MANILA (AFP) – Optimism is soaring that the Philippines is finally becoming an Asian tiger economy, but critics caution a tiny elite that has long dominated is amassing most of the new wealth while the poor miss out.
President Benigno Aquino has overseen some of the highest growth rates in the region since he took office in 2010, while the stock market has hovered in record territory, credit ratings have improved and debt ratios have dropped.
“The Philippines is no longer the sick man of East Asia, but the rising tiger,” World Bank country director Motoo Konishi told a forum attended by many of Aquino’s economic planning chiefs recently.
However economists say that, despite genuine efforts from Aquino’s team to create inclusive growth, little progress has been made in changing a structure that for decades has allowed one of Asia’s worst rich-poor divides to develop.
“I think it’s obvious to everyone that something is structurally wrong. The oligarchy has too much control of the country’s resources,” Cielito Habito, a respected former economic planning minister, told AFP.
He presented data to the same economic forum at which Konishi spoke, showing that in 2011 the 40 richest families on the Forbes wealth list accounted for 76 percent of the country’s gross domestic product (GDP) growth.
This was the highest in Asia, compared with Thailand where the top 40 accounted for 33.7 percent of wealth growth, 5.6 percent for Malaysia and just 2.8 percent for Japan, according to Habito.
According to the Forbes 2012 annual rich list, the two wealthiest people in the Philippines, ethnic Chinese magnates Henry Sy and Lucio Tan, were worth a combined $13.6 billion.
This equated to six percent of the entire Philippine economy.
In contrast, about 25 million people, or one quarter of the population, lived on $1 a day or less in 2009, which was little changed from a decade earlier, according to the government’s most recent data.
Some of the elite families have dominated since the Spanish colonial era that ended in the late 1800s.
Prominent Spanish names, such as Ayala and Aboitiz, continue to control large chunks of the economy and members of the families are consistent high placers on Forbes’ annual top-40 wealth list.
Their business interests range from utilities to property development to banking, telecommunications and the booming business process outsourcing industry.
Many of the ethnic Chinese tycoons, such as Sy and Tan, got their start soon after the country gained post-World War II independence from the United States.
The tendency for the same names to dominate major industries can be partly attributed to government regulations that continue to allow near monopolies and protections for key players.
For decades after independence from the United States in 1946, important sectors such as air transport and telecommunications were under monopoly control, according to a Philippine Institute for Development Studies paper.
Despite wide-ranging reforms since 1981, big chunks of the market remain effective oligopolies or cartels, it said.
Habito said the path to riches for the few is also helped by a political culture that allows personal connections to easily open doors.
The Aquino government’s mantra since succeeding graft-tainted Gloria Arroyo’s administration has been good governance and inclusive growth, and their efforts have been applauded by the international community.
The government is spending more than $1 billion this year on one of its signature programmes to bridge the rich-poor divide.
The conditional cash transfers programme will see 15 million of the nation’s poorest people receive money directly in exchange for going to school and getting proper health care.
However Louie Montemar, a political science professor at Manila’s De La Salle University, said little had been done at the top end to impact on the dominance of the elite.
“There’s some sense to the argument that we’ve never had a real democracy because only a few have controlled economic power,” Montemar told AFP.
“The country dances to the tune of the tiny elite.”
Nevertheless, the government and economists say there are many other reforms that can be taken to bring about inclusive growth.
Analysts said the most direct path out of poverty was improving worker skills, using higher tax revenues to boost spending on infrastructure, and rebuilding the country’s manufacturing sector.
To this end, many economists endorse the Aquino government’s cash transfer programme as well as reforms to the education system, which include extending the primary and high school system from 10 to 13 years.
But for people such as mother-of-five Remy del Rosario, who earns about 1,500 pesos ($36) a week selling cigarettes on a Manila roadside, talk of structural reform and inclusive growth mean little.
With her bus driver husband out of work, the family has no savings and her income is barely enough to cover food, bus fare, and prescription medicines.
“Other people may be better off now, but we see no improvement in our lives,” she said.
This series of video clips from a US news agency shows an investigation into underage prostitution in the Philippines. The bar owner is an American, of course. While most prostitution is owned and patronized by Filipinos, it is the foreigner owned bars that attract the attention of authorities and charities. The Filipino owners are too well connected and know how to work the system, who to pay and so on. None of which excuses the foreigners who own these bars and encourage underage prostitution or at the least do nothing to ensure the GROs are over 18.
The point is raised that many of these girls are not happy with being arrested, or ‘saved’. They are doing this to help their families and for many this is the easiest and most effective option. You won’t read much about efforts to change the status quo in the country and create more employment opportunities for the masses. The rich who own everything like it just as it is. Their kids go to top schools and have great career prospects. The 60% or so of the population on or below the poverty line have few choices. Because the rich own all the land the focus for generations has been on agriculture, yet there is not enough arable land to justify this. They should have gone into manufacturing like their Asian neighbours, providing jobs for the masses. They relied on foreign investment back in the Marcos days but since 1986 that investment has declined. Why? Too hard to do business here and not get ripped off, have to pay corrupt officials or jump through hoops, have local partners who itch to take the lot and so on. At least Marcos used his dictatorial reign to improve foreign investment and jobs while filling his own pockets. Too many at the top of late, with the notable exception of the current President, have carried on the pocket filling but not passed anything on to the masses, just their cronies.
The sex trade does exist int he Philippines and it does, sadly, include children and that can never be condoned. Keep in mind though the one sided presentation of this problem. Foreign bar owners and customers are a fraction of the trade. The vast majority of prostitutes work for Filipino bosses and service Filipino clients. But that is not as ‘newsworthy’ as one fo the former colonial ‘masters’ getting his come-uppance, is it?
The price of a tank of cooking gas (Shellane, Gasul, Catgas and other brand names for LPG 11kg bottles) varies widely across the country. From a low of P690 around Manila to P1,000 delivered to your home in some of the farther provinces with an average price of P800. (US$20 approx) If you don’t use lpg then maybe you burn charcoal or rice husks, coconut husks or corn husks, depending on what is grown where you live. This is why most Filipino homes include a ‘dirty kitchen’, one situated outdoors where the smelly stuff is cooked.
Despite the fact the Philippines produces plenty of LPG itself, the price has shot up in recent years. Petrol (gasoline) has also increased beyond the reach of many as wages simply haven’t kept pace with inflation. Yet still there is a huge ‘middle class’ of over 20 million Filipinos who seem to be able to not only keep the existing malls open and in business, but also patronise the many new malls forever springing up all over the islands. Anyone care to comment?
From the Bournemouth UK Daily Echo, reprinted without permission but in the hope it will help!
These people are trying to help the Filipinos and are right in the middle of it, floating side by side with those they came to help. Let’s help them if we can, OK?
houses were destroyed by flood in suburban Montalban town, east of Manila, Philippines
I have to confess I am surprised there are still fish this big to be caught in Philippines waters. These come from off Bacolod. Further north there are simply too many people dynamiting reefs and poisoning the water with arsenic and taking all the little reef fish and selling them in the market. The little fish are what feed the bigger ones, or grow into them and if they are all taken, there is nothing left to keep the eco-system going.
I understand Dong’s dilemma. he has to feed his family today and let tomorrow take care of itself. Not very long sighted but sadly the poor don’t have the luxury of such vision. The catholic church inc, on the other hand, does. The priests and bishops live in relative luxury, at the very least not having to worry where the food to feed their illegitimate families comes from. They stop the poor from being able to manage their lives in a modern way with contraception, yet they have no problem breaking their own rules of celibacy, let alone the trust parents place in them when they leave them alone with their kids.
Still, the fish is a symbol of Christianity, I believe. Maybe this is symbolic, that there is hope for the fish, the fishermen, the people and the religion they hold so dear. One hopes so.
The other day there was approval given to raise the cost of electricity in Cebu. The reasons for this are many but a cynic would argue it is because the provision of electricity is in private hands. Sticky, rich, powerful hands. They need the money, simple as that. The Philippines is the most expensive place in South East Asia for electricity and part of that is due to the way it is generated. Some is made via coal-fired plants but most comes from diesel generators. Very expensive to run but with the fall in oil prices recently one would expect electricity costs to drop. No, one wouldn’t because one is not that naive, is one?
The Philippines should be able to generate thermal power like Iceland does, but they don’t. They could use wind and solar power more, but they don’t. I guess they don’t want to invest in the infrastructure and no foreigner will. Do you blame them? The German company that built NAIA 3 is still waiting for the millions the Arroyo government reneged on paying them. Who can trust anyone here if that is the message the government of the day sent out? The same government that got into power funded by donations from the Chinese government! Then they nearly sold their telecommunications upgrade to the Chinese so some rich son of a powerful political family could get his share of the billions being thrown around.
Make no mistake, this place is as corrupt as they come. Just accept it and either get your share or play the game their way. If you complain you might as well go home because you won’t last. It’s their game, they just like it when you pay for the ball, the uniforms, the oranges at half time and then say nothing while they cheat to victory. Hahahaha, welcome to da Pilipeens.
With the Philippines withdrawing two naval vessels from the contested South China Sea region due to bad weather, it is hoped tension between the Philippines and China will ease. While China will ultimately win because it is much bigger than the other players in the game, it is good to see the Pinas giving the Chinese a run for their money.
A glance at the map clearly shows China being well away from the islands compared to Vietnam, Malasia, Brunei and the Philippines. What Taiwan hopes to achieve is beyond me but I guess they want the oil too. Or maybe they feel it will help their cause if China invades should they be seen siding with the anti-Chinese group. I won’t say pro-American but it is obvious the other contender in this game of one-upmanship is the USA.
In the 21st century I predict China will get more and more powerful and the USA weaker and eventually isolationist and withdrawn. After centuries of suffering under emperors then decades of iron rule under the Communists who now realise technology is not letting their people stay in the dark and ignorant of decent standards of living, the billion plus people of China will soon be as dominant a force in the world in this and coming centuries as Anglo-Europeans were in previous ones. All I can say is Nei Ho Mah!