to the SC verdict on Hacienda Luisita and the

Presidents agenda to control all three branches of government; LP president Manuel Mar Roxas IIs aim to

take over the Vice Presidency via his electoral protest against Jejomar Binay, which is also pending at the SC;

and Associate Justice Antonio Carpios desire to become CJ.

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Coronas decision to go toe-to-toe against the countrys most powerful man lies less on his claim of innocence

and more on desperation to protect himself. The apparent support of the inuential Iglesia ni Cristo (INC),

whose relationship with Aquino turned cold soon after the 2010 polls and whose prominent lawyer-members

have lent their services to defend the Arroyos and their allies, may have also encouraged Corona to challenge

his impeachment.

In his propaganda campaign parallel to the Senate hearings, Corona depicted his impeachment as an attack

against the supposed independence of the Judiciary and for the regime to put its own stooge in the SC. Not only

did Corona mobilize the people and resources of the Judiciary for his defense, he also used the SCs powers toderail the impeachment trial (such as the TRO on Coronas dollar accounts and barring Justices and staff from

testifying at the Senate), creating the specter of a constitutional crisis.

Downgraded complaint

Since the LP anticipated an early resignation, the prosecution team it turned out was not quite prepared to go

through the impeachment trial. As the hearings at the Senate progressed, the serious defects of what appeared to

be an ill-prepared impeachment complaint have been exposed.

From an original eight articles of impeachment, the complaint was reduced to just three: failure to disclose his

Statement of Assets, Liabilities and Net Worth or SALN (Article 2); failure to meet standards of competence,

integrity and probity (Art. 3); and partiality in granting a TRO to allow the Arroyo couple to go abroad (Art. 7).

Dropped were partiality and subservience in cases involving Arroyo (Art. 1); issuing a TRO on the HoRs

impeachment of Gutierrez (Art. 4); arbitrariness and partiality in the case of 16 newly-created cities (Art. 5);

improperly probing an SC Justice to absolve him (Art. 6); and failure to account for the Judiciary Development

Fund (Art. 8).

It did not help that the LP leadership of the prosecution team displayed ineptitude in presenting and arguing

the case. The case was put in greater jeopardy as the LP presented pieces of evidence that were either

acquired through questionable means or were downright problematic such as the case of the small lady who

supposedly gave photocopied bank accounts of Corona and the defective Land Registration Authoritys (LRA)

list of 45 real estate properties.

Worse, while the public was led to believe that the impeachment of Corona was about going after the formerPresident, lead counsel Rep. Niel Tupas Jr. weakened the case connecting Arroyo to the former CJ when he

agreed to exclude Associate Justice Lourdes Sereno as a witness in the trial. This was despite a pending request

by prosecutor Rep. Neri Colmenares of Bayan Muna Partylist for Sereno to appear before the Senate so that she

can expound on her dissenting opinion on the SC TRO on the DOJs travel ban.

In the end, the battleground was reduced to the non-declaration of Coronas dollar accounts and certain peso

accounts in his SALN. But despite much help from LP stalwarts in the Senate led by Sen. Franklin Drilon,

the prosecution was still unable to rmly establish a very strong case against Corona before Congress took its

regular Lenten break.

Maneuverings

But the six-week recess proved fateful as Malacaang moved to secure the votes of senators it deemed wereundecided or leaning towards acquittal. Sen. Miriam Defensor-Santiago revealed that during the break, the

Aquino administration dangled pork barrel to lure the members of the impeachment court to convict Corona.

Earlier, the defense team alleged that Executive Secretary Paquito Jojo Ochoa Jr. offered at least Php100

million in soft projects to senators. Government denied these claims.

What was clear was that President Aquino used the massive resources, machinery and inuence of the

Executive to pin down Corona. Amid reports that the INC was lobbying senators to acquit Corona, the President

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himself held a one-on-one meeting with the religious groups leader Eduardo Manalo to explain that the

impeachment was part of the administrations reform agenda.

The smoking gun in the trial was given by Conchita Carpio-Morales, Aquino-appointed Ombudsman and a

personal foe of Corona. Citing a report by the Anti-Money Laundering Council (AMLC) and assisted by the

Commission on Audit (COA), Morales disclosed that Corona maintains 82 dollar accounts worth US$10-12

million left undeclared in his SALN, which the Senate pounced on.

Consequently, Corona was forced to admit not declaring in his SALN some US$2.4 million in four dollaraccounts while signing a waiver to let authorities probe the said dollar accounts if they were ill-gotten. He also

dared his accusers and all high-ranking government ofcials to sign a similar waiver. But this did not prevent

his conviction as the Senate, echoing the arguments of Malacaang and the prosecution, argued that non-

disclosure of wealth (even if it is not ill-gotten) is a culpable violation of the Constitution.

Aquino/LP agenda

However, the rhetoric ofdaang matuwidand reform agenda was quickly betrayed by developments as soon as

the Senate voted 20-3 last May 30 to convict Corona. An offshoot of the impeachment was the controversial

waiver challenge, which Aquino and the LP have suddenly dismissed as unnecessary even as the President was

reminded of his campaign promise to sign such a waiver.

Despite widespread public clamor for government ofcials to waive the condentiality of their bank accounts,

only a handful heeded the call, including the progressive party list groups. Aquino, his Cabinet ofcials and

leading LP members who initiated and directed the impeachment campaign continue to ignore the clamor,

exposing the hypocrisy, to say the least, of their avowed campaign for transparency and accountability in

pushing for the ouster of Corona.

Even the certainty that Arroyo will be held to account for her crimes remains in limbo as the administration

continues to mishandle the issue whether due to outright incompetence or calculated scheme to keep Arroyo

and her cohorts around. Until today, only one case initiated by government has been led against the former

President, the 2007 electoral sabotage case, which gives her an opportunity to post bail.

The much stronger case of 2004 poll fraud (Hello Garci scandal) is still not being taken up while the

Ombudsman has downgraded her non-bailable plunder case in relation to the botched US$329-million NBN-ZTE deal to a bailable case of graft and corruption. The Aquino government also does not seem interested

in pursuing human rights cases against the former President for command responsibility in the militarys

murderous Oplan Bantay Laya (OBL) I and II.

Already, there are calls from ofcials such as Senate President Juan Ponce Enrile to allow bail for Arroyo and

let her seek medical treatment abroad, even as the Aquino administration appears to extend her special treatment

by allowing her extended hospital arrest. These developments reveal how the Aquino bloc is apparently still

unprepared to signicantly shake up the countrys system of elite governance with an Arroyo conviction for

plunder or human rights violations. It is also consistent with how the impeachment process was less about

accountability and more about controlling the Judiciary.

For the Aquino clique, the concrete and immediate gain from the removal of Corona is that it now has a free

rein to choose the head of the SC and ensure a more cooperative, if not totally compliant, Judiciary. Coronasouster gives a chilling effect on the appointees of Arroyo even as Aquinos own appointees in the SCSereno,

Bienvenido Reyes and Estela Perlas-Bernaberemain a minority.

At present, the Judicial and Bar Council (JBC) has approved the nomination of 22 candidates that include six

sitting members of the SC, including Carpio and Sereno; and two Executive ofcialsDOJ Secretary Leila de

Lima and Solicitor General Francis Jardeleza, among others. Jardeleza is a former lawyer of San Miguel Corp.

(SMC) of Aquinos uncle, Eduardo Danding Cojuangco Jr. The selection of the next CJ is apparently causing

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contradictions even within the Aquino clique itself, as it considers both the reaction o

Documents

Btalk 2012 Midyear_20120712