Bello Et. Al - State of Fragmentation

State of Fragmentation

The Philippines in Transition

Walden Bello Kenneth Cardenas Jerome Patrick Cruz Alinaya Fabros Mary Ann Manahan Clarissa Militante Joseph Purugganan Jenina Joy Chavez

Copyright Published 2014 by Focus on the Global South and Friedrich Ebert Stiftung With offices at

Focus on the Global South - Philippines #19 Maginhawa Street, UP Village Diliman, Quezon City, 1011 Philippines +632 433 1676

Friedrich-Ebert-Stiftung (FES) in the Philippines Unit 2601, 26/F Discovery Centre 25 ADB Avenue, Ortigas Center 1600 Pasig City, Metro Manila +632 634 6919 | 637 7186 to 87

No part of this book may be reproduced by anyone unless there is an expressed permission by the copyright holders; if any part of this book shall be cited and/or quoted in any publication or paper/report, online or print, proper acknowledgement and/or attribution should be given to the authors and copyright holders. Overall Editor and Project Coordinator

Jenina Joy Chavez Copy Editor

Clarissa V. Militante Additional Research

Carmina Flores-Obanil Princess Celestino Editorial Assistant

Mary Joy Manahan Cover and book design/layout

Amy Tejada

Table of Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 The Philippines: Failed State, Failed Economy?

Chapter 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Urban Property Development and the Creative Destruction of Filipino Capitalism

Chapter 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Industrial Decay: The Hollowing-Out of Manufacturing and Employment

Chapter 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 Agrarian Atrophy and the Changing Countryside

Chapter 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 A Labor Exporting State: The Globalization of the Philippine Migration Model

Chapter 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159 A Fragile Frontier: Environmental Vulnerability and Conflicts over Natural Commons

Chapter 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195 Shantytown Nation: The Urban Underclass and Struggle for Space

Chapter 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223 Population Pressure, Poverty, and Development

Chapter 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247 Three decades into People Power, Whither Philippine Civil Society, Social Movements, Citizens?

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273 Acronym . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287 About the Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291 Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297

introduction

The Philippines: Failed State, Failed Economy?

For many Filipinos, the last 40 years is a period best forgotten. In the earlier half of said period, the country was saddled with a dictatorship for 14 years; then it fell from the status of having the second most developed country in Asia after Japan to that of “sick man” of East Asia, plagued by low economic growth and burgeoning poverty. During the first three years of the presidency of President Benigno Simeon Aquino III, the national mood seemed to have changed. At the end of 2012, the Philippines appeared to have fared well in terms of its economic performance. It registered 7.4 percent growth rate in the last quarter—said to be the best in Southeast Asia during that time—while the GDP growth rate came to an average of 6.6 percent for the whole year. Like the rest of East Asia, the country was able to avoid the worst effects of the global economic crisis occasioned by financial implosion that had kept Europe and the US in a state of stagnation for the fifth year in a row.

Evading the global financial crisis What saved the Philippines and other countries of East Asia from the first phase of the global financial crisis was most likely their having experienced the Asian financial crisis of 1998, when the region was wracked by a chain reaction of massive inflows of speculative capital, overinvestment, collapse in real estate prices, capital flight, and speculative attacks on regional currencies. Burned by the crisis, the Philippine state built up billions in dollar reserves to defend against 5

S t a t e o f Fr a g m e n t a t i o n : T h e P h i l i pp i n e s i n T r a n s i t i o n

future speculative attacks, while Philippine banks became cautious about their exposure to the complex financial instruments being devised by US banks called derivatives. True, when the financial crisis brought down the real economies in the North in 2008 and 2009, the East Asian economies, which have been greatly dependent on northern export markets, felt the impact. However, by 2010, owing partly to stimulus programs in the Philippines and its neighboring economies, like China, the worst appeared to be over, and growth resumed, even as the crisis deepened in Europe and the US. In 2012, trouble appeared to recur, as China’s growth slowed down, as did Korea’s, a sign that these East Asian economies were not permanently immune to the deep stagnation in US, Europe, and Japan. Southeast Asia was also dependent on these markets, but allegedly owing to a shift to domestic demand as engine of growth, the OECD predicted that the Philippines and the rest of the region would continue to register “robust” growth in the midst of what was then seen as a prolonged global crisis.1

Fragile growth Growth statistics were not the only cause for optimism in the Philippines in the first years of the Aquino administration. The country’s political leadership was widely seen to be taking the anti-corruption campaign seriously, with former President Gloria Macapagal-Arroyo under hospital arrest and awaiting prosecution, and her appointee, former Chief Justice Renato Corona, having been ousted in 2012. Moreover, Congress passed the extremely contentious Responsible Parenthood and Reproductive Health Bill, which was seen as necessary to bring down the country’s high fertility rate that most development analysts saw as spoiling the best laid development plans. In explaining the growth statistics, government officials like Finance Secretary Cesar Purisima stressed how this was a result of the administration’s focus on “good governance.” Certainly, there was no disputing the fact that new confidence among both domestic and foreign quarters was triggered by the administration’s anti-corruption campaign, and there was little doubt that the Aquino government was also serious about containing poverty, as seen 6

i n t ro d u c t i o n

S t a t e o f Fr a g m e n t a t i o n : T h e P h i l i pp i n es i n T r a n s i t i o n

in the inclusion of over three million families in its Conditional Cash Transfer Program. The Asian Development Bank toasted the CCT as the country’s most successful anti-poverty program ever, one which was a model for other countries.2 However, these were factors that could affect the growth rate only in the medium or long-term. A central factor in explaining the positive growth rate would be the combination of accelerated public works spending throughout the country and the higher inflow of remittances from overseas Filipino workers. In 2012, remittances were expected to rise by seven percent over the U$20.1 billion that came in 2011.3 Equal to some 10 percent of the country’s gross domestic product, remittances fuelled the domestic spending that made up for the weakness of the country’s key export markets in the US, Europe, and Japan.

Annus horribilis That the Aquino administration, despite its good governance aura, had been skating on thin ice became evident after the elections of May 2013, which the ruling coalition handily won. Positive news on conventional growth statistics and foreign investors’ assessments continued to mark the next seven months following the elections. The seven percent plus GDP growth rate and the administration’s reputation for good governance obtained for the Philippines the prized “investment grade” status from the key rating agencies, Standard and Poor’s, Fitch, and Moody’s. But what should have been a moment of triumph was banished by a series of reversals. The most serious was an exposé, shortly after the May elections, of how a number of senators and members of Congress had been receiving massive kickbacks from their pork barrels (or “priority development assistance funds”) by channeling funds meant for infrastructure or schools to fake projects and fake non-governmental organizations. While the president and his key aides were not implicated in the scandal, they initially defended PDAF. But when they changed course and called for the abolition of the congressional pork barrel, this was seen as an opportunistic move to ride the wave of popular sentiment against pork barrel as a patronage mechanism. The Philippines: Failed State, Failed Economy?

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Next happened super typhoon Yolanda, aka Haiyan, in November 2013, which not only flattened Tacloban City and left a trail of destruction through the Visayas region but also exposed how ill-prepared the administration was in efficiently managing disaster relief operations. Then there was Meralco’s ‘Christmas gift’ to its 5.3 million customers in Luzon—a 4.5 pesos per kilowatt hour increase in its rates. The increase was triggered when eight of its power suppliers went offline on unscheduled outages, at the same time that the Malampaya natural gas pipeline was shut down for maintenance, forcing Meralco to obtain power at a much more expensive price than usual from the Wholesale Electricity Spot Market. As popular anger built up against Meralco’s rate increase and the strong evidence that its power suppliers had colluded to raise electricity rates at the spot market, the president remained aloof from the crisis, bringing on charges that he’s insensitive to consumer needs and even of being beholden to the big families that run the power sector, like the Lopezes.4 Though less dramatic, trends related to the economic prospects of the country would have equally ominous significance. In the middle of 2013, the National Statistics Coordination Board released figures that showed that 27.9 percent of the population lived below the poverty line, a figure that had been practically unchanged since in the first half of 2009 (28.6 percent) and first semester of 2006 (28.8). These figures are all the more disturbing because globally, the poverty situation has actually improved since 2005. According to the World Bank, the proportion of people living in extreme poverty—on less than $1.25 a day—fell in every developing region from 2005 to 2008. While the Aquino administration could pin most of the blame on previous administrations, it was not possible to escape some blame. Obviously, despite the CCT coverage of over three million families that constituted the poorest of the poor, the government’s flagship anti-poverty program was making little headway in reducing poverty. The CCT was not the only program in trouble. During the briefings on the 2014 budget, the Agrarian Reform secretary was forced to admit that agrarian reform, one of the leading programs to address poverty and inequality, would 8



not be completed by the end of June 2014. Secretary Gil de los Reyes said that the backlog in undistributed land stood at almost 700,000 hectares; 450,000 of which were private lands—some of the most undistributed lands in the country—subject to compulsory acquisition. According to him, it would take up to the end of June 2016 to complete the distribution process, two years past the deadline set by law.5 A faltering land reform program paralleled the paucity of initiatives aimed at altering the structure of the economy to place it on a sustainable developmental path. Indeed, one could not say that there was a macroeconomic strategy for development, though one of the key preconditions of a strategy, effective family planning, might be said to have been put in place by the passage of the Reproductive Health Bill. The 2010 Medium Term Development Plan talked about “inclusive growth,” but that was a mantra imported from the latest World Bank and United Nations thinking, not a strategy for how to manage and deploy scarce resources in the most effective manner to achieve development.6More broadly, one can say that the administration would still have to decisively break from the old path of neoliberal restructuring and globalization.

No break with the past Begun with the “structural adjustment” imposed on the country by the World Bank and the International Monetary Fund in the 1980s, neoliberal restructuring reached its apogee during the presidency of Fidel Ramos (1992-1998). Though it began to run into problems, neoliberal restructuring continued to serve as the default economic policy during the years spanning the presidencies of Joseph Estrada (1998-2001) and Gloria Macapagal-Arroyo (2001-2010). The neoliberal path, followed in varying degrees by the five administrations prior to the current one, had four key features: prioritization of debt repayment, export-orientation in both agriculture and industry, and neoliberal reform, the key thrusts of which were deregulation, privatization of production and services and trade liberalization, and massive labor export to address local unemployment and underemployment as well as increase national income through remittances. The Philippines: Failed State, Failed Economy?

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This path did not lead to sustained development. Instead, it resulted in the emasculation of government as an economic actor; eroded agriculture and industrial base by uncontrolled importation; and made the Philippines vulnerable to external economic and political developments. A key indicator of the failure of this economic path has been the anemic growth rate; this has averaged four percent over the decade, 2000-2010, much below the seven to eight percent needed to launch sustained growth, raise per capita incomes, and roll back poverty. Even more worrisome, the national economy, driven mainly by globalization, has lost its coherence; industry, agriculture, education, and employment also lost theirs with one other. The state’s role as passive bystander exacerbated this trend, as it has been unable to exercise its planning function owing to the anti-state bias of neoliberalism. The state of poverty and inequality was probably a better index than growth statistics on the health of the economy. The indicators in this area were mixed. In 2012, there were statistical improvements in hunger rate. The proportion of Filipino families experiencing involuntary hunger fell to 16.3 percent in the fourth quarter of 2012, from 21 percent in the third quarter. The expansion of the CCT program probably has had the effect of reducing the level of hunger. As for the poverty rate, with 27.9 families living below poverty line, it remained virtually unchanged in 2012 from the figure six years earlier. The figure was, as one commentary noted, “the highest among emerging Asian economies.” As for inequality, it was likely that the Philippines’ gini coefficient, the most reliable index of inequality, was still largely the same as in 2009, when it stood at 44, the highest in Southeast Asia.7

Debt-service economics One cannot understand the Philippines’ development predicament without going back to a momentous decision made in the late `80s, under pressure from its foreign creditors, to prioritize debt repayment. The so-called “model debtor strategy” adopted under the administration of Corazon Aquino, the current president’s mother, was cast in iron by Executive Order 292, which provided for the automatic appropriation of the full amount needed to service the foreign debt. It is worthwhile to note that it is only the Philippines with such a provision in its legal code. 10



This resulted in investment, which was, along with consumption, the key engine of growth becoming sorely constrained since government was the biggest investor in the economy. Government resources instead flowed out of the country in the form of debt service payments. In the critical period 1986-93, some eight to ten percent of GDP left the country yearly in the form of debt service payments, with the total amounting to nearly $30 billion.8 Even with this massive outflow, the Philippine debt was not reduced and in fact rose from $21.5 billion in 1986, when Aquino assumed power after the overthrow of Marcos, to $29 billion in 19939 because of the onerous terms of repaying debt, such as variable interest rates and the practice of incurring new debt to pay off the old. This translated into radical increase in interest payments as percentage of total government expenditures, from seven percent in 1980 to 28 percent in 1984. Capital expenditures, on the other hand, plunged to 16 percent from 26 percent. Debt servicing, in short, became, alongside wages and salaries, the number one priority of the national budget, with capital expenditures being deprived of outlays. The radical stripping away of capital expenditures represented by these figures would explain the stagnant one percent average yearly GDP growth in the `80s and the 2.3 percent rate in the first half of the `90s.10 The savage reduction of government capital expenditures translated into a steep reduction in the ratio of investment to GDP. From nearly 30 percent in the early ‘80s, under the Marcos regime, it dropped to 17 percent in the mid`80s and never really recovered, staying at an average 20-22 percent in the 2000 decade.11 Contrary to neoliberal theorists who saw no need to worry about the pullback in government investment, the private sector did not step into the gap. This trend of continuing outflow of government resources in the form of payments to creditors and the shrinking of capital expenditures continued in the first years of the new century. In 2005, according to the World Bank, 29 percent of government expenditures went to interest payments to both foreign and domestic creditors and 12 percent to capital expenditures.12 This configuration of government spending prompted the University of the The Philippines: Failed State, Failed Economy?

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Philippines School of Economics to complain that the budget left “little room for infrastructure spending and other development needs…”13 With government capital expenditures remaining low, total fixed investment remained anemic during the reign of Gloria Macapagal-Arroyo, running at only 14 percent of GDP, which the World Bank noted was “substantially lower than during the deep recession in the first half of the ‘80s and in most other larger East Countries.”14 The pattern was unchanged during the first three years of the Aquino administration; 20-22 percent of the budget was allocated to debt service. Infrastructure spending remained constrained, as the administration reviewed public works contracts the previous regime had entered into to weed out corrupt agreements. The Philippine experience was a painful lesson in the economics of debt. It was also a grim reminder of the fallacy of neoliberal theory. Government spending does not crowd out private investment. In fact, the opposite has been true: it “crowds in” private investment. The priority placed by government on living up to the terms of foreign debt was a central factor in the behavior of foreign investment towards the Philippines. Along with structural adjustment and trade liberalization, the debt economy contributed to the country’s failure to take off at a time when the massive transfer of manufacturing facilities to Southeast Asia was taking place, resulting in a regional boom everywhere, except in the Philippines. With poverty engulfing close to a third of the population, the Philippines was a depressed market as far as Japanese investors were concerned, and they were not about to sink much money into it. Between 1987 and 1991, for instance, a paltry $797 million in Japanese investment entered the Philippines, while Thailand received $12 billion.15 When one included Korean and Taiwanese investment, which usually tracked Japanese investment, the gap would be even greater. Thailand received $24 billion in investment during the same period, or 15 times the amount invested in the Philippines, which came to $1.6 billion.16“ This difference in the flow of investment from the three countries,” Kunio Yoshihara rightly observed, “produced a significant disparity in growth performance of the two countries [the Philippines and Thailand] during the period.”17 12



The country continued to lag behind its dynamic neighbors in foreign investment inflows well into the recent Aquino period, despite positive commentary in the foreign press about the president’s anti-corruption reforms. At $1 billion, foreign direct investment in 2012 was half its level in 2007 and was well below the $1.5 billion in remitances that flowed in every month.18

Globalization: disintegration and integration Debt service economics cannot be said to be solely responsible for the Philippines’ failure to launch. The globalization of the Philippine economy via neoliberal restructuring was perhaps an even bigger factor. To say the economy was globalized meant it underwent a process of “disarticulation” and “re-articulation.” The traditional sectors of the economy—agriculture, industry, and services—were disarticulated from one another or “dis-integrated” at the national level and selected dimensions of the economy were rearticulated or “integrated” at the global level. In the succeeding sections, the disarticulation of agriculture, industry, and services will be examined closely followed by the articulation of the economy at the global level with the rise to prominence of the electronics sector, the “business processes outsourcing” sector, and the labor export economy.

Agriculture’s decline The decline of agriculture was one of the most distressing trends in the economy over the last three decades. Contributing to this were several factors: decline of government support for agriculture owing to structural adjustment, liberalization of agricultural trade, a protracted agrarian reform program, and the impact of climate change. For a long time, the sector was starved of government support owing to the draconian structural adjustment forced on the country following the `80s debt crisis. From 5.5 percent of the total budget during the Marcos regime, funding dwindled in succeeding administrations, coming to 3.6 percent during The Philippines: Failed State, Failed Economy?

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the nine-year reign of Gloria Macapagal Arroyo.19 By the end of the Arroyo administration, the area under irrigation, at 1.3 million out of 4.7 million hectares of cultivated cropland, was practically the same as that under Marcos a quarter of a century earlier. Crop yields sagged across the board; the average of 2.8 metric tons of rice per hectare was way below yields in China and Vietnam.20 Good roads are key to agricultural production but by the end of the `90s, only 17 percent of the Philippines’ road network was paved, compared with 82 per cent in Thailand and 75 per cent in Malaysia.21 At the same time that structural adjustment was reducing state support for agriculture, trade liberalization undertaken under the World Trade Organization’s Agreement on Agriculture, which the Philippines signed in 1995, mandated the elimination of quotas for agricultural commodities, resulting in a massive inflow of foreign imports. The victims of liberalization included the corn, vegetable, and poultry sectors. Perhaps the most cogent indicator of the ruinous impact of trade liberalization was the fact that from being traditionally a net food exporting country, the Philippines became a net food importing country from the mid-`90s on. A third factor hampering agricultural production and productivity was the very slow pace of agrarian reform. One of the most promising initiatives of the administration of Corazon Aquino was the Comprehensive Agrarian Reform Program in 1988. Yet, the progress in land distribution was uneven, with landlords taking advantage of loopholes in the law to slow down the reform. The uncertainties, confusion, and conflicts triggered by the protracted process thwarted production and productivity. Land reform in Taiwan, Korea, and Japan succeeded in terms of social justice and productivity because the reform measures had solid backing from government, gave definitive legal ownership to tenant farmers, had more than adequate financing, and provided effective support services. CARP had none of these, resulting in only 17 percent of the 1.5 million hectares of private land targeted for reform getting redistributed by 2008, or 20 years after the program had began. In June 2009, feeling the pressure from agrarian reform advocates, Congress passed the Comprehensive Agrarian Reform Extension with Reforms Act, which extended the land reform program to 2014 and provided PhP150 14



billion for land redistribution and support services. Despite CARPER, however, land redistribution continued with its slow pace, and by the middle of 2013, some 700,000 hectares of prime agricultural land, as noted earlier, remained undistributed. This was a task that the administration admitted would not be completed by the end of June 2014, the deadline for land acquisition and distribution set by law.22 Providing a counterpoint to this record of underperformance was a Supreme Court decision mandating the distribution to tenants of Hacienda Luisita’s 10,000 hectares belonging to the president’s relatives. Implementation of the Supreme Court decision, however, has also been slow and fraught with obstacles posed by the Hacienda Luisita management. The sluggish pace of agrarian reform implementation has not been simply a case of bureaucratic inefficiency or due to resistance by landed interests. The dominant view in governing circles in recent years is that agricultural development is principally a productivity issue and not a social justice concern, that what is important is making the investments in physical infrastructure, marketing, and credit that will unleash the potential of agricultural entrepreneurs. To agrarian reform advocates, the problem with this perspective is that production cannot be separated from justice. The main element that would unleash the productive potential of our millions of farmers is security of tenure over their land. Moreover, poverty-stricken tenant farmers and rural workers who have long been chained in feudal relations need assistance from government to be transformed into vibrant small farmers responding to market incentives. Farmer entrepreneurs are not created overnight. This is why land reform advocates lobbied hard for the inclusion of Section 13 of CARPER, which provided that at least 40 percent of all appropriations for agrarian reform during the five-year extension period would be set aside and made available for support services. If there is one thing that can be learned from the experiences of successful agrarian reform in Taiwan, Korea, and Japan, pro-reform advocates contended, it is that land redistribution, secure property rights, and production assistance or subsidies for support services make up the formula for a dynamic agricultural sector. The absence of one of these factors was what torpedoed many other land reform efforts in the Philippines and elsewhere. The Philippines: Failed State, Failed Economy?

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But the problem goes beyond some administration technocrats’ narrow focus on productivity. Much development thinking in the country today is centered on improving the atmosphere for business activities in the city, promoting the dynamism of the real estate industry, supporting the growth of financial services, and attracting more investment in Business Process Outsourcing activities. Development is anchored on servicing the needs of a growing globalized middle class. In this mindset, agriculture is an afterthought, and food security is one that can be met with increased imports. In this paradigm, the over 50 percent of the population that live in the countryside are not regarded as a dynamic source of development, the main engine of which is seen to lie in urban economic activities fuelled by foreign investment and OFW remittances. From this perspective, the bulk of the population that remains in agriculture is “excess baggage” constituting a drag on economic takeoff. But the neglect of agriculture is not simply a development paradigm problem. The truth of the matter is that the most dynamic sectors of the economic elite appear to have lost interest in agriculture as source of wealth. As sociologist Kenneth Cardenas argues later in this volume, Filipino capitalists are going back to land as source of wealth, but instead of using it as base for a rural, cash-crop-oriented economy, it is being used for urban development. The highest rate of returns on investment comes from shopping malls, office buildings, and middle and upper class housing. Yet even as the most energetic sectors of the upper class have moved into urban real estate development, seeking to capture demand for housing fueled by the billions of dollars in OFW remittances, their less enterprising brethren cling on to rural land, less and less for production and more and more for speculation or security. Increasingly, it is mainly small producers and rural workers that have an interest in making a living from farming, and even then, large numbers of them are abandoning the countryside for what they see as the lack of opportunities resulting from persisting inequalities and the absence of incentives. Their logic is compelling: better to take your chances in Saudi Arabia than scratch a living from land from which you can get evicted any time. Finally, a key factor negatively affecting agriculture is climate change. This became especially obvious in 2011-2013, when extreme weather events not only took thousands of lives but caused tremendous destruction of crops. Some 16



of the country’s worst floods, resulting from non-stop rains in the middle of 2012, destroyed a staggering $57 million worth of crops.23 Then in December of that year, Typhoon Pablo, aka Bopha, struck a part of the Philippines, the lower half of Eastern Mindanao that had not been hit by a typhoon in recent decades, causing $5 billion worth of damage to 101,356 hectares of coconut plantations and taking a thousand lives.24 Even more ferocious was Typhoon Yolanda, aka Haiyan, which was estimated to have inflicted some $6 billion worth of damage to the economy and taken close to 10,000 lives.25

De-industrialization The combination of trade liberalization, structural adjustment, and absence of planning proved fatal to Philippine manufacturing. With liberalization under structural adjustment, the effective rate of protection for manufacturing fell from 44 to 20 percent.26 And even this was eroded when, in a radical move, the Ramos administration brought down tariffs across the board to the zero to five percent range. The list of industrial casualties included paper products, textiles, ceramics, rubber products, furniture and fixtures, petrochemicals, beverages, wood, shoes, petroleum oils, clothing accessories, and leather goods. The textile industry shrank from 200 firms in the late `70s to less than 10 today. 27 The shoe industry centered in Marikina is struggling for its life due to the surge in Chinese-made shoes from trade liberalization and smuggling.28 Not surprisingly, the contribution of Philippine industry to the Philippines’ Gross Domestic Product has declined in the past three decades, from 39 percent in 1980 to 32 per cent in 2009. A major factor was the decrease in the share of manufacturing in industrial GDP, which fell by more than four percentage points from its 1980 levels.29 Perhaps the best summation of what transpired came from a proponent of liberalization who said that Philippine industry was “unable to adjust to a less protected environment, resulting in the curious phenomenon of ‘de-industrialization’ at a low level of economic development.”30 More direct was judgment of a former head of the Department of Finance: “There’s an uneven implementation of trade liberalization, which was to our disadvantage.”31 While consumers may have benefited from tariff cuts, “it has killed so many local industries…”32 The Philippines: Failed State, Failed Economy?

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Privatizing government services Privatization of key services provided by the government was a key thrust of the neoliberal restructuring of the Philippines, especially under the Ramos administration. Water service delivery. During that period one of the showcases of privatization was that of the 119-year-old Manila Waterworks and Sewerage System in 1997, which was at that time the biggest water-sector privatization in the world. Two of the biggest local conglomerates were involved, along with their foreign partners: the Lopez Group and the Ayala group. The terms of the deal were that the Maynilad, belonging to the Lopez Group, would take charge of water provision in the East Zone of Metro Manila while Manila Water of the Ayala Group would take over the West Zone. The terms were that, using government-owned infrastructure, the two concessionaires would operate the system, draw profits from this, and then turn the assets and management of the system back to the government after 25 years. By 2000, however, the privatization was in trouble. Maynilad wanted to walk out of the deal, citing force majeure owing to its borrowing in dollars that became onerous to service after the peso collapsed during the Asian financial crisis. However, other critics pointed out that the reason for Maynilad’s bad situation was its unrealistic very low bids in order to get the concession, also a practice of Manila Water.33 The low original bids and other miscalculations led the concessionaires to petition changes in the original agreement, which were granted by the government. From the consuming public’s point of view, the most damaging of these concessions was the continual readjustment of prices. Price increases became a feature of the water privatization experience in Metro Manila. In five year’s time, from a pre-privatization amount of 8.78 pesos, prices were readjusted six times and increased more than 500 percent for Manila Water and 10 times, or more than 100 percent, for Maynilad, making Manila consumers the victims of some of the highest costs of piped water in the Asian region, outranking costs in Singapore and other developed countries.34 18



Energy generation. The fiasco that attended the privatization of water delivery likewise plagued the power sector privatization. On June 8, 2001, President Gloria Macapagal-Arroyo signed RA 9136, the Electric Power Industry Reform Act. The measure set the stage for the breakup of the National Power Corporation and the privatization of all stages of the power industry, from generation to transmission to distribution. The aim was to bring down what were then seen as skyrocketing power rates. Over 12 years later, however, surveys showed that power rates in the Philippines were either the highest or second highest in Asia and ranked among the highest in the world. Brownouts lasting several hours a day plagued Mindanao and the Department of Energy warned of disruptions and shortages in the near future in Luzon. Privatization did not deliver in terms of lower prices and greater efficiency in many ventures, including the corporate takeover of Manila’s water supply, but EPIRA turned out to be the most spectacular failure in privatization. A key aim of EPIRA was to bring about a free market in the power market. Instead, it resulted in shifting energy generation from the original monopoly structure to an oligopoly structure. For instance, generating capacity in the Luzon grid is now highly concentrated among three major groups: San Miguel, 30 percent; Aboitiz, 17 percent; and Lopez, 15 percent.35 It is estimated that these groups control 52 per cent of energy generating capacity in the whole country.36 Moreover, the cross-ownership provision of EPIRA allowed for vertical integration of generation and distribution, resulting in an even more monopolized structure of energy provision in this country. EPIRA was supposed to bring about massive investment into electric generation capacity, yet there was only a 2,223 MW net increase in installed generating capacity, and this was mostly committed before EPIRA had taken effect.37 Given the fact that the country may need a total additional capacity of 14,400 MW in the next few years, many say this speaks badly of the private sector’s ability to meet the country’s needs under the framework of EPIRA. After nearly 12 years, EPIRA has not brought about the efficiency in power distribution and lower electricity rates that its sponsors promised. Like most The Philippines: Failed State, Failed Economy?

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other neoliberal schemes that had sought to expand the reach of the private sector and dismantle the state sector in the belief that this would allow the market to “work its magic,” it brought about the worst of all possible worlds: skyrocketing power prices and a powerful oligopoly that didn’t care about gouging the consumer. The failures of EPIRA have not slowed down the privatization process. In the biggest single privatization of hydropower generation in the last few years, the Magat Dam was handed over to a partnership between SN Power of Norway and the Aboitiz group, a deal that was facilitated by a $100 million loan from the World Bank’s International Finance Corporation. SN Power also acquired control of two other hydropower dams, Binga and Ambuklao.38 In another controversial development, the Supreme Court, in October 2012, approved the sale of the 218-megawatt hydroelectric power plant of the Angat Dam in Bulacan to Korea Water Resources Development Corporation (K-Water), a company owned and controlled by the Korean government.39 Ten years after the process of privatization began, the Department of Energy’s 19th Status Report on EPIRA Implementation asserted, “The government may need to involve itself once again in power generation to avoid power shortages in the future and keep hold of the current momentum being enjoyed as an investment attractive economy.“40 If this assessment of the failure of the private sector is correct, then the country faces a major problem. Needless to say, getting government involved again in energy generation is going to be a real challenge since only some 10 percent of the NPC’s former assets remain in its hands.

Globalizing the economy As noted earlier, globalization is a process that disarticulates the national economy and reintegrates parts of it at the global level in accordance with the dynamics of global capital. Matching the disarticulation of its agriculture and industry, the Philippines assumed three key roles in the global division of labor: as an assembler of electronic chips for export; a site for the transfer of Business Processing Activities from the developed countries; and as an exporter of skilled, semi-skilled, and unskilled labor. 20



The emergence of the Philippines as a major electronic chip exporter had its origins in the Marcos period, when the World Bank promoted an exportoriented development strategy that relied on having the transnational corporations to situate the labor-intensive assembly activities in Philippine export processing zones where they could access cheap labor. Since 1997, electronics has consistently accounted for more than half of all commodity exports, amounting to $31 billion in 2010. In that same period, electronics and semi-conductor exports, however, remained essentially flat for over a decade, even as the Philippines became the worst hit among Asian producers by the global financial crisis that began in 2008, owing to a major downturn in demand in major developed country markets. Analysts said, however, that the stagnant state of the industry was not due simply to cyclical trends but to “structural weaknesses,” meaning low investment and innovation.41 Since the electronic and semi-conductor industry was dominated by foreign corporations, this meant that the Philippines was losing its advantage as a location for cheap-labor assembly operations. A much-ballyhooed new trend was the location to the Philippines of call centers and other business process outsourcing operations of US-based transnational corporations. According to one report, “The Philippines’ share in global Off-shoring and Outsourcing grew to 15 percent in 2008, the third largest around the world. In the same year, the industry contributed 3.6 percent to the country’s GDP and 12.36 percent to exports, in particular, to the export of services.”42 However, those employed in the sector came to only 12,000, contributing only 0.74 of total employment in 2006. While it was widely reported that the Philippines had outstripped India as a BPO hub, other reports put it at a more modest place.43 Moreover, the BPO sector, like the export electronics industry, was dominated by low-value-added activities, notably call centers. The participation by domestic business was generally limited to developing and renting out space to TNCs, with foreign equity representing 92 percent of total equity in 2009.44


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Labor export For all intents and purposes, the most dynamic sector of the economy was labor export. While government authorities were loath to acknowledge this, and there was only perfunctory acknowledgment of its role in the economy in the medium-term development plans, the reality was that it was labor export, with the billions of dollars it was bringing in to support the consumption of families of overseas workers, that was keeping the economy afloat. This country is now one of the great labor exporters of the world. Some 11 percent of its total population and 22 percent its working age population are now migrant workers in other countries.45 With remittances totaling some $20 billion a year, the Philippines ranks fourth as recipient of remittances, after China, India, and Mexico.46 The country’s role as labor exporter cannot be divorced from the dynamics of neoliberal capitalism. The labor export program began in the mid-`70s as a temporary program under the Marcos dictatorship, with a relatively small number of workers involved—some 50,000. The program eventually ballooned to encompass some nine million workers as a result of the devastation of the economy and jobs by the structural adjustment policies imposed by the World Bank and the International Monetary Fund beginning in 1980, trade liberalization under the World Trade Organization, and the prioritization of debt repayment by the post-Marcos governments in national economic policy since 1986. Structural adjustment resulted in de-industrialization and the loss of so many manufacturing jobs; trade liberalization pushed so many peasants out of agriculture, a great number directly to overseas employment; and prioritization of debt repayments, 20 to 40 percent of the annual budget, robbed government of resources for capital expenditures that could have acted as an engine of economic growth. In the role that structural adjustment and trade liberalization played in creating pressures for labor migration, the experience of the Philippines paralleled that of Mexico, another key laborexporting country.47

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The dynamics of the labor export phenomenon, however, cannot be understood solely in terms of the impact of neoliberal structural adjustment. It is intimately related to the accelerated process of globalization, or the integration of production and markets, since the `80s. The freer flow of commodities and capital has been one of the features of the contemporary process of globalization. Unlike in the earlier phase of globalization in the 19th century, however, the freer flow of commodities and capital has not been accompanied by a freer movement of labor globally in the current phase of globalization. After all, the centers of the global economy— both the old sites of accumulation like Europe and the United States and the dynamic new sites like the Gulf States—have imposed ever-tighter restrictions on migration from the poorer countries. Yet the demand for cheap labor in the richer parts of the world continues to grow, even as more and more people in developing countries seek to escape conditions of economic stagnation and poverty, often the result of the same dynamics of a system of global capitalism that have created prosperity in the developed world. The number of migrants worldwide grew from 36 million in 1991 to around 191 million in 2005.48 The aggregate numbers do not, however, begin to tell the critical role that migrant labor plays in the prosperous economies. For instance, the booming economies in the Persian Gulf and Saudi peninsula are relatively lightly populated in terms of their local Arab population, but they host a substantial number of foreign migrant workers, many of whom come from South Asia and Southeast Asia. Indeed, foreign migrant workers are a disproportionate part of the populations of the Persian Gulf states—ranging from 25 percent in Saudi Arabia to 66 percent in Kuwait, to over 90 percent in the United Arab Emirates and Qatar.49 This gap between increasing demand and restricted supply has created an explosive situation, one that has been filled by a global system of trafficking in human beings that can in many respects be compared to the slave trade of the 16th century. Labor export is big business, having spawned a host of parasitic institutions that now have a vested interest in maintaining and expanding it. The transnational The Philippines: Failed State, Failed Economy?

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labor export network includes labor recruiters, government agencies and officials, labor smugglers, and big corporate service providers like the US multinational service provider Aramark. What is actually happening is the expansion of a system of labor trafficking that is just as big and as profitable as sex trafficking and the drug trade. The spread of free wage labor has often been associated with the expansion of capitalism. But what is currently occurring is the expansion and institutionalization of a system of unfree labor under contemporary neoliberal capitalism, a process not unlike the expansion of slave and repressed labor in the early phase of global capitalist expansion in the 16thcentury that was pointed out in the work of sociologists like Immanuel Wallerstein.50 This expansive system that creates, maintains, and expands unfree labor is best illustrated in the case of the Middle East, now the main destination of OFWs. As Atiya Ahmad writes, “With the booming of the Gulf states’ petrodollardriven economies from the early 1970s onwards, a vast and consolidated assemblage of government policies, social and political institutions, and public discourse developed to manage and police the region’s foreign resident population. Anchored by the kefala or sponsorship and guarantorship system, this assemblage both constructs and disciplines foreign residents into ‘temporary labor migrants.’”51 This elite-promoted construction of migrant identity promotes internalization of the migrants’ role as social subordinates and at the same time emasculation of their status as political agents. They are expected to remain and so far have largely behaved as non-participants in the politics of their so-called host societies, even if these societies are swept by the winds of political change. In 2009, some 64 per cent of the more than one million Filipino workers that went abroad went to the Middle East.52 Most of these workers were women and the biggest occupational category was household service workers or maids.53 In its effort to curb this free market in virtual slavery or to prevent workers from going into countries where their physical security would be in great danger like Afghanistan or Iraq, the Philippine government requires governmentissued permits for workers to be able to leave or in other cases it has imposed 24



deployment bans to some countries. However, labor recruiters, who are often in cahoots not only with Middle East employers but also with the US Defense Department and US private contractors, have found ways of getting around these regulations. Clandestine networks that smuggle workers from the Southern Philippines to destinations in the Middle East have been organized. Based on interviews with these workers, this is the clandestine route of such networks: people told of being smuggled out in the Southern Philippine city of Zamboanga by small boat to the Malaysian state of Sabah. From there, they were transported in the hold of a bigger boat going to Singapore, where they were then offloaded and brought by land transport to a site near Kuala Lumpur. In Kuala Lumpur they were forced to work for their subsistence for six weeks. It was only after two months that they were finally transported by plane from Kuala Lumpur to Dubai, then to Damascus, where they found themselves in the midst of a civil war!54 With such illegal transnational human smuggling networks in operation, it is not surprising that of the 9,000 domestic workers in Syria, the Embassy estimated that 90 percent were there illegally; that they had no valid exit papers from the Philippines.55 Among other things, this has made locating them and contacting them very difficult after Manila had issued orders to the Embassy in January 2014 to evacuate all Filipino workers in Syria. The situation is similar in Afghanistan and Iraq. For much the same reason, there is no accurate figure of how many Filipinos have been illegally recruited to be service workers in the US bases by the Pentagon and US military contractors, but 10,000 is probably a conservative number. In the case of Afghanistan, the collusion between illegal labor traffickers, the US government, and US private contractors poses a gargantuan challenge to the weak Philippine state. The predominance of women among the workers being trafficked to the Middle East has created a situation rife with sexual abuse, and a system whereby labor trafficking and sexual trafficking are increasingly intersecting. Here is an excerpt from a report of the House Committee on Overseas Workers following the visit of some members to Saudi Arabia in January 2011: The Philippines: Failed State, Failed Economy?

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“Rape is the ever-present specter that haunts Filipino domestic workers in Saudi Arabia. …Rape and sexual abuse is more frequent than the raw Embassy statistics reveal, probably coming to 15 to 20 per cent of cases reported for domestics in distress. If one takes these indicators as roughly representative of unreported cases of abuse of domestic workers throughout the kingdom, then one cannot but come to the conclusion that rape and sexual abuse is common.”56

One can go further and say that there is a strong element of sex trafficking in the trafficking of Filipino women in the Middle East given the expectation, especially in many Gulf households, that providing sex to the master of the household is seen as part of the domestic worker’s tasks. In sum, the creation of the labor-export economy in countries like the Philippines stemmed greatly from the impact of structural adjustment, trade liberalization, and the prioritization of debt repayment, policies that led to de-industrialization, the erosion of local agriculture, and the gutting of state investment, disabling it as an engine of growth. Moreover, the dynamics of neoliberal capitalism have led to the creation of a global system of labor trafficking, reinforcing the insight of Immanuel Wallerstein that the development of capitalist relations of production does not, in many cases, displace but reinforce or promote the spread of unfree labor. This includes not only new centers of capital accumulation like the Middle East but also old centers like the United States.

Local capital adjusts to globalization Pressures for agrarian reform and the liberalization of the economy pushed by global capital and local technocrats led to transformations in the bases of wealth and capital accumulation of the propertied classes in the country. The displacement and destabilization of landed wealth already began in the Marcos period with the expiry of the Laurel-Langley Agreement in 1974, which ended the privileged access of Philippine sugar into the United States. Sugar had been the basis of the wealth of the so-called sugar barons, the dominant faction of the Philippine landed class, to which the current president’s relatives 26



belong. Agrarian reform and trade liberalization pushed by the World Trade Organization intensified the insecurity of landed wealth in the `80s and `90s. The Philippines, as noted earlier, was transformed from a net food exporting country to a net food importing country since the mid-`90s, with agricultural exports dwindling to less than one percent of its total exports. In comparative terms, the value of Philippine agricultural exports from 1974 to 2010 grew by 16 percent, while that of Indonesia, Malaysia, and Thailand grew by 744, 184, and 2,652 percent respectively.57 The virtual destruction of key segments of Manila’s import-substituting manufacturing sector, which was built up in the `40s to the `70s, by import liberalization paralleled the negative trends in agriculture. Car assemblers like Delta Motors Yutivo Motors disappeared, as did the textile and garments industry that had been the bulwark of the Chinese-Filipino capitalist class, along with some 100,000 jobs.58When they did not disappear owing to liberalization, they sold out to foreign capital, like the local cement industry, which passed to the hands of the multinationals Pemex, Holcim, and LaFarge. In the ‘90s, analysts were already speaking about the disappearance of the Philippine bourgeoisie. In fact, in the words of Kenneth Cardenas, Philippine was simply undergoing “creative destruction” in Schumpeterian fashion. Much wealth was rechanneled away from traditional agricultural and manufacturing enterprises to snapping public utilities that were being privatized like the Metro Manila water supply system and the National Power Corporation and to urban real estate. Privatization provided the opportunity for the Lopez and Zobel groups to move into water provision in the Metro-Manila area and led to the transformation of the power industry from a government monopoly to one where 52 per cent of energy generation was controlled by San Miguel, the Aboitiz group, and the Lopez group. Urban real estate, however, became the investment area of choice. Central to this development were three drivers of demand: remittances from OFWs, which fuelled home construction and condominium sales; office space leasing by the Business Processes Outsourcing industry; and retail space rentals in malls, driven by spending by OFWs and the new globalized middle classes. The Philippines: Failed State, Failed Economy?

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Among the 20 richest Filipinos in 2012, 13 have significant holdings in diverse forms of real estate investment. While the Zobel Group (Ayala) has remained probably the most prominent real estate developer, it is joined by the Gotianuns (Filinvest), the Villars (Vista Land and Lifescapes), and the Antonios (Century Properties), as well as the formidable Chinese-Filipino taipans that have had few investments in property until fairly recently. These included Henry Sy’s SM Development Corporation, Andrew Tan’s Megaworld Corporation, and John Gokongwei’s JG Summit. The story of Filipino capital in the last 30 years has been their move from unprotected agriculture and manufacturing to areas of the economy that continued to be reserved for Filipinos, such as real estate, telecommunications, water, energy, and mining. Local elites did not crumble in the face of globalization; they adjusted to it by relocating the sources of accumulation even as they were broadly subordinated to the dynamics of transnational global capital.

The Philippine state: still an anti-developmental state? In the search for the causes of underdevelopment in the Philippines, much analysis has focused on the nature and structure of the Philippine state. One of the most influential of these approaches has been that of Paul Hutchcroft, who called the post-World War II Philippine state a “patrimonial oligarchy,” where a powerful economic elite extracted resources from and manipulated a weak and disorganized state bureaucracy, a configuration of power that was inherited from the American colonial period.59 Superficially, the Marcos dictatorship (1972-86) might have seemed to be a strong state, but actually it was a system that “facilitated the capture of the state by new—and more centralized— regime interests.”60 What financial resources were generated by the economic system were siphoned via state mechanisms to the Marcos family, relatives, and cronies instead of being recycled into productive investment in a market-driven economy. The overthrow of Marcos in 1986 may have changed the form of the state—from a dictatorship to an elite democracy—but the relationship between the state bureaucracy and the economic elite has remained the same, that is, the state serves as a pliant instrument for wealth extraction by the upper classes, though in contrast to the Marcos period, class power is now less concentrated. 28



The implications of such a regime for development was spelled out by Robin Broad: “That state finds itself without relative autonomy to pursue policies that do not reflect the short-term interests of the exploiters; parts of the state are not just politicized but are ‘captured.’ Such a state is not what has been called a ‘strong state’ or a ‘developmental state’—that is, one able to formulate and implement policies independently of powerful groups.”61 What Hutchcroft failed to see but Broad did take into account was that this weak state was manipulated as well by powerful external forces, meaning the US, International Monetary Fund, and World Bank. Indeed, the local elite and international actors have often worked in tandem, though perhaps not consciously, to create a weak, “anti-developmental state.” This was particularly the case in the `80s, when the local elites successfully emasculated state-led land reform, a key element in the economic take-off of Korea and Taiwan, while the IMF and World Bank significantly altered the country’s trade structure via structural adjustment and the imposition of debt servicing as the national economic priority. But were there trends that were loosening the elite’s grip on the state? Some analysts purported to see a transition from “elite democracy” to a “contested democracy,” where development could be pursued more autonomously by the state. To these analysts, one of the most significant steps in the latter direction was the Party-List Law, which provided for filling 20 percent of the seats in Congress with the nationwide election of representatives representing “marginalized groups.” From the time it came into effect in 1998, the party list law allowed the election of candidates that were not tied to traditional local elites, who then began to sponsor—and pass—measures that did not serve elite interests but were pro-people and pro-development. Indeed, the number of laws that were spearheaded by progressive party-list organizations was impressive. These included the Cheaper Medicines Act, Anti-Death Penalty Act, Renewable Energy Act, Magna Carta on Women, Anti-Torture Act, Comprehensive Agrarian Reform Extension Act, Right to Self-Organize Law, National Land Use Act, Overseas Absentee Voting Act, Balanced Housing Act, and the Responsible Parenthood and Reproductive Health Act.


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That such pieces of progressive legislation could be passed stemmed from a more fluid political landscape, where elite power continued to be hegemonic but non-elite forces were actively, and in some cases successfully, disputing elite hegemony. Yet the failures of the reform groups in both civil society and in government have shown the limits of their ability to challenge the system. They failed to repeal the automatic appropriations of government funds to pay off the debt. They were not able to stop the privatization of water provision or energy generation. They failed to formulate a non-neoliberal developmental strategy centered on an activist state. They were not successful in halting contractualization of the labor force. Moreover, what had served as the entry point for progressive forces into legislative arena, the party list system, has gradually been distorted by traditional elites as another way of entering the House of Representatives, in addition to the route of district representation. In short, the achievements of non-elite political and social forces in terms of creating contested spaces in the political system could not be denied, but whether these added up to creating a momentum for the emergence of a developmental state remained to be seen.

Conclusion In the first years of the second decade of this century, the economic prospects of the Philippines appeared to be improving, with many in the business press toasting it as one of Asia’s most promising economies. But while important reforms targeting corruption and poverty were in progress, there were no visible initiatives that represented a break with the failed neoliberal legacy. One of the most damaging of these neoliberal policies was the prioritization of debt repayment, which led to massive curtailment in state capital expenditures. The sharp reduction in state investment was not made up by the private sector, contributing greatly to the stagnation of the economy in the `80s and its low rate of growth in the last two decades. Debt service economics, however, was not the only cause of stagnation. The globalization of the Philippine economy via neoliberal restructuring was a 30



central factor. Globalization of the Philippine economy had two aspects. On the one hand, it involved the disarticulation or disintegration of the national economy, leading to a crisis in agriculture, industry, and services. On the other hand, it articulated or integrated key dimensions of the economy at the global level. So even as the traditional mainstays of the national economy suffered and stagnated, new sectors emerged, though their dynamism could not hide their intrinsic fragility. These sectors were electronics, business process outsourcing, and labor export. Though remittances, by 2011, surpassed $20 billion, labor export could not substitute for an economy producing jobs for its labor force rather than forcing them to migrate for lack of opportunities. Even as the Philippine lower classes adapted to becoming a labor force for the world, the Philippine economic elites transformed their sources of capital accumulation. From the traditional sectors like agriculture and manufacturing, the elite channeled its investments into urban real estate, a sector that was made very profitable by demand stemming from foreign investment, but especially by demand for housing fuelled by the massive remittances to the families of migrant workers. While being broadly subordinated to the dynamics of transnational capital, local capital did not capitulate but adapted to globalization largely via “creative destruction,“ to use Schumpeter’s terms, that is by shifting the sources of wealth extraction from manufacturing and agriculture to urban real estate. A key problem in Philippine development has been the state, which has traditionally not functioned as a development agent but as a mechanism used by the economic elite to almost exclusively extract wealth from society. Over the last few decades, however, sectors of civil society have been empowered, and this has translated into some influence over the political process and political institutions such as Congress. While progressive legislation has been produced and “contested” political spaces have emerged, the upper classes remain hegemonic and the Philippine state still has to make the transition to becoming a developmental state.


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Notes

1

“OECD: Southeast Asian Economic Outlook to Return to Pre-crisis levels,” Guardian, Nov. 18, 2012, http:// www.guardian.co.uk/global-development/datablog/2012/nov/18/oecd-south-east-asia-economic-outlook 2 “CCT’s Continuing Success,” Philippine Daily Inquirer, Oct 8, 2012, http://opinion.inquirer.net/38362/cctscontinuing-success 3 “‘Informal’ OFW remittances P242 billion higher,” Business Mirror, Nov 14, 2012. 4 See among others, Walden Bello, “Missing in Action: President Aquino and the Meralco Rate Hike Scandal,” Philippine Daily Inquirer, Dec 21, 2013, http://opinion.inquirer.net/67785/missing-in-action-presidentaquino-and-the-meralco-rate-hike-scandal 5 See Walden Bello, “Waterloo for Agrarian Reform,” Philippine Daily Inquirer, Sept 16, 2013, http://opinion. inquirer.net/61273/waterloo-for-agrarian-reform 6 National Economic Development Authority, Philippine Development Plan, 2011-16 (Pasig: NEDA, 2011). 7 Abigail Ho, “Philippines leads in income inequality in Asean, says study,“ Philippine Daily Inquirer, April 11, 2012, http://business.inquirer.net/8377/philippines-leads-in-income-inequality-in-asean-says-study 8 World Bank, World Bank Debt Tables, Vol 2 (Washington, DC: World Bank, 1994), p. 378. 9 Ibid., p. 379. 10 World Bank, World Development Indicators 1998 (Washington, DC: World Bank, 1997), p. 131. 11 Jesus Felipe and Rana Hasan, “Unemployment, Labor Laws, and Economic Policies in the Philippines,” in Jesus Felipe and Rana Hasan, eds., Labor Markets in Asia: Issues and Perspectives (Houndmills, Basingstoke, Hampshire: Palgrave Macmillan, 2006), p. 446. 12 Calculated from figures provided in World Bank, Accelerating Inclusive Growth and Deepening Fiscal Stability (Manila: World Bank, March 2008). 13 Emmanuel de Dios et al., “The Deepening Crisis: the Real Score on Deficits and the Public Debt,” Faculty of Economics, University of the Philippines, August 2004. 14 World Bank, ibid., p. 27. 15 Kunio Yoshihara, The Nation and Economic Growth (Kuala Lumpur: Malaysia, Oxford University Press, 1994, p. 49. 16 Ibid. 17 Ibid. 18 The booming Philippines’ missing link: foreign investors,” Reuters, Dec 19, 2012. 19 Government data provided by Riza Bernabe, personal communication, May 5, 2008. 20 Rovik Obanil, “Rice Safety Nets Act: More of a Burden than a Shield, Farm News and Views (1st Quarter 2002), p. 10. 21 Walden Bello, Food Wars (London: Verso, 2009), p. 60. 22 See Walden Bello, “Waterloo for Agrarian Reform,” Philippine Daily Inquirer, Sept 16, 2013, http://opinion. inquirer.net/61273/waterloo-for-agrarian-reform 23 Kara Santos, “Philippines Floods Prompt Climate Action,” Interpress Service, Aug 27, 2012 24 PCA Eyes Coco Levy Fund for ‘Pablo’ Farm Rehab,” Philippine Star, Jan 4, 2013, p. A-21. 25 $6 billion economic impact from Typhoon Haiyan tops November CAT report,” The Broke, Dec 5, 2013, http://www.citopbroker.com/news/6-billion-economic-impact-from-typhoon-haiyan-tops-november-catreport-6093 26 Walden Bello et al, The Anti-Developmental State: The Political Economy of Permanent Crisis in the Philippines (Manila: Anvil, 2009), p. 25. 27 Fair Trade Alliance, Stop De-industrialization: Recalibrate Philippine Tariffs Now (Manila: Fair Trade Alliance, 2003), p. 16. 28 “Philippines Gets Stomped,” Multinational Monitor, Jan-Feb 2006, Vol 27, No 1, http://www. multinationalmonitor.org/mm2006/012006/front.html 29 O. Nusui, Taking the Right Road to Inclusive Growth: Industrial Upgrading and Diversification in the Philippoines (Mandaluyong: Asian Development Bank, 2012.

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30 A. Balisacan and H. Hill, eds., The Philippine Economy: Development, Policies, and Challenges (Quezon City: Ateneo de Manila University Press, 2003) 31 Isidro Camacho, quoted in Eric Boras, “Government Loses $120 billion to Tariff Cuts,” Business World, Oct 20, 2003. 32 Ibid. 33 Orville Solon and Steven John Pamintuan, “Opportunities and Risks in the Privatization-Regulation of MWSS,” Philippine Review of Economics, Vol 38, No 1, cited in Jude Esguerra, “A Critical Assessment of the Manila Water Concession,” undated. 34 Mary Ann Manahan, “Water Privatization Project Crumbles: the Philippine Experience,” Focus on the Global South, Nov 2004, p. 5. 35 “EPIRA at 10: Revving up Reforms in the Philippine Power Sector,” CPRD Forum, 2012, p. 6. 36 Ibid. 37 Ibid. 38 “People’s Response to Water Privatization and Resource Grabbing: Strategies to Reclaim Water and Commons,” Quezon City, Aug 1, 2012. 39 “SC allows sale of Angat Dam power plant to Korean firm,” GMA News, October 24, 2012. 40 Department of Energy, 19th EPIRA Implementation Report: Period Covering April 2011 to October 2011, Manila, 2012, p. 36. 41 “‘Resurgent’ PH electronics industry seen in 2-3 years,” http:// http://www.abs-cbnnews.com/ business/02/27/12/resurgent-ph-electronics-industry-seen-2-3-years 42 “IT-BPO Industry Profile, Prospects, Challenges, and Issues for Growth and Employment,” Angelo King Institute Policy Brief, De La Salle Universiry, Vol 4, No 2, 2012. 43 See “BPO vows to expand Phl labor base as Canada leaves Top 10 list,” Business Mirror, Dec. 5, 2012, http://businessmirror.com.ph/index.php/business/companies/4659-bpo-vows-to-expand-phl-labor-baseas-canada-leaves-top-10-list 44 http://www.bsp.gov.ph/statistics/keystat/ict/itbpo_3.2.htm 45 http://en.wikipedia.org/wiki/Philippine_Labor_Migration_Policy 46 http://en.wikipedia.org/wiki/Overseas_Filipino 47 See Walden Bello, The Food Wars (London: Verso, 2009), pp. 39-67. 48 Guy Arnold, Migration (London: Pluto Press, 2012), p. 4. 49 Atiya Ahmad, “Beyond Labor: Foreign Residents in the Gulf States,” in Migrant Labor in the Gulf,: Summary Report (Washington, DC: Center for Strategic and International Studies, 2011), p.3. 50 Immanuel Wallerstein, The Modern World System (New York: Academic Press, New York, 1974). 51 Ibid., p. 3 52 http://en.wikipedia.org/wiki/Philippine_Labor_Migration_Policy 53 http://en.wikipedia.org/wiki/Overseas_Filipino 54 Interviews with Filipino workers in shelter, Philippine Embassy, Damascus, March 18, 2012 55 Estimate of Sec of Foreign Affairs Albert del Rosario, cited in “Pinoy workers repatriated from Syria grateful to be back in PHL, GMA News, September 12, 2012, http://www.gmanetwork.com/news/story/273646/ pinoyabroad/news/pinoy-workers-repatriated-from-syria-grateful-to-be-back-in-phl. 56 “The Dark Kingdom? The Condition of Overseas Filipino Workers in Saudi Arabia: Final Report of the Investigating Mission of the Committee on Overseas Workers’ Affairs (COWA) to Saudi Arabia, January 9 – 13, 2011,” House of Representatives of the Philippines, Feb 9, 2011. 57 Data sourced from The World Bank. (2012). World development indicators and Global development finance. World DataBank. retrieved 20 February 2013, from http://databank.worldbank.org/ddp/home.do 58 Walden Bello, David Kinley, and Elaine Elinson, Development Debacle: the World Bank in the Philippines (San Francisco: Institute for Food and Development Policy, 1982), p. 170. 59 Paul Hutchcroft, Booty Capitalism: The Politics of Banking in the Philippines (New York: Cornell University Press, 1998). 60 Ibid., p. 111. 61 Robin Broad, “The Political Economy of Natural Resources: Case Studies of the Indonesian and Philippine Forest Sectors,” The Journal of the Developing Areas, Vol 29 (April), pp. 330—331.


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C h apter

1

Urban Property Development and the Creative Destruction of Filipino Capitalism

The first decade of the millennium was incredibly good for Filipino capitalism. Consider these: in the 10-year period, from 2000-2010, the combined profit of the 30 companies comprising the Philippine Stock Exchange composite index grew 635 percent in real terms, from PhP26.1 billion to 304.23 billion. In 2006, when Forbes began publishing an annual list of the richest Filipinos, the combined net worth of the 40 wealthiest Filipinos was US$16 billion. By 2010, their fortunes were collectively worth US$22.8 billion, showing 32.3 percent increase in real terms on the 2006 figures. In comparison, the Philippines’ gross domestic product grew by only 59 percent during the same decade; GDP per capita increased by a mere 13 percent.1 Several of these Forbes-listed conglomerates continue to embark on ambitious international expansion plans instead of depending exclusively on Philippine market. Henry Sy’s SM Prime is presently planning to open five more malls in China within the next three years;2 the Gokongweis’ Universal Robina is eyeing a factory in Myanmar, which will follow successful investments in manufacturing in Thailand, Vietnam, Malaysia, Indonesia, and China;3 and San Miguel Corporation, as part of its plan to bring total sales to PhP1 trillion by 2013, is planning to put up plants in Myanmar, Cambodia, and Laos.4 These outcomes had not been expected. The first decade of the millennium was very turbulent for business, having begun with Philippine capitalism in serious crisis, as the economy reeled from the Asian financial crisis of 1997-98. The initial contraction, at half percent, was mild compared to the severe drops 35

S t a t e o f Fr a g m e n t a t i o n : T h e P h i l i p p i n e s i n T r a n s i t i o n

seen in the rest of middle-income Southeast Asia. But an anemic recovery, coupled with a hollowed-out neoliberal state unwilling and unable to either stem the outward flow of portfolio investments or to spend its way out of the crisis, prolonged the economy’s stay in the doldrums, culminating in a fiscal crisis in 2005. For much of that decade, political crisis also gripped the country. The impeachment trial of Joseph Estrada, the subsequent revolt of middle-class Manila, and the installation of Gloria Macapagal-Arroyo in the presidency in 2001 proved to be harbingers of more political precariousness. As the decade wore on, Arroyo’s questionable mandate further lost legitimacy; rigged elections, massive protest actions, and the re-emergence of adventurism and impunity in the military eventually became the landmarks of her presidency. If at home there was political instability, outside, the closing years of the decade witnessed global capitalism erupt in a systemic crisis that until now it has not emerged from.

Demise of industries and traditional bases of accumulation Looking at how in the past three decades the established modes of building fortunes in this country have been steadily eroded, the success of Filipino capitalists becomes even more surprising. Cash crop export, the economic bulwark of the landed cacique class, has been in terminal decline for almost four decades now. Until the early `70s, the Philippines was by any measure an agrarian rural economy. During that decade, agriculture accounted for between 27 and 31 percent of GDP, while coconut, sugar, fruit, and tobacco exports accounted for an average of 43 percent of total agricultural exports.5 But beginning with the expiry of the Laurel-Langley Act in 1974, which ended the privileged access of sugar producers to the US market, a range of factors made export-oriented agriculture an increasingly untenable capitalist modus operandi. The world market for sugar entered a prolonged period of depressed prices, which saw prices plummet from US$0.67 a pound in 1974 to US$0.10 in the mid-`80s. Similarly, coconut products traded at an average of 44 percent of 1974 prices from 1975 to 1985.6 Sugar and coconut monopolies created 36

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during the Marcos regime, partly as responses to this crisis, were mismanaged by his cronies and ended up hastening their collapse.7 From 1987 to the present, the successes and failures of agrarian reform have become another important factor in the development of Philippine capitalism. On one hand, agrarian reform has caused the breaking up and redistribution to the tillers of several large estates; on the other, it has precipitated the reclassification of land into non-agricultural uses to thwart redistribution.8 More recently, the crisis in export agriculture has deepened with the entry of imported produce under a liberalized trade regime, as a result of the commitments entered into by the Philippines under the World Trade Organization and in bilateral and regional free trade agreements. Liberalization has rendered Philippine agriculture susceptible to competition from cheaper, often subsidized, agricultural imports.9 In comparative perspective, the value of Philippine agricultural exports from 1974 to 2010 grew by 16 percent, while that of Indonesia, Malaysia, and Thailand’s grew by 744, 184, and 2,652 percent, respectively.10 The Philippines, presently running an agricultural trade deficit with 11 of its 16 free trade ‘partners’,11 has been a net agricultural importer since the mid-`90s,12 and its agricultural exports have dwindled to less than one percent of its total exports.13 Domestic manufacturing was equally devastated in the last three decades, from the `80s to the closing of the recent decade. The tariff- and-quota-based protection schemes erected to develop a domestic industrial capability, upon which the Taipan class had built its wealth, were effectively dismantled by three decades’ worth of neo-liberalization. Older accounts of Filipino capitalism, such as Kunio Yoshihara’s catalogue of Southeast Asian capitalists in the `80s and Temario Rivera’s on the landlords-cum-import substitution industrialists, reveal the extent of devastation of domestic manufacturing capital. The majority of the families, companies, and industries which defined ‘ersatz capitalism’ in the Philippines in the early `80s have now been consigned to the dustbin of history.14 In the automotive industry, the niche for domestic assemblers created by import substitution policies no longer exists. Companies such as Delta Motors and Yutivo Hardware, which respectively assembled Toyota and General Motors products for the local market, were among the first casualties of the Urban Property Development and the Creative Destruction of Filipino Capitalism

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political and economic crises during the closing years of the Marcos regime.15 The textiles industry, which had built the wealth of a number of ChineseFilipino capitalists and had once been considered a cornerstone of Philippine industrialization, collapsed due to structural adjustment and competition from textiles smuggled out of export processing zones.16 By the World Bank’s own estimates, 100,000 workers were laid off in the garments and textile industries alone as a direct consequence of structural adjustment, which was equivalent to five percent of total industrial employment in the early `80s.17 At the height of the Asian financial crisis, the entire cement industry was taken over and remade into subsidiaries of large transnational companies like Holcim, Cemex, and Lafarge.18 With domestic content laws and tariff barriers either reduced or removed, factories multinational companies built for the Philippine market ceased to have reason to exist, and production for the Philippine market has since been relocated elsewhere to factories in ASEAN and China. The most recent example of this trend was Goodyear, which closed its Las Piñas factory in 2009 after 53 years of operating in the country.19 The entry of foreign competitors in the once-protected domestic market also proved ruinous for entire industries, such as the shoe and domestic appliance industries. Year 1980 imports per capita rose by 134 percent in 2010, while GDP per capita merely rose by 26 percent. State-owned enterprises set up as nuclei for Philippine industrialization were privatized without even fulfilling their original mandate. National Steel Corporation was snapped up in 2004 by Pramod Mittal, the younger brother of Lakshmi Mittal of the ArcelorMittal Group, which has since folded up.20 Petron changed hands several times, with majority ownership passing from PNOC, to Saudi Aramco, then to the Ashmore Group, before being acquired by San Miguel Corporation at the end of 2008. These factors, combined with the failure of the country to attract Japanese capital in the wake of the Plaza accord,21 caused the Philippines to de-industrialize in relative terms just as its neighbors embarked on rapid and thorough export-oriented industrial development. At the beginning of the `70s, the Philippines had the most industrialized economy among the middle-income ASEAN countries Indonesia, Malaysia, Philippines and Thailand. At its peak in 1983, industry contributed 39 percent 38

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of GDP and employed 14 percent of the Filipino workforce. By 2010, the Philippines had the lowest level of industrialization among these four countries, contributing only 30 percent of total GDP, while its share in total employment barely moved; presently, its share is at a little less than 15 percent. What little growth in manufacturing that took place from the `90s to 2000s was in foreign investment-fueled, export-oriented industries located in export processing zones, in which Philippine capitalists have had a rather limited involvement.22 With the demise of industries and decline in agricultural production, it is now structurally impossible to amass incredible wealth on either the backs of peasant labor or from a protected domestic market. This situation stands in stark contrast to the `50s and `60s, when the wealthiest Filipinos were almost invariably sugar barons and when the upper echelons of Philippine politics were drawn from their ranks.23 This is also markedly different from the `70s and early `80s, when an ersatz industrial capitalist class propped up by the Marcos regime dominated the economy.24 Today, none of the wealthiest Filipinos have significant holdings in cash crops, and although a number of prominent political figures descend from haciendero families, cash crop agriculture is no longer the dominant economic interest of members of Congress. With some notable exceptions, the crony capitalists tasked with running the national industries in the Marcos era were generally unable to leverage the considerable wealth they had amassed to ensure dominance in the economy. More crucially, almost none of the capitalists from neither the landowning cacique class nor the Taipan class have mobilized their wealth to transition into export-oriented manufacturing, a key component of the capitalist transformations in the highgrowth economies of East and Southeast Asia. It would have been easy to proclaim the death of oligarchic capitalism at the turn of the 21st century, with the Asian financial crisis and the IMF rescue packages in its aftermath dealing the final blow on domestic capitalist classes in Southeast Asia. As far as the Philippine capitalists are concerned, the home markets have been pried open by their transnational counterparts.25 But there would be no death certificate yet for the Philippines and its capitalists. Domestic capitalist class power instead would reinvent itself and experience resurgence amidst erosion of traditional bases of accumulation and condition of permanent crisis; despite, too, of failure to shift to export-oriented manufacturing. Urban Property Development and the Creative Destruction of Filipino Capitalism

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Philippine capitalists flourish under new rules Filipino capitalists are now at the cusp of joining the transnational capitalist class. This is how it happened. Andrew Mellon’s observation in 1929 becomes a refrain in the present global economic crisis: that during crises, assets return to their rightful owners. But this opens up questions: what is the crisis; who and what are the ‘rightful owners’; what are the processes through which assets have ‘returned’ to them? From the early `80s to the present, three sets of processes have defined the structure of Philippine economy; its position across global circuits of labor, commodities, and capital; and the opportunities for accumulation available to its capitalist classes. First, there is neoliberalization. The Philippines is one of the countries where neoliberalism has seen an unqualified ideological triumph. It was among the first countries in the world to participate in the structural adjustment program in 1980, and has since been the recipient of a total of nine structural adjustment loans from the World Bank while also being a participant in three IMF programs.26 The momentum of neoliberal reform has been sustained from within by state economic planning agencies, the academe, and private-sector think tanks.27 The Philippines has consistently gone beyond the prescriptions of the Washington Consensus by: unilaterally adopting the lowest average tariff rates in the world; innovating on the privatization of economic zones; embarking on some of the biggest privatizations in the world. Far from being a completely ideological project, however, neoliberalization in the Philippines has been implemented in a specific, locally-contingent, and highlyuneven manner. The resultant contours have been crucial to the recent successes of domestic capitalists, especially under the Philippine privatization program. Beyond the crown jewel corporations, such as Philippine Airlines, Petron, National Steel, and National Power Corporation (Napocor), public land and infrastructure have been the most consistent targets for privatization of successive post-EDSA governments. In Metro Manila, military lands, such as Fort Bonifacio and Camp BagoBantay, national government centers in Quezon City, and reclaimed lands

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on Manila Bay have been privatized. In recent years, these projects have, in fact, defined urban development. Through the Bases Conversion and Development Authority alone, a total of 267 hectares of the city have been privatized in this manner, creating for government some PhP46.697 billion revenues.28 Two particular features of the privatization program deserve closer scrutiny. Privatization projects have been pursued through auctions of large tracts of land, though this is not the only means through which privatization can be accomplished. The privatization of Singapore Airlines, for instance, was accomplished through a public offering, allowing the Singaporean middle class to participate in the privatization process.29 The land assets of a national government can also be privatized as smaller lots, or allocated for socialized housing. In the Philippines case, however, the lots have been huge, and the stakes high. With mandate to sell the land at as high a price as possible, the BCDA sold these lots to the highest bids, precluding the use of these lands for anything but the highest ends of the market. The initial bloc of Fort Bonifacio privatized in 1995 was 150 hectares; the winning bid was a hefty US$1.6 billion. In 2013, the highest bid for the 74-hectare FTI Complex in Taguig, the latest public land to be privatized, was PhP24.3 billion.30 To put this figure in perspective: under the Urban Housing and Development Act, the mandated maximum size for socialized house-andlot units, which have a price ceiling of PhP400,000 per unit, is 18 square meters. At the prices paid by the winning bidders, an unimproved 18 square-meter plot in Fort Bonifacio would have cost PhP676,962; the same size of land in the FTI complex, PhP591,081. No wonder then that privatized Fort Bonifacio is now a master-planned, high-end district whose recent locators include the embassies of Singapore and the United Kingdom, the new headquarters of the Philippine Stock Exchange, and the local offices of several multinational corporations. The other feature is that privatization took place with the national patrimony provisions of the 1987 Constitution firmly in place, limiting foreign ownership of private land to 40 percent of total equity. This provision has often been understood as resistance to neocolonial appropriation of the country’s natural resources. Filipino resources should benefit Filipinos, or so it has been thought. But given the highest-bidder, the winner-take-all system in place for privatizing lands and the constitutional restrictions on land ownership effectively have Urban Property Development and the Creative Destruction of Filipino Capitalism

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enforced an oligopoly for Filipinos who could effectively mobilize capital, either their own, or that of foreign partners. (See Table 1) Trade liberalization and deregulation in the country have exhibited the same unevenness. On one hand, trade liberalization has been remarkably brutal to agriculture and industry, as described above. On the other, several key sectors have been protected from complete foreign ownership in varying degrees, guaranteeing a place in the economy for domestic capital. As with private lands, foreign equity in mining companies and public utilities—including telecommunications—is limited to 40 percent of total equity. For banks, it is 60 percent. Retail trade has also been liberalized, but in a halting and piecemeal manner. High-capitalization stores have been established using foreign equity, but they have to rent space in malls, which are not foreign-owned. The extent to which Philippine administrations would bend neoliberal doctrine backwards to favor allies is best demonstrated in the airline industry. In 1998, then President Joseph Estrada rolled back an earlier open skies policy to shield from foreign competition Philippine Airlines, then majority-owned by his friend Lucio Tan.31 In other sectors, the Philippines innovated on new forms of liberalization, beginning in the mid-`90s, which have again opened opportunities for Filipino capitalists. In 1995, it was the first in the world to transfer to the private sector the development and administration of export-processing zones, which had been the exclusive domain of states.32 In 2000, it allowed single floors of buildings to be declared as information and communications technology special economic zones, paving the way for the rise of the multi-billion dollar business process outsourcing industry. These innovations made the export processing zone program of the Philippines one of the most successful globally. Thus, from 2005 to the 2010, the Philippine Economic Zone Authority recorded IT investments worth US$10 billion.33 The national patrimony provisions of the constitution, however, have assured that the few Filipinos who could mobilize the requisite capital could have at least a 60 percent stake in the development and operation of these zones. The second set of processes is economic globalization, Philippines style. Here, uneven neoliberalization has had a key role. In this second process, the country has undertaken specialization to fill three niches in the global economy. First 42

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niche is electronics manufacturing, primarily in the low value-added, laborintensive processes of testing and sub-assembly manufacturing. Since 1997, electronics have consistently accounted for more than half of all commodity exports of the Philippines; the value of electronics exports have grown from US$22.17 billion in 2000 to US$31 billion in 2010.34 This growth, however, has taken place almost entirely within export processing zones, and with some exceptions such as the Ayala’s Integrated Microelectronics Inc., this industry has seen very little participation by domestic capitalists35 other than the development and administration of the zones themselves. Second niche is services outsourcing industry, virtually nonexistent in 2000, but by 2010 was raking in US$9.5 billion in exports earnings and employing a little more than half a million Filipinos.36 From 2004 to 2010, revenue growth in the sector averaged 54 percent annually; the Philippines is now one of the biggest services outsourcing destinations in the world. But similar to the export electronics industry, outsourcing has been dominated by low value-added activities, particularly call centers. Domestic capitalist involvement has been limited to the development and rental of office spaces for the locators; foreign equity represented 92 percent of total equity for the entire industry in 2009.37 Third niche is labor exportation. Weak generation of domestic employment in this neoliberal era has underpinned a massive labor exodus, with labor export and remittances now comprising huge share in the country’s economic activity. In 2010, 1.9 million Filipinos out of a labor force of 37.1 million were deployed overseas on temporary contracts.38 In the same year, remittances totaled US$18.76 billion, the fourth largest remittance inflow in the world after India, China, and Mexico. This exodus has come at an immense social and human cost, though invaluable in keeping the Philippine economy afloat during the present global financial crisis. Domestic consumption in the services sector, not export growth nor investment, has been behind the Philippines’ recent above-average economic performance.39 The third of the processes is capitalist development characterized by sectoral and geographic unevenness. This has created spectacular profits for Filipino capitalists but has failed to substantively improve the well-being of the majority of the Filipinos. Against a stagnating agriculture sector and weak transitioning to Urban Property Development and the Creative Destruction of Filipino Capitalism

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export-oriented industrialization, the services sector dominated the Philippine economy in the last three decades. At the close of this period, in 2010, the services sector accounted for 55 percent of the country’s GDP and a little more than half of total employment. Among the sectors which were able to outpace the growth of the economy from 2000 to 2010, only bananas and fisheries were agricultural; the only industrial subsector was mining.40 Similar to the experience of post-industrial societies of the global North, the growth in services in the recent decade created a bifurcation in opportunity: on one hand, remittance and outsourcing work produced narrow culturally- and economically-globalized middle classes; on the other, a large and still growing insecure labor force worked in low-wage, flexible services jobs that sustained the economy. Remittances further exacerbated this situation. The early phase of labor export saw remittances being used to sustain agricultural livelihoods, though OFW expenditures have since shifted from education, consumption, and investment into real estate.41 Geographically, the transformation of the economy has favored Manila and its surrounding regions. The sectors that have become the Philippines’ niche are overwhelmingly urban. In 2011, the National Capital Region, Central Luzon, and Calabarzon (Calamba, Laguna, Batangas, Quezon) deployed 43.3 per cent of the country’s overseas workforce;42 the 2007 Family Income and Expenditures Survey meanwhile showed that 93.9 per cent of remittancereceiving families from these regions had incomes of PhP100,000 or higher.43 These developments should not come as a surprise, given the very high upfront costs involved in deploying overseas for work; it would be the betteroff families in better-off regions, and not the poorest of the poor, who would have more access to overseas employment. The employment generated by export-oriented manufacturing has been concentrated in peri- and ex-urban greenfield sites in Cavite and Laguna, which are assured of steady power and water supply, access to the airport in Manila, and a compliant labor force policed by local government.44 The BPO boom also used to be concentrated in the business districts of Metro Manila; before the enactment of a provision, which allowed single floors of office spaces to be declared as special economic zones, Manila had zero economic zones. By the end of the decade in 2010, there were 82.

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Jobs and opportunities have been concentrated in the cities, even as the viability of rural agrarian livelihoods has increasingly been rendered tenuous. Pre-existing push and pull factors have aggravated rural-urban migration, creating a level of urbanization in the Philippines anomalously high for its level of development. Among the 56 countries classified by the World Bank in 2009 as lowermiddle income, the Philippines had the fifth highest level of urbanization; its urban population was larger than the rest of the top 10 combined45. Manila, historically the primary city in the Philippine urban system, has been the main destination of this rural-urban exodus. The previous trend that saw economic decentralization from the core of Manila to its surrounding regions was reversed in this last decade. The share of Metro Manila in the Philippine economy in this period was consistently above 50 percent of GDP.

Back to the land The Philippines’ brand of neoliberalization, the unique vectors through which its economy globalized, and its uneven sectoral and geographic development, have all converged in urban real estate. Mirroring the economy’s state, real estate development would also begin the decade in crisis: the sector shrank during the period 2000 to 2002, hitting a 24.7 percent year-on-year contraction in the first quarter of 2001. But the decline would be turned around in 2003, beginning with sustained growth in residential lot sales, and office and retail space rental and leasing. From the second quarter of 2004 until the fourth quarter of 2008, this sector would record double-digit streak, broken only twice by high single-digit growth rates. In the third quarter of 2006, the sector would grow at a record pace of 26.2 percent year-on-year, breaking its third quarter record of 1982. This record would be exceeded yet again by the 27.7 percent growth in the second quarter of 2010. At the end of its bust period in 2002, the gross value added of real estate development would stand at approximately PhP8.8 billion. In 2010, it would be PhP22.1 billion.46 If considered as a separate subsector, real estate would be the second-fastest growing sector of the economy in the last decade, outpaced only by mining.


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Fuelling this spectacular growth were remittances from overseas Filipinos, specifically invested in home construction and condominium purchases; followed by office space leasing by the BPO industry; and retail space rentals in malls, driven by consumer demand from the newly ‘globalized’ middle class. In a press release for the record-breaking third quarter of 2006, the National Statistical Coordination Board noted: “brisk sales in residential projects from OFWs, the strong demand for business office spaces from the BPO industry and higher income from rental and leasing operations from newly opened supermalls propelled the growth of real estate.”47 By the industry’s own reckoning, 30 percent of all remittances sent by overseas Filipinos have been spent on real property.48 Going by this estimate, some US$5.6 billion of OFW remittances was spent on real estate in 2010 alone49. In the same year, Vista Land estimated that 60 percent of their sales were from overseas Filipinos;50 Robinson’s Land’s, 40 percent;51 and Ayala Land’s, 20 percent.52 Much of this investment was poured into Metro Manila and its suburbanizing periphery. In 2000, there were a little over two million occupied housing units in the NCR; 10 years after, permits for the construction of 377,471 new units were issued for the region53. From 2002 to 2010, some 21 million square meters’ worth of new residential space—an area equivalent to the land area of Marikina—was constructed in the NCR, accounting for 27 percent of total residential construction in the country. If residential construction in the adjoining provinces of Bulacan, Cavite, Laguna, and Rizal were included, the total would run up to 37.7 million square meters or 48 percent of new residential construction nationwide54. Commercial construction has been undergoing a similar boom. At the beginning of the millennium, office space supply in the NCR stood at around 3.6 million square meters. By the end of its first decade, supply increased by more than 50 percent, or to a little less than 5.5 million square meters.55 Demand from the BPO industry, to the tune of 300,000 square meters per year during that period, resuscitated office rentals coming from a near-crash situation during the Asian financial crisis.56 Upward trend in demand for office space continues and is expected to outstrip supply by 2015.57 Past trends showed 18 percent vacancy rates at its peak in 2001, decreasing to below two percent in 2012.

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Non-residential construction from 2002 to 2010 reached 20.2 million square meters in the NCR and 27.6 million square meters in its extended metropolitan region, accounting for 37 and 50 percent of total construction in the country, respectively58. Malls have dominated the retail landscape. In 2000, there were approximately three million square meters of retail space in malls, but by the end of the decade, space use expanded by 60 percent, reaching five million square meters.59 SM Prime accounted for more than half of this space, using up 2.7 million square meters, followed by Ayala Land, at approximately 808,000 square meters, and Robinson’s Land, 723,000 square meters. Together, these three operators accounted for almost 85 percent of the total mall retail area in Metro Manila and almost all of the new leasable areas constructed over that decade. In 2000, these three companies raked in a total of PhP8.1 billion in retail space rental income, which would more than triple, reaching PhP30.3 billion, in 2010. (See Table 2) Even as it integrated urban real estate into circuits of global capital, neoliberalization also freed urban land supply through privatization of state lands. Military bases were converted; former national government centers, such as the North and East triangles in Quezon City, were sold and privatized as well as reclaimed land, as in the case of Pasay. The state defaulted on urban development and planning to give way to the logic of the market: North Triangle, which was planned to house government offices, is now being touted as Quezon City’s new central business district; former First Lady Imelda Marcos’ ‘city from the sea’ in Pasay, the site of embassies, cultural spaces, and international expositions now hosts SM’s Mall of Asia and several big-ticket gambling and leisure developments.60 It can be said that free market liberated the city from the Marcoses’ New Society, yet in an ironic turn, it also broke down the fetters of the old economy that had predominantly benefited the landed elite. In a deliberate effort to avoid agrarian reform, the landowning class saw an escape in the conversion of their lands from agricultural to commercial purposes through reclassification. In Cavite alone, some 4,337.5 hectares were used for redevelopment in this manner from 1988 to 2001.61 However, the converted or reclassified lands around Manila’s peripheries did not create the expected demand for industrial Urban Property Development and the Creative Destruction of Filipino Capitalism

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parks and economic zones. In 2009, a total of 1,095.5 hectares in 12 economic zones in Cavite held the dubious status of ‘developments in progress’ which were ‘not fully occupied by locators’ though some of these zones had been incorporated as economic zones as long ago as 1996.62 In core areas of the metropolis, idled factories of the old import-substitution industries were demolished to create brown-field sites for redevelopment. The redevelopment of industrial land in Libis into Eastwood City, which was the first information technology special economic zone in the country, is perhaps emblematic of the broader transformation of the economy.63 The model has since been applied to the redevelopment of the former Nestle factory in Muntinlupa, Plastic City in Valenzuela, and a belt of warehouses, silos, and factories on the north bank of the Pasig River from EDSA all the way to C-5.

Urban property development restores capitalist class power That was how the new economy came about. Simply told, overseas Filipinos and foreign investors poured in billions of dollars as investments in lands ‘newly liberated’ from the state, agriculture, and domestic manufacturing, and were redeveloped into residential enclaves, condominiums, office space, and malls. If their monies were the drivers, who then rode on the growth of this new economy? As in any other economy, power in the brave new Philippines is found in the opportunities available for capitalist accumulation. Just like ownership of land under hacienda agriculture or dictatorial largesse under import-substitution industrialization, control over these opportunities means control over the creation of wealth. Over the past two decades, an array of crony capitalists, manufacturing-oriented Taipans, and landed elites have converged on urban real estate as a central component of their strategies to diversify from their traditional sources of wealth. They have amassed wealth from haciendas and/ or factories of the now dead industries which received new life from real estate development. The new economy has created possibilities for such wealth accumulation through the torrent of foreign investment and remittances that it has unleashed whether by accident or design. 48

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The 10 richest Filipinos in 2012 all had interests in real estate; 15 of the top 20 have significant holdings in real estate. (See Table 3) Most of the real estate companies owned by these people and their families have been fairly new to the game, and among this group, only Gotianun (Filinvest), Villar (Vista Land and Lifescapes), and Antonio (Century Properties) have built their fortunes on real estate. The rest of the group is composed mainly of Chinese-Filipino Taipans who earlier built their wealth from manufacturing or retail, with almost zero investments in property development up until recently. The newest member of this group is Jollibee’s Tony Tan Caktiong, who in 2012 set up Double Dragon Properties with owner of restaurant chain, Mang Inasal’s Edgar Sia II. Before this move, the international expansion of Tan Caktiong’s fast food empire was becoming increasingly exceptional in a group composed of Taipans that had taken only the route of domestic intensification and diversification. Despite being new entrants to the industry, these real estate companies now have a dominant position in the market, especially in the vertical development subsector. Henry Sy’s SM Development Corporation is perhaps the best example of this trend: with a market share of 23.8 percent, SMDC is now the largest condominium developer in the country, having sold some 28,650 units since its first construction in 2003.64 SMDC is also the fastest-growing arm of the Sys’ business empire; in 2006, housing and tourism development only accounted for one percent of the revenues of Henry Sy’s holding firm, SM Investments Corporation. By 2011, this grew to 11 percent, and would astoundingly account for a full third of SMIC’s profits. In contrast, retail—Sy’s traditional bread and butter—brought in 76.6 percent of SMIC’s total revenues, but only accounted for 9.5 percent of total profits.65 The same story of rapid growth and incredible profitability would repeat itself. Andrew Tan’s Megaworld Corporation, which comes in at second place, completed its first project in 1994, but now holds 13.1 percent of the market and accounts for more than half of profits of Tan’s Alliance Global conglomerate. Lucio Tan’s Eton Properties had completed its first real estate project in 2007, generated PhP4.45 billion in revenues in 2010, and now holds 5.2 percent of the market. These giants have also grown much faster than the already-impressive pace of the real estate sector as a whole. SM Development’s revenues grew by 47,400 percent from 2003 to 2011, while Urban Property Development and the Creative Destruction of Filipino Capitalism

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Megaworld’s grew by nearly 45,000 percent from 2004 to 2011. By 2010, property development was firmly established in the portfolios of the country’s largest conglomerates. (See Figure 1) The newfound dominance of big capital in real estate development may be seen as proof of the axiom that capital seeks its own level; that it will seek out the most profitable opportunities. Yet the opportunities available in real estate development have not been available to just anyone; the specific contours of neoliberalism have denied the participation of foreign firms, even as it has created the conditions for these companies’ spectacular growth. It wasn’t merely generic capital which was able to exploit these conditions, but a specific fraction of it. Henry Sy’s dominance in real estate development and in banking owed as much to the protection afforded to him by foreign investment negative lists as to his ability to mobilize the requisite capital. A piece of the puzzle lies in the politics of neoliberalism.

Neoliberalism in the Philippines David Harvey’s distinction between neoliberalism as an ideological creed and neoliberalism as a project for restoring class power is useful in understanding how it has ushered in a period of super profits for Filipino capitalists. As ideological creed, neoliberalism best advances the well-being of individuals and of society “liberating individual entrepreneurial freedoms…within an institutional framework characterized by strong private property rights, free markets, and free trade.”66 This view is along the same line of ideas worked out by Friedrich von Hayek, Milton Friedman, and the so-called Austrian school of economics, which have since achieved hegemonic status in the academe, think tanks, and popular media. Neoliberalism in practice, however, deviates from this ideal. In practice, neoliberal reforms are not just about reducing perceived inefficient distortive effects of state involvement in the economy, it is more about relying on the state’s monopoly of force to suppress dissent and organization against neoliberalism, as well as about supporting the state’s unique ability to create markets where there used to be 50

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none. Notwithstanding the Thatcherist “There Is No Alternative” mantra, three decades of neoliberalism has yet to engineer a global convergence on a single model of economic organization; what it has produced is a bewildering variety of place-specific neoliberalisms. In China, for instance, neoliberalism has worked well with strong state role in the creation of a new capitalist manufacturing class; across the Yellow Sea, it has dismantled the cozy relationship between the state and the chaebol in South Korea.67 What has remained consistent in all variants of neoliberalism across countries is that they have all created conditions for the re-concentration of class power diluted under Keynesian-welfare, developmental, and other political-economic projects enacted after World War II. In all these, though in varying degrees, the state has tempered capitalism’s excesses.68 This view of neoliberalism explains the discrepancies between its theory and practice—a scriptural reading of the Austrian school would have forbidden China’s use of state power to enforce technology transfers from foreign investors to its domestic industries. It also wouldn’t have allowed Carlos Slim, presently the world’s richest man, to amass his fortune by monopolizing Mexico’s telecommunications market. If neoliberalism were understood as an excuse for the concentration of class power, and not as a coherent creed, these apparent sins would suddenly make complete sense. Under these conditions, diversification to real estate development in the Philippines’ cases has emerged as an excellent strategy. As discussed, urban property development is neatly at the center of the new economy. Not only is it a shelter from the neoliberal storm, it is also well-positioned to salvage valuable flotsam. It is a sector protected from foreign competition and one that stands to gain most from the stagnation of agriculture through the development of greenfield sites for EPZs and suburban developments, and from the decline of the import-substitution industries by redeveloping brownfield sites into IT parks, malls, and residential towers. The technical barriers to entry are minimal, especially if competencies in construction, sales and marketing, and banking have previously been developed. The only major barrier is access to large amounts of capital, which has even worked to the advantage of Filipino capitalists, as it has insulated their companies’ operations from broader-based competition.


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The unevenness has benefited several sectors and industries which have ended up being the exclusive domain of Filipino capitalists. The same has enabled a resurgence of their class power. This is neither the ideal end result of neoliberal orthodoxy, if the Philippines were to be pitted against the rest of middleincome Southeast Asia, where foreign companies maintained a higher profile in the services sector. Britain’s Tesco has a dominant position in Bangkok’s retail landscape; the biggest low-cost carriers in Malaysia, Singapore, and Thailand are subsidiaries of Malaysia’s AirAsia. In these same sectors in the Philippines, the protection neoliberalization afforded has created unintentional national champions—SM, which began expanding internationally in 2001, and Cebu Pacific, which is presently the third-largest low-cost carrier in Asia. Understood in this light, the specific contours of Philippine neoliberalization, as well as their outcomes, have not been accidental. Neither have their consequences been unalterable, intrinsic qualities of globalization. Instead, they have reflected the exercise of power to effect specific outcomes, both through structural adjustment programs that international financial institutions implemented and the ideological support of Filipino technocrats, the political elites, and domestic capitalists. Nowhere is the fusion of business and politics in urban land more apparent than in Philippine Congress. Its members, the landed and political cacique classes, who were eager to avoid agrarian reform, have also cashed in on the demand for suburban house-and-lot developments, industrial zones, cemeteries, and resorts by converting their landholdings and, in many instances, by participating in the development business as well. Research by Sheila Coronel and the Philippine Center for Investigative Journalism showed that from 1992 to 2004 the proportion of congressmen and women with agricultural land dwindled from 58 to 39 percent. The proportion which held interests in real estate remained steady, from 53 to 49 percent. In the 9th Congress, agricultural land was the dominant business interest in the lower house, as it had been historically; by the 11th Congress, real estate development replaced it at the top spot. 69 As in pre-Marcos Congresses, the hacenderos continue to be a potent lobby that shows no qualms about using political power to protect their interests. Thanks to decentralization of key decision-making processes, they are able 52

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to exploit the unclear boundaries between patrimonial and public powers at the local level to help the process of land conversion along. 70 In Congress, they have voted to increase the funds granted to the National Home Mortgage Finance Corporation through the Comprehensive and Integrated Shelter Financing Act.71 Beginning with Juanito Remulla’s lobbying with Marcos, who was his fraternity brother, to locate an export processing zone in Cavite,72 particularly influential politicians have since been able to leverage their power for the declaration of special economic zones in their fiefdoms, and for the prioritization and realignment of national infrastructure projects which serve these zones. To varying extents, influence in Malacañang and with other lawmakers certainly helped the declaration of pet-project economic zones in Zamboanga, Cagayan, and Aurora, and the realignment of expressway projects in southern Manila and Central Luzon. Senator Manuel Villar perhaps presents the prototype of the 21st-century panginoong may-lupa: a real estate developer who was able to build on his business to ‘diversify’ into politics, and then eventually exploited synergies between the two. Villar was implicated in a number of allegations of landgrabbing in Bulacan and Cavite and the use of pork barrel funds on roads serving developments put up by his company, Vista Land and Lifescapes, and had been the subject of a Senate ethics investigation on his involvement in the realignment of the C-5 extension expressway project to benefit VLL developments.73 In the 16 years between winning his first election in 1992 and his 2008 presidential bid, Villar’s net worth grew 13 times its original size.74

The creative destruction of Filipino capitalists Not all of the established real estate companies have benefited from this boom—and it is crucial to ask why. Among the old guard, Ayala Land, Vista Land and Lifescapes, and to a certain extent Filinvest, have fared much better than companies such as Fil-Estate, Sta. Lucia, and New San Jose Builders. Historically, real estate has proven itself as the most resilient moneymaking machine in the country. Owing to the high and relatively secure returns, urban land speculation has long been a favored accumulation strategy of both the Urban Property Development and the Creative Destruction of Filipino Capitalism

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elites and middle classes.75 Between 1975 and 1991, urban land appreciated at a rate of 2.5 to 3.65 times faster than the GDP growth rate;76 in 1991, a few elite families owned 44 percent of all urban land in Metro Manila.77 Almost all fractions of domestic capital have, to varying extents, been investments in land speculation.78 Yet there is qualitative difference between family-owned estates held as idle speculative assets and land for property development, as demonstrated in the rivalry between SM and Ayala conglomerates over land owned by the Ortigas clan. Whichever conglomerate ends up acquiring the land, the true winner will be diversified capital, and the loser, landed, speculative capital. That the large landowning families of Metro Manila, such as the Ortigases, the Aranetas, and the Tuasons, are no longer major players in property development indicates how the property development industry is not about the scale of capital involved, but is a qualitatively different game. The story of Ayala Land might provide some insight into how the game has changed. Among the major capitalist clans of the Philippines, the Ayalas were the first to discover that skyscrapers were much more valuable than cash crops such as sugar. The family initially had built its wealth on an industry allied to cash crops—liquor distillation—and then forayed into insurance during the American colonial period. After World War II, they began developing its landholdings in Hacienda Makati in earnest; beginning with the development of Forbes Park in 1948, they set about on a long-term development project which would eventually lead to the development of the Makati Central Business District. By the `60s the Ayalas would be the country’s largest real estate developer.79 For the rest of the century, property development would remain the core business of the family, even as they would diversify into businesses such as banking, automotive sales, food processing, electronics manufacturing, and most recently, business process outsourcing. The last decade also saw Ayala Land expanded from their high-income mainstay business to middle- and even low-income housing; the company launched a record number of units in 2010 and 2011. This story illuminates two processes defining how Filipino capitalism and urban property development have been changing. With some variations, the trajectory other capitalists have taken in recent years mirrors that taken by the Ayalas. Up to the mid-`90s, the core businesses of John Gokongwei, Jr., Andrew Tan, and Lucio Tan were manufacturing industries closely allied to cash crops, such 54

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as sugar refining, food processing, liquor distillation, and cigarettes. Lucio Tan had begun in tobacco and with substantial help from former President Marcos acquired La Tondeña in the late `80s; he aggressively diversified into services in the `90s. The situation of the Gokongwei’s JG Summit is particularly illuminating as, over the past decade, Robinsons Land was consistently the only profitable arm of the conglomerate; JG Summit closed its textiles operation in 2006.80 Incidentally, the only conglomerates described by Yoshihara in his 1988 study which thrive today are those involved in liquor and food processing, such as La Tondeña, San Miguel, and Universal Robina, or those which have operations in the services industry, particularly retail and banking; without exception, all of these conglomerates have diversified into real estate. At the same time, the diversification of Ayala Land into multiple market segments demonstrates a shift in the urban property sector itself. To take advantage of the property boom, it is no longer sufficient to merely have a large land property, or to have a history in real estate development; what has become the overriding qualification is the ability to mobilize large amounts of capital to meet the globalized sources of demand for different products— condominiums, IT offices, and export processing zones—versus those offered by traditional developers. The cash-flush conglomerates of the Taipans have had this ability; the previously-dominant developers did not. Neil Brenner and Nik Theodore have argued that neoliberal reform must be understood as the outcome of a dialectical process of the neoliberal project with “legacies of inherited institutional frameworks, policy regimes, regulatory practices, and political struggles.”81 They never arrived at an ideologicallypure form of neoliberal practice, but rather at path-dependent and locallyspecific reconfiguration of interests and institutions, a “creative destruction” that involves “the (partial) destruction of extant institutional arrangements and political compromises through market-oriented reform initiatives; and the (tendential) creation of a new infrastructure for market-oriented economic growth, commoditization, and the rule of capital.” This process is revealed in what’s common and different in the old and the new economy. Common in the two is the use of land as source of wealth; the difference is that land is no longer base for rural, cash crop-oriented economy, Urban Property Development and the Creative Destruction of Filipino Capitalism

55


but is being used for urban development. Urban development is itself being reconfigured—while it remains a lucrative investment, profits from it are now realized through its active circulation as capital, as opposed to speculation in idle assets. What is most critical in understanding Filipino capitalism in the 21st century is not that a number of prominent names and families have retained their wealth and dominance over the Philippine economy, but that while they may be the same people who come from the same families, they now belong to an altogether different fraction of capital. These changes demonstrate a need to shift the discussion from who are the Filipino capitalists—their racial backgrounds, how they lead their lives, who their kids marry, and all such other lifestyle section prattle—to what kind are they. From some angles, they may resemble their comprador forebears, in that they accrue profits from globalized (née foreign) sources of demand, and can become immensely wealthy without improving the lives of the rest of Filipinos. But in contrast to the compradors, 21st century Filipino capitalists, getting fuel from remittances and foreign investments, have been accumulating wealth that has been transforming them into a transnational class. The question now is if this mode of capitalist growth can translate into broaderbased gains, as seen in the rest of East Asia. This leads to one final aspect of the Filipino capitalists’ creative destruction. In a manner similar to the keiretsu of Japan and the chaebol of South Korea, a national species of transnational conglomerates is being formed in the Philippines. However, in contrast to their East Asian counterparts, Filipino capitalists are becoming transnational without becoming substantively industrial; without neither a commitment to help the state in its developmental project nor a Fordist incentive to create strong domestic market and a partnership with labor. If they can profit now without having to ensure the improvement of the lives of Filipinos, there is no reason to believe that they will in the future.

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Table 1. Major land privatizations and public-private partnerships in Metro Manila, 1995 to present Location

Year privatized

Size (ha.)

Winning bidder

Winning bid

Camp Bago Bantay82

2004

5

Bellevue (SM Investments Corp.)

PhP695 million

Vetronix83

2004

6.68

Megaworld

PhP286 million

Expanded Delta Lot, Bonifacio Global City84

2008

1.2

Net Group of Carlos Rufino and Jacques Dupasquier

PhP2.032 billion

FTI Complex85

2012

74

Ayala Land

PhP24.33 billion

Metro Pacific

PhP39 billion for a 55% stake in a joint venture with the Bases Conversion and Development Authority. Eventually sold to Ayala Land and the Camposes’ Evergreen in 2003 for US$90 million.

Megaworld

PhP624 million advanced for replication of Philippine Air Force facilities. PhP503.9 million in revenues remitted to BCDA from 2003 to 2009.

Outright sales

Joint ventures

Fort Bonifacio/ Bonifacio Global City86

Villamor/ Newport City87

1995

2003

150

25

McKinley Hill

2003

50

Megaworld

PhP942 million advanced; guaranteed minimum revenue share for the BCDA of PhP1.772 billion yearly for 15 years.

North Bonifacio89

2009

8.38

Megaworld

PhP3.151 billion; PhP15.6 billion in investments by Megaworld

88

North Triangle/ QC Central Business District/Vertis North90 JUSMAG, Fort Bonifacio91

2009

2010

29.1

34.5

Ayala Land

Megaworld

NHA contributed the property, valued at PhP6 billion, and expects a return of PhP12 billion in the lifetime of the project. PhP1.5 billion; guaranteed revenue share of PhP873.4 million yearly for 23 years; PhP700 million for replication of affected military housing.


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Table 2. Leasable retail floor area and revenues for retail rental for the three major mall operators, 2000 and 2010 Estimated retail gross floor area in NCR (square meters)

Revenues from retail rental (thousand pesos)

2000

2010

2000

Ayala Land

637,435

808,314

2,000,000

4,600,000

Robinsons Land93

393,000

723,000

1,280,000

5,739,180

SM Prime94

1,589,556

2,758,064

4,854,510

19,992,949

Total

2,619,991

4,289,378

8,134,510

30,332,129

92

2010

Table 3. Property development interests of the richest Filipinos Rank, Associated real estate 201295 companies96

Began operations

Henry Sy and family

1

SM Development Corp.97 SM Prime Holdings Belle Corp.

200398 1985 1989

Lucio Tan and family

2

Eton Properties Philippines, Inc.

200799

Enrique Razon, Jr.

3

Bloomberry Resorts and Hotels, Inc.

2012

John Gokongwei, Jr. and family

4

Robinsons Land Corp.

1980

David Consunji and family

5

DMCI Homes

1999

Andrew Tan

6

Megaworld Corporation Empire East Land Inc. Global-Estate Resorts, Inc.100

1989

1948

2011

Jaime Zobel de Ayala and family

7

Ayala Land, Inc.

George Ty and family

8

Federal Land, Inc.

Roberto Ongpin

9

Alphaland Corp.

2007

Eduardo Cojuangco

10

San Miguel Properties102

1990

Tony Tan Caktiong and family

12

DoubleDragon Properties Corp.103

2012

Jon Ramon Aboitiz and family

16

AboitizLand, Inc.

1993

101

Andrea Gotianun and family

17

Filinvest Land, inc.

Manuel Villar

18

Vista Land and Lifescapes, inc.

1972

1967 1975104

Beatrice Campos and family

19

Greenfield Development Corp.

1961

Mariano Tan, Jr.

22

Greenfield Development Corp.

1961

Enrique Aboitiz and family

23

AboitizLand, Inc.

1993

Eric Recto

24

Alphaland Corp.

2007

Jose Antonio

25

Century Properties Group, Inc.

1986

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Figure 1. The rapid growth of property development as an accumulation strategy. Share of property development in selected conglomerates’ net incomes from 2000-2011105 SM Investments Corporation

Ayala Corporation


59


Alliance Global, Inc.

JG Summit Holdings, Inc.

DMCI Holdings, Inc.

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Notes 1

Data on the richest Filipinos derived from Doebele, J., Vorasarun, C., Ramakrishnan, J., & Nam, S. (2006, December 25). Philippines 40 richest. Forbes. Retrieved 3 May 2013, from http://www.forbes.com/ global/2006/1225/039.html; & Nam, S. (2010, July 7). Special report: the Philippines’ wealthiest. Forbes. Retrieved 3 May 2013, from http://www.forbes.com/lists/2010/86/philippines-10_The-Philippines-40Richest_Networth.html. Data on the Philippine economy derived from The World Bank (2012). World development indicators and Global development finance. World DataBank. Retrieved 20 February 2013, from http://databank.worldbank.org/ddp/home.do 2 Sayson, I.C. (2012, August 2). Billionaire Sy plans $1.5 Billion mall expansion: Southeast Asia. Bloomberg. Retrieved 19 February 2013 from, http://www.bloomberg.com/news/2012-08-01/billionaire-sy-plans-1-5billion-mall-expansion-southeast-asia.html 3 Dumlao, D.C. (2012, April 19). URC to open biofuel plant in PH, factory in Myanmar. Philippine Daily Inquirer. Retrieved 19 February 2013 from, http://business.inquirer.net/54581/urc-to-open-biofuel-plant-in-ph-factoryin-Myanmar 4 De la Fuente, F.G. (2012, May 29). Beverage bigwigs keen to set up more factories. Business World. Retrieved 19 February 2013 from, http://www.bworldonline.com/con10t.php?section=Corporate&title=Beveragebigwigs-keen-to-set-up-more-factories-&id=52563 5 GDP data drawn from The World Bank. (2012). World development indicators. World DataBank. Exports data drawn from the National Statistics Office (1997-2010). Philippine Statistical Yearbook. 6 Data sourced from The World Bank. (2012). Global economic monitor. World DataBank. Retrieved 20 February 2013, from http://databank.worldbank.org/ddp/home.do 7 Larkin, J.A. (1993). Sugar and the origins of modern Philippine society. Berkeley: University of California Press. 8 Borras, S. (2001). State-society relations in land reform implementation in the Philippines.” Development and Change, 32, 545-575; Kelly, P. (2003). Urbanization and the politics of land in the Manila region. The Annals of the American Academy of Political and Social Science, 170-187. 9 Bernabe, R. (2007). Potential impact on Philippine agriculture: bilateral and regional free trade agreements. Rural Development Review, 1(2). 10 Data sourced from The World Bank. (2012). World development indicators and Global development finance. World DataBank. Retrieved 20 February 2013, from http://databank.worldbank.org/ddp/home.do 11 Bernabe, R. (2007). Potential impact on Philippine agriculture: bilateral and regional free trade agreements. Rural Development Review, 1(2). 12 Borras, S. (2001). State-society relations in land reform implementation in the Philippines.” Development and Change, 32, 545-575. 13 Data drawn from National Statistics Office (1977-2010). 14 For an account of the dominant players in Philippine Ersatz capitalism in the early 1980s, see appendices in Yoshihara, K. (1988). The rise of Ersatz capitalism in South-East Asia. Quezon City: Ateneo de Manila University Press. 15 GM withdrew from the Philippine market in 1985, while Delta Motors closed in 1982; see Yoshihara, K. (1988). The rise of Ersatz capitalism in South-East Asia. Quezon City: Ateneo de Manila University Press, 162; 191. 16 Ofreneo, R. (2006). Development choices for Philippine textiles and garments in the post-MFA era. Journal of Contemporary Asia, 39(4), 543-561. 17 Bello, W., Kinley, D., & Elinson, E. (1982). Development debacle: the World Bank in the Philippines. San Francisco: Institute for Food and Development Policy and the Philippine Solidarity Network, 170. 18 Bello, W., Malig, M.M., Docena, H. & De Guzman, M. (2004). The anti-development state: the political economy of permanent crisis in the Philippines. Quezon City: University of the Philippines Press, 115. 19 Goodyear Corporate Website. (n.d.). Goodyear to close Philippines tire plant. Good Year News Releases. Retrieved 18 February 2013 from, http://www.goodyear.com/cfmx/web/corporate/media/news/story. cfm?a_id=20 20 Cahiles-Magkilat, B. (2011, November 17). GSPI promises $1-billion new capital but BoI is wary. Manila Bulletin. Retrieved 18 February 2013, from http://mb.com.ph/node/341724/g; Rimando, L. (2012, May 18).


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Philippine loses arbitration case vs Indian-run steel firm. Rappler. Retrieved 18 February 2013, from http:// www.rappler.com/business/5579-philippines-loses-arbitration-case-vs-indian-run-steel-firm 21 Bello, W., Malig, M.M., Docena, H. & De Guzman, M. (2004). The anti-development state: the political economy of permanent crisis in the Philippines. Quezon City: University of the Philippines Press, 19-20. 22 Kelly, P.F. (2000). Landscapes of globalization: human geographies of economic change in the Philippines. London: Routledge, 54; McKay, S.C. (2006). Satanic mills or silicon islands? the politics of high-tech production in the Philippines. Ithaca: Cornell University Press, 48-50. 23 Rivera, T. (1994). Landlords and capitalists: class, family, and state in Philippine manufacturing. Quezon City: University of the Philippines Press, 50-53. 24 Yoshihara, K. (1988). The rise of Ersatz capitalism in South-East Asia. Quezon City: Ateneo de Manila University Press. 25 Robinson, R., Beeson, M., Jayasuriya, K., and Kim, H., eds. (2000). Politics and markets in the wake of the Asian crisis. London: Routledge: 172-261. 26 Bello, W. (1999, November 8). “Is the structural adjustment approach really and truly dead?” Business World. Retrieved 17 February 2013, from http://www.tni.org/article/structural-adjustment-approach-really-andtrully-dead 27 Bello, W., Malig, M.M., Docena, H. & De Guzman, M. (2004). The anti-development state: the political economy of permanent crisis in the Philippines. Quezon City: University of the Philippines Press, 92-95. 28 Bases Conversion and Development Authority. (2010). Annual report 2010: setting new goals, charting new directions, 33. Retrieved 18 February 2013, from http://www.bcda.gov.ph/file_attachments/0000/5226/ BCDA_AR2010_FINAL.pdf 29 Bowen, J. T. & Leinbach, T. R. (1995). The state and liberalization: the Airline industry in the East Asian NICs. Annals of the Association of American Geographers, 85(3), 468-493. 30 Camus, M.R. (2012, August 30). Ayala overbid on FTI not so drastic. Business Mirror. 31 Bello, W., Malig, M.M., Docena, H. & De Guzman, M. (2004). The anti-development state: the political economy of permanent crisis in the Philippines. Quezon City: University of the Philippines Press, 247-249. 32 McKay, S.C. (2006). Satanic mills or silicon islands? the politics of high-tech production in the Philippines. Ithaca: Cornell University Press, 150-154. 33 Bangko Sentral ng Pilipinas. (2010). Results of the 2010 survey of information technology-business process outsourcing services. BSP Publications. Retrieved 28 February 2013, from http://www.bsp.gov.ph/downloads/ Publications/2012/ICT_2010.pdf 34 National Statistics Office (1977-2010). 35 McKay, S.C. (2006). Satanic mills or silicon islands? the politics of high-tech production in the Philippines. Ithaca: Cornell University Press, 56. 36 ABS-CBN. (2012, April 6). IT-BPO revenues hit $10.1 billion in 2010. ABS-CBN News. Retrieved 28 February 2013, from http://www.abs-cbnnews.com/business/04/06/12/it-bpo-revenues-hit-101-billion-2010. 37 Bangko Sentral ng Pilpinas. (n.d.). Foreign-to-total equity ratio by IT-BPO Category, 2005-2009. Retrieved 28 February 2013, from http://www.bsp.gov.ph/statistics/keystat/ict/itbpo_3.2.htm 38 National Statistics Office (2009-2010). Philippine Statistical Yearbook. Quezon City: National Statistics Office. 39 Based on data from Bangko Sentral ng Pilipinas. (n.d.). Economic and financial statistics. Retrieved 29 February 2013, from http://www.bsp.gov.ph/statistics/efs_ext3.asp; and National Statistics Office (2000-2010). Philippine Statistical Yearbook. Quezon City: National Statistics Office. 40 Data from the National Statistical Coordination Board (various years). National Accounts of the Philippines. 41 Banzon-Bautista, C. (1989). The Saudi connection: agrarian change in a Pampangan village, 1977-1984. Agrarian Transformations: Local Processes and the State in Southeast Asia. Berkeley: University of California Press, 144-158; Bangko Sentral ng Pilipinas. (n.d.). Consumer expectations survey, 2007-2013. Retrieved 28 February 2013, from http://www.bsp.gov.ph/publications/regular_consumer.asp 42 National Statistics Office. (2012). 2011 Survey on overseas Filipinos. Retrieved 28 February 2013, from http:// www.census.gov.ph/content/2011-survey-overseas-filipinos-sof 43 Institute for Migration and Development Issues. (2008). Table 62: Regional data of families receiving cash, gifts and other forms of assistance from abroad Family Income and Expenditures Survey (FIES). Philippine Migration and Development Statistical Almanac. Retrieved 14 May 2013 from, http://almanac.ofwphilanthropy.org/ index.php?option=com_con10t&task=blogcategory&id=104&Itemid=122

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44 McKay, S.C. (2006). Satanic mills or silicon islands? the politics of high-tech production in the Philippines. Ithaca: Cornell University Press, 146-165. 45 Based on data derived from The World Bank. (2012). World development indicators and Global Development Finance. World DataBank. Retrieved 20 February 2013, from http://databank.worldbank.org/ddp/home.do; The other nine countries are Djibouti, Ukraine, Iraq, Bolivia, Armenia, Congo, El Salvador, Paraguay, and Cape Verde. 46 These estimates are in constant 1985 pesos, and were derived from data on the “Ownership of Dwellings and Real Estate” (ODRE) industry group in the quarterly National Accounts of the Philippines reports published by the National Statistical Coordination Board. Ownership of dwellings refers to the imputed rents of owneroccupied dwelling units, while real estate refers to commissions from real estate sales and mortgages, and receipts from renting and leasing of residential and commercial space. The estimate for 2002 is 17 percent of the published value for gross value added by ODRE, which is the approximate share of real estate in the ODRE industry group in 2003, while the estimate for 2010 is 31 percent of the published value for ODRE GVA, which is the share of real estate in the ODRE industry group for the 4th quarter of 2010. Sourced from National Statistical Coordinating Board (2003), “Third Quarter 2003 Gross National Product and Gross Domestic Product by Industrial Origin”, and (2010), “Fourth Quarter 2010 Gross National Product and Gross Domestic Product by Industrial Origin”, National Accounts of the Philippines, Retrieved 4 May 2013, from http://www.nscb.gov.ph/sna/2003/3qtr-2003/2003ser3.asp & http://www.nscb.gov.ph/ sna/2010/4th2010/2010ser4.asp 47 National Statistical Coordinating Board. (2006). 3rd Quarter 2006: Gross national product & gross domestic product by industrial origin. National Accounts of the Philippines. Retrieved 4 May 2013, from http://www. nscb.gov.ph/sna/2006/3rdQ2006/2006ser3.asp 48 Lucas, D. (2007, May 20). OFW remittances fueling growth in real estate. Philippine Daily Inquirer. Retrieved 4 May 2013, from http://globalnation.inquirer.net/news/breakingnews/view/20070520-67002/OFW_ remittances_fueling_growth_in_real_estate.; Balea, J. (2009, September 29). RP property sector on way to recovery. ABS-CBN News. Retrieved 4 May 2013, from http://www.abs-cbnnews.com/business/09/27/09/ rp-property-sector-way-recovery 49 Data on remittances from Bangko Sentral ng Pilipinas. (n.d.) Economic and financial statistics. Retrieved 29 February 2013, from http://www.bsp.gov.ph/statistics/efs_ext3.asp 50 Balea, J. (2009, September 29). RP property sector on way to recovery. ABS-CBN News, 29 September 2009. Retrieved 4 May 2013, from http://www.abs-cbnnews.com/business/09/27/09/rp-property-sector-wayrecovery 51 Lucas, D.L. (2008, April 11). OFWs boost Robinsons land housing sales. Philippine Daily Inquirer. Retrieved 4 May 2013, from http://business.inquirer.net/money/topstories/view/20080411-129653/OFWs-boostRobinsons-Land-housing-sales. 52 Montealegre, K.A.M. (2011, November 1). ALI says project launches on track with goal. Manila Times. 53 Data sourced from Housing and Land Use Regulatory Board. (n.d.) License to Sell Statistics. Retrieved 13 May 2013, from http://hlurb.gov.ph/license-to-sell-statistics/ 54 Data derived from National Statistics Office. (2012). Index of construction statistics. Retrieved 13 May 2013, from http://www.census.gov.ph/old/data/sectordata/databldgperm.html 55 Colliers International. (2011). Philippine real estate market report: Q1 201,1 Quarterly Update, 4. 56 Cahiles-Magkilat, B. (2012). Local office space shortage forecast. Manila Bulletin, 29 May 2012. Retrieved 14 February 2013, from http://www.mb.com.ph/node/360753/local-office-. 57 Colliers International. (2011, June 21). Philippine real estate market report: Q1 2011 Quarterly Update, 4; Quintos, L. (2012). BPO boosts office space pre-leasing. Manila Times. Retrieved 14 February 2013, from http:// www.manilatimes.net/index.php/business/top-business-news/25247-bpo-boosts-office-space-pre-leasing 58 Data derived from National Statistics Office, 2012. 59 Colliers International. (2010). The knowledge report: property market overview, 2nd Quarter, 10. 60 For a more substantial discussion of this theme, see Shatkin, G. (2005). Colonial capital, modernist capital, global capital: the changing political symbolism of urban space in Metro Manila, the Philippines. Pacific Affairs, 78(4), 577-600. 61 Kelly, P. (2003). Urbanization and the politics of land in the Manila region. The Annals of the American Academy of Political and Social Science, 175.


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62 Provincial Government of Cavite. (2009). Socio-Economic and Physical Profile 2009, 106. 63 Quezon City Government. (2002). Quezon City Comprehensive Land Use Plan, 2(2). 64 Data sourced from SM Development Corporation (2011). SM Development Corporation – Company Presentation, April 2011; SM Development Corporation (2001-2011). SM Development Corporation Annual Report. 65 SyCipGorresVelayo& Co. (2012). Independent Auditor’s Report, SM Development Corporation, 35. 66 Harvey, D. (2005). A brief history of neoliberalism. Oxford: Oxford University Press, 2. 67 For a discussion of neo-liberalism in Korea, see Pirie, I. (2006). Economic crisis and the construction of a neoliberal regulatory regime in Korea. Competition and Change, 10(1), 49-71. 68 Harvey, D. (2005). A brief history of neoliberalism. Oxford: Oxford University Press, 19-36. 69 Coronel, S. (2003). Open for business. iMagazine, 9(3). Retrieved 14 May 2013, from http://i-site.ph/ Analysis/business.html 70 Kelly, P. (2003). Urbanization and the politics of land in the Manila region. The Annals of the American Academy of Political and Social Science, 170-187. 71 Coronel, S. (2003). Open for Business. iMagazine, 9(3). Retrieved 14 May 2013, from http://i-site.ph/ Analysis/business.html 72 McKay, S.C. (2006). Satanic mills or silicon islands? the politics of high-tech production in the Philippines. Ithaca: Cornell University Press, 143. 73 Torres, T. (2011, March 14). SC gives green light for Senate to probe Villar on C-5 road allegation. Philippine Daily Inquirer. Retrieved 10 May 2013, from http://newsinfo.inquirer.net/inquirerheadlines/nation/ view/20110314-325418/SC-gives-green-light-for-Senate-to-probe-Villar-on-C-5-road-allegation 74 Collas-Monsod, S. (2010, April 9). Who junked compassion and decency? Philippine Daily Inquirer. Retrieved 10 May 2013, from http://opinion.inquirer.net/inquireropinion/columns/view/20100409-263313/Whojunked-compassion-and-decency 75 Goss, J. (1998). The struggle for the right to the city in Metro Manila. Philippine Sociological Review, 46(3-4), 88-120. 76 Banzon-Bautista, M.C.R. (1998, July-December). Culture and urbanization: the Philippine Case. Philippine Sociological Review, 46(3-4), 21. 77 Berner, E. (1997). Defending a place in the City: localities and the struggle for urban land in Metro Manila. Quezon City: Ateneo de Manila University Press, 21. 78 Krinks, P. (2002). The economy of the Philippines: elites, inequalities and economic restructuring. New York: Routledge, 199-201; Rivera, T. C. (1994). Landlords and capitalists: class, family, and state in Philippine manufacturing. Quezon City: University of the Philippines Press, 33. 79 Batalla, E.V. (1999). Zaibatsu Development in the Philippines: the Ayala Model. Southeast Asian Studies, 37(1), 18-49. 80 JG Summit Holdings, Inc. (2007). 2007 Annual Report, 122. 81 Brenner, N. and Theodore, N. (2002). Cities and the geographies of actually existing neoliberalism. In Brenner, N. and Theodore, N. (eds.) Spaces of neoliberalism: urban restructuring in North America and Western Europe. Oxford: Blackwell. 82 Gonzales, I.C. C. and Visto, C.S. (2004, February 19). SM unit buys BagoBantay property for P695 million. Business World. 83 Gonzales, I.C. C. and Visto, C.S. (2004, February 19). SM unit buys BagoBantay property for P695 million. Business World. 84 Osorio, M.E. P. (2008, April 29). Rufino group bags ‘primest lot’ in Global City for P2.032B. Philippine Star. 85 Camus, M.R. (2012, August 30). Ayala overbid on FTI not so drastic. Business Mirror. 86 Lorenzo, A.B. L. (2007, July 26). Metropac on Fort Bonifacio: biting off more than it could chew. Business World 2007 Anniversary Report. 87 Bases Conversion and Development Authority (2010). Annual report 2010: setting new goals, charting new directions. Retrieved 13 May 2013, from http://www.bcda.gov.ph/file_attachments/0000/5226/BCDA_ AR2010_FINAL.pdf 88 Bases Conversion and Development Authority (2010). Annual report 2010: setting new goals, charting new directions. Retrieved 13 May 2013, from http://www.bcda.gov.ph/file_attachments/0000/5226/BCDA_ AR2010_FINAL.pdf

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89 Bases Conversion and Development Authority (2009). Annual report 2009: a catalyst for transformation. Retrieved 13 May 2013, from http://www.bcda.gov.ph/file_attachments/0000/2647/BCDA_ AR2009_112210.pdf 90 Dumlao, D. (2012, July 5). Ayala Land unveils P65-B business district project in QC. Philippine Daily Inquirer. Retrieved 13 May 2013, from http://business.inquirer.net/69289/ayala-land-unveils-p65-b-business-districtproject-in-qc. 91 Bases Conversion and Development Authority (2010). Annual report 2010: setting new goals, charting new directions. Retrieved 13 May 2013, from http://www.bcda.gov.ph/file_attachments/0000/5226/BCDA_ AR2010_FINAL.pdf 92 Gross floor area figures are estimates derived from Ayala Land, Inc. (2005). 2004 Annual Report, 16. Retrieved 13 May 2013, from http://ir.ayalaland.com.ph/uploads/files/ALI_Annual_Report_2004.pdf; Ayala Land, Inc. (2011). Ayala Land, Inc. 2010 Integrated Annual and Sustainability Report, 3. Retrieved 13 May 2013, from http://www.ayala.com.ph/CSR/ali_2010_annual_report.pdf. Ayala Land reports gross leasable areas for all its commercial centers, and the estimate for NCR was derived by subtracting gross floor areas of Ayala Center Cebu (119,565 sq.m. for 2000, 128,686 sq.m. for 2010) and Marquee Mall in Pampanga (70,000 sq.m. for 2010) from this reported figure. Revenue figures were reported in 2004, Ayala Land, Inc. (2005). 2004 Annual Report, 16 and 2010, and Ayala Land, Inc. (2011). Ayala Land, Inc. 2010 Integrated Annual and Sustainability Report, 34. Retrieved 13 May 2013, from http://www.ayala.com.ph/CSR/ali_2010_annual_report.pdf 93 Data on gross floor area were derived from Robinsons Land Corporation and Subsidiaries (2006). SEC Form 17-A Annual Report Pursuant to Section 17 of the Securities Regulation code and Section 141 of the Corporation code of the Philippines for the Fiscal Year Ended September 30, 2005, 2, and Robinsons Land Corporation and Subsidiaries (2011). SEC Form 17-A Annual Report Pursuant to Section 17 of the Securities Regulation code and Section 141 of the Corporation code of the Philippines for the Fiscal Year Ended September 30, 2010, 3. Data on revenues sourced from JG Summit Holdings, Inc. (2002). JG Summit Holdings, Inc. 2001 Annual Report, 67; Robinsons Land Corporation (2011). Robinsons Land Corporation 2010 Annual Report, 34. 94 Data derived from SM Prime Holdings, Inc. (2003). Continuing the uptrend: SM Prime Holdings, Inc. 2002 Annual Report, 14-16, 25; SM Prime Holdings, Inc. (2011). SM Prime Holdings, Inc. Annual Report 2010, 16, 48. 95 Rankings derived from Forbes. (2012). Philippines’ 40 Richest List. Retrieved 17 May 2013, from http://www. forbes.com/philippines-billionaires/list/. 96 Firms operating in distinctly different segments, and/or are not structured as subsidiaries of another property development firm within the conglomerate, are listed; subsidiary brands, e.g. Alveo, Avida, and Amaia for Ayala Land, Inc., are not listed as separate entities. 97 SM Development Corporation was consolidated with SM Prime, SM Investment Corporation’s mall development arm, in May 2013. 98 Date of first construction. SM Development itself was acquired, as Ayala Fund Inc., in 1986, and renamed SM Fund Inc. It was renamed SMDC in May 1996. 99 Date of first construction in the Philippines. Lucio Tan’s Eton Properties was first established in Hong Kong in the `80s, where its business is worth US$ 2.6 billion. http://business.inquirer.net/75247/biz-buzz-buying-airrights 100 Formerly Fil-Estate Land, Incs., acquired by the Alliance Global Group in 2011. See Dumlao, D. (2011, January 12). Alliance Global takes 60% control of Fil-Estate Land. Philippine Daily Inquirer. Retrieved 17 May 2013 from http://business.inquirer.net/money/breakingnews/view/20110112-314057/Alliance-Global-takes-60control-of-Fil-Estate-land 101 Joint venture with Ashmore Group, a London-based private equity fund, and Ongpin’s RVO Capital Ventures Group. 102 Through San Miguel Corporation, although Mr. Cojuangco divested of his stake in San Miguel Corporation in mid-2012. 103 Founded as a joint venture with Edgar Sia II of MangInasal. 104 As Camella Homes. Vista Land and Lifescapes incorporated 2006. 105 Data sourced from the annual reports of these conglomerates from 2000 to 2011.


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C h apter

2

Industrial Decay: The Hollowing-Out of Manufacturing and Employment

Opposite the growth that has allowed Filipino capitalists to accumulate vast wealth is industrial sector decline and hollowing-out. In the period 2000-2010, while 7,726 new firms emerged from real estate, renting, and business activities, and 425,101 new jobs were generated, firms in the formal sector incurred net losses and jobs were lost.1 Further back in the `50s, the Philippines was expected to be one of most-likely-to-succeed Asian nations. Industrial growth indeed peaked in the `70s, averaging 7.8 percent2 throughout the decade. Not long after, however, early industrialization attempts were abandoned and infant industry promotion stalled. This was immediately replaced by structural adjustment in the `80s, which would have tragic effects on the country’s industrial sector; its poorest average growth performance was 0.5 percent in the period 1981-90.3 The first decade of the millennium saw a remarkable and definitive shift in Philippine economic structure. Big capital adjusted and diversified from agriculture and manufacturing into services and nontradables, particularly utilities, property, retail trade, and infrastructure. The previous chapter shows the tremendous gains this shift has earned for big capital. This chapter will discuss what was lost, and what this loss means for the country. Lacking policy support and shunned by capital, manufacturing continues to shrink while the economy has increasingly informalized. What is being touted as modest growth is characterized by low job generation, highly-skewed distribution, and vulnerability to financial shocks. Issues of structural infirmities and appropriate industrial deepening are ignored. 67


The premise of restructuring Immediately after World War II, the Philippines had embarked on importsubstitution industrialization, which was slowly abandoned after barely one and a half decades. While vestiges of old protection remained, there was no real attempt to promote infant industry, even as export-orientation became a clear project throughout the late `60s and the `70s. Philippine industrialization strategy consisted of tentative and uneven set of policies, which ushered the primacy of liberalization in the development discourse.4 Past protectionist biases5 under an “inward looking strategy of industrialization”6 were tagged as the root causes of the long-term sluggishness of the economy.7 The narrative that the Philippines squandered its development potential took root. Government itself summed up the essence of the country’s unilateral Tariff Reform Program that commenced in 1981, thus: “In the `70s, industrial and trade policies were biased towards importsubstituting activities which resulted, among others, in the overprotection of certain local, domestic market-oriented industries. Said excessive protection, in turn, led to market distortions that discriminated against investments in agriculture and exports and encouraged the production of finished consumer goods over intermediate and capital goods. The initiative to reform the tariff system came from the recognition that over two decades of protection through high tariffs have proved counter-productive rather than supportive of the country’s development objectives. Realizing the need for a change in policy to remedy the situation, government official policy shifted from emphasis on importsubstitution to promotion of exports.” 8 The analysis found widespread support from members of the economics profession who offered additional arguments in support of policy reform. According to them, it was selective export promotion favoring large enterprises and the adoption of capital intensive technologies that aggravated the bias against agriculture and labor-intensive industries, which then resulted in high

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S t a t e o f Fr a g m e n t a t i o n : T he P hi l ippi n es i n T r a n sitio n

tariffs.9 They maintained that these twin policies discouraged backward linkages, penalized downstream industries, and encouraged the use of imported inputs.10 The egalitarian undertones of the critique were alluring. This argument was that protection rewarded a narrow segment of consumer goods manufacturers, but discriminated against exporters and producers of capital and intermediate products.11 This linked directly to two other weaknesses—the regional concentration of industries and the underdevelopment of small- and mediumscale enterprises.12 Metro Manila became the preferred location because of its proximity to supply of imported inputs and the availability of more favorable tax and credit concessions. In contrast, small producers did not enjoy the same privileges captured by big businesses, and they had limited access to technical assistance and technology transfers afforded to large industry through licensing agreements and foreign equity participation. Another set of critique focused on the least defensible and much-censured political-economy framework—the capture of the state by particularistic elite interests. The dominant perspective on the Philippine state (covering an unbroken period from the colonial era to post-Martial Law) emphasized the significant role of national oligarchy in the systematic plunder of the economy.13 Post-war import substitution was designed to enable the elites to diversify their stakes in the economy14. Contented to be appendages of multinational corporations and by the protection high tariffs provided, the elite simply concentrated on the export of raw agriculture.15 Viewed as an instrument of elite dominance rather than as an agency representing broad national development interest, the state suffered low credibility. It didn’t help that corruption and wasteful showcase projects bled the national coffers and led to massive foreign debt obligations. Little wonder that many saw a captured government and its protectionist interventions as the worst possible policy combination.16 Since the main strands of criticism had revolved around state capture and the interventionist policies that discriminated against agriculture, small manufactures, and labor, the dominant response was to open up the market. For the most part, it was also an ideological response. Industrial Decay: The Hollowing-Out of Manufacturing and Employment

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Belief in the market, on the one hand, stressed that industrial policies may be “unnecessary,” as “structural transformation of a developing country can be expected to occur naturally, i.e. even without the benefit of industrial promotion policies.”17 Disdain for government, on the other, led to a judgment that government could not be allowed to pick winners by favoring specific sectors or firms, and that it should be concerned only with general support like infrastructure, research and development, and education. Specific reforms aimed at reducing government’s role have been institutionalized more systematically starting from the time of President Fidel V. Ramos. The 1992-1998 Medium Term Development Program expressly identified the private sector as the engine of growth, and laid down the programs for the restructuring of the bureaucracy, on top of the continuing program to open up the economy and the privatization program.18 The domestic push to roll back state action coincided with a global project led by the United States and the international financial institutions to “re-subordinate” the South. This meant quashing emerging Southern development agenda to increase political-economic activism of developing countries, while allowing a dose of “state-assisted capitalism.”19 The debt crisis in the early `80s made it easier for structural adjustment programs to be imposed on countries like the Philippines that needed relief. The IFIs dictated the direction of reforms in the Philippines. The remarkable growth of the East Asian newly industrializing countries or NICs—in particular, South Korea and Taiwan—was misread as “newly discovered formula for economic development in the late twentieth century.”20 Exportorientation, cheap labor, currency undervaluation, free markets, and minimum state intervention became the key ingredients.21 Completely overlooked was the historical use of state intervention through subsidy and protection to achieve industrialization goals.22 SAPs, too, explicitly proscribed the use of these interventionist instruments. Against this backdrop, the stage was set for the policies for economic liberalization.

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Reorienting industry through policy reform The most advanced and most consistently implemented reform agenda since the `80s and over five post-Marcos administrations is economic liberalization, which encompasses efforts to liberalize trade, privatize public assets and sectors, and relax restrictions on foreign direct investment policies.

Trade liberalization These trade reforms implemented since 1981 (see Table 1) have had three key features: one, the biggest push to reform has been unilateral and consistent since the `80s; two, these commitments have been sealed in international agreements, going back on which would incur costs; and three, the government has been aggressive and often liberalized beyond what international commitments required. Still feeling the effects of the debt crisis, the Philippines had to go to the IFIs for balance of payments and fiscal relief. The result was a couple of structural adjustment program loans that implied several instalments of the Tariff Reform Program. In the period 1981-85, TRP1 brought down all the tariff rates to within the zero-to-50 percent range, cutting both the average tariff and the variation in tariffs across industries. Future instalments of the TRP were done through a series of Executive Orders. TRP2, implemented through EO 470, brought down tariffs to within the three - 30 percent range. Tariffs on industrial products were cut by TRP3, through EO 264, to further go down to range three - 10 percent by year 2000. The same July 1995 EO dealt the “largest overhaul of the country’s tariff code,”23 with rate reductions on 4,142 tariff lines in the manufacturing sector, and a target of a uniform five percent tariff by 2004. TRP4 started as early as 1998, but with the most modifications taking place in 2001, mandating a band of zero - five percent range instead of the uniform five percent tariffs. Only few sensitive agricultural products were exempted. TRP affected manufactured goods the most, with tariff rates coming down to almost zero in 15 years, between 1988 and 2003. Among the most aggressive cuts were on: radio, television, and communication equipment, from 21.83 percent in 1988 to 0.09 percent in 2003 (or a 99.6 percent cut); paper and


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paper products, from 34.5 percent to 3.6 percent (89.6 percent cut); textiles, from 38.73 percent to 4.96 percent (87.2 percent cut); and footwear, from 36.21 percent to 5.45 percent (84.9 percent cut).24 The marked unilateral aggressiveness of the TRP was stalled in 2003 when tariffs were either increased to a 5 - 15 percent range, affecting more than a thousand product lines, or frozen at 2003 levels affecting even more product lines.25 The “re-calibration” was done in response to pressure from domestic industries, as well as an attempt to check further revenue losses.26 It was hardly the end of trade liberalization, though. Having abandoned unilateral liberalization, the country turned to multilateral, regional, and bilateral agreements to continue opening up. The country joined the ASEAN Free Trade Agreement in 1993 and the World Trade Organization in 1995. In 1996, EOs 288, 313, and 328 lifted quantitative restrictions in favor of tariffs and set minimum access volumes for agricultural imports, in compliance with the country’s commitments. With WTO rules as basic framework, the Philippines often applied tariffs more generous than most favored nation bound rates, and closer to AFTA rates, until the re-calibration in 2003. Still, various trade and economic agreements were signed through ASEAN and bilaterally resulted in further tariff reductions, though within the framework of reciprocity. By 2012, the Philippines had specific commitments to Korea, Japan (regional and bilateral), New Zealand, and India. The sweeping reforms drastically brought down average nominal tariffs, cutting in half `80’s 42 percent to about 20 percent in 1985; rates further fell to a mere sixth of its `80s’ level and to 7.12 percent in 2012. Retaining some sensitive products, agriculture registered the highest average nominal tariff at 11.92 percent; mining, the lowest at 2.30 percent; manufacturing, 6.18 percent.27

Investment policy In tandem were trade liberalization and the increased openness in investment regime. Deemed as “the most beneficial form of capital flows,”28 foreign direct investments became a major economic target. The strategy had been two72

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pronged: expansion of the areas open for foreign participation and updating of policies to encourage export-oriented investments. (See Table 2) To integrate and harmonize various investment policies, EO 226 (1987 and amended in 1995) enacted the Omnibus Investment Code, created the Board of Investment, and made available fiscal and non-fiscal incentives for domestic and foreign investors. Republic Act 7042 or the Foreign Investment Act of 1991 allowed foreign equity participation of up to hundred percent in all areas, whether catering to domestic or export markets, except those included in the Foreign Investment Negative List. This was further refined by RA 8179, removing List C, and allowing foreign participation in small- and medium-sized enterprises for a minimum paid-in capital of US$200 million. In year 2000, RA 8762 or the Retail Trade Liberalization Act opened up retail businesses to full ownership, subject only to qualifications that included a minimum capital requirement of US$7.5 million; foreign companies were also allowed to engage in rice and corn trade. At the same time, the financial sector was also liberalized. Following the easing of restrictions on entry into domestic banking and branching in the early `90s, RA 7721 liberalized the entry and scope of operations of foreign banks in the country. The impact was immediate, from only four foreign banks prior to RA 7721 to 18 branches and subsidiaries by early 1995.29 Rural banks were also liberalized for foreign equity (RA 10754), and so was the operation of investment houses (RA 8366). For its proponents, trade liberalization did not proceed fast enough; they had to push for “second best scenario.” While waiting for zero tariffs on imports, appropriate policies were put in place to provide exporters with imported inputs at almost free trade prices and to approximate for them the net effective protection received by the import substituting industries.30 The earliest implemented policy sought to utilize the bases vacated by the US military. The Bases Conversion and Development Act (RA 7227, 1992) created free ports out of these properties. RA 7844 (1994) mandated the formulation of an export development plan and provided fiscal incentives to exporters, while RA 7916 (1995) created special economic zones that would provide special incentives to locators. Following these were laws that created other SEZs and free ports (RA 7922, 7903, 9490 and 9782). Industrial Decay: The Hollowing-Out of Manufacturing and Employment

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The passage of the Mining Act of 1995, which signalled openness, allowed 100 percent foreign ownership and up to 50 years lease. The Supreme Court, in January 2004, declared the law unconstitutional, but reversed its decision in December of same year.

Privatization Completing the triad of major economic reforms was an ambitious privatization program. At the height of Martial Law, President Ferdinand Marcos expanded the state’s economic role by: expanding existing government-owned or -controlled corporations; creating new enterprises ostensibly to support his vision of New Society; and confiscating the commercial interests of his political rivals.31 Government also absorbed the failing ventures of its cronies when the country fell into recession in the period 1980-82. The economic fallout and the government’s weakened capacity to fend off structural adjustment, notwithstanding, privatization was stalled until the last months of Marcos’rule. By the time Marcos fled the country, the government was left with 105 parent GOCCs, 144 subsidiaries, and 18 subsidiaries of subsidiaries, plus an additional 60 acquired assets the new government sequestered from the deposed president’s cronies.32 Under post-EDSA governments, privatization facilitated the re-entry of old interests into some of the strategic assets, and later on, when the traded sectors showed remarkable decline, the shift towards utilities and property development. It did not help that in the clamor for reforms post-EDSA, which centered on arguments for efficiency, equity, anti-corruption, fiscal recovery, and belief in markets, none in the government was invested in claiming personal stakes in the assets being auctioned off. The key privatization policies implemented were determined and comprehensive, initially covering non-performing assets and non-strategic proprietary interests, then expanding to strategic industrial ventures and utilities (oil, water services, electricity, telecommunications), and land. (See Table 3) Capping these off were mechanisms for private participation in key infrastructure and development areas, which would evolve from build-operate-transfer schemes to publicprivate partnerships. The government has privatized 480 assets by July 200133; 74

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29 more assets would be privatized after the Privatization and Management Office took over, starting in 2001 until end-2012.34 Under the presidency of Gloria Macapagal-Arroyo, the Electricity Power Industry Reform Act also privatized NPC’s generating or operating plants; 26 of these as of June 2010.35 Water service delivery also got introduced to privatization with the breaking up of the MWSS into two areas that were bid out under long-term concessions to private contractors.

The unravelling In the third quarter of 2013, the Philippines registered a real GDP growth rate of 7.0 percent. This was significant because while there had been 58 consecutive quarters of positive growth since 1999, there had only been 14 instances of growth beyond seven percent. In this case, it was the fifth consecutive quarter the seven-percent mark was breached in the Benigno S. Aquino III presidency, the first time such a feat was achieved.36 Equally significant were the successive upgrades given to the Philippines by credit rating agencies in the past three years. But alongside these feats has been the decline of industry and manufacturing industry. While trade performance has barely budged, FDIs have remained stagnant, with economic activity shifting from manufacturing to services and non-tradables, and the employment sector weakening. All these signifying three decades of failure to generate expected outcomes from reforms.

Missed targets: poor trade performance, low investments Undoubtedly, the Philippines has become more integrated to the global economy, doubling its trade to GDP ratio from 1980 (52 percent) to 2000 (105 percent)37, which is hailed as success. Since 2000, however, it has been on a continuous slide, indicative not just of actual trade capacity (which at 65 percent in 2012 was only a little more than a fifth from 32 years ago), but also of the restructuring away from manufacturing that has ensued. The other main trade indicators are: merchandise trade as a percent of GDP has fluctuated very near the 1980 level (46.9 percent in 2012 vs 43.3 percent in 1980) and manufactures exports seemed to have peaked in 1999. Ravaged by Industrial Decay: The Hollowing-Out of Manufacturing and Employment

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competition and marginalized by declining terms of trade, agricultural exports are now at less than one percent of GDP. The new entrant is services trade, which hovers within 12 - 13 percent of GDP.38 Not even economists’ claim that the suspension of TRP4 has been inimical to trade could explain the devastation of the trade sector. Since it joined the WTO, the Philippines has always registered lower trade restrictiveness both in terms of MFN applied tariffs and market access, 3.7 percent and 2.77 percent respectively, compared to ASEAN members taken collectively, 5.02 percent and 4.36 percent, in 1995-2009. Yet it experienced less than three-fifths the trade growth ASEAN did (4.33 percent vs 7.68 percent).39 Unable to graduate from primary products or hasten industrial innovation, Philippine trade has always been in deficit. Average shortfalls hovered around US$70-100 million in the `50s and `60s, and increased more than five-fold (US$546 million) in the `70s.40 During liberalization period this ballooned to billions of dollars representing significant percentages of GDP. From US$1.5 billion in 1980 (five percent of GDP), the deficit grew to US$2.6 billion (six percent of GDP) in 1990, fluctuating in the 2000s (US$1.6 billion/two percent of GDP in 2000; US$3.6 billion/two percent of GDP in 2010), and peaked again at six percent of GDP and US$14.2 billion in 2012.41 Despite government’s efforts, the country has also not been a favorite destination of foreign investments. Reviews of SEZs and free ports have been mixed in terms of the investments they have been able to attract, though they claim to have gained some. The Subic Free Port, for instance, claims to have attracted a total of US$8.8 billion between 1992 and 2012.42 Overall, from a net outflow of US$106 million in 1980, FDIs have grown to US$1.6 billion in 2010, representing less than one percent of GDP. In the past three years, a modest spike in FDIs has been observed, peaking at US$2.8 billion or 1.12 percent of GDP in 2012. The country’s performance, however, has paled in comparison to its closest neighbors, which in nominal terms have received at least three times (Vietnam, US$7.4 billion in 2011) to seven times (Indonesia, US$19.9 billion in 2012) as much FDI, representing at least twice (Indonesia, 2.3 percent in 2012) to five times (Vietnam, six percent in 2011) as much as ratio of GDP.43 76

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Not only has the opening up in investment regimes failed to usher in sizeable amounts of FDIs, it has also resulted in domestic investments’ downward shift. Gross capital formation as percent of GDP is now a quarter less than its 1980 level (29.08 percent in 1980, 20.5 percent in 2010, and 21.5 percent in 2012).44 It is private participation in key infrastructure, amounting to US$54.3 billion in the period 1990-2011, or two-thirds more than the total net FDI inflows (US$32.3 billion) for the same period, that showed modest performance. Almost a quarter of these investments (US$12.8 billion) were made in 1997 when investments in telecoms, transport, and water and sanitation were at their highest. Other than this, and energy’s peak in 2009, private investments in these sectors tapered off outside key moments, together averaging US$2.4 billion in the last decade. Even then, the contribution across the four sectors varied, with energy consistently getting significant share, while water and sanitation only had small additional investments in 2006 and 2009.45 The combination of poor trade performance and limited domestic and foreign investments are now grave indicators that the reforms have not worked. Add to this government’s deliberate withdrawal from the economy, it was inevitable that the country’s economic base would weaken and hollow-out.

Manufacturing decline The Philippines manufacturing sector has underperformed compared to its Asian neighbours. Philippine industry’s peak, 7.8 percent average growth in the `70s, was systematically torn down, achieving a mere 0.5 percent growth rate in the `80s. Industrial value-added dwindled progressively from 39 percent of GDP in 1980 to 32.7 percent in 2013. The manufacturing sector slid down faster from 26 percent to 22.8 percent in the same period.46 The dip in the country’s industrial and manufacturing performance was in sharp contrast to the increasing Asian shares in global manufacturing output since the `70s. ASEAN neighbors showed marked improvement from the `70s to the `90s, with Malaysian and Thai manufacturing shares to GDP increasing by 60 percent and 55 percent, respectively, and Indonesia’s more than doubling (120 percent increase).47 Industrial Decay: The Hollowing-Out of Manufacturing and Employment

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The Asian Development Bank attributes the country’s dismal performance to the failure of the “trade liberalization in the 1990s and even in the recent high growth period.”48 This has resulted in de-industrialization49 and continuous decline in shares of manufacturing for more than two decades now.50 While maturing economies are expected to experience de-industrialization and growth in higher-end services share, the Philippines case is peculiar as it began de-industrializing even before it could actually take off. The performance of manufacturing has shown some variations across sectors and product lines. Among the hardest hit by liberalization was textiles, which together with garments had been considered as base industries contributing substantially to both manufacturing output and employment in the `60s and the `70s. From its heyday during the import substitution period to the early `90s, textile experienced sustained output reduction and factory closures.51 In the more dynamic garments sector, the number of establishments more than tripled between 1983 and 1988, until its share in the number of manufacturing firms settled at 13 to 15 percent of total.52 The electronics sector benefited from the open investments regime, taking full advantage of the EPZ and SEZ setup. It was also regarded as one of the fastest growing export industries, with revenues growing twenty-fold from US$1.5 billion in 1990 to US$31 billion in 2010; its exports accounted for 66 percent of the total in the period 2000-2007.53 The success of the sector owed much to the relocation of Japanese and Asian NICs affiliates in the region54, the same affiliates buying most of the export sales from the local firms.55 Yet while performing great exports-wise, the electronics sector also demonstrated what ailed Philippine manufacturing. The heavy reliance on electronics, or more pointedly the failure to cultivate new emerging winners, made the country susceptible to a slowdown once new capacities had been ‘run in’ and new facilities were built up in other locations.56 In addition, a slowdown in demand meant substantial fluctuation in export earnings, as shown in the wake of the global financial crisis of 2008.57 The sector also interacted little with other domestic sectors58, precluding the development of backward and forward linkages and increase in sectoral value-added.

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Another casualty has been the automotive industry. Specific support to the industry has paved the way for the development of vehicle assembly and more importantly, parts and components manufacturing, which has accounted for as much as 80 percent of industry output.59 The industry has been nurtured through a policy of local content requirement, high tariffs, and restrictions on importation of motor vehicles.60 But failing to establish linkages between foreign assemblers and local parts producers, and to reduce car prices,61 the wave of liberalization has also swept the industry. On top of the unilateral compulsion, changes have been made to comply with WTO agreements on Trade Related Investment Measures.62 Prior protection and privileges were removed in 2003 and tariffs were cut down to zero in 2010.63 Not only have these changes undermined domestic auto parts manufacturers64, in fact killing related assembly activities like those in passenger jeepneys (e.g. Sarao and Francisco Motors), they have also made importation cheaper and have eclipsed the domesticallyassembled car sales, which grew by a miniscule three percent in the period 1998-2003; import grew 39.5 percent in the same period.65 Absent the wall of tariff protection and amid the general paleness of the economy, the exit of Ford Group Philippines at the end of 2012 dealt a fatal blow to the government’s Automotive Export Program. Ford cited low supply base and the lack of economies of scale as reasons.66 Much has been said about the important role of SMEs in the economy. There is no escaping the reality that most of the establishments in the country are micro and small-scale. Their performance has been affected by the unabated slide in overall performance of domestic firms, especially in industry and manufacturing; by poor linkages; and by the inability of these businesses to establish economies of scale. Many of the bigger establishments have either been privatized or closed down, so that by 2012, nine in 10 of formal establishments in the country were micro enterprises, or those that employed less than 10 workers. Medium and large enterprises together accounted for only 0.87 percent of formal establishments, and only 204 firms employed more than 2,000 workers in 2011.67 At present, the concentration of their economic activity, and hence also of employment, is heavily skewed in favor of Luzon, dispersal of industry being yet another unmet objective of the reform process. (See Figure 1)


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Weak employment generation The number of establishments in the formal sector increased in the 20-year period between 1990-2010 by almost 385,000, but this was accompanied by a decrease of 920,000 jobs in the formal sector. The biggest job losses were in wholesale and retail trade (1.3 million) and manufacturing (694,000).68 Among the losses were in textile and garments, whose job contributions were cut to only two-fifth and two-thirds of their peak contributions to manufacturing employment after liberalization.69 Jobs in the electronics sector increased almost ten-fold since 198570, contrasting with the deeper job cuts in other sectors. The shift to (or if one of the original objectives of the reform were to be used, the failure to temper the tendency for) capital intensive operations in manufacturing71, while it happened, was not enough to explain massive formal job losses. The biggest determinant was sluggishness in manufacturing and the shift to more informal employment arrangements. Services now dominate the economy, accounting for 53.4 percent of employment, agriculture, 30.9 percent, and industry, 18.6 percent.72 This employment mix is far from ideal. One reason is that productivity per worker in services (US$3,937 in 2011), while three times as high as in agriculture (US$1,262), is only half that of industry (US$7,731). Manufacturing (US$9,236) yields the highest value-added.73 Another is that on average manufacturing pays better than services, and third, manufacturing jobs require lower educational attainment compared to services.74 In addition, the lack of employment opportunity is more severe in the provinces—only three in ten formal jobs is outside of Luzon. On top of the already massive losses in the formal sector, the overall employment picture now is even worse. The formal sector accounts for only 17 percent of total employment, or only 6.3 million employed workers as of 2011. Over 33 million Filipinos work under informal conditions—as own-accounts workers or employers in own informal enterprise; as contributing family workers; as employees holding informal jobs or are paid domestic workers; and as ownaccount workers engaged in the production of goods for exclusive use by own

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household. Informality in the formal sector is also high, characterized by the absence of formal contracts and lack of benefits and social protection.75 The country has only managed to generate 6.4 million new jobs, or a measly two percent average annual increase between 2000 and 2010. Unemployment has been on the rise since the `80s, reaching its worst in the period 2000-2004 when it was almost double-digit (9.8 percent in 2001) for five consecutive years. More recently, the improvement in the jobs situation in 2011 was shortlived, as almost one million jobs were lost the following year. For 2012 and 2013, joblessness remained stuck at seven percent, with further haemorrhaging taking place, especially in the agriculture sector.76 Furthermore, as of 2013, underemployment remains high at 19.8 percent.77

Confronting the issues Through the Development Roundtable Series, Focus on the Global South started a conversation in the period 2008-2011 among several stakeholders and interested groups on a variety of topics including what had gone wrong with the country’s industrial sector. The DRTS cited predictions from several studies78 about the trade reform program: that it “would result in a small decline in the number of jobs in agriculture and services,” and “new jobs (will be) created in manufacturing”; that “real GDP will increase and income distribution will improve, with the poorest quintile income group receiving the largest share of the GDP growth.”79 Clearly, the predictions were all off-mark. The country suffered from a trade deficit resulting from trade liberalization and concentration of exports in only few industries; there was no creation of a diverse basket of exports. Trade liberalization did not improve the state of manufacturing, and as a result the sector did not produce expected jobs to make up for job reductions in the agriculture and service sectors. Overall, per capita income did not improve and the average Filipino’s standard of living remained roughly the same. Not with a small amount of convenience, then, has it become fashionable again to revive the state question. The captured state remains and therefore the process of reform is bound to be undermined. Recently, this view has been updated by throwing into the mix “vulnerability to external shocks and internal Industrial Decay: The Hollowing-Out of Manufacturing and Employment

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instability.” The conclusion, however, is that the less than ideal “institutional settings of the political leadership and economic technocracy” largely determines the poor economic performance of the country.80 It is true, and is in fact also the contention of this book, that entrenched elite interests have capture the state, and dominate a big chunk of political and economic life. However, as discussed in Chapter 1, this domination also adjusted to the economic restructuring that happened in the last three decades. The argument that the weakness of state structure undercuts potential benefits from policy reform, therefore, offers an incomplete picture at best. First, liberalization was offered as response to the problem and market reforms were expected to loosen the grip of the “soft state” enmeshed in rent extraction.81 Second, the marketization agenda has been bankrolled by no less than the IFIs with huge resources at their disposal—surveillance, the ability to release loans in tranches and subject to the country’s compliance with agreed conditions, and a governance agenda which they peddled the world over. Third, except for the stalling of TRP4, for which bilateral, regional, and international commitments already compensated, the policy of opening up has been uninterrupted and unchanging. It is not enough to allege that the fault lies elsewhere. Political capture, weak governance, high transactions costs, bad weather—these explain only part of the problem. A significant part of the failure has to do with ideology, and three related issues need to be reckoned with in the interest of moving forward. One is that trade openness is not the end-all and be-all of reform. Economist Dani Rodrik, reacting to the controversial World Bank study of Dollar and Kraay of post-`80s “globalizers,” which included the Philippines, concluded that: “When the analysis focuses on indicators of trade policy, we find no evidence that rapid/deep trade liberalizers did better than other countries (and some evidence to the contrary)…The claims regarding the beneficial effects of trade liberalization on poverty have to be seen as statements based on faith rather than evidence.” 82

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Two, the liberal reforms and the entities that ensured that reforms stayed in place effectively denied the country critical policy options that had been available to the East Asian NICs when they were starting out. These included the deliberate use of subsidies and incentives to direct economic activity and to impose discipline, and the nurturing of public enterprises for strategic economic and related purposes. Three, the over-preoccupation with political economy (state capture, corruption, and rent-seeking) resulted in the almost total shunning of government role in the economy. To reiterate, the need for institutional change has been huge; it includes wide-ranging reforms that have been proven very difficult to move. But we have also seen that the market has not been the best arbiter of values or the perfect allocator of resources. To arrest the decay of Philippine industry, even as the push for better governance and institutions continue, more focused and pro-active government interventions are needed. Beyond securing marketfriendly policies, they are needed to support new technologies, innovations, and investments, as well as to properly manage these support and investment, and to facilitate greater coordination within industry. As former World Bank chief economist Justin Yifu Lin has noted, neoliberal restructuring “…was not an effective economic strategy for most developing countries, which typically are trapped in multiple levels of distortions and need gradually to gradually organize their transition out of these second-, thirdor nth-best situations. The Washington Consensus framework… ignored the requirement that developing countries’ governments play a key role in overcoming the issues of coordination and externality in the process of technological innovation, industrial upgrading, and structural change.” 83 Of critical importance is to learn from all the mistakes and shortcomings of the past—prior to, during, and after reform—and to build workable policy mixes to address these weaknesses and their negative impacts. This process necessitates looking at the possibilities offered by all available policy instruments in trade (e.g. tariff re-calibration to the maximum allowable as committed internationally), investment (e.g. directing fiscal incentives towards clearly identified sectors), public enterprise (e.g. the option of re-entry in power generation to provide relief as well as to encourage more competition in the electricity market), among many other potential interventions. Industrial Decay: The Hollowing-Out of Manufacturing and Employment

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A future for industrial policy The country has experienced a modest but uninterrupted growth since 1999 despite its inability to attract more FDIs or improve its trade performance. The economy has adjusted by moving away from the losing traded sectors while capital has trooped to the more lucrative property development and utilities, to the disadvantage of agriculture and manufacturing. The result has been low employment generation and increasing inequality. Notably, unemployment has been on the rise again since 2011 even as growth has started breaching the seven percent mark, making the challenge of “inclusive growth” all the more urgent. There are calls and renewed interest in the revival of the manufacturing sector to realize inclusive growth. According to the Asian Development Bank, “(t)he Philippines’ biggest need is to develop stronger industrial base to enable the economy to “walk on two legs” of industry and modern services, to create productive job opportunities for the growing working-age population”, and proposes “more targeted public sector support, which focuses on specific industries and products, for industrial upgrading and diversification.” 84 The call for a more activist approach to industry by government is not new. For instance, there have been prior recommendations for government to intervene to address the constraints and spur upgrading in the electronics sector.85 But it has only been in recent years that a convergence has developed around what an increasing number of economists have been saying, what IFIs have started to push, what at least some sections of industry have been asking for, and what many advocates have been proposing. In 2012, the government responded and launched the Manufacturing Industry Roadmap initiative.86 The guidelines for the initiative specifically directed identified industry clusters to “recommend measures to overcome constraints, manage liberalization, and upgrade the industry.” The Roadmap initiative is a positive step, but how far will it go? Silent on the specific failure of trade reform, it would be a disappointment if the policy menu will not encompass all options. The initiative allows horizontal (e.g. protection

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of property rights) and vertical (e.g. limited tax incentives and direct credits) interventions, as well as coordination mechanisms, but it is unclear whether tariffrelated measures and public enterprise are allowed in the mix. The timidity of the Roadmap contrasts with the views of prominent economists such as Justin Lin, former chief economist of the World Bank, who has called for an ambitious agenda for the developing state, consisting of “providing information about new industries, coordinating related investments across different firms in the same industries, compensating for information externalities of the pioneer firms, and nurturing new industries through incubation, attracting foreign investment, and encouraging clustering. The state also needs to lead in improving hard and soft infrastructure to reduce transaction costs for individual firms and facilitate the economy’s industrial development process.”87 Lin calls his proposed strategy for developing countries like the Philippines the “New Structural Economics.” Beyond the actual incentives and possible policy adjustments, the success of industrial policy also hinges on how it is able to build domestic knowledge by facilitating greater interaction among industry players, and between industry players and the academe and research community. It will also depend on how labor-management relations are negotiated, which places importance on where labor comes into the process. More than just labor, creating a constituency for industrial policy is vital, as there will no doubt be difficult decisions that need to be mediated, e.g. the sharing of resources, the impact on the environment, how to decide on whose favor a trade-off will be resolved, how to get consensus on policy and direction, etc. What industrial policy advocate and University of the Philippines Professor Rene Ofreneo calls as “industrial culture” needs to be revived. According to him, it is important to have “industrial visioning accompanied by public-private cooperation and consultation on industrial programming.”88 There is now an emerging consensus that the future of the Philippine economy lies in reversing three decades of neoliberal self-destruction. The question is: does political will exist to take the country in this direction?


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Table 1. Major Economic Reforms, 1980-2012: Trade Liberalization89 Policy

Year

Objective/Coverage

1980-85

TRP1 aimed to reduce the range of nominal tariffs from 0-100% to a range of 10-50%. Implementation was suspended in 1983.

Import Liberalization Program (ILP) EO 49, EO 70

1986

TRP1 revived under Cory Aquino through a series of EOs, more than halving the restricted imports to only 823 from 1,798 in 1985.90

EO 306

1986

Tariff reduction on crude oil from 20% to 15%.

RA 6647

1988

Further restructured import duty rates, ranging from a low of 5% to a high of 75%.

1991-95

Program de-emphasized the role of tariffs in industrial and trade promotion. Non-tariff restrictions converted into tariffs.

1991

Clustered tariff rates around four bands: 3 percent, 10 percent, 20 percent, and 30 percent, covering 95% of total tariff lines by July 1995. Limited number of items has 0, 5%, 15%, 25% and 50% on a limited number of items. Harmonized Commodity Classification and Coding System (HS) adopted.

EO 8

1992

Tariffication of quantitative restrictions (QRs) on 153 commodities. Increased the tariff rates of relevant commodities by 100% of their old levels, with built-in 5-year phase down of tariffs.

EO 313

1996

Increased tariff rates on sensitive products: meat and meat products, poultry, cereals and grains, vegetables.

Tariff Reform Program 1 (TRP1)


EO 470

Established a four-tier structure of tariffs: 3% for raw materials and capital equipment not locally available; 10% for raw materials and capital equipment locally available; 20% for intermediate goods; and 30% for finished goods.


EO 189

1994

Tariff reductions on capital equipment and machinery

EO 204

1994

Tariff reductions on textiles, garments, and chemical inputs

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EO 264

1995

Tariff reductions on 4,142 lines in the HS system in the manufacturing sector; EO set stage for the four-tier system

EO 288

1996

Tariff reductions on “non-sensitive” agricultural products.

EO 461

1998

Imposed tariff of 3% on imported crude oil and refined petroleum products

1998

Set the tariff reduction schedule for 23 industries identified as export “winners”: copper products; fertilizer; motor vehicle parts and components; iron and steel products; jewelry; electronics; ceramics; marble products; marine products; processed foods; petrochemical and oleochemical products; leather goods; footwear; lumber; particle board; fiberboard; veneer and plywood; textiles and garments; basketwork; seaweeds and carageenan; holiday décor; furniture; and fresh fruits.

EO 465

Tariff Reform Program 4 (TRP4) Set tariff schedule for 2001-2004 for all products (excluding certain meat products in HS Chapter 2, rice, corn and sugar). Main objective is to achieve a tariff band of 0-5% in industrial and non-sensitive agricultural products by 2004.

EO 334

2001

Note: Implementation of TRP4 was stalled in 2003, starting with EO 241 which suspended tariff reductions for 3 years (2003-2005). With Memo 18, the Bureau of Plant and Industry imposed additional requirements for all imported fresh fruits and vegetables91, as a response to pressure from domestic vegetable producers. In 2004, EO 375 increased tariffs on certain iron and steel products from 3% to 7%. Completing what liberalizers call as “back pedalling on reforms” was EO 574 in 2006, which recalibrated MFN rates (Chapters 1-97), maintaining 2006 rates for product lines until 2010.


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Other MFN Tariff Issuances92 EO 440

2005

Tariff reductions on crude petroleum oils and refined petroleum products.

EOs 818 and 819

2009

Extended zero tariff on milling wheat; and cement and cement clinker.

EO 790

2009

Tariff reductions on biofuels and biofuel blends.

EOs 691, 765, 766

2009

Temporary tariff reductions, for price stabilization, on crude petroleum oils and refined petroleum products; wheat; and cement and cement clinker. An automatic tariff mechanism indexed to world oil priceswas created for petroleum products.

EOs 21 and 22

2011

Zero tariff on milling (food) wheat; and cement and cement clinker

EO 898

2010

Tariff reductions on certain iron and steel products.

EO 890

2010

Granted zero tariffs on crude oil, petroleum products and asphalt.

EO 70

2012

Tariff reductions on capital equipment, spare parts and accessories imported by BOIregistered new and expanding enterprises.

WTO Treaty Obligations

1996

Lifted QRs, replaced with maximum bound rates committed under the WTO-UR in agriculture. Repealed the following laws providing for QRs: RA 1296 (Onions, Potatoes, Garlic, and Cabbages, Except for Seedling Purposes); RA 2712 (Coffee); PD 1297 (Ruminants for Breeding, Slaughter and Beef); Para. 10 of Section 23 of RA 7607 (Magna Carta for Small Farmers); Para. (a) of Section 15 of RA 7308 (Seed Industry Development Act); Section 4 of RA 4155, as amended (Virginia Tobacco); and, PD 1483 (Foreign Cigar Leaf Tobacco for Blending Purposes). Created the Agricultural Competitiveness Enhancement Fund

EO 313

1996

Interim tariff protection to sensitive agricultural products. 170 tariff lines were subject to tariff quotas, specified the tariff rate equivalent for each agricultural QR.

EO 486

1998

Reduced to 144 the number of tariff lines subject to tariff quotas.

RA 8178 Agriculture Tariffication Act

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EO 627

2007

Reduction of MFN rates on certain agriculture products (e.g. mechanically deboned meats) as compensation for ‘special treatment’ afforded to rice under Annex 5 of WTO-AoA (7 year extension of special treatment until 2012).

ASEAN Free Trade Area-Comprehensive Effective Preferential Tariff (AFTA-CEPT) Commitments EO 49

2000

Transferred products from the unprocessed agricultural product temporary exclusion list (UAP-TEL) and general exemption (GE) list into the inclusion list (CEPT-IL).

EO 448

2005

Tariff reductions on certain articles to implement commitments to the ASEAN Integration System of Preferences (AISP). Lifted suspension on tariff reductions on petrochemicals and certain plastic products (EO 161, 2003), reducing tariffs from 10% to 5% in line with AFTA-CEPT commitment.

EO 486

2006

EO 703

2008

Note: The Association of Petrochemical Manufacturer of the Philippines (APMP) obtained a writ of preliminary injunction from RTC of Makati in 2007; the order of the lower court was reversed and writ dissolved by the Supreme Court in 2011.93 80% of product lines in inclusion list slapped zero tariff.

ASEAN Industrial Complementation Scheme (AICO) EO 575 EO 679

2006 2007

Tariff reductions on certain imported articles in favor of Toyota Motor Philippines Corporation; Toyota Autoparts Philippines, inc. (COE Nos. Toyota/2006 /35 and Toyota/2006/36)

EO 677 EO 678

2007 2007

Tariff reductions on certain imported articles in favor of Philippine Auto Components, inc. (COE Nos. Denso/2007/11 and Denso/2007/12)

2008

Tariff reductions on certain imported articles in favor of Honda Cars Philippines, inc. (HCPI) and Honda Parts Manufacturing Corporation (COE No. Honda/2006/46)

EO 702

ASEAN-China Free Trade Agreement EO 613

2007

Tariff reductions based on the normal track.

EO 618

2007

Tariff reductions based on the sensitive track.


89


EO 814

2009

2009-2012 tariff commitments under the normal track; transfer of certain tariff lines from the sensitive to the normal track

EO 71

2012

Tariff reduction based on highly sensitive list.

2012

Tariff reduction based on the sensitive list; transfer of certain tariff lines from the sensitive to the normal track (pharmaceutical goods, glass, semi-finished or iron and non-alloy steel, motor vehicles, electrical apparatus).

EO 72

ASEAN-Korea Free Trade Agreement (AKFTA) EO 638

2007

Grants reciprocal tariff rate treatment on tariff lines included in the sensitive track

EO 639

2007

Grants reciprocal tariff rate treatment on tariff lines included in the sensitive track

EO 812

2009

Tariff reductions 90% of the products in the normal track to zero with flexibility

2010

Transfer from the sensitive track to the normal track (coconut/copra, palm kernel or babassu oil and fractions thereof, whether or not refined, but not chemically modified).

2011

Temporary waiver of the reciprocal tariff treatment on certain articles based on Philippines-Korea agreement on the compensatory measure due to delayed implementation of Philippine tariff concessions

2012

Tariff reductions on certain products included in the highly sensitive list. 2016 rates were pegged for highly sensitive products including poultry, meat, vegetables, plastic and other petrochemical products, electrical apparatus between 5-40%. Note: The agreement actually allows for rates up to 50% for highly sensitive products.

2012

Tariff reductions on certain products included in the sensitive list. Most items in the sensitive list had rates of between 15-20% except frozen fish (5%) and wheat (7%) for 20122015. Rates would be reduced for all products to 5% by 2016. Transfer of certain tariff lines from the sensitive to the normal track (copra, cement, pharmaceutical products, iron and non alloy steel, electrical apparatus).

EO 895

EO 52

EO 73

EO 74

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Japan-Philippines Economic Partnership Agreement (JPEPA) EO 767

2008

Tariff reductions set for 2008-2018, with in-quota and out-quota rates for all products covered between zero and 41 %.

EO 905

2010

Further tariff reductions on motor vehicles and components, parts and/or accessories.

ASEAN-Japan Comprehensive Economic Partnership Agreement (AJCEPA) EO 852

2010

Tariff reductions based on treaty agreement.

ASEAN Trade in Goods Agreement (ATIGA)

EOs 892 and 894

2010

Invocation of protocol for special consideration for rice and sugar. Tariff for rice maintained at 40% and for sugar at 38% for 2010-2011, for gradual reduction to 5% by 2014.

ASEAN-Australia and New Zealand FTA (AANZFTA) EO 851

2010

Tariff reductions based on treaty commitments.

ASEAN-India Comprehensive Economic Cooperation EO 25

2011

Tariff reductions based on treaty commitments.


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Table 2. Major Economic Reforms, 1980-2012: Investment Policy Policy

Year

Objective/Coverage Created the Board of Investments.

EO 226 Omnibus Investment Code of 1987 Article 39, Title III Amended by RA 7918

1987 1995

Grants fiscal incentives to BOI-registered firms: income tax holiday; tax exemptions (on imports of spare parts and capital equipment, breeding stocks and genetic materials); tax credits (on domestic breeding stocks and genetic materials, raw materials and supplies); exemptions on wharfage dues and export tax; additional deductions from taxable income (labor expense, necessary and major infrastructure works). Grants Non-fiscal Incentives: allowance to employ foreign nationals in certain positions; simplified customs procedures; importation of consigned equipment; privilege to operate a bonded manufacturing/trading warehouse.

EO 63

1987

Grants non-fiscal incentives, especially the provision of a special investor’s resident visa, to foreigners investing at least US $50,000 in any DOT-accredited tourism-related project or in any tourism establishment Allowed up to 100% foreign equity participation in all areas, except those that are included in the Foreign Investment Negative List (FINL).

RA 7042 Foreign Investments Act of 1991 Amended by RA 8179

1991 1996

List A: areas reserved for Filipinos as mandated by the Constitution or specific laws, e.g. mass media, cooperatives, small-scale mining. List B: defense/firearms; activities associated with risk to public health and morals; small-scale enterprises; small natural resource-based export enterprises List C: areas adequately served by existing establishments Removed List C. Allowed non-Filipino participation in small and medium-sized domestic enterprises, with minimum paid-in capital US$250,000.

RA 7227 Bases Conversion and Development Act of 1992 Amended by RA 7917 in 1995 and RA 9400 in 2007

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1992 1995, 2007

Established the Subic Bay Metropolitan Authority and the Bases Conversion and Development Authority Group— which includes the Clark Development Corporation, the Poro Point Management Corporation, the Camp John Hay Management Corporation, etc. RA 9400 converted SBMA, CDC, Poro Point, John Hay and Morong into separate customs and taxation territories.


1992

Established a 5-year Countrywide Industrialization Fund, managed by Philippine National Bank, the Development Bank of the Philippines, the Land Bank of the Philippines, and a Countrywide Industrialization Office; with specific clause on foreign exchange contribution as one of the criteria for financial assistance.

RA 7652 Investor’s Lease Act

1993

Allowed foreign investors to lease private land for up to 50 years, renewable once for an additional 25 years, for the creation of industrial estates, factories, assembly or processing plants, agro-industrial enterprises, and the development of land for industrial, tourism, commercial, or other productive use.

EO 98

1993

Established the Export Development Council

RA 7368 Countrywide Industrialization Act of 1992

Formulation of an Export Development Plan as part of the medium-term Philippine Development Plan. RA 7844 Export Development Act of 1994

RA 7721 Foreign Bank Liberalization Act of 1994

1994

Grants additional incentives to exporters: Exemption from Presidential Decree No. 1853, provided that the importation shall be used for the production of goods and services for export; Duty-free importation of machinery, equipment and spare parts; Tax credit for imported inputs and raw materials, and for increase in current year’s export revenue

1994

Allowed foreign bank participation in the domestic market, though with some restrictions. Foreign bank ownership is limited to a 60% stake in any new or already-existing Philippine banking subsidiary.

DOF Order No. 100-94 DOF Insurance Sector Liberalization Order

1994

Allowed foreign insurance companies to operate in the domestic insurance market through branches, newly incorporated subsidiaries and the acquisition of domestic firms.

RA 7942 Mining Act of 1995

1995

Allowed 100% foreign ownership of mining properties, up to 81,000 hectares of land up to 50 years and auxiliary entitlements of water, timber and easement rights.

RA 7916 Special Economic Zone Act of 1995 Amended by RA 8478

1995 1999

Established ecozones as separate customs territory; established the Philippine Economic Zone Authority (PEZA).


93


RA 7903 Zamboanga City Economic Zone Act of 1995

1995

RA 7922 Cagayan Special Economic Zone Act of 1995

1995

RA 9490 Aurora Special Economic Zone Act of 2007 Amended by RA 10083

Established the 16,120-hectare Zamboanga City Special Economic Zone and Freeport in Zamboanga City. Established the 54,000-hectare Cagayan Special Economic Zone and Freeport in Sta. Ana, Cagayan province. Established the 12,923-hectare Aurora Pacific Economic Zone and Freeport in Casiguran, Aurora province.

2007 2010

Converted the Bataan Economic Zone into the 1,742-hectare Freeport Area of Bataan in Mariveles, Bataan province.

RA 9728 Freeport Area of Bataan Act of 2007

2007

RA 8366 Investment House Liberalization Act of 1997

1997

Allowed foreign firm participation in the domestic investment house industry, with ownership of up to 60% of company stock, subject to a minimal paid-in capitalization of PhP300M.

RA 8762 Retail Trade Liberalization Act of 2000

2000

Opened up Philippine retail industry to foreign players, including full ownership subject to a minimum capital requirement of US$7.5M.

2004

Encouraged the development of a domestic shipping industry where at least 60% of stock is owned by Filipinos, granting fiscal incentives to qualified domestic ship operators while loosening shipping rate regulations and mechanisms

2009

Established the Tourism Infrastructure and Enterprise Zone Authority to oversee the creation and operation of tourism enterprise zones (TEZ’s), whose specified lands are exempt from UDHA and CARP. Provided lease of lands within TEZ’s to foreign investors for a maximum period of 50 years, renewable once for a period of 25 years, in alignment with the Investor’s Lease Act. Numerous fiscal incentives are also offered to investors operating within TEZ’s. Foreign investors who have made a minimum investment of $200,000 are also entitled to a special investor’s resident visa.

RA 9295 Domestic Shipping Development Act of 2004

RA 9593 National Tourism Policy Act of 2009

RA 10574, Foreign Equity Law Amending RA 7353, Rural Act of 1992

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2013

Allowed foreigners to own, acquire or purchase up to 60% of voting stocks in rural banks.


Table 2b: Deregulation and Related Policy EO 59

1993

Provided for the mandatory interconnection of public telecommunications carriers to create a fully integrated nationwide telecommunications network, encouraging greater private sector investment in telecommunications

EOs 185, 213

1994

Allowed new investors to enter shipping routes already served by franchise operators, and deregulated shipping passenger and freight pricing schemes.

EO 219

1995

Liberalized domestic and international civil aviation

1998

Encouraged the entry of new participants in the downstream oil industry by extending fiscal incentives for investors and amending oil pricing regulations and mechanisms.

2001

Liberalized the power industry, encouraged competition in generation and supply through privatization and unbundling of the system, establishment of open access and electricity tariff unbundling.

RA 9184 Government Procurement Reform Act of 2003

2003

Standardized the process of competitive bidding of government procurement procedures; with specific provision on procurement from both domestic and foreign suppliers, consistent with the country’s obligations in international treaties and agreements. (Article XII, Section 43)

EO 29

2011

Open Skies Policy

RA 8479 Oil Industry Deregulation Act of 1998 RA 9136 Electric Power Industry Reform Act of 2001


95


Table 3. Major Economic Reforms, 1980-2012: Privatization Policy

Year

Objective/Coverage

1986

Privatization of Government-Owned and Controlled Corporations (GOCC’s); Established the Philippine government’s privatization program; Created the Committee on Privatization and the Asset Privatization Trust (APT).

EO 215

1987

Allowed Private Generation of Electricity; Established the right of private sector producers, including foreign firms, to build and operate electric power generation facilities through cogeneration, Build-Operate-Transfer, and BuildOperate-Own schemes.

RA 6957 Build-Operate-Transfer Act of 1990

1990

Established the framework for the financing, construction, operation and maintenance of public infrastructures by private sector firms.

Amended by RA 7718

1993

The fixed term under which a private contractor– owned at least 60% by Filipinos— may operate infrastructures is not to exceed 50 years.

Presidential Proclamation 50

RA 7181 Asset Privatization Trust Extension Act Amended by RA 7661 Amended by RA 7886

1992 1993 1995

RA 7227 Bases Conversion and Development Act of 1992 Amended by RA 7917 in 1995 and RA 9400 in 2007

1992 1995, 2007

Collectively extending the life of the Asset Privatization Trust from December 8, 1991, until December 31, 1999, with modification on where the proceeds of successful privatization efforts are to be directed.

Authorized the sale, lease and joint venture development of former military camps such as Fort Bonifacio and Villamor Airbase.

1993

Authorized the President to enter into negotiated contracts with Independent Power Producers (IPPs); powers in effect for one year.

RA 8041 National Water Crisis Act of 1995

1995

Authorized the President to enter into negotiated contracts in water services; reorganized the Metropolitan Waterworks and Sewerage System (MWSS) and the Local Waterworks and Utilities Administration (LWUA).

EO 298

1996

Empowered the APT to use other modes of privatization like joint ventures, BOT schemes, management schemes, lease-purchase, and securitization agreements.

2001

Created the Privatization Council and the Privatization Management Office under the Department of Finance.

RA 9136 Electric Power Industry Reform Act of 2001

2001

Privatized NAPOCOR.

EO 8

2010

Reorganized the Build-Operate-Transfer Center into the Public-Private Partnership Center, with a reassignment from the Department of Trade and Industry to the National and Economic Development Authority.

RA 7648 Power Crisis Act of 1993

EO 323

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Figure 1. Geographical Distribution of Formal Establishments and Employment In Percent, 2012 Total Employment

Formal Establishments

14.0%

18.7%

14.4%

15.6% 71.6%

Luzon

65.6%

Visayas

Mindanao

Source of Basic Data: National Statistics Office. (2012). 2012 Updating of the List of Establishments (ULE): Final Result. Retrieved 10 October 2012, from http://www.census.gov.ph/content/2012-updating-list-establishmentsule-final-result


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Notes 1 National Statistics Office. List of establishments, 2000-2010. 2 National Statistical Coordination Board (NSCB). National Accounts of the Philippines, 1946-2012. 3 National Statistical Coordination Board (NSCB). National Accounts of the Philippines, 1946-2012. 4 See for example: Bautista, R., Power, J. & Associates. (1979). Industrial promotion policies in the Philippines. Manila: Philippine Institute of Development Studies. 5 Philippine Institute for Development Studies. (2008, March). Industrial agglomeration and industrial policies: the Philippine experience. Philippine Institute for Development Studies Discussion Paper No. 2008-13. Retrieved 19 February 2013 from, http://http://www.pids.gov.ph/dp.php?id=4300&pubyear=2008 6 Medalla. E. et al. (1995). Catching up with Asia’s tigers. Makati City: Philippine Institute for Development Studies. 7 Bautista, R. and Tecson, G. (2003). International dimensions. In Balisacan and Hill, (Eds.), The Philippine economy: development, policies and challenges. Quezon City: Ateneo de Manila University Press. 8 Tariff Commission. Primer: tariff reform program. Retrieved 19 February 2013 from, http://www. tariffcommission.gov.ph/tariff1.html 9 Bautista, R. and Tecson, G. (2003). International dimensions. In Balisacan and Hill, (Eds.), The Philippine economy: development, policies and challenges. New York: Oxford University Press. Medalla, E. (1998, May). Trade and industrial policy beyond 2000: an assessment of the Philippine economy. Philippine Institute for Development Studies Discussion Paper Series No. 98-05. 10 Medalla, E. (1998, May). Trade and industrial policy beyond 2000: an assessment of the Philippine economy. Philippine Institute for Development Studies Discussion Paper Series No. 98-05. 11 Bautista, R., Power, J. & Associates. (1979). Industrial promotion policies in the Philippines. Manila: Philippine Institute of Development Studies. 12 Bautista, R., Power, J. & Associates. (1979). Industrial promotion policies in the Philippines. Manila: Philippine Institute of Development Studies. 13 Anderson, B. (1988). Cacique democracy and the Philippines: origins and dreams. New Left Review, 1(169) as cited In De Dios, E. and Hutchroft, P. (2003). Political economy. In Balisacan and Hill, (Eds.), The Philippine economy: development, policies and challenges. Quezon City: Ateneo de Manila University Press. 14 De Dios, E. and Hutchroft, P. (2003). Political economy. In Balisacan and Hill, (Eds.), The Philippine economy: development, policies and challenges. Quezon City: Ateneo de Manila University Press 15 Studwell, J. (2013). How Asia Works. New York: Grove Press. 16 Medalla, E. et al. (1995). Catching up with Asia’s tigers. Makati City: Philippine Institute for Development Studies. 17 Medalla. E. et al. (1995). Catching up with Asia’s tigers. Makati City: Philippine Institute for Development Studies. 18 The 1992-1998 Medium Term Development Program. 19 Bello, W. (2001). The future in the balance: essays on globalization and resistance. Oakland, Calif.: Food First Books. 20 Bello,W. and Rosenfeld S. (1990). Dragons in distress: Asia’s miracle economies in crisis. San Francisco: Institute for Food and Development Policy. 21 World Bank. (1993). The East Asian miracle: economic growth and public policy. New York, N.Y.: Oxford University Press. 22 Studwell, J. (2013). How Asia Works. New York: Grove Press. 23 Clarete, R. (2005). Philippines: ex-post effects of trade liberalization in the Philippines. [This chapter was presented at the conference, Adjusting to Trade Reforms: What are the Major Challenges for Developing Countries]. Retrieved 30 May 2013, from http://www.unctad.info/upload/TAB/docs/TechCooperation/ philippines_study.pdf 24 Clarete, R. (2005). Philippines: ex-post effects of trade liberalization in the Philippines. [This chapter was presented at the conference, Adjusting to Trade Reforms: What are the Major Challenges for Developing Countries]. Retrieved 30 May 2013, from http://www.unctad.info/upload/TAB/docs/TechCooperation/ philippines_study.pdf

98

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25 United States Trade Representative. (2005). National trade estimate report for 2005. Retrieved 29 February 2013, from http://www.ustr.gov/archive/assets/Document_Library/Reports_Publications/2005/2005_NTE_ Report/asset_upload_file415_7493.pdf 26 World Trade Organization. (2005). The Philippines: growth prospects are linked to continued trade liberalization reforms. Trade Policy Review. Retrieved 29 February 2013, from http://www.wto.org/english/ tratop_e/tpr_e/tp249_e.htm 27 Tariff Commission. (2012). 2012 MFN Tariff structure: executive orders. Retrieved 29 February 2013, from http://www.tariffcommission.gov.ph/MFN%20Tariff%20Structure%202012.pdf 28 Aldaba, R. (2010, April). Foreign direct investment policy. Unpublished AER Report. 29 Bunye, I. R. (2012, June 24). Philippine banking history Part IV. Sun Star Manila. Retrieved 29 February 2013, from http://www.sunstar.com.ph/manila/opinion/2012/06/24/bunye-philippine-banking-history-partiv-228490; Only 14 branches according to Milo, M S. and Pasadilla, G. O. (2005). Effect of liberalization on banking competition. Philippine Institute for Development Studies Discussion Paper No. 2005-03. 30 Manasan, R. (1990). A review of fiscal incentives for exports in the Philippines. Philippine Journal of Development, 31(17), 2. 31 Ofreneo, R., Marasigan, L., Center for Labor Justice and UP SOLAIR. Several articles for the DRTS TWG on trade, industrial policy and privatization [Abridged version]. Retrieved 29 February 2013, from http:// focusweb.org/philippines/fop-articles/articles?start=5 32 Romano, G. (1996). Philippine public enterprises and privatization. Mandaluyong: Fiscal Administration Foundation, Inc.; as cited in Ofreneo, R., Marasigan, L., Center for Labor Justice and UP SOLAIR. Several articles for the DRTS TWG on trade, industrial policy and privatization [Abridged version]. Retrieved 29 February 2013, from http://focusweb.org/philippines/fop-articles/articles?start=5 33 Privatization and Management Office. The Philippine privatization program. Retrieved 29 February 2013, from http://www.pmo.gov.ph/about.htm 34 Privatization and Management Office. List of assets fully disposed/privatized CY 2001 to 2012. [Communication with author, August 2013]. 35 National Economic Development Authority. Philippine Development Plan 2011. 36 Based on National Statistical Coordination Board. (2014). National accounts of the Philippines: data and charts. Retrieved 29 February 2013, from http://www.nscb.gov.ph/sna/DataCharts.asp 37 Data indicators from the World Bank Database. Retrieved 29 February 2013, from http://data.worldbank.org/ indicator 38 Data indicators from the World Bank Database. Retrieved 29 February 2013, from http://data.worldbank.org/ indicator 39 The World Bank. Country snapshot – Philippines. World Trade Indicators 2009/2010. Retrieved 29 February 2013, from http://info.worldbank.org/etools/wti/2b1. http://info.worldbank.org/etools/wti/2b1.asp?pillarID=1&indList=66,118,152,161,190&cid=153 comparator=a4&vr=Value&timeperiod1=t1&timeperiod2=t2&timeperiod3=t3&timeperiod4=t4 40 NSO and Central Bank as cited in Mangabat, M. (1998, October). Effects of trade liberalization on agriculture in the Philippines: institutional and structural aspects. Working paper (ESCAP Regional Co-ordination Centre for Research and Development of Coarse Grains, Pulses, Roots and Tuber Crops in the Humid Tropics of Asia and the Pacific) No. 37. 41 Data is for external balance in goods and services in current dollars and % of GDP. From World Bank Data. Retrieved 29 February 2013, from http://data.worldbank.org 42 Subic Bay Metropolitan Authority. Performance indicators. Retrieved 29 February 2013, from http://www. mysubicbay.com.ph/about-us/performance 43 FDI data are from the World Bank. Retrieved 29 February 2013, from http://data.worldbank.org 44 From World Bank. Retrieved 12 October 2012, from http://data.worldbank.org 45 From World Bank. Retrieved 29 February 2013, from http://data.worldbank.org 46 From World Bank. Retrieved 29 February 2013, from http://data.worldbank.org 47 From World Bank. Retrieved 29 February 2013, from http://data.worldbank.org 48 Felipe, J and Estrada, G. (2007 September). Benchmarking developing Asia’s manufacturing sector. Economic Research Department Working Paper Series No. 101. Manila: Asian Development Bank. 49 Balisacan, A.M. and Hill, H. (Eds.). (2003). The Philippine economy: development, policies and challenges. Quezon City: Ateneo de Manila University Press.


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50 Rowthorn, R and Ramaswamy, R. (1998). Growth, trade and deindustrialization. International Monetary Fund Working Paper (WP/98/60). 51 Intal, P.S. Jr. and E. See. (2006). Whither the Philippine manufacturing sector: looking back, way forward. Paper presented at the Production Networks, Industrial Adjustments, Institutions, Policies and Regional Cooperation Conference, DLSU-Angelo King Institute, Manila, Philippines. 52 Habaradas, R. (2008). Adjustments in the garments and textiles industry in the Philippines in view of the postquota regime. DLSU-AKI Working Paper Series 2008-09. 53 Goboleo, D. (2009). Electronics industry: surviving the global financial crisis and attaining competitiveness. Policy Advisory 2009-07. Congressional Planning and Budget Department, House of Representatives. 54 Austria, M. (2006). Enhancement and deepening of the competitiveness of the Philippines electronics industry under a bilateral setting. Philippine Institute for Development Studies Discussion Paper Series No. 2006-09. 55 Department of Trade and Industry. (2011). Philippine electronics industry profile. Retrieved 29 February 2013, from http://www.philexport.ph/c/document_library/get_file?uuid=8659b363-97ff-4ffd-b7e8364fa03c492f&groupId=127524 56 Lall, S. (2000, August). Export performance and competitiveness in the Philippines. Queen Elizabeth House Working Paper Series QEHWPS49. Queen Elizabeth House. University of Oxford. Retrieved 29 February from http://www3.qeh.ox.ac.uk/pdf/qehwp/qehwps49.pdf 57 BSP data showed that from the peak of US$31B in 2007, electronics exports went down to US$28.5B in 2008 and US$22B in 2009 before recovering back to US$31B in 2010, only to fluctuate back to US$23.8B in 2011 and US$22.6B in 2012. Bangko Sentral ng Pilipinas. Economic and Financial Statistics. Retrieved 29 February 2013, from http://www.bsp.gov.ph/statistics/efs_bop2.asp 58 Gereffi 1999 & 2001 as cited in Austria, M. (2006). Enhancement and deepening of the competitiveness of the Philippines electronics industry under a bilateral setting. Philippine Institute for Development Studies Discussion Paper Series No. 2006-09. 59 Ofreneo, R. (2003). TRIMS and the automobile industry in the Philippines in transnational corporations, learning and innovation: implications of the TRIMS agreement. Technology Policy Briefs, 2(1). 60 Aldaba, R. (2007 November). Assessing the competitiveness of the Philippine auto parts industry. Philippine Institute for Development Studies Discussion Paper Series No. 2007-14. 61 Abrenica as cited in Aldaba, R. (1997, September). Micro studies: Philippine car assembly sector. Philippine Institute for Development Studies Discussion Paper Series No. 97-21. 62 Aldaba, R. (2007 November). Assessing the competitiveness of the Philippine auto parts industry. Philippine Institute for Development Studies Discussion Paper Series No. 2007-14. 63 Aldaba, R. (2011, June). Globalization, competition, and international production networks: Policy directions for the Philippine automotive industry. Philippine Institute for Development Studies Policy Notes No. 2011-13. Retrieved 12 October 2012, from http://dirp4.pids.gov.ph/ris/pn/pidspn1113.pdf 64 Ofreneo, R. (2003). TRIMS and the automobile industry in the Philippines in transnational corporations, learning and innovation: implications of the TRIMS agreement. Technology Policy Briefs, 2(1). 65 Aldaba, R. (2007 November). Assessing the competitiveness of the Philippine auto parts industry. Philippine Institute for Development Studies Discussion Paper Series No. 2007-14. 66 Mendoza, A. (2012, July 4). Shock, sadness and frustration at Ford’s announcement. Philippine Daily Inquirer. Retrieved 12 October 2012, from http://business.inquirer.net/69033/shock-sadness-and-frustration-atford%E2%80%99s-announcement 67 Data based on NSO, List of Establishments, 2011, also cited in Chavez, J.J. and Fabros, A. (2012). Philippine industry and employment: a snapshot. Issues Views, Action. Quezon City: AER. 68 From National Statistics Office. List of Establishments, 1990-2010. 69 Habaradas, R. (2008). Adjustments in the garments and textiles industry in the Philippines in view of the postquota regime. DLSU-AKI Working Paper Series 2008-09. 70 Santiago, E. (n.d.). About the electronics industry: a snapshot. Semiconductors and Electronics Industry of the Philippines (SEIPI). Retrieved 12 October 2012, from http://siteresources.worldbank.org/INTPHILIPPINES/ Resources/ErnestoSantiago.pdf 71 Intal, P.S. Jr. and E. See. (2006). Whither the Philippine manufacturing sector: looking back, way forward. Paper presented at the Production Networks, Industrial Adjustments, Institutions, Policies and Regional Cooperation Conference, DLSU-Angelo King Institute, Manila, Philippines.

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72 Data from National Statistics Office. Labor Force Survey, 2013. Retrieved 12 October 2012, from http:// www.census.gov.ph/content/2013-annual-labor-and-employment-status-annual-estimates-2013 73 Data from World Bank. Retrieved 12 October 2012, from http://data.worldbank.org 74 Yap, J. T. (2012). Regional economic integration and inclusive growth: the story line. Presentation during the launch of the Manufacturing Roadmap, October 19, 2012. 75 Chavez, J.J. and Fabros, A. (2012). Philippine industry and employment: a snapshot. Issues Views, Action. Quezon City: AER. 76 Employment data here are computed from National Statistics Office, Labor Force Survey, various years, based on October surveys, unless otherwise indicated. 77 National Statistics Office. (2013, December 27). 2013 Annual labor and employment status (Annual estimates for 2013). Retrieved 12 October 2012, from http://www.census.gov.ph/content/2013-annual-labor-andemployment-status-annual-estimates-2013 78 Particular studies cited were: Habito, C. and Cororato, C. (2000). WTO and the Philippine economy: an empirical and analytical assessment of Post-WTO trade reforms in the Philippines. Study report for USAID/ Philippines AGILE Program; and Cororaton, C. and Cockburn, J. (2005). Trade reform and poverty in the Philippines: a computable general equilibrium microsimulation analysis. CIRPEE Working Paper No. 05-13. Quebec: Laval University, 79 Malaluan, N. (2011). Philippine trade liberalization: faith damns, losers can only weep. Development Roundtable Series Papers. Quezon City: Focus on the Global South. 80 Raquiza, A.R. (2012). State structure, policy formation and economic development in Southeast Asia: the political economy of Thailand and the Philippines. London and New York: Routledge. 81 Fabella, R.V. (2000, June). The soft state, the market and governance. Philippine Review of Economics, 42(1). 82 Rodrik, D. (2000). Comments on “Trade, Growth and Poverty,” by D. Dollar and A. Kraay, Harvard University. Retrieved 12 October 2012, from http://www.sss.ias.edu/files/pdfs/Rodrik/Research/trade-growth-poverty. PDF 83 Lin, J. Y. (2012). The quest for prosperity: how developing economies can take off. Princeton: Princeton University Press, p. 41. 84 Usui, N. (2012). Taking the right road to inclusive growth: industrial upgrading and diversification in the Philippines. Mandaluyong City, Philippines: Asian Development Bank, p. 9. 85 Austria, M. (2006). Enhancement and deepening of the competitiveness of the Philippines electronics industry under a bilateral setting. Philippine Institute for Development Studies Discussion Paper Series No. 2006-09. 86 Similar roadmap initiatives have also been launched for agriculture; forestry, fishery and mining; construction and mass housing; energy and water; and transport, highway development network, and air cargo logistics, but the manufacturing part seems most advanced. Aldaba, R. M. (2012, October 19). Inception workshop crafting the Philippine Manufacturing Industry Roadmap. Powerpoint presentation, Makati City. 87 Lin, J. Y. (2012). The quest for prosperity: how developing economies can take off. Princeton: Princeton University Press, pp. 119-120. 88 Ofreneo, R. (2012). Labor and ADB against stagnant industrialization. Action for Economic Reforms Yellow Pad. Retrieved 10 October 2012, from http://aer.ph/?p=4865 89 The Tariff Commission has its own listing of EOs related to FTAs: Tariff Commission. Implementing executive orders for free trade areas. Retrieved 10 October 2012, from http://www.tariffcommission.gov.ph/special_ eos_on_ftas.htm 90 Mangabat, M. (1998, October). Effects of trade liberalization on agriculture in the Philippines: institutional and structural aspects. Working paper (ESCAP Regional Co-ordination Centre for Research and Development of Coarse Grains, Pulses, Roots and Tuber Crops in the Humid Tropics of Asia and the Pacific) No. 37. Retrieved 10 October 2012, from http://ageconsearch.umn.edu/bitstream/32680/1/wp980037.pdf 91 USDA Foreign Agricultural Service. (2009). Food and agricultural imports regulations and standards. FAIRS County Report: Philippines. Retrieved 10 October 2012, from http://gain.fas.usda.gov/Recent%20GAIN%20 Publications/Food%20and%20Agricultural%20Import%20Regulations%20and%20Standards%20-%20 Narrative_Manila_Philippines_7-17-2009.pdf 92 TRP4 was first signed in 2001 but was shelved in 2003 with EO 241 (see note on table). Tariff reductions since then have been aligned with international/bilateral obligations. However, there are some issuances that appear to still be unilateral, for instance those included in this table. 93 Supreme Court of the Philippines. (2011). En Banc: G.R. No. 177130. Retrieved 10 October 2012, from http://sc.judiciary.gov.ph/jurisprudence/2011/june2011/177130.htm


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3

Agrarian Atrophy and the Changing Countryside

The agricultural sector is the Philippines’ biggest loser in economic restructuring and globalization, reduced to a grim state some 40 years after peaking in productivity in the `70s. From contributing almost one-third of the country’s output during the `70s, the sector’s share has plummeted to an abysmal 11.5 percent of GDP in 20111. Denied the opportunity to reach its full potential after experiencing productivity for a short period, it grew merely at an average of 1.1 percent in the `80s, two percent in the `90s and 2.9 percent in the period 2000-2010.2 Rural poverty has remained high and huge trade imbalances have become trademarks of agriculture. Profound social, economic, and geographical changes have swept Philippine rural economy. These changes have been most obvious in the physical landscape of rural areas: the once idyllic barrios that had been immortalized in the paintings of Filipino artist Fernando Amorsolo became the site in the late `90s of commercial complexes and gated residential enclaves rising alongside agricultural lands cultivated by farmer-tillers who had once dominated the scene. Around urbanizing provinces like Cavite, Bulacan, Nueva Ecija, and Batangas, European-themed houses standing next to waterlogged fields of rice have become common. There has also been an exodus of labor from the countryside into cities and other countries, usually driven by the search for better economic opportunities. Still, agriculture has remained the second largest absorber of the country’s 103


labor force, next to the services sector, which has also seen increasing unemployment. The countryside has become an arena for an interesting interplay of out-migration, increasing joblessness, and aging labor. The nationwide agrarian reform effort—bitterly derided by agrarian reform advocates as an “orphan program” due to the halfhearted full backing from government and to its chronic underperformance—has wrought decisive shifts in the structure and ownership of Philippine farms. But the landed elite have managed to retain control of their assets in one form or another using evasion tactics and land use reclassifications. More recently, there have been pressures to reconfigure the investment and property rights regime of the rural economy. A spate of foreign and domestic agribusinesses interests have caused new concerns about alleged ‘global land-grabbing’—the redistribution of lands away from peasants and towards new globally-oriented rural capitalists. All these changes have placed Philippine agriculture at its current juncture characterized by the withering away of production and reconfiguration of the countryside.

Philippine agriculture in retreat The highest level of growth in the sector was recorded all the way back in the `70s (6.2 percent), a consequence of surging public investments in agriculture by the Marcos government.3 Soon afterwards, however, the worldwide slump in rural commodity prices, the imposition of structural adjustment, and the 1983 recession all resulted in much lower agricultural growth rates that were barely able to keep up with the expanding national population. The growth rate of the sector declined drastically in the `80s, contracting by 0.1 percent from 1981 to 1985, and stagnating throughout the `90s. The sector showed modest improvements from 2001 to 2005 (3.6 percent), only to be knocked down again by the onset of the 2008 global financial crisis.4 Across major crop varieties, especially those cultivated for export, the experience has been little short of disastrous. The prolonged slump in world prices affected the country’s top exports sugar, coconut, and copra. World 104

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prices crashed, from less than a third to just over two-fifths relative to 1974 prices. The sugar industry arguably suffered from the most dramatic downturns, having collapsed in the `80s-`90s.5 The area cultivated to sugarcane, though, did not change significantly between 1970 and 1990 (only a 6.25 percent decrease; from 400,000 to 375,000 hectares in the period 1970-1990).6 Coconut was the other loser, growing only 0.6 percent in the `90s. Beyond these prime export crops, vegetable, banana, tuna, coffee, and cacao industries all suffered similar shake-ups. Staple crops did not fare better; the domestic corn sector was a major loser. Deluged by massive maize imports from 1995 onwards, growth in this sector stalled and it lost almost one-fifth of cultivated lands (3.15 million hectares in 1993 versus 2.59 million hectares in 2012).7 Likewise, while rice production volume increased by 71 percent, between 1994 and 2012, to 18 million metric tons, the rice industry has not kept pace with the country’s population growth. From being a rice self-sufficient nation in the `70s, the Philippines increasingly relied on rice imports to plug shortfalls in supply. By 2008, the Philippines officially became the largest rice importer in the world, shipping in about 2.5 million metric tons of rice imports in that year alone.8 The country scaled down imports in 2011 and set an explicit target for rice self-sufficiency for 20139, but failed to achieve it. Becoming a chronic food importer, from being a major agricultural exporter, has been one of the most profound changes experienced by local agriculture. Agricultural export earnings have not moved since the `70s and the country has not fared well compared with the nearest regional neighbors. Agriculture is now but a shadow of what it was in the `70s when it accounted for 54 percent of all exports in 1975.10 In the last two decades, liberalization has resulted in gaping trade imbalances: from a surplus of US$292 million in 1993 (before the country joined the WTO), the sector produced a deficit of US$764 million in 199711, which ballooned to US$3.1 billion in 2012.12 One cannot even talk about bright spots, only that some sectors such as poultry, livestock, and feed-grains have been less afflicted by trade liberalization and other policies than others.


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Owing to its parlous state, agriculture has contributed diminishing shares in GDP, experienced stagnant employment, and suffered decreasing productivity. The decline in agriculture’s total economic output has clearly been a key factor in the weakening of its capacity to absorb rural labor—this suggests that it has been the labor productivity of agriculture that has lagged vis-à-vis other economic sectors, with such condition translating into perpetually-low incomes. Value-added per worker in agriculture was a low US$1,262 in 2011, less than a third that of services (US$3,937) and one-sixth that of industry (US$7,731).13 The waning of agriculture has affected its capacity to abate poverty, with rural areas hosting three of four poor Filipinos in 2009. Almost three in five (56.8 percent) rural households were poor, marked by unevenness across subsectors and commodity groups. Poverty was highest among forestry workers (68 percent) and corn growers (64.1 percent); followed by farmers of coconut (56.2 percent), coffee and cacao (53.6 percent), sugar cane (53.2 percent), and vegetables (48.1 percent); and lastly landless workers (49.2 percent).14 In all these, rural women experienced deeper poverty. Rural income inequality has become even more skewed over the years, with the rural Gini index rising from 0.3796 in 1985 to 0.4977 in 2009.15 The disparity has also been largely based on the inequitable access to and control of land. The Gini index of landholdings stood at 0.54 in 1980; it grew to an even more unequal level, 0.57, in 1991, where it remained until the last official estimates on landowning asymmetries in 2002.16 This has made the Philippines one of the most unequal rural societies in Southeast Asia, where comparable ratios of our regional neighbors such as Indonesia (0.46), Thailand (0.47), and Vietnam (0.53) are notably lower.17

The anti-agriculture state That agriculture has been a neglected, under-invested sector has long been an accepted fact, especially by small farmers and rural development advocates. The roots of the problem, however, extend far beyond the issue of state under-spending; from the structural adjustment programs to prioritization of debt-servicing, agriculture was the sacrificial lamb of the rise of the neoliberal 106

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policymaking orthodoxy. Capping it all was the lackluster performance of the Comprehensive Agrarian Reform Program, which from its inception had been burdened with all forms of resistance from the landed elite.

Poor public investment To begin with, agriculture was one of the foremost casualties of the ‘model debtor’ strategy adopted by every administration since that of Corazon Aquino. With automatic appropriations for debt-service payments eating up to 29 percent of the national government budget annually, available public resources that could have addressed the worst of the sector’s woes in the `80s, and its ensuing doldrums afterwards, were reduced to pitiful levels. The prioritization of debt, and the resulting poor investment in the sector, has been the biggest culprit in the stagnation of our agriculture. The high watermark of spending during the Marcos dictatorship (5.5 percent of total state budget) rapidly decreased to 3.3 percent in 1988, and 3.6 percent during Gloria Macapagal-Arroyo.18 In the course of those two decades, national government expenditure for agriculture, agrarian reform, and natural resources per capita dropped from an already meager PhP121.24 in 1980 to an even lower PhP104.91 in 2007. It was only in 2008—or 25 years after the 1983 debt crisis—that the budget allocation for the sector again reached five percent of the total19. Under the administration of Benigno Aquino III, however, the budget share of agriculture once again declined, dropping to its lowest level at roughly 2.3 percent in 2011.20 The government itself has acknowledged the gross inadequacy of state spending as a problem. In a 2011 report, the Congressional Oversight Committee on Agricultural and Fisheries Modernization concluded that, “Although there were other contributing factors, insufficiency of funds still accounts as the primary reason for the lack of infrastructural development in the country.”21 By 2010, only 49 percent of all irrigable lands were receiving official irrigation services. The paving of roads, meanwhile, lagged for more than two decades; although official government figures reported that 75.15 percent of major national roads had been paved as of 2010, more than 69 percent of all local roads—far more likely to have been regularly used by small farmers—remained Agrarian Atrophy and the Changing Countryside

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unpaved.22 Funding for the land reform program has similarly suffered and public agricultural research has been negligible. With the government’s capacity to provide support services has all but withered, widespread pawning of assets has emerged as the primary arrangement among small farmers to obtain essential agricultural loans.23 Next to informal lenders, subsidized credit programs or directed credit programs have been the major source of credit for small farmers and fishers.24 Yet instead of prioritizing credit in allocations for the already debt-diminished resources of the Department of Agriculture, the government abolished a large number of DCPs in 1986. Belying its name, the Agriculture and Fisheries Modernization Act of 1997 further withdrew resources from the sector, particularly from smallholder agriculture. AFMA abolished all DCPs and consolidated the funds allocated for them into the Agri-Industry Modernization Credit and Financing Program, a lending program coursed through private banks. This was a hapless, ill-thought, policy since in reality the agriculture sector has been the least prioritized sector of commercial lenders, with an average share of only three to four percent in the total loans granted by all banks from 1998 to 2002 (compare this to 86 percent in the services sector and 11 percent in the industry sector). Not surprisingly, rather than smallholders, large agribusinesses and plantation farms producing export crops like banana and pineapples have been able to access these realigned marketized credit facilities.25 The government has retreated from its role as a comprehensive provider of vital services, which in some cases exclusive market forces have filled up. Smallholder agriculture and poor peasants have suffered from this, finding farming an increasingly unviable proposition.

Unrelenting liberalization As discussed in Chapter 2, the country’s accession to the WTO in 1995 opened the floodgates to agricultural liberalization, but even prior to this the government had already embraced unilateral liberalization. In the `80s, the government had embarked on an ambitious Tariff Reform Program through two structural adjustment loans from the World Bank. By the early `90s, the 108

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Philippines had one of the most open agricultural markets in Southeast Asia. The Corazon Aquino administration, pre-occupied with repaying the foreign debt and still corralled by particularistic economic interests, implemented “stop and go” liberalization. This stood in sharp contrast to the relative consistency with which the Ramos administration would pursue its liberalization agenda. Under Ramos, the country would join the WTO and accelerate the trade liberalization program. Under the WTO, specifically under the Agreement on Agriculture, agriculture import quotas were converted into tariffs and trade of sensitive products such as sugar, coffee, potatoes, pork, poultry meat, and live animals was liberalized. Although permitted to retain limits on rice imports, the country was also required to admit minimum imports the equivalent of one percent of domestic consumption in 1995, eventually rising to four percent in 2004.26 However, because rice production by then had already been deprived of state support and caught up in the broad atmosphere of agrarian malaise, the country ended up importing more than it was obligated to in order to supply local needs. Worse, these imports consequently depressed the price of rice, further discouraging local farmers from selling their products. The country fell sharply behind the production rate of its two top suppliers, Thailand and Vietnam, where the state strongly supported agriculture. Not only has the WTO membership transformed the country’s high degree of self-sufficiency into a permanent state of import-dependence, it has also steadily marginalized small farmers. Government customs revenues, which could have been used for agricultural investment, have progressively been reduced. Worst, employment projections have been off. In the 1994 ratification debates, half a million jobs were projected to be generated yearly, but employment in agriculture instead sunk to 10.8 million jobs in 2001 from 11.2 million in 1994.27 By early 2000s, government officials were themselves attesting to the disastrous repercussions of Philippine inclusion in the WTO. No less than President Gloria Macapagal-Arroyo herself proclaimed then a need to “reengineer the WTO to ensure there is a level playing field” in the international trading regime.28 However, while temporary suspensions were made in the Tariff Reform Program, commitments in the WTO were never calibrated. The country also Agrarian Atrophy and the Changing Countryside

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started negotiating and signing regional (with ASEAN) and bilateral trade and investment agreements. With the fast-tracking of the ASEAN Free Trade Area, most agricultural products, including the most sensitive unprocessed agricultural products, were committed for inclusion in the free trade agreement.

CARP: back in the emergency room? Watered down since its creation in 1988, and beset by incessant opposition and inertia throughout its 25-year life, land reform failed to progress and is now faltering. The ensuing conflicts, confusions, and uncertainties have thwarted the program’s expressed goals of delivering social justice to landless tillers and raising the productivity of smallholders. So slow, in fact, has the program’s implementation that it has had to be extended twice, mainly through the policy advocacy efforts of agrarian reform and rural development advocates. In 1998, CARP’s land acquisition and distribution component had been given its first 10-year extension and an additional funding of PhP50 billion through RA 8532. Then in 2009, CARP or RA 6657 was given five more years to be completed through CARP Extension with Reform or RA 9700, signed 7 August 2009. The stalling of the land reform program has been widely recognized to be the outcome of protracted resistance of vested landed interests, a gross lack of political will on the part of the Philippine government, and high levels of incapacity, inefficacy, and long-entrenched corruption within the Department of Agrarian Reform itself. To avoid redistribution, targeted landowners have used every possible trick in the book and harnessed every possible legal loophole. They subdivided their land among family members, sold their land to dummies or proxies, converted land to commercial and industrial uses, tied up the process in the courts, cut off funding for reforms, remade the facts on the ground, and engaged in outright physical resistance. In a number of cases, farmers who had received Certificates of Land Ownership were ordered off by the authorities, even if they had already taken possession of the land and had been working it for years.29 Even worse, intimidation and assassination of activists, including land reform advocates, such as Rene Penas and Eric Cabanit, became commonplace during the presidency of Gloria Macapagal-Arroyo, and continued in the Benigno Aquino III administration. 110

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Cutting off funding for the program was a critical weapon, especially during the Arroyo administration. Congress repeatedly slashed the budget for land acquisition, with little effort from other government officials to restore the level of funding that was needed to make redistribution successful. As one study co-sponsored by DAR and the German aid agency GTZ (German Technical Cooperation) noted, “From a financial perspective, the glaring lesson learned is that the program has not been a priority of all branches of government. Even if the Executive Branch could harness public interest to promote development interventions such as CARP, a landlord-dominated Congress could choke off the program by not providing the necessary support for its logistical requirements.”30 CARP is now the longest running social justice program being implemented in the Philippines’ post-EDSA 1986 era. DAR reported that from 1987 to 2010, some 2.3 million farmer beneficiaries were awarded lands under the program, with at least one million farmer beneficiaries benefitting under its leasehold component. Taken at face value, this immediately translates into 2.3 million new small owner-cultivators and one million new leaseholders granted economic and decision-making powers through agrarian reform. Unfortunately, time and again, the veracity of these accomplishment reports have been questioned.31 In 2008, a 12-province survey by Centro Saka Inc. (an NGO working on agrarian reform-related issues) was conducted to validate the accomplishment figures of DAR on private agricultural lands. Even as it discovered that 95 percent of its respondents had been awarded lands, 82 percent had been given titles, and 85 percent had been able to immediately occupy the lands they had been awarded, with the survey also revealed that there were numerous ‘ghost’ beneficiaries in three of the 12 provinces studied. There was even a barangay that had never existed, but which DAR cited officially as residence of awarded beneficiaries under CARP.32 Records show that all land reform programs from 1972 until 2013 distributed a total land area of 8.352 million hectares to 5.45 million beneficiaries.33 However, the second extension of CARP still suffers from delays and underperformance. Coming at a later stage, and covering more problematic Agrarian Atrophy and the Changing Countryside

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landholdings, implementing the mandate of CARP/CARPER has become even more challenging. Under the administration of President Benigno Aquino III, much attention has been focused on the fate of Hacienda Luisita, one of the biggest landholdings in the Philippines, owing to its being owned by the Cojuango clan to which the president belongs. The Supreme Court has declared the stock ownership option chosen by the Cojuangcos as a method of agrarian reform to be unconstitutional, paving the way for the redistribution of the land to the plantation’s 6,000 plus workers. While developments around Hacienda Luisita have grabbed the limelight, the progress of land reform elsewhere has been painstakingly slow, and occasionally in danger of being reversed. During the briefings on the 2014 budget, the Secretary of Agrarian Reform admitted that land reform would not be completed by the end of June 2014. Secretary Gil de los Reyes said that the backlog in undistributed lands stood at almost 700,000 hectares, 450,000 of which were private lands—some of the most prized lands in the country—subject to compulsory acquisition. According to him, it would take up to the end of June 2016 to complete the distribution process, two years past the deadline set by law.34 As it turns out, these remaining lands are the most contentious, most tedious, and most difficult landholdings to acquire and distribute. It is hardly reassuring that most of these continue to be concentrated in notorious bastions of landlordism such as the provinces of Negros Occidental, Camarines Sur, North Cotabato, Masbate, and Isabela. These provinces also happen to have higher poverty incidences than other parts of the country. (See Table 1) The DAR chief’s announcement of a unilateral extension of land redistribution has added to the anxieties of small farmers and land reform advocates who already have been alarmed by the streamlining of the Department of Agrarian Reform. While the administration projects this as simply a “rationalization” of the DAR bureaucracy, many in civil society sees it as the phasing out of the department. Agriculture Secretary Proceso Alcala’s admission that the functions of the DAR would be divided between the Department of Agriculture and the Department of the Environment and Natural Resources has lent credence to this interpretation.35 112

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Asked what was blocking completion of land acquisition and distribution according to schedule set by the law, the agrarian reform secretary pointed to technical problems associated with land inventories, land record discrepancies, and classification of lands. It is hard, however, to conceal the real reason. In many parts of the country, more and more cases of revocation of Certificates of Land Transfer have been occurring, the most publicized of which are in Quezon. Indeed, there has been a 4.6 percent increase in the number of cases filed at the Agrarian Reform Adjudication Board between 2012 and 2013. There is a judicial counter-offensive by landlords taking place, and it is likely to intensify as land reform finally focuses on the most productive private lands in the Western Visayas and Mindanao. The struggle over Hacienda Luisita case is not the climax of agrarian reform. The tenacity with which the Cojuangcos had held on to the plantation might simply presage the intensity of the coming battle in the Visayas and Mindanao, where big landed families will use every legal loophole, along with coercion, to retain effective control of their lands.36

The countryside’s ‘new face’? The lack of public investment, the stymieing of CARP, and the imposition of trade liberalization and other policies biased against agriculture have all contributed to the under-development that now afflicts the rural economy. However, to echo what has been said in this book’s introduction, this represents only half of the story. Even as structural adjustment and neoliberal globalization have knocked off the agricultural sector from its privileged place in the country’s traditional political economy, the agrarian sector has also been subtly ‘re-articulated’ or ‘re-integrated’ into the emerging globalized circuits of production and consumption in the archipelago. This re-articulation of the agricultural sector is giving rise to a ‘new face’ of the countryside in both subtle and conspicuous ways. Both labor and capital, like much of the rural landscape itself, have adjusted to the contemporary Agrarian Atrophy and the Changing Countryside

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conjuncture within and beyond the agricultural sector, with new actors and forces coming to fore over the years.

CARP’s uneven implementation and land conversion spree While small farms have always dominated agriculture, the limited success in the implementation of CARP further brought down farm sizes in the last three decades. In the 2002 Census of Agriculture, the average farm size was 2.01 hectares, down from the average size of 3.59 hectares in the `60s. The number of farms with size of less than one hectare has also increased dramatically. In the `60s only 249,773 or 11.15 percent of total farms were below one hectare in size and most farms (50.2 percent) were within the one to 2.99 hectare range. In 2002, there were 1.9 million farms below one hectare, or 40 percent of total.37 In 2010, Dr. Ted Mendoza of the University of the Philippines in Los Baños estimated that average farm size decreased further to 1.4 hectares. This was almost half a hectare down from the 2002 average farm size of 2.01 hectare. This figure was almost at par with the average 1.7 hectare award normally given to an agrarian reform beneficiary, according to the DAR.38 In Luzon, since the unfinished distribution of rice and corn lands under Marcos’ Presidential Decree No. 27 was also included in CARP, changes in land ownership structure and tenurial arrangements in the rice and corn lands continued. As political economist Rene Ofreneo put it as early as 1980, though PD 27 and CARP implementation was limited, it nevertheless “dramatically altered the feudalistic structure in the rice and corn lands” and caused the “emergence of a new class with a more varied structure” from what was previously the dominant class groupings of landlords, kasamas or sharecroppers and independent owner-cultivators, and the minority grouping of lessees or namumuwisan, sub-lessees, and landless rural poor.39 Agrarian reform has broken the traditional landlord-tenant relationship and has replaced it with more impersonal and money-oriented contractual arrangements involving either “rural capitalists” or what some analysts term as the “new haves.” 114

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The ‘feudal’ landlords of the Philippine countryside were supplanted by rural traders, retailers, and large farmers, especially as source of credit. In exchange for loans and the supply of ever-more expensive inputs, small farmers prearranged the sale of their produce to these creditors, almost always at underpriced rates. As much as four-fifths of all marketed agricultural surplus was estimated by sociologist Peter Krinks to have been purchased by cartels of these agricultural traders in 2002, comprising “the biggest form of exploitation of growers.”40 Contract-growing arrangements and other contracts that orchestrated agricultural activities, especially in the production and distribution of new commercial crops, have been one of the major trends in the agricultural sector over the past decades.41 These have enabled some former landowners to retain their strategic influence over the agrarian political economy, even in the absence of direct control over land and production due to the partial success of land redistribution efforts. In other cases, such as in the Visayas, agrarian reform implementation has been sluggish and marked with conflict, violence, and harassment of potential farmer beneficiaries due to the stiff resistance of local landowners against CARP. In Mindanao, however, land- and plantation-owners have ensured that relations of production in the agricultural sector would continue to favor their economic interests by using the 10-year deferment granted to commercial farms to break worker’s unions and to solidify their base within these unions in order to lay the ground for retention of ownership or control over their landholdings. Rural analysts Saturnino Borras, Jr. and Jennifer Franco claimed that on the eve of the expiry of the deferment period in 1998, commercial farm owners successfully retrenched militant workers while executing what they termed “pre-nuptial” deals with their preferred beneficiaries.42 These deals were leaseback agreements, joint ventures, contract growing arrangements, and other such alternative venture arrangements the terms of which had been dictated by commercial farm owners on their preferred beneficiaries. With the implementation of these AVAs, farm workers who had been awarded lands were forced to accept and maintain the status quo. Those who opposed were either quickly marginalized or retrenched. Cases abound where conflict Agrarian Atrophy and the Changing Countryside

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broke out because the former landowner pitted two parties of claimants to the plantation, one representing management and the other representing the farm workers. Most of these AVAs have not been properly deliberated, monitored, and governed by the DAR-prescribed guidelines for commercial farms. The Presidential Agrarian Reform Council (PARC) is the approving body on AVAs, while an AVA Task Force the main monitoring arm. Unfortunately, the AVA Task Force was only created in 2003 and started functioning in 2005. By then, most AVAs as dictated by commercial farm owners were already ongoing. Of the 20 applications for AVAs in 2005, only two have been approved by the PARC.43 Similarly, the conversion of agricultural lands to non-agricultural uses was also a primary evasion tactic of landowners against CARP. These conversions pushed urban expansion in Central and Southern Luzon and other major urban centers. Between 1991 and 1997 alone, 56,966 hectares of agricultural farmland—nearly the same size of Metro Manila—was officially approved both by the DAR and the Department of Justice for conversion to other uses. Non-government estimates of the volume of land conversions throughout the `90s suggest, however, that more than 200,000 hectares of farmland may have been converted for development by realtors, both legally and illegally.44 In Cavite from 1991 to 1994, there was an alarming 617 percent increase in the amount of rural lands withdrawn from agriculture. Two-thirds (65 percent) of these lands were larger landholdings more than 25 hectares in size and therefore covered by CARP.45 These conversions were facilitated under Philippines 2000 of the Ramos administration and was further hastened when the DOJ came out with Opinion No. 44 (DOJ 44), which stated that all agricultural lands reclassified into residential, commercial, and industrial use before June 15, 1988 were exempted from CARP. Earlier, under the Local Government Code of 1991, local government units (LGUs) had been given powers over land use reclassification. To lay down the legal requirement for the conversion and exemptions, landowners (many of whom were also elected officials at the local level) wielded their power and influence to have their agricultural lands reclassified for other uses by the local government.46

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Land conversions were highest in the designated growth corridors like CALABARZON, endangering food security and displacing agricultural labor. A Philippine Center for Agrarian Reform and Rural Development study shows that land conversions in Cavite drastically reduced local production, forcing food vendors to source out the produce they sold from as far as Divisoria and Central Luzon. Rising demands for rice and other food along with the influx of migrating workers to the agri-industrial zone exacerbated the situation. The study noted that while there were sectors which benefitted from the conversion, former tenants and those farmers who chose to been farming became worse off. Many of the former tenants who had sold their lands remained underemployed or unemployed after the conversion.47 Those who remained in farming, on the other hand, complained of higher production costs, strained relations with nonfarming neighbors, additional transportation costs, among others.

Rural migrants, “new haves” and aging farmers Stagnating wages and productivity have compelled rural households to shift livelihoods. As documented by agricultural economist Jeanne Frances Illo, farming households have oftentimes responded to tough times by establishing micro-enterprises and subcontracting garments production work by increasing their levels of waged work and renting out their farming assets.48 Perhaps the most significant livelihood strategy that rural households have adopted is labor migration, both within the country and abroad. Rural-tourban migration has been a long-term trend, with highly-agricultural areas such as the Ilocos Region, Cagayan Valley, Western Visayas, Central Visayas, Eastern Visayas, and Central Mindanao experiencing net outflows.49 Once within the city, though, members of agricultural households have only been able to find marginal forms of employment in the services (e.g. as sales clerks), manufacturing (as factory workers), and the informal sectors.50 Alternatively, when a family can pool enough money or undertake the necessary education investments, overseas migration have become an option, with choice jobs in nursing, physical therapy, and maritime fields.51 When a member of a rural household is able to successfully secure overseas employment, the financial returns have been more considerable.


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In 2006, among Bulacan and Pangasinan farmers, families with a member working abroad enjoyed annual average incomes 146 percent higher than those without migrant members, while those with domestic migrant members earned average incomes 8.8 percent lower. This extra income from foreign remittances has enabled the rural households to invest more in the education of their children, buy and upgrade farming and household assets, and construct better homes.52 The promised gains of overseas work have become a major reason for pawning, leasing and, in some cases, outright selling of lands in the rural areas. Households aspiring to send a family member abroad use their lands as collateral to pay for placement fees for overseas work, with family members sliding back into being tenants or farm workers. This was the case for seven of 20 participants in a focused group discussion conducted by Focus on the Global South in 2012 among heirs of agrarian reform beneficiaries in Baranggays Pulo and Mangga in San Isidro, Nueva Ecija. The discussion revealed that to be able to send a family abroad, the parents pawned their awarded land. The family members’ earnings abroad were later used to redeem the lands, while some went into other businesses such as rice trading and duck raising, or diversified into planting watermelons, melons, and other crops.53 The rising numbers of OFWs has also prompted gradual changes in the agrarian class relations. Among the farmer-OFWs interviewed in the FGD, at least 20 percent lent out money to other farmers, and required the latter’s land as collateral. The arrangement allowed them to take control of the rice fields, and in most cases they hired the farmers who had pawned the land as farm workers who were then paid a share of the output. Such arrangements continued until the debt plus interests were fully paid. In case the farmers were unable to redeem their pawned lands, the initial transaction turned into a foreclosure or what the farmers called as “sanglang-bili.” Because of this, some ended up owning more than the prescribed seven-hectare retention limit under CARP. Since most of the transactions were informal, the actual titles would not bear this out especially if the lands had not been fully paid under PD 27 or CARP. This occurrence in Nueva Ecija has been replicated in other areas. In 2010, Ofreneo coined the term “new haves” to describe OFW families who have 118

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accumulated enough money to buy up land and properties and to start small-businesses such as rice trading, micro-lending, and jeepney and tricycle operations.54 A decade earlier, geographer Philip Kelly had noted the same patterns in Cavite: those with regular cash remittances from abroad were usually the wealthiest residents, the new village creditors and renters, and were owners of capital goods like rice mills, threshers, and hand-tractors; they also lent operating capital to farmers. He also found that to some degree the “wealthiest class of tenant farmers” also played the role of creditor/renter directly cultivating their own land and were engaged in diversified range of activities including fruits and vegetables cultivation, livestock, and even the operation of sari-sari stores.55 The migration waves have drawn human resources away from agricultural production in more ways than one. Overseas work immediately removes the migrant in question from the agrarian economy, while the remittances sent by overseas workers are often used to enable other family members to engage in business and occupations other than farming. It also affects the aspirations and attitudes of rural households. For instance, Kelly, in his 2000 study of two Cavite villages, observed that like many other rural Filipinos, the residents of Barangay Bunga had largely developed aspirations to work overseas to improve their income. Since the benefits for those who were able to send a family member abroad were demonstrated in terms of solidly built houses, comfortable furnishing, and electrical appliance, increasing numbers of families also sought work overseas as well. Wrote Kelly: “Like most other Filipino villagers, people in Bunga aspire to the foreign currency earnings of working abroad and the financial security that it can provide in a local context. Relatively few households have had such an opportunity, but the benefits to those that have are immediately apparent. […] Although the numbers involved in overseas work remain relatively small… its effect is felt beyond this number alone. For every person that is abroad, or who has previously been abroad, there is one person, or perhaps more, who need not engage in the grueling work involved in Agrarian Atrophy and the Changing Countryside

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harvesting or planting rice because of the ‘dollar’ income that is coming in. In addition, the possibility of working abroad has an effect on the aspirations and work attitudes of the younger generation. Thus, in one case, a farmer’s son could refuse to work for his father while he did nothing but wait for his papers to come through to become a seaman.”56 Another lasting impact of rural out-migration has been the loss of the younger generations and second liners in farming. Indeed, it has been widely noted that the waves of migration to the urban areas produced a ‘youth bulge’. In a 2004 study by Xenos and Gultiano, it was found that 19 percent of all youth in Metro Manila and 10 percent of those in other urbanized areas had lived in another province or rural municipality only five years earlier. With overseas work and urban employment as options, a great disinterest towards farming seemed to have prevailed among the children of peasants. Paraphrasing Kelly, subsistence agriculture appeared to have gradually become an anachronism in the minds of the younger generation, only reinforced by the commonplace perceptions among farmers themselves that their occupation was ‘lowly.’57 The ageing population of farmers has become a major concern among civil society advocates, government, and policy makers. A 2008 survey by the nongovernment Philippine Peasant Institute on small owner-cultivators found that the farming sector was an ageing population. Out of the 1,816 respondents covering six crops across the country, 80 percent were 40 years old or older, with 52 percent belonging then to the 40-59 year old range. A quarter (24 percent) was at least 60 years old or older, and there were even farmers aged 80 years old or older who still farmed despite their age.58 In 2010, Dr. Ted Mendoza of UPLB made a more alarming observation that “farmers may be a dying breed,” because the average age of farmers had become 57 years and rural youth labor decreased as younger generations left in search of off-farm opportunities.59 This trend in the aging of Filipino farmers has not gone unnoticed, with TESDA Director General Joel Villanueva, taking note of the need to address the ageing farming population, saying that “there is a need to create a pool of workers in the agriculture sector…farmers are aging and soon, there will be a dearth of 120

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farmers in the country.” Many echo this sentiment, and stress the likely impact of the farmers’ ageing population and low farming incomes on the country’s bid to achieve food security. There has been recognition that unless agriculture is made an attractive option, it will continue to lose the young, with labor shortages in the rural economy in the future becoming a threat.60

Powerful agribusiness Despite the decline of the agriculture sector, a new class of “rural capitalists” has emerged over the past two decades, i.e. rural bankers, rice millers, traders of farm inputs and equipment, and small industrialists and businessmen, who provide credit and alternative marketing outlet for farm produce. Some of the previous landowners have ended up in this class, while others have found ways to evade agrarian reform by parceling out their lands. The other capitalists that have emerged are those who concentrated on agribusiness, companies which provided the agricultural inputs and equipment needed because of the Green Revolution. This is the reason why a big number of big land-owning families, in many cases in partnership with trans-national corporations have maintained their economic and political clout. As Quitoriano puts it, “the symbiosis of big landownership and politics defines the ability of these families to maintain control of big landholdings against every conceivable rule that should prove otherwise”.61 This group includes landowner groups (e.g. Philippine Banana Growers and Exporters Association/PBGEA) that successfully lobbied for deferments under CARP or opposed environmental bans by LGUs (e.g. the ban against aerial spraying issued by Davao). Since the time of Macapagal-Arroyo, efforts to promote “international investments in agriculture” have become aggressive. A 2010 World Bank report listed the Philippines as the second most preferred destination for land investments in the East Asia and the Pacific region with at least 3.1 million hectares affected by these investments, in turn giving rise to fears of ‘global land grabbing’.62 The government has actively encouraged developed countries and/or foreign agribusiness corporations to go into contract farming and joint venture or to lease large tracts in the country for the production, sale, and export of foods and biofuels. These investments have been reflected as Agrarian Atrophy and the Changing Countryside

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accomplishments from foreign trips or negotiated under bilateral and multilateral trade agreements like those with China and Japan.63 The World Bank, through its various sub-bodies, has facilitated this spate of land investments in the country. The International Financial Corporation and Foreign Investment Advisory Services have been helping the Philippines in its land investment program. FIAS reviewed Philippine investment incentives in 2002, with the objective of removing constraints to FDIs. In 2006, FIAS, working with the Multilateral Investment and Guarantee Agency, again provided inputs for the development of a program for foreign investment retention, expansion, and diversification. In 2008 and 2009, FIAS together with the Board of Investments identified a pipeline of potential investments in land in the Philippines amounting US$1 billion, covering 200 new expansion opportunities for investors.64 These land investments—epitomized by the 1.24 million hectare RP-China Farm Deals of 2007—has generated much attention in the context of the multiple crises of food, fuel, finance, and climate that beset the global economy in the latter half of the 2000s. The intermeshing of these crises have prompted foreign governments like the Gulf States to acquire lands in the developing world to safeguard their food and energy supply amid growing global vulnerabilities. Land concessions by Philippine government to these foreign governments have almost always been justified on flawed assumptions of the lands in question being ‘idle’ or ‘marginal’’ while the investment arrangements have been trumpeted with premature, overly-optimistic estimates. Negotiations around these arrangements have also been unsystematic and non-transparent. There is no centralized public database of these foreign and domestic land deals, which has made it difficult to gather conclusive information on their scope, substance, and impacts. Although not much information has been made available to the public on the extent of land investments or land grabbing in the Philippines, it is clear that it has already penetrated into Philippine agriculture. In 2009, the Philippine Agricultural Development and Commercial Corporation (PADCC) reported that 1.997 million hectares of agricultural lands in the Philippines were being matched for investment by foreign governments 122

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and agribusiness corporations. According to 2012 data from the Board of Investments, PhP7.151 billion in approved foreign agricultural investments poured into the country from 2003 to October 2012, with nearly 60 percent of all investments coming in from 2008 onwards from various South Korean, American, Thai, Dutch, Japanese, and other companies partnering with Philippine firms.65 What remains unclear at this point, however, is how much of these investments can be counted as proper land deals and how much agricultural investments have taken place beyond the scrutiny of the BOI. PADCC, for one, has admitted that it can only monitor investments directly negotiated with them, submitted to them by investors or forwarded to them by the BOI. Direct negotiations done at the local level, possibly between foreign investors and individual farmers/ farmers organizations and/or LGUs remain unmonitored and unreported. Only occasional media reports shed light on some of these deals, like in the case of the 94,000 hectares leased by South Korean company Jeonnam Feedstock Limited for corn production in Mindoro Occidental.66 Other controversial projects have likewise been exposed such as the EcoGlobal Deal in 2009 and the A. Brown Oil Palm Plantation in 2011, both in Mindanao.67 All these indicated that the hectarage already committed to land investments as reported by PADCC may be understated. Investors involved include not just foreign governments and their agencies (such as the NEH Group of Bahrain and FEAICO of Saudi Arabia), but also private corporations (like the non-agricultural SL Agritech and Metro Pacific Investment Corp.), and global finance-backed prospectors (e.g. AgriNuture and the Black River Capital Food Funds Holdings Pre. Ltd.).68 The non-transparent manner by which these investments were negotiated raises concerns over the lack of coherence and consistency in monitoring and regulating them. These big land investments are marginalizing small farmers in two ways: they push up the value of land and make small farms even more unviable, and they encourage the shift of agricultural lands to non-food production. An additional question is whether these investments are in accordance with laws on agrarian reform, forest lands management, and indigenous peoples’ rights.


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Initial studies on foreign land investments show adverse effects on agrarian reform beneficiaries and non-CARP small owner-cultivators. In Isabela and Quezon provinces farmers who leased their lands to foreign corporations are now bankrupt and have been served notices of foreclosure by the Land Bank, mainly because the promised increase in income did not materialize.69 The lack of support services after land redistribution prompted these farmers to lease their lands, often becoming marginal farm workers in the new ventures. These investments were predominantly in bio-fuels, pushing the farmers away from food production, and weakening their capacity to feed themselves. This phenomenon now threatens the country’s food security as these investments have not been made on “idle, marginal, unproductive and untenured lands” as originally intended. The threat has already been observed in the Aurora Pacific Economic zone cases, where rice production has been affected in order to make way for the infrastructures of the Philippines’ newest Freeport.70 In Sarangani province, B’laan women tribal leaders decry the hunger in their community, as almost 500 hectares of land previously planted to rice, corn, banana, and root crops were converted to jathropa production.71 In the case of Mindanao, the entry of investments in various agreements and contracts like joint ventures, leaseholds, public-private partnerships (PPPs), and the aggressive expansion of crops for biofuels all brought constraints on the agrarian reform program. In 2010, the Alternative Forum for Research in Mindanao (AFRIM) mapped out the entry of biofuel crops in the island such as jathropa, oil palm, napier grass, and rubber. As new investments were being promoted in contiguous areas, agrarian reform communities (ARCs) were pushed as recipients of the agreements. But without transparency and supervision on contracts, these have threatened farmer-beneficiaries and cooperatives’ security in relation to control and access to the awarded land. Instead of securing land for the ARCs, lands were brought back under the management of former landowners or new investors, through various types of contract. Other case studies have also uncovered that lands converted to biofuels used to be planted to rice, some of which had irrigation facilities. Some land deals have led to the cancellation of farmers’ CLOAs, violated their land rights, and are feared to lead to a re-concentration of land ownership.72

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New vulnerability The January 2014 Labor Force Survey73 dismayed many when it showed that the country lost more than 810 thousand jobs in agriculture throughout 2013.74 Authorities were quick to defend that this was because, due to climatic changes, the planting season also changed; those who were supposed to work the farm in that quarter had to wait longer. The explanation did not cover everything, but it pointed to a new vulnerability agriculture faced. As a number of international studies have confirmed, the Philippines is one of the most vulnerable to extreme weather events, adding to the constraints the agricultural sector has to address. Rice is particularly a sensitive crop— farmers plant 60 percent of the country’s rice during the rainy season, a period when strong typhoons has occurred in recent years. From 2000 to 2012, major typhoons caused economic losses, estimated at $3.85 billion (see Table 2). A substantial portion of these were agricultural losses. Inadequate support services including the absence of crop insurance and direct compensation has made the recovery after each disaster more difficult and relegated farming as a high-risk undertaking.

Looking to the future Data are still incomplete, and need to be coherently linked together, but the threats to the country’s agriculture are evident. The sector has been losing human resources; traditional farming households have barely kept up with low productivity and even lower incomes. Land speculation and foreign investments are adding upward pressure to land prices and to entice farmers to lease their lands, some of them losing their CAR-awarded lands in the process. Migration to the cities and abroad are opening up an avenue to escape rural poverty, but it is not available to all. The problems in industry prevent the sector from absorbing excess rural labor, making them suffer the blight of urban poverty. The twin challenge then is the restoration of agriculture and the completion of agrarian reform, on the one hand, and the revival of industry, on the other.


125


Table 1. Top Provinces with Highest Land Redistribution Backlog, 1997, 2008, 2011 and Poverty Magnitude and Incidence, 2012 Provinces

Remaining Lands for Distribution in Hectares under CARP

Poverty (2012)†

1997 (a)

2008 (b)

2011 (c)

Magnitude (poor population)

Incidence (in percent)

Negros Occidental

154,246

147,888

144,861

916,694

32.3

Camarines Sur

86,365

54,433**

63,042

771,984

41.2

Masbate

78,229

57,007

33,156

448,333

51.3

South Cotabato

74,863

60,186

40,703

430,210

32.0

Negros Oriental

69,391

34,892

24,027

638,466

50.1

Leyte

66,067

60,260

36,007

713,063

39.2

Albay

42,418

Not in the top 10

Not in the top 10

511,636

41.0

Northern Samar

40,833

Not in the top 10

Not in the top 10

309,089

50.2

Iloilo

32,991

Not in the top 10

25,019

580,937

26.2

Camarines Norte

32,503

Not in the top 10

Not in the top 10

160, 390

28.7

Isabela

Not in the top 10

49,708**

57,730

365, 024

24.4

Lanao del Sur

30,311*

43,988**

39,567

687, 138

73.8

Maguindanao

Not in the top 10

Not in the top 10

29,034

571,223

63.7

Sorsogon

Not in the top 10

32,796

Not in the top 10

297, 931

40.7

Saranggani

Not in the top 10

30,161

18,450

269, 112

53.2

† Based on National Statistical Coordinating Board data, February 2014

(a) Workable balance based on the Ramos Legacy in Agrarian Reform: A Transition Report. In 1997, Congress debated first extension period of CARP and enacted RA 8532, which mandated an additional PhP 50 billion funding for the program’s land redistribution component. (b) Based on DAR’s Data as of March 2008, which was computed and used by Focus on the Global South staff during the Reform Carp Movement campaign. (c) Based on the PARC-DAR Data, March 2011. * ranked 12th in 1997. ** no explanations on why there was an increase in the 2011 figures.

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Table 2. Estimated economic losses and human displacements from storms cyclones impacting the Philippines, 2000 to September 2013 Year

Notable Typhoons (1M + affected)

Affected Persons

Economic Losses (in US$)

2013

(*Yolanda not included)

707,528

1.68

2012

Bopha

7,560,480

918.14

2011

Sendong, Pedring, Quiel, Juaning, Falcon

9,468,676

527.24

2010

Juan

2,595,545

284.42

2009

Pepeng, Ondoy

12,221,663

932.70

2008

Fengshen, Halong

6,851,979

441.63

2007

-

1,922,309

10.22

2006

Reming, Milenyo

7,821,808

330.92

2005

-

20,011

2.0

2004

Marce

3,241,278

138.87

2003

-

466,261

35.302

2002

-

982,194

13.53

2001

Nanang, Feria

3,450,437

99.06

2000

Seniang, Reming, Edeng

6,187,431

83.46

63,497,600

3,853.17

TOTAL

Source of Basic Data: EM-DAT: The OFDA/CRED International Disaster Database. (2014). Retrieved 13 February 2014, from http://www.emdat.be, Université Catholique de Louvain, Brussels (Belgium).


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Notes 1 Data computed from National Statistical Coordination Board. National Accounts of the Philippines, 19462012. Retrieved 19 February 2013, from http://www.nscb.gov.ph/sna/2013/2nd2013/tables/1Q2Rev_Summary_93SNA.pdf 2 Computed from the National Statistical Coordination Board. National Accounts of the Philippines, 19462012. Retrieved 19 February 2013, from http://www.nscb.gov.ph/sna/; Cited in Chavez, J.J. and Fabros, A. (2012). Philippine industry and employment: a snapshot. Issues, Views, Action. Quezon City: Action for Economic Reforms. 3 Bernabe, R. (2007). Potential impact on Philippine agriculture: bilateral and regional free trade agreements. Rural Development Review, 1(2), 4. 4 National Economic and Development Authority. (2013). Philippine development plan 2011-2016 : competitive & sustainable agriculture & fisheries sector (Chapter 4), 102. Retrieved 10 October 2013, from http://www.neda.gov.ph/wp-content/uploads/2013/09/CHAPTER-4.pdf 5 Balisacan and Hill, (Eds.), The Philippine economy: development, policies and challenges. Quezon City: Ateneo de Manila University Press, 178. 6 Krinks, P. A. (2002). The economy of the Philippines: elites, inequalities and economic restructuring. London: Routledge, 105, 113. 7 Bureau of Agricultural Statistics. Philippine agriculture in figures, 2012. Retrieved 10 October 2013, from http://countrystat.bas.gov.ph/?cont=3 8 Virola, R. A. (2011, August 8). Rice self-sufficiency or rice security?: some statistics on rice and exports. Statistically Speaking. Retrieved 10 October 2013, from http://www.nscb.gov.ph/headlines/ StatsSpeak/2011/080811_rav.asp#tab4 9 Tobias, A. et al. (2012). Handbook on rice policy for Asia. Los Baños, Philippines: International Rice Research Institute. Retrieved 10 October 2013, from http://books.irri.org/9789712202858_content.pdf 10 Balisacan and Hill, (Eds.), The Philippine economy: development, policies and challenges. Quezon City: Ateneo de Manila University Press, 180. 11 Bello, W., Malig, M.M., Docena, H. & De Guzman, M. (2004). The anti-development state: the political economy of permanent crisis in the Philippines. Quezon City: University of the Philippines Press, 142. 12 Valencia, C. (2013, April 12). Agri trade deficit widens by 30% . The Philippine Star. Retrieved 19 February 2013, from http://www.philstar.com/business/2013/04/12/929582/agri-trade-deficit-widens-30 13 Chavez, J.J. and Fabros, A. (2012). Philippine industry and employment: a snapshot. Issues Views, Action. Quezon City: Action for Economic Reforms; Valencia, C. (2013, April 12). Agri trade deficit widens by 30% . The Philippine Star. Retrieved 19 February 2013, from http://www.philstar.com/ business/2013/04/12/929582/agri-trade-deficit-widens-30 14 Tabuga, A.D. et al. (2012). Poverty and agriculture in the Philippines: trends in income poverty and distribution. Philippine Institute for Development Studies Discussion Paper, No. 2012-09, 27. 15 Tabuga, A.D. et al. (2012). Poverty and agriculture in the Philippines: trends in income poverty and distribution. Philippine Institute for Development Studies Discussion Paper, No. 2012-09, 12. 16 Focus on Poverty. (2012, January 25). Poverty in the Philippines: resource inequality. Retrieved 10 October 2013, from http://www.focusonpoverty.org/poverty-in-the-philippines-resource-inequality/ 17 Food and Agriculture Organization of the United Nations. Table 1- Number and area of holdings, and Gini’s index of concentration: 1990 round of agricultural censuses. Retrieved 10 October 2013, from http:// www.fao.org/economic/the-statistics-division-ess/world-census-of-agriculture/additional-internationalcomparison-tables-including-gini-coefficients/table-1-number-and-area-of-holdings-and-ginis-index-ofconcentration-1990-round-of-agricultural-censuses/ar/ 18 Philippine Government. (2012, July 24). 2013 Budget message of President Aquino. Official Gazette. Retrieved 10 October 2013, from http://www.gov.ph/2012/07/24/2013-budget-message-of-president-aquino/ 19 Bureau of Agricultural Statistics. Philippine agriculture in figures, 2012. Retrieved 10 October 2013, from http://countrystat.bas.gov.ph/?cont=3 and Presidential Agrarian Reform Council (2011) 20 www.gov.ph/2010/08/24/2011-budget-message-of-president-aquino/ 21 Congressional Oversight Committee on Agricultural and Fisheries Modernization. Infrastructure : executive summary. Retrieved 10 October 2013, from http://cocafm.gov.ph/wp-content/uploads/ downloads/2011/02/Infrastructure.pdf

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22 National Economic and Development Authority. (2013). Philippine development plan 2011-2016 : competitive & sustainable agriculture & fisheries sector (Chapter 4), 102. Retrieved 10 October 2013, from http://www.neda.gov.ph/wp-content/uploads/2013/09/CHAPTER-4.pdf 23 Ballesteros, Marife. (2003). Property rights in land reform areas. Philippine Institute for Development Studies Policy Notes, No. 2003-14, 3. 24 Llanto, G. M. (2005). Rural finance in the Philippines: issues and challenges. Makati City, Philippines: Philippine Institute for Development Studies. 25 Llanto, G. M. (2005). Rural finance in the Philippines: issues and challenges. Makati City, Philippines: Philippine Institute for Development Studies. 26 Bello, W. (2005). The anti-development state: the political economy of permanent crisis in the Philippines. London: Zed, 141-143 27 Bello, W. (2009). The food wars. London: Verso, 158. 28 Bello, W. (2005). The anti-development state: the political economy of permanent crisis in the Philippines. London: Zed, 179. 29 Bello, W. (2009). The food wars. London: Verso, 158. 30 Bello, W. (2009). The food wars. London: Verso, 158. 31 Manahan, M.A. (2013). The state of agrarian reform under President Benigno Aquino III’s government beyond the numbers: a struggle for social justice and inclusive rural development. Quezon City: Focus on the Global South-Philippines. 32 Flores-Obanil, C. B. (2008) Private agricultural land distribution under CARP. Quezon City: Centro Saka Inc. 33 Data is for 1972-2012 and cover the accomplishments of both DAR and DENR. February 5, 2014, Congressional Hearing of Committee on Agrarian Reform, House of Representatives. Presentation of Secretary Virgilio de los Reyes. 34 See Walden, B. (2013, September 16). Waterloo for agrarian reform. Philippine Daily Inquirer. Retrieved 10 October 2013, from http://opinion.inquirer.net/61273/waterloo-for-agrarian-reform 35 Walden, B. (2013, September 16). Waterloo for agrarian reform. Philippine Daily Inquirer. Retrieved 10 October 2013, from http://opinion.inquirer.net/61273/waterloo-for-agrarian-reform 36 Walden, B. (2013, September 16). Waterloo for agrarian reform. Philippine Daily Inquirer. Retrieved 10 October 2013, from http://opinion.inquirer.net/61273/waterloo-for-agrarian-reform 37 Bernabe, R. (2007). Potential impact on Philippine agriculture: bilateral and regional free trade agreements. Rural Development Review, 1(2), 4. 38 Mendoza, T. (2011). “Agriculture during President Gloria Macapagal Arroyo: the challenges under Pnoy administration.” Paper discussed during the series lecture series Re: “UP Assessment of the Presidency andAdministration of President Gloria Macapagal Arroyo (2001-2010).” Held at Center for Leadership, Citizenship, and Democracy, NCPAG, UP Diliman Quezon City, on 18th November 2011. 39 Ofreneo, R. (1980). Capitalism in Philippine agriculture. Quezon City: Foundation for Nationalist Studies. 40 Krinks, P. A. (2002). The economy of the Philippines: elites, inequalities and economic restructuring. London: Routledge, 104. 41 Krinks, P. A. (2002). The economy of the Philippines: elites, inequalities and economic restructuring. London: Routledge, 141-142. 42 Borras, S. Jr. and Franco, J. C. (Eds.). (2005). On just Grounds: struggling for agrarian justice and citizenship rights in the rural Philippines. Manila: Institute for Popular Democracy. 43 Flores-Obanil, C. and Manahan, M.A. (n.d.). “Leaseback arrangements: reversing agrarian reform gains.” Written for the People’s Campaign for Agrarian Reform Netwrok, Inc. (AR Now!) in collaboration with the Philippine Center for Rural Development Studies (CENTRO SAKA Inc.) 44 Ochoa, C.L. (1999). The rural sector and the Ramos administration. Kasarinlan, 14(3/4), 171. Retrieved 10 October 2013, from http://www.journals.upd.edu.ph/index.php/kasarinlan/article/viewFile/1419/pdf_61 45 Cardenas, D. C. (n.d.). Effects of land-use conversion on local agriculture the case of Cavite, Philippines. Retrieved 7 June 2014, from ftp://ftp.fao.org/es/esa/beijing/cardenas_landuse.pdf 46 Ochoa, C.L. (1999). The rural sector and the Ramos administration. Kasarinlan, 14(3/4), 171. Retrieved 10 October 2013, from http://www.journals.upd.edu.ph/index.php/kasarinlan/article/viewFile/1419/pdf_61 47 Cardenas, D. C. (n.d.). Effects of land-use conversion on local agriculture the case of Cavite, Philippines. Retrieved 7 June 2014, from ftp://ftp.fao.org/es/esa/beijing/cardenas_landuse.pdf 48 Illo, J. F. (n.d.). Labor in Agriculture and Fisheries, 10-11. 49 Porio, E. (1997). Urban governance and poverty alleviation in Southeast Asia: trends and prospects. Quezon City: Center for Social Policy and Public Affairs, 23.


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50 51 52 53 54 55 56 57 58 59

60

61 62

63 64 65 66 67 68

69

70 71 72

73 74

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Illo, J. F. (n.d.). Labor in Agriculture and Fisheries, 9. Illo, J. F. (n.d.). Labor in Agriculture and Fisheries, 13. Illo, J. F. (n.d.). Labor in Agriculture and Fisheries, 15-16. Focused Group Discussion conducted by Focus on the Global South, headed by Flore-Obanil, C. B. (2012). Ofreneo, R. (2012). Migration and development: when will the turning point come? Philippine Institute Growth and Prosper for All. Ed., Filomeno Sta. Ana, Action for Economic Reforms. Kelly, P. (2000). Landscapes of globalization: human geographies of economic change in the Philippines. London: Routledge, 95-97. Kelly, P. (2000). Landscapes of globalization: human geographies of economic change in the Philippines. London: Routledge, 95-97. Porio, E. (1997). Urban governance and poverty alleviation in Southeast Asia: trends and prospects. Quezon City: Center for Social Policy and Public Affairs, 32. Unpublished research by Philippine Peasant Institute, in collaboration with the Japan Coalition for NGO Cooperation (JCNC), 2008. Mendoza, T. (2011). “Agriculture during President Gloria Macapagal Arroyo: the challenges under Pnoy administration.” Paper discussed during the series lecture series Re: “UP Assessment of the Presidency andAdministration of President Gloria Macapagal Arroyo (2001-2010).” Held at Center for Leadership, Citizenship, and Democracy, NCPAG, UP Diliman Quezon City, on 18th November 2011. Jaymalin, M. (2011, October 2013). “Shortage of farmers looms with aging agri workers – TESDA.” PhilStar.com. Retrieved 6 June 2014, from http:// http://www.philstar.com/headlines/742783/shortagefarmers-looms-aging-agri-workers-tesda Quitoriano, E. (2008). In the hands of farm workers: can banana commercial farms survive? Pasig City, Philippines: Development Academy of the Philippines. Deiniger, K. (2010). World Bank: Large scale land acquisition: what is happening and what can we do? Presentation to Land Day Event hosted by the Global Donor Platform and FAO/SDC/IFAD on 24 January 2010. Retrieved 10 October 2013, from http//www.donorplatform.org/content/view/332/210/ as cited In Flores-Obanil, C. and Manahan, M.A. (2011, Janury-June). Three years to go: PNoy government to hurdle landlords, inefficient system and deficient budget. Policy Review, Focus on the Global South Philippines, 1(3-4). Flores-Obanil, C. B. (2010). Organized resistance. Inkota Brief, May 2010. Retrieved 10 October 2013, from http://www.inkota.de/material/suedlink-inkota-brief/152-land-grabbing Manahan, Mary A. (2011, October 19). Is Asia for sale? trends, issues, and strategies against land grabbing. In Food Sovereignty in Southeast Asia, Kasarinlan, 26(1-2). Data sourced from National Statistical Coordination Board. Investment Statistics 2003 to October 2012. Retrieved 6 June 2014, from http://www.nscb.gov.ph/fiis/DataCharts.asp Dela Cruz, R.J. (2011). The new conquistadores and one very willing colony: A discussion on global land grabbing and the Philippine experience. Italy: International Land Coalition. Dela Cruz, R.J. (2011). The new conquistadores and one very willing colony: A discussion on global land grabbing and the Philippine experience. Italy: International Land Coalition. Manahan, M.A. (2013). The state of agrarian reform under President Benigno Aquino III’s government beyond the numbers: a struggle for social justice and inclusive rural development. Quezon City: Focus on the Global South-Philippines. Carranza, D. T. (2011). Implications of biofuels investments on land rights and livelihoods of the rural poor: three cases of biofuels investments in Luzon. Rural Poor Institute for Land and Human Rights Service, Inc. (RIGHTS, Inc.). Powerpoint presentation. National Conference on Lands and Agro Investment Deals, April 14, 2011, Davao City. Banzuela, R.S et al. (2012). Land grabs in the Philippines: a country case study. Preliminary unpublished draft. PAKISAMA and AFA, 2012. Dela Cruz, R.J. (2010). Agrofuels. Preliminary draft. Carranza, D. T. (2011). Implications of biofuels investments on land rights and livelihoods of the rural poor: three cases of biofuels investments in Luzon. Rural Poor Institute for Land and Human Rights Service, Inc. (RIGHTS, Inc.). Powerpoint presentation. National Conference on Lands and Agro Investment Deals, April 14, 2011, Davao City. Data from National Statistics Office. Labor Force Survey, 2013. Retrieved 12 October 2012, from http:// www.census.gov.ph/content/2013-annual-labor-and-employment-status-annual-estimates-2013 Data from National Statistics Office. Labor Force Survey, 2013. Retrieved 12 October 2012, from http:// www.census.gov.ph/content/2013-annual-labor-and-employment-status-annual-estimates-2013 Chapter 3

C h apter

4

A Labor Exporting State: The Globalization of the Philippine Migration Model The Philippines offers the best and worst in overseas migration.

With four decades of sustained and large-scale labor export under its belt, the country’s migration enterprise has engendered a national economy, staggering in its scale, reach, and consequence. It is an economy significantly defined by and extremely dependent on international labor flows. It is said that no other phenomenon has paved the way for such deep and pervasive changes within the Philippine economic and social landscape. Migration has led to some inroads and gains, while at the same time emphasizing contradictions and challenges that has characterized the country’s development trajectory and position in global political economy. Today, the Philippines ranks among the world’s top labor exporting nations, with at least 10 percent of the population living and working abroad, a figure which in itself indicates the country’s primary participation in global economic affairs. The Philippines has deployed migrants in over 200 countries across the globe, in almost all kinds of jobs. Filipino workers fill up practically the entire roster of the world’s labor needs, from being manual laborers to skilled service workers, to highly educated and experienced professionals. Filipino migrant workers have been trying their luck overseas since the galleon trades during the Spanish period, but the current migration flows have the distinction of having the most extensive number of people deployed abroad and incomparable dollar earnings remitted back home, transnational flows that keep the economy afloat. That the country’s most profitable export has always been its people is now undeniable. 131


Four decades of overseas labor migration 1970s. When overseas contract work was initially explored in the `70s, it was presented as a short-term response. With the Middle East economic boom requiring more and more workers, the Marcos administration expressed optimism that contract migration would at least partly address unemployment and the balance-of-payments position.1 During this period, unemployment levels reached an average of 11.8 percent, double-digit figures which rose to an all-time high of 12.7 percent toward the end of the Marcos dictatorship in 1985.2 The country’s overseas employment program was enshrined in the 1974 Labor Code (Presidential Decree 442), through a provision that aimed “to promote the overseas employment of Filipinos and to secure for them the best possible terms and conditions of employment” by creating the Overseas Employment Development Board and the National Seamen Board. With the temporary labor export framework laid down, the `70s ushered the outflow of short-term contract workers to the Middle East, largely made up of engineers and construction laborers who carried out numerous ambitious infrastructure projects in Saudi Arabia and neighboring oil-rich nations. Escalating conflict in war-torn Mindanao also resulted in the displacement of thousands of Filipinos, some of whom migrated to Sabah, and were accepted as refugees by the Malaysian government. Under the Marcos administration, attempts to redirect rising agrarian tensions in other parts of the archipelago also resulted in a complex and volatile societal configuration in Mindanao. Following this government-facilitated internal migration to Mindanao under Marcos, historical ties between Mindanao and Sabah developed an added dimension—displaced Filipino citizens fleeing to the neighboring island. 1980s. Contract work statistics sharply rose in the `80s, soon after the creation of important government bodies mandated to administer overseas labor migration and maximize opportunities that were opening up in the Gulf and other prospective destinations. From only 1,863 Filipino workers in 1971, the number of overseas contract workers shot up almost 20 times to 36,035

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five years later. This number increased to 314,284 in 1982, the year the Philippine Overseas Employment Administration was formed. In the `80s, other contract work destinations would also open up. Beyond the Gulf countries, neighboring Asian nations would start receiving more foreign laborers, as their industrialization projects took off.3 In the Philippines, attempts to propel an export-oriented, labor-intensive economy would not fare well. In fact, the spike in overseas deployment figures in the 1980s coincided with the implementation of Structural Adjustment Programs in the Philippines, which brought down average tariff rates significantly. Rather than bolster the bid to industrialize, these programs would result in the decimation of existing industries in the country, which in turn would displace hundreds of thousands of farmers and workers. 1990s. With the entry of the Philippines into the World Trade Organization regime, overseas migration intensified further, as implementation of the liberalization program also escalated. Instead of reaping expected benefits in employment and productivity, by following prescriptions such as acceding to the Agreement on Agriculture, employment in agriculture dropped from 11.29 million in 1994 to 10.85 million in 2001.4 In the case of manufacturing, promising domestic industries that had developed in the `50s and the `60s collapsed or weakened under the impact of globalization and liberalization. The garments industry suffered tremendous blows; the one million jobs it was capable of generating in this period would drastically shrink (700,000 in factories and 300,000 in households) to a mere 10th of its previous size, only 100,000 workers by 2010.5 Alongside the devastation of agriculture and manufacturing, the country also experienced a significant rise in the number of female overseas workers, ushering in the oft-cited feminization of labor migration. By the `90s, more than half of Filipino workers entering the global labor force were women. According to deployment data from the POEA, female new hires have surpassed males since 1993.

A Labor Exporting State: The Globalization of the Philippine Migration Model

133


Unlike preliminary trends in occupation and destination, with the male majority taking on construction or transport jobs, over the course of the mid-`80s to the `90s a notable increase in placements to more service-oriented occupations occurred along with the rise in number of women migrants. A sizable number of these female migrant workers ended up as domestic workers and entertainers, among other vulnerable occupations that were considered prone to exploitation, isolation, and abuse. Apart from deployment to the Middle East, female migrants proceeded to other countries in Asia, such as Malaysia and Singapore that begun to require domestic and other care workers as their economies expanded. Other destinations such as Spain and Italy also opened up. The feminization of migration brought with it other issues, especially after the rising number of migrant women cases, including but not limited to those of Flor Contemplacion, Sarah Balabagan, and Maricris Sioson, grabbed public attention and became national tragedies.6 First decade of 2000s. By 2004, female new hires comprised 74 percent of deployment. It was during this period that President Gloria Macapagal-Arroyo’s government set an explicit target in annual labor deployment of one million overseas Filipino workers in its Medium Term Philippine Development Plan (MTPDP 2004-2010).7 Overseas migration has obviously become a necessary means for survival not only of Filipino households, but also of the Philippine government. As Maruja Asis (2006) observes, “the government, not just its people, has come to rely on overseas employment as a strategy for survival. After years of pushing the official line that it does not promote overseas employment, the government set a target in 2001 to deploy a million workers overseas every year.”8 By 2006, the one million mark was breached, reportedly the only jobs generation target that was categorically met in the course of Arroyo’s six-year term.9 The impact of the global economic crisis during the years 2008-2009 further demonstrated the vulnerable position of Filipinos working abroad. The global crises exposed the Philippine government’s constrained capacity to cope with an influx of returning migrants and provide them adequate social protection. According to reports, in 2009 a little more than 12,000 OFWs lost their jobs after factories shut down and workplaces downsized at the height of the 134

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global economic downturn. Some six thousand workers mostly from Taiwan and the United Arab Emirates were forced to go home, while thousands more reportedly opted to stay overseas, some as irregular migrants without secure job placements, thinking that their opportunity to earn was still better abroad despite the dismal conditions they faced.10 Ironically, the crisis which sent thousands of these OFWs back home served as a push to further intensify overseas deployment. When POEA figures came in, the years 2008 and 2009 still showed increases in both deployment and remittances over previous years’, and this even in the face of global economic slowdown.11

Labor-exporting state In the last four decades, as response to the rising significance of migration in the country’s political economy, the Philippine state has developed an advanced infrastructure for overseas labor deployment and management. Today, the Philippines is credited for a far-reaching complex of migration-related agencies and mechanisms that as a whole systematizes migration flows, consequently institutionalizing the state’s central role in labor export. (Annex 1 details this elaborate labor migration infrastructure)

Over-regulation, under-performance, and mismanagement The state’s migration management stance has a narrow approach to overseas migration, using as indicator of migrant worker well-being the rise and fall in dollar remittances and deployment. As some advocates have put it, there’s a tendency to reduce migrant Filipinos into commodities–for-exports consumers with purchasing power to be captured, cases to be filed, casualties to be repatriated, or victims to be saved. Migrant NGOs and civil society groups, many of which have been organized to fill the gaps in policy advocacy and service provision, openly challenge this implicit stance. They also point out that some government programs tend to be inadequate, ineffective, and “reactive,” lacking the benefit of careful planning, sufficient funding, and adequate staffing. A Labor Exporting State: The Globalization of the Philippine Migration Model

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A case in point is how the POEA conducts its job. The agency sets employment guidelines and standards for various worker sectors, which include seafarers, entertainers, and domestic workers (covering repatriation, minimum 15 days paid leave, regular rest days, and so forth). It is tasked to monitor compliance and adjudicate violation cases, as well as impose penalties and fines. However, it has been raised that POEA seems understaffed for the tasks it is mandated to handle. For instance, “in 2007, POEA employed six full-time inspectors for the country’s 1,422 active agencies and the 479 agencies that applied for new licenses—a ratio of about one inspector for every 317 agencies…Indeed, POEA records indicate that not all agencies are inspected every year. Rather, POEA prioritizes inspections, looking first at agencies whose licenses are up for renewal and those that have a record of recruitment violations or have filed requests to change their location or add office space.”12 Apart from poor performance in monitoring recruitment agencies, POEA’s adjudication process has been riddled with delays and backlogs. Thus, it has been suggested that while services are available for workers, they may end up losing interest or faith in migration mechanisms and programs, given the slow and tedious process involved. POEA’s monitoring and adjudication performance is just one source of a recurring critique—that the Philippine state tends to over-regulate migration in design, while underperforming in practice. Other irregularities associated with mechanisms for managing migration flows have given state intervention in migration a bad name13. The OWWA-managed overseas welfare fund, which pools the US$25 membership fees from departing OFWs, is one example. Over 600,000 OFWs have been provided some form of service, including the thousands who were repatriated from the Gulf war in 1991, those affected by the war in Lebanon in 2006, and more recently from Syria, using the PhP100M emergency repatriation fund set aside for wars, crisis, and epidemics. While the importance of the OWWA fund is widely acknowledged, there have been issues raised regarding transparency and other irregularities in the management of these OFW dues. In the years 2003-2004, OWWA fund transfers to Philhealth, supposedly to extend health services to migrant workers and their families, highlighted how limited the voice 136

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is of migrant workers in decision-making and the overwhelming control the state has on a quasi-government funding facility. The president appoints members of the OWWA board, and throughout various administrations what has been seen is that the president exercises significant discretion on the use and disbursement of OWWA money. After the controversial 2004 Presidential elections, cases against former President Gloria MacapagalArroyo were filed, due to alleged irregularities in the use of OWWA funds in the run up to the 2004 polls. According to the case proponents, OWWA resources had been used to distribute those controversial Philhealth cards (bearing the president’s image) to voters, in order to shore up support for the incumbent president, who was then running for a full term. Apart from reports regarding alleged diversion of OWWA funds, Commission on Audit (COA) reports also showed millions in unliquidated cash advances, fanning suspicion that the OWWA was turned into a cash cow or a lucrative elections war chest, offering massive discretionary funds, with almost negligible transparency and accountability crosschecks, readily available for the use of politicians in power.14

Active promotion; limited protection Beyond the controversies hounding POEA or OWWA, however, is government migration management infrastructure, which has remained severely limited, functioning mainly as a mitigating mechanism to address numerous attendant issues that crop up throughout decades of intensified OFW deployment.15 Instances of restricted intervention have grabbed attention throughout the years, several of these demonstrating the state’s incapacity, ineptitude, and/or indecisiveness in the face of dire situations. The results have been detrimental, the worst being the cases of migrant workers arriving in boxes (reports say that on average, remains of six OFWs arrive in NAIA each day), while the supposedly more fortunate ones figure out their own recourse, jumping out of buildings16 or hitch hiking to cross borders, left to their own devices. The various wars and crises in the Middle East were a source of these recurring storylines (whether in Iraq, or Kuwait or Lebanon). As these global stories of conflicts and wars underscored the risks that imperiled Filipino migrant workers, other incidents have also highlighted the suffering and abuses OFWs experienced even in times of relative peace, as in the case of Filipino domestic workers in the Arab states. A Labor Exporting State: The Globalization of the Philippine Migration Model

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In the 1991 Gulf war, thousands of Filipinos were forced to flee the conflict zone, catching government largely unprepared to evacuate the massive numbers of affected OFWs. Beyond repatriation, efforts to immediately respond to the crisis and eventually place a deployment ban were openly challenged in various ways, especially by migrant workers themselves who have time and again subverted government deployment bans, serving a hard collective rebuke that taken together seems to be saying, your effort to protect us is heartwarming but we need work. In fact, in several news reports, OFWs interviewed have said in different ways that they would rather risk death in a war zone, than passively wait to die of hunger back home. In the face of poor prospects back home, the complex reality now is that many migrants stay on or sneak back into these danger zones, despite government efforts to protect and promote their welfare. As the Gulf war raged in the Middle East, another more quiet but insidious situation was exposed in Japan in the `90s, where thousands of Filipina workers had been deployed in clubs and bars. When the badly beaten and wounded remains of 22-year old Filipina entertainer Maricris Sioson was flown back in late 1991, the Philippine public was confronted with yet another tragic illustration of the vulnerabilities and paradoxes that constituted overseas Filipino migration. While official records from Japan listed the cause of death as hepatitis, subsequent autopsies conducted showed multiple head injuries and stab wounds, including one resulting from the insertion of a blade in her genital area. The suspicious circumstances surrounding Sioson’s unresolved death underscored the dangers that countless Filipina migrant workers who go abroad for employment faced, such as physical and sexual abuse that could cost them their lives. Sioson’s case also exposed the limited jurisdiction of the Philippine state to pursue and resolve cases that take place overseas. In later years, various mechanisms would be instituted to protect Filipinas working in Japan. More stringent entry requirements for entertainers would be put in place, aimed at regulating the entertainment industry but then ironically resulting in higher incidence of irregular migration. One example was the clandestine forms of marriage migration that would serve as back door for thousands of Filipina workers who had been denied legal entry through formal channels that became too restricted and overly regulated. 138

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These events of the early `90s demonstrated some complexities of migration and the tricky balance involved in governing these transnational flows, underscoring the harsh and serious undertones that make up the migration storyline. These are just some of the more glaring cases that show specific ways by which the state’s twin mandates—promotion of overseas deployment and the protection of OFW welfare—run in conflict. Government’s protection system tends to be seriously compromised by the overwhelming push for overseas deployment. In other words, the prevailing thinking here is that it is impossible to protect OFW welfare while still heavily promoting and relying on overseas employment. The non-government Center for Migrant Advocacy stresses that “there cannot be a model specifically on protection and promotion of the human and labor rights of OFWs and their families if the overall thrust of the government is to deploy a million OFWs annually.”17 Then again, the clash between active intervention in marketing and deployment on one hand and the mandate to protect, on the other, is even more pronounced when looking at the more practical, logistical details of extending assistance and protection to OFWs. Even as migrant protection mechanisms are deemed inadequate or even poorly designed, the more obvious fact is that migrant protection mechanisms simply cannot cope with constant increases in demand for services, given the continuous outflow of Filipinos by the millions. As Jeremiah Opiniano of Overseas Consortium puts it: “While government is trying its best to serve and protect Filipinos, the numbers may be too much for resource-strapped agencies to handle.”18

Increased demand; tighter controls The logic behind this and other criticisms raised against the government’s migration management system is rather intuitive. First, as the state continues to rely on overseas deployment, it also continues to expose its citizens to attendant, inherent risks in overseas labor migration. Despite the widely acknowledged benefits of overseas work, labor migration goes hand in hand with increased vulnerability of foreign workers who are provided with less protection and have limited access to services as non-citizens of receiving A Labor Exporting State: The Globalization of the Philippine Migration Model

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countries. At the same time, once migrant Filipinos move abroad, the authority, reach, and power of the Philippine government to protect and promote their welfare become severely undermined. In labor receiving countries, a parallel set of policies and institutions has similarly evolved to regulate migration even as the demand for foreign workers continues to grow. Middle East labor migration expert Atiya Ahmad writes, “with the booming of the Gulf states’ petrodollar-driven economies from the early `70s onward, a vast and consolidated assemblage of government policies, social and political institutions, and public discourse developed to manage and police the region’s foreign resident population. Anchored by the kefala or sponsorship and guarantor system, this assemblage both constructs and disciplines foreign residents into ‘temporary labor migrants’.”19 Beyond the Gulf states, in varying degrees, there are in other parts of the world similar temporary labor arrangements creating migration management infrastructures and setting parameters and conditions by which foreigners may stay and work. These restrictive structures are consequently engendering vulnerabilities for migrant workers that are in turn aggravated by abuses in labor relations, exploitation in the workplace, and marginalization in daily life in a foreign country. In Malaysia, for instance, foreign worker documents are registered under the name of the employer who has the prerogative to cancel these documents, should they see it fit. Policies such as this are considered a means of social control intended to regulate an influx of migrants in an era of intensified labor migration. These restrictive policies also open up room for arbitrary decision-making and abuses. These place the migrant workers completely at the mercy of their employers, while they live and work beyond the reach of their own state’s protection and authority. Under these circumstances, migrants do not only have limited protection but also restricted access to avenues of redress after an incident of abuse or exploitation has occurred.20 Although not all employers abuse their power over migrant workers, there is nonetheless a recurring pattern of exploitation and abuse recorded throughout decades. These documentations further suggest the expansion of repressive and un-free labor conditions in the global economy. Parameters set by restrictive 140

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regimes for labor management and social control directly or indirectly produce indentured conditions for migrant labor. As a global system of legal and illegal labor trafficking becomes even more vital to globalized economy, cases of passport confiscation, contract substitution, non-payment of wages, inhumane working and living conditions, and physical and sexual abuse continue to mark the landscape of labor migration. In the case of domestic workers, the combination of total dependence on their employers, their isolation from the world outside the household, and restricted movement as a consequence of prevailing views on women in certain societies, creates a situation rife with physical, emotional, and sexual abuse. Worse, rape has become a common occurrence, particularly in the Middle East, where millions of OFWs are deployed and numerous domestic workers have reported giving in to the wishes of the master in order to keep their jobs. With the predominance of women among deployed workers, particularly in the Middle East, the expansion of labor migration shows a global system in which labor trafficking and sexual trafficking increasingly intersect.

Migration as necessity, migration as choice Four decades of labor export have demonstrated that the best way to protect OFWs is to ensure sufficient work opportunities in the Philippines; that overseas migration should be seen as only one option and not the only option to earn a decent living and improve the lives of Filipino families. Incumbent President Simeon Benigno ‘PNoy’ Aquino III himself has said during the 2012 Abu Dhabi Dialogues held in Manila that to become an economic refugee has become the “fate of the Filipino” and that the phenomenon has become prevalent that it has now been given a name—Philippine diaspora. He however emphasized that it was his government’s “mission to reverse this trend” and to make working abroad “not a necessity, but a choice.” Beyond setting a favorable investment climate or managing migration, however, the state needs to take a more active role in crafting and implementing a comprehensive development agenda to revive the domestic economy.


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Migration, if left unchecked, impacts on the job security of migrant workers. The domestic workforce has now become more attuned to global labor needs, leaving them vulnerable to shifts and turns as they individually respond to shortterm signals and conditions in international labor markets. The government, however, has not been able to anticipate consequences and lay down longterm solutions to this. The situation of nurses is a case in point. In the `90s and early 2000s, there was a significant increase in the number of enrollees and in the number of nursing schools in the country. At the same time, previous graduates of other courses and professionals took up nursing degree in order to take advantage of the high salary and immigration offers received by nurses abroad. While more and more fresh nursing graduates were being produced, an increasing number of existing health professionals was also migrating. But while the country’s health system has been in dire need of experienced health professionals, it has not been able to accommodate the growing number of nursing graduates each year. The drastic response of some nurses has been to serve as volunteers or interns without pay to gain experience that will make them more competitive in a constricting global market. The alarming increase in the number of unemployed nurses has pushed the Secretary of Labor to issue a statement advising jobless nurses to explore openings in health related BPO accounts.21

Sustaining a migration economy Oversees labor migration has been transforming the Philippine economic landscape in ways unseen before and often unexpected, but it has not altered the economy to such extent that factors contributing to the migration push will be eliminated. Functioning as an important release valve, both in times of crisis and times of relative stability, overseas labor flows absorb an estimated 25 percent of the country’s labor force and support at least five million households.22 While overseas employment has been expanding steadily, domestic employment generation still has not been growing fast enough to accommodate an increasing number of new labor entrants each year. Amidst this backdrop, Filipino workers 142

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have continued to migrate to find work elsewhere, indicating that the temporary release valve has now become a permanent catch basin. Surveys showed that in 2010 one in every five Filipinos wanted to migrate to another country and live there, if it were only possible. The Commission for Filipinos Overseas also reported that in 2010 about 9.5 million overseas Filipinos comprised 4.4 million permanent migrants, 4.3 million temporary migrants, and 704,916 irregular migrants.23 Overseas migration has sustained infusion of income crucial to the survival of millions of Filipino families and of the economy as a whole. Migrant remittances have become an important source of foreign receipts and a critical driver of consumption and overall economic activity. Former National Economic Development Authority Chief, Cayetano Paderanga, Jr. has explained the phenomenon: “our economy will not collapse without remittances but we would be faced with a difficult situation. Remittance is already a feature of the economic situation.”24 For those in the business sector, overseas migration and rising remittances now constitute the important engine driving “a unique business model” operating in the Philippines. In an interview with CNN, Jaime Augusto Zobel de Ayala chair and CEO of the country’s oldest and largest conglomerate, the multibillion dollar Ayala Corporation, said that consumption and remittances were at the core of the Philippines’ unusual resilience, even amidst the global economic slowdown. “The world has gone through a fairly seismic shift. What’s been quite extraordinary in the Philippines is that a component of the economy that’s been lacking in many developed countries, which is the demand component of consumption, has been alive and well in the Philippines,” he said.25 The Philippines ranks among the world’s top remittance-receiving countries, alongside huge countries like India, China, and Mexico. From only US$103 million in 1975, remittance flows went up to a record-high of US$23.8 billion in 2012, functioning as a stable source of financial transfusion that bankrolled growth in various sectors in the economy.26 Remittances, on average, roughly equal 10 percent of GDP. The substantial increase in OFW deployment and remittances has also bolstered the substantial A Labor Exporting State: The Globalization of the Philippine Migration Model

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increase in net factor income from abroad (NFIA, now called net primary income/NPI), which went up from–6.5 percent of GNP (now, gross national income/GNI) in 1985 to a high 24.9 percent in 2010.27 Remittances have also been performing strongly, even in comparison with the country’s export earnings. When the country’s labor export program begun, remittances only amounted to five percent of export earnings. Today, OFW remittances amount to nearly half of export revenues. Compared to the country’s main export commodities, OFW remittances have clearly increased at a much faster pace, catching up with top earners, which included electronics. In 2000, OFW remittances amounted to only 27 percent of total electronics export earnings, which already stood at US$22.5 billion. In 2011, OFW remittances hit the US$20 billion mark, while electronics exports stayed relatively at the same level, US$23.7 billion.28 As source of dollar inflows, Filipino migrant remittances have also outranked foreign direct investments, portfolio investments and official development assistance. In 2008, the Philippines registered US$1.4 billion in FDI, US$-1.3 billion in portfolio investments and US$0.6 billion in ODA. These amounts paled in comparison to OFW remittances of US$16.42 billion that same year.29

OFW-driven consumption boom Remittances have a direct impact on household consumption. Consumption comprises up to 70 percent of the Philippine economy, reports the government; in 2007 “private consumption, which constitutes the largest proportion of GDP on the expenditure side, continued its stable growth at 5.9 percent fueled by remittances from overseas workers.”30 OFW’s have often been urged to invest in the Philippine economy. There may well be small enterprises financed by OFW money, but there seem to be hardly any successful medium and big enterprises that owe their existence to direct investment by OFWs. OFW money has, in the main, gone into consumption, and the biggest beneficiaries of the OFW remittances have been local corporations that have succeeded in cornering a huge chunk of that remittance money through the sale of goods and services and directing it to investment calculated to corner 144

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even more of it. The migration phenomenon is, in fact, closely linked to the emerging Philippine economic winners. Recognizing the reliability of remittances and OFW consumption, more and more business targets are planned according to migrant family spending patterns. Various surveys are being conducted to examine consumption patterns of migrants and their families, reflecting the kind of serious attention devoted to the OFW market. For example, the BSP conducts a quarterly consumer expectations survey, with a special segment dedicated to the spending behavior of overseas Filipinos.31 Migrant household behavior analysis now routinely feeds into forecasts and expansion plans of a growing number of industry players, as businesses anchor their models on chasing the OFW boom. For instance, within the real estate sector, estimates show that more than 30 percent of migrant earnings are allotted to household improvements or home purchase; while some company reports record as much as 70 percent of yearly sales attributed to the OFW segment. CDC Holdings recently reported Php900 million in sales mainly from the OFW segment when it announced plans for new construction of residential units designed for OFW families. It’s the diversification to midlevel markets made possible by the OFW boom that is being credited for the growth and reinvigoration of the real estate sector particularly in areas outside Metro Manila. Even more established corporations such as Ayala Land have also similarly ventured into this market, diversifying their high-end property portfolio with new plans to construct more affordable housing projects that cater to mass market segments. This growth in turn is spilling over to other sectors, such as the construction industry, which according to the Philippine development report “grew 13.3 percent boosted by remittance fueled residential construction in 2007.”32 Other sectors, such as telecoms, airlines, and banking, have similarly fashioned their investment and expansion plans with the intention of taking part in the socalled OFW boom. While advertising and marketing pitches have been shaped according to the OFW thematic, customized products, such as family SIM packages, joint banking, mobile phone transfers, and so forth, have also been designed with migrant households in mind. Budget airlines, such as Cebu Pacific, have announced the introduction of new flights, expanding to destinations with a large Filipino population to be able to corner the growing OFW market. A Labor Exporting State: The Globalization of the Philippine Migration Model

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The direction of this growth is at once global and local. Communications companies, money transfers, banks, and real estate firms have begun to set up offices in key OFW destinations, while also taking part in government-organized road shows abroad. Locally, malls are also developing new promotions to keep OFW income captured within the area of its commercial establishments, through packaged services for OFWs and their families, consistently identified as a major client base of shopping centers. Businesses have been expanding with the goal of securing a substantial piece of the OFW pie, which in turn is aimed at cornering the whole range of goods and services that constitute the OFW family lifestyle. Major malls such as SM and Ayala malls have launched OFW-targeted facilities such as Global Pinoy Center and VIPinoy. SM’s Global Pinoy Center is a one-stop shop dedicated to migrant Filipinos and their families. Global Pinoy Center offers a members’ only lounge in SM malls, which comes with a package of amenities, discounts, and services that facilitate practically every possible transaction that households would like to carry out—from shopping to banking, to securing loans, and receiving remittance transfers, of course carried out through SM corporation’s banking arm, Banco de Oro, now the Philippines’ largest bank.

Remittances and big business Big business interest in OFW dollars is evident throughout the entire chain of transactions and consumption, from housing to ‘malling’ to banking. Migrant remittances circulate within the many arms of the few bustling conglomerates in the country. One dynamic link between OFW remittances and big business is illustrated in the case of the multibillion-dollar remittance transfer industry, which directly facilitates migrant money transfers. On the global level, mainstays of the global remittance industry, such as Western Union, make billions of dollars off transaction fees and foreign exchange revenue. Facilitating almost an estimated fifth of remittances sent worldwide, Western Union enjoys the largest share of the global remittance market at 18 percent. In 2011, the company raked in US$4.2 billion in transactions fees, US$1.15 billion in foreign exchange revenues, and US$1.16 billion in net income.33 146

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In the Philippines, the country’s largest banks, SM’s Banco de Oro and the Ayalas’ Bank of the Philippine Islands (BPI), have also been cornering the lion’s share of the country’s remittance market. In 2008, BDO facilitated US$4.2 billion in remittances, equivalent to 25.7 percent of OFW transfers that year, while BPI, sliding to the second spot, cornered US$3.75 billion of the remittance market.34 Like Western Union, remittance transfer services offered by these major players earn from transaction fees and foreign exchange revenues in the billions.35 Key features of the Philippines’ remittance-driven economy can be traced in the links between these top banks and the country’s major corporations, which are part of multibillion-dollar conglomerates that have business interests in virtually every sector of the economy. Banco de Oro is connected with SM Prime Holdings, Inc, with interests in retail, malls and real estate. BPI, the country’s oldest and erstwhile biggest bank, is part of the Ayala group of companies, which also has a stake in real estate and property development, telecommunications, utilities, retail and commercial complexes, practically the whole range of services that’s been thriving off OFW remittances. In 2011, Ayala Corporation registered a PhP9.4 billion net income driven by its core businesses, particularly banking and real estate. BPI and Ayala Land both set record high in net income in 2011, at PhP12.8 billion and PhP7.1 billion, respectively.36 While corporations identify clear gains from the migration economy, for many OFWs and the rest of the country the benefits may not be as evident or lasting, while the costs have remained high. Even as the global remittance industry exemplifies the immense gain that can be made from moving migrant earnings across the globe, viewed from the other side, it also points to several flaws in the way this ‘unique business model’ operates. In the course of these global transfer gains, the migrants themselves barely have any say on how and where these pooled resources should be reinvested. According to Francis Calpotura of the Transnational Institute for Grassroots Research and Action, corporations are profiting off high costs of sending remittances, which deduct a significant share from individual migrant earnings. “Studies show that if money transfer fees were cut in half, 33 million people A Labor Exporting State: The Globalization of the Philippine Migration Model

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could be lifted out of poverty in the developing world. Immigrant workers spend up to a week’s wages to pay these monthly fees. For families in the home country, the fee represents almost two months’ worth of wages,” Calpotura explained.

Easing domestic unemployment and poverty The more disturbing aspect of this remittance-driven economy is that it spurs economic activity and growth without generating domestic employment or distributing gains from economic growth. Economic expansion in the Philippines’ migration economy has hastened the shift towards services, while further weakening both the industry and agriculture sectors. Even as dynamic activity has spurred growth in the service sector, many of these developments are in the areas of sales, real estate, and consumption with limited forward or backward linkages that could catalyze growth in other sectors of the economy. At the same time, services accounts for more than half of total employment and about 40 percent of underemployment, which further raises questions regarding the quality of jobs that are actually generated in these segments. While remittance-driven economy has not produced local jobs, the economic growth in general has been exclusivist. Increased economic activity, particularly the expansion in real estate and malls construction, have boosted profits for some domestic corporations, but have hardly made a positive impact in other key economic indicators. Over-all domestic income growth has remained concentrated in the hands of a few big corporations directly benefitting from OFW consumption. It is certainly not a coincidence therefore that mall magnate Henry Sy has been hailed as the country’s richest man, and that among the Fortune 40 Richest Filipinos, are people from similar or related type of business. Growing dependence on labor migration may be easing pressure on the domestic economy but this trend also conceals social and economic conditions that would have been more pronounced had it not been for overseas migration, in turn, making it more convenient for the country’s elites to postpone necessary, yet long overdue structural reforms. While masking the problematic condition 148

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of jobless growth, overseas migration also lessens the blow of the absence of an effective population policy. It has been raised that without remittance inflows, the country’s employment crisis and poverty level would be at a much worse state. What has been suggested is that without OFW migration the number of unemployed Filipinos is expected to double. With an additional three million workers that cannot be accommodated by the formal domestic labor market, there will also be a significant increase in unstable and/or provisional jobs in the informal sector, as well as drastic reductions in OFW remittances and an anticipated slowdown in economic activity.37 Some estimates put the number of poor Filipinos at 30.1 million in 2006, which was over three million more than the 26.8 million indicated in official poverty figures, had it not been for remittances.38

Unpacking the migration experience The Philippines provides an important picture of how migration has transformed developing countries in ways that exacerbate uneven internal development and reinforce global disparities. Failing to address structural conditions that underpin the push and pull of overseas labor flows, decades of labor export have contributed to a shift towards a remittance-dependent and largely consumption-driven, services-centered economy, which in turn has required continued labor export expansion. Under such global conditions, peripheral economies are designated the role of global labor suppliers, as their hollowedout domestic economies depend increasingly on overseas migration flows, not only to rake in the much needed financial infusion from remittances, but also to serve as band-aid solution to the failure to generate jobs at home. In the case of the Philippines, the current model of consumption-driven growth, characterized by the proliferation of shopping malls and residential property development, has spurred a growth model that has benefited a few sectors, without generating the much-needed development outcomes, particularly in the areas of employment, productivity, and poverty levels. In this regard, more and more people in developing countries seek to escape conditions of economic stagnation and poverty, as the demand for cheap labor A Labor Exporting State: The Globalization of the Philippine Migration Model

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continues to rise in both old and new centers of the global economy. Even as these conditions have often been the result of the same dynamics of a global capitalist system that has created prosperity in the developed world, as well as widening disparity across the globe, sustained overseas migration and remittance transfers appears to be propelling capitalist expansion along the same lines instead of addressing factors that heighten the push and pull towards labor migration.39 It is difficult to imagine a Philippine economy without OFWs and their remittances. Indeed, what has taken four decades to evolve seems almost impossible to undo, and not because of the time it has taken to reach this stage. While the phenomenon still opens up opportunities, the challenge is how to harness the resources and the breathing space labor migration provides, and how to use it to help build a more robust domestic economic foundation. The state again becomes a key player—what it does or does not do will seal the fate of Filipino migrant labor.

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ANNEX 1 Elaborate labor migration infrastructure

The state’s migration infrastructure is a work in progress, developing gradually over the last four decades the facilitation of deployment and mitigation of negative consequences of migration. The government infrastructure took shape following (1) the creation of specific agencies related to migration processes and the delivery of programs and services for overseas Filipinos; (2) the re-orientation of existing departments (e.g. the Department of Foreign Affairs and the Department of Labor and Employment) to underscore explicit responsibilities in the context of migration; and (3) the legislation of policies and laws that advance the welfare and rights of Filipinos overseas. With the active involvement of the state, overseas employment graduated from being an individual initiative facilitated by small private or informal recruitment networks like in previous waves of migration. Since the `70s, overseas employment has been transformed into a government-regulated process, even as there have always been explicit articulations that the Philippine government does not actively promote overseas migration. The origins of this policy framework traces back to the `70s, in several key legislation and programs, starting with the New Labor Code of 1974. During this period under the Marcos dictatorship, with the anticipated thrust to escalate labor export, important agencies, including the National Seamen Board and the Overseas Employment Development Board, were formed under the rubric of what was then called the Ministry of Labor and Employment. The formation of the Philippine Overseas Employment Administration and the Overseas Workers Welfare Administration in the `80s signaled that the labor export thrust was to go full swing. The POEA, created by virtue of EO 797, assumed the functions of the Overseas Employment Development Board, the National Seamen Board, and the overseas employment functions of the Bureau of Employment Services; and was tasked to “formulate and undertake, in coordination where necessary with the appropriate entities concerned, a


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systematic program of promoting and monitoring the overseas employment of Filipino workers taking into consideration domestic manpower requirements, and to protect their rights to fair and equitable employment practices.”40 POEA regulates the recruitment industry, facilitates government-to-government arrangements on worker deployment, while delivering pre-employment services, including the conduct of public education and information campaigns, pre-deployment orientation seminars, and anti-illegal recruitment seminars. Originally called the Welfare Fund for Overseas Workers upon its creation in 1984, OWWA serves as the lead agency responsible for the protection and promotion of OFW welfare and well-being. OWWA carries out its welfare functions in conjunction with its mandate to manage the overseas welfare fund pooled from the US$25 membership contributions collected from departing OFWs. While the POEA generally covers OFW functions up until deployment, OWWA develops and implements programs for migrant Filipino workers who are already overseas, covering the delivery of welfare services and benefits, including insurance and repatriation in times of crisis, drawing from OFW membership contributions.41 Today, the Department of Labor and Employment, under which both POEA and OWWA fall, also establishes Philippine Overseas Labor Offices, special field offices operating alongside existing embassies and consulates of the Philippines. Headed by the Philippine Labor Attachè, an official of the DOLE, the POLO can be found in various destination countries that host a sizeable Filipino worker constituency. The passage of the Migrant Worker and Overseas Filipinos Act of 1995 (RA 9042, later amended by RA 9422 and RA 10022), touted as the first legal instrument of its kind in Asia, further altered the landscape of government functions, reconfiguring the bureaucracy in recognition of the needs of a growing OFW sector.42 Aside from DOLE, the Department of Foreign Affairs has also been reframed, mandated to respond to the needs and concerns of the growing migrant Filipino population. In RA 9042, the DFA along with the entire complex of Philippine foreign service posts has been explicitly tasked to make the protection and 152

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advancement of migrant worker welfare as ‘highest priority concerns.’ In this regard, embassies and consulates the world over are required to extend assistance to nationals, providing services to an extensive sector of migrant workers in different parts of the world.43 Other pertinent policies instituted in the last decade include three laws signed in 2003: the Overseas Absentee Voting Act (RA 9189, amended in 2012 by RA); the Anti-Trafficking in Persons Act (RA 9208); the Citizenship Retention and Reacquisition Act (RA 9225). On top of these national laws, the Philippines is also signatory to a number of regional and international commitments on migrant workers. The Philippine government has also ratified the UN Convention on the Rights of All Migrant Workers and their Families, as well as the UN Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children.


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Table 1. Annual OFW Deployment and Remittances, 1975-2012

Year

Deployed Overseas Filipino Workers

Remittances (US$ Million)

Year

Deployed Overseas Filipino Workers

Remittances (US$ Million)

1975

36,035

103.00

1994

719,602

3,008.1

1976

47,835

111.0

1995

653,574

4,877.5

1977

70,375

213.0

1996

660,122

4,306.6

1978

88,241

290.85

1997

747,696

5,741.8

1979

137,337

364.74

1998

831,643

7,368.0

1980

214,590

421.3

1999

837,020

6,794.6

1981

266,243

545.87

2000

841,628

6,050.5

1982

314,284

810.48

2001

867,599

6,031.3

1983

434,207

944.45

2002

891,908

6,886.2

1984

350,982

658.89*

2003

867,969

7,578.5

1985

372,784

687.2

2004

933,588

8,550.4

1986

378,190

680.44

2005

988,615

10,689.0

1987

449,271

791.91

2006

1,062,567

12,761.3

1988

471,030

856.81

2007

1,077,623

14,449.9

1989

458,626

973.0

2008

1, 236,013

16,426.9

1990

446,095

1,181.1

2009

1,422,586

17,348.1

1991

615,019

1,500.3

2010

1,470,826

18,762.9

1992

686,457

1,769.5

2011

1,687,831

20,116.9

1993

696,630

2,229.6

2012

1,802,031

21,391.3

Source: Philippine Overseas Employment Agency. OFW Statistics -- Compendium of Statistics. Retrieved 17 March 2014, from http://www.poea.gov.ph/html/statistics.html; and Bangko Sentral ng Pilipinas. Overseas Filipinos’ Remittances, various years and 2008-2012 Overseas Employment Statistics. Retrieved 12 May 2014, from http://poea.gov.ph/stats/2012_stats.pdf. Retrieved 17 March 2014, from http://www.rappler.com/ business/12143-philippine-economy-can-t-do-without-ofw-remittances-neda

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Notes 1 Tigno, J. (1990). International Migration as State Policy: The Philippine Experience as Model and Myth. Kasarinlan, 6, 1-2. 2 Tigno, J. (1990). International Migration as State Policy: The Philippine Experience as Model and Myth. Kasarinlan, 6, 1-2. 3 A few of these nations such as Taiwan and Korea also started off as migrant-sending countries that have slowly graduated into more established destination economies, following a successful bid to industrialize, overtaking the Philippines, contrary to earlier forecasts that predicted its rise all the way to the top of Asia’s industrialized heap. 4 For the full discussion, refer to Bello, W., Malig, M.M., Docena, H. & De Guzman, M. (2004). The antidevelopment state: the political economy of permanent crisis in the Philippines. Quezon City: University of the Philippines Press. 5 Ofreneo, R. (2011). Garments: Seeking protection through free trade? Business World, S1/4 to S1/5. 6 Flor Contemplacion, Sarah Balabagan, Maricris Sioson are Filipina migrant workers to Singapore, the Middle East and Japan, respectively, who have become symbols of the multiple vulnerabilities, abuse and injustice faced by OFWs. Maricris Sioson, a Filipina entertainer in Japan in the 1990s, returned dead a few months into her stint in Japan supposedly due to hepatitis, although subsequent autopsy in the Philippines showed evidence of foul play. In 1994, the execution of Flor Contempacion, blamed for the death of a young Singaporean boy and another Filipina worker, has placed a glaring spotlight on government neglect and limited capacities, after Philippine authorities intervened too late to change the outcomes of what is considered a wrong and unjust case. The rape and near execution of Sarah Balabagan, who had killed her employer in self-defense, also brought to public attention the plight of Filipina domestic workers in the Middle east, many of whom suffer from various forms of abuses and rape, with little or no access to justice and redress, where receiving country mechanisms tend to be skewed in favor of nationals. 7 Medium Term Philippine Development Plan 2004-2010. 8 Asis, M.B. (2006). The Philippines’ Culture of Migration. Retrieved 14 February 2013, from http://www. migrationinformation.org/feature/display.cfm?ID=364. 9 “Instead of 1.6 million jobs being created in 2005, only 700,000 new jobs were added to the labor market or 43.7 per cent of the 1.6 million target. In 2006, job creation declined to 648,000 (40.5 per cent of 1.6 million) and even further down in 2007, to 599,000 (37.4percent).” For full discussion, see Ofreneo, et al, 2008, Government’s Job Target: A Report Card— Trabaho, Saka, Pangisdaan, Negosyo: Ramdam ba ang Asenso? 10 “In a country where migration as a livelihood strategy is so deeply entrenched, those labor migrants who have lost their jobs and returned to their country of origin hope to leave again as soon as possible (Reister, 2009). It was noted, too, that alternatives like self-employment are rather unpopular, citing that those who were able to take a loan of PhP 50,000 (apporx. US $ 1,000) offered by the OWWA (Overseas Workers’ Welfare Association) used the money to bridge the period before finding new employment abroad.” (Ang, A. and Custodio, A. M. (2012). Impact of the global crisis on overseas workers and the families-left-behind: a snapshot of the Philippine case. Asian Social Science). 11 Recognizing the precarious position of its nationals, the Philippine government set down a crisis package plan that extended assistance and funds for returning OFWs. The main program for OFW returnees consisted of three options: (1) training for domestic placement; (2) training for overseas placement; and (3) a loan of 50,000 pesos for entrepreneurial activity. Feedback from OFW returnees underscored how unprepared and ill-equipped the state was even just to temporarily re-absorb a few thousand migrants, a mere fraction in a sea of millions that have been accommodated by the global labor market. Reports noted, for instance, how OFW families used the 50,000 peso loan not for entrepreneurial activity but instead as a “bridge fund” to tide them over while their stream of regular income was cut. A study by Ang and Custodio (2012) noted that “The resilience of the OFWs themselves have somehow cushioned the impact. There were OFWs who have returned to the country and sought government help while most chose to stay in the host countries using up their savings and trying to look for other jobs in other


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economic sectors or the shadow economy. This implies that despite retrenchment and unemployment, most migrants avoided returning to the Philippines (yet). Those who have returned tried to leave again as soon as possible. Many planned to work overseas for up to 10 years more before settling back, while some intended to leave the country and establish life (be citizens) in their host countries. Ang, A. and Custodio, A. M. (2012). Impact of the global crisis on overseas workers and the families-left-behind: a snapshot of the Philippine case. Asian Social Science, 8, 3. 12 Aguinas, D.R. (2008). Managing Temporary Migration: Lessons from the Philippine Model. Migration Policy Institute, Insight: Program on Migrants, Migration & Development. 13 For instance, recognizing the potentials of OFW remittances early on, the government has attempted to play an active role not just in worker deployment but also in channelling remittances from abroad. For one, the Bangko Sentral ng Pilipinas (BSP) has been tasked to monitor remittance flows as well as regulate formal remittance channels, such as banks and more recently telecommunications companies. Indeed, the Philippine migration enterprise is acknowledged as a profitable project not just for the multimillion dollar recruitment industry, the remittance market or the workers themselves. The government has also tried to cash in on this enterprise, in various ways, since the start of the labor export program, for instance by issuing executive orders to dictate the channels by which remittances could be sent and establishing an overseas welfare fund from pooled OFW membership fees, administered by a government appointed board of directors. In the early 1980s, for instance, the Marcos administration issued Executive Order 857 more commonly referred to as forced remittance, requiring OFWs to send 50 to 70 percent of their earnings through formal banking channels. This allowed government to have control over remittance flows as well as partake of the earnings, which has not been possible with the informal padala system that was more popular among OFWs at the time. The executive order was heavily criticized by migrant workers and other groups for its impositions and punitive provisions. It was lifted in 1983. 14 Aning, J. (2012). New case filed vs Arroyo for OWWA fund transfer. Philippine Daily Inquirer. Retrieved 12 February 2013, from http://newsinfo.inquirer.net/126595/new-case-filed-vs-arroyo-for-owwa-fund-transfer. 15 For instance, it is constantly brought up that even while domestic workers and female migrants have been enduring difficulties, abuse and injustice abroad, it was not until resounding public outcry following the hanging of Flor Contemplacion that the government took notice. The truth of the matter here is that the passing of a migrant workers protection law in 1995 (RA 8042) was borne out of the emblematic and tragic death of an OFW who could not be assisted by the state, a sad reality that reflects underpinning contradictions and limitations of a so-called model management strategy. 16 Herbert Docena’s “The Jumpy Ladies of Lebanon” provides an incisive account of the plight of Filipina domestic workers during the war in 2006. Docena, H. (2006, August 27). The jumpy ladies of Lebanon. The Philippine Center for Investigative Journalism, Overseas Flipinos. 17 Center for Migrant Advocacy (CMA). (2009). The Philippines: A Global Model on Labor Migration? 18 Opiniano, J. M. (2010, June 12). Can RP go beyond seeing OFWs mitigating economy’s shortfalls? The Philippine Star. Retrieved 12 February 2013, from http://www.philstar.com/letters-editor/583195/can-rpgo-beyond-seeing-ofws-mitigating-economys-shortfalls 19 Georgetown University and Center for International and Regional Studies. (2011). Migrant labor in the Gulf: working group summary report. Doha, Qatar: Center for International and Regional Studies, Georgetown University School of Foreign Service in Qatar, 3. 20 Recently, reports have surfaced pointing to sex-for-flight schemes perpetrated by some Philippine officials abroad, accused of preying on distressed Filipina workers, who flee to government facilities for assistance. 21 Need a citation 22 Overseas flows here refer to both temporary and permanent migrants, which are estimated at 9.5 Million in 2010, according to official figures from the Commission on Filipinos Overseas. The 2009 Family Income and Expenditure Survey registered 5.03 million families receiving income from abroad. 23 Permanent migration has been rising steadily while irregular migration has considerably decreased, from its peak at almost two million in the 1990s Commission on Overseas Filipinos, 2010 Stock Estimates. Retrieved 14 February 2013, from http://www.cfo.gov.ph/pdf/statistics/Stockpercent202010.pdf. 24 Ordinario, C. (2012). Remittances: How Filipinos Abroad Keep the Philippines’ economy alive. Business Mirror. Retrieved 14 February 2013, from http://businessmirror.com.ph/home/top-news/22545remittances-how-filipinos-abroad-keep-the-philippiness-economy-alive.

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25 CNN Talk Asia. (April 2012). Interview with Brothers running the Philippines’ Ayala Corporation, Jaime Augusto Zobel de Ayala, Fernando Zobel de Ayala. Retrieved 14 February 2013, from http://www. transcripts.cnn.com/TRANSCRIPTS/1204/27/ta.01.html. 26 Bangko Sentral ng Pilipinas, Overseas filipinos’ remittances. Economic and Financial Statistics. Retrieved 14 February 2013, from http://www.bsp.gov.ph/statistics/efs_ext3.asp. 27 National Statistical Coordination Board. (2014). Philippine economy grew by 7.2 percent in 2013; 6.5 percent in Q4 2013. Retrieved 14 February 2013, from http://nscb.gov.ph/sna/default.asp. 28 National Statistics Office. (2012). 2011 Survey on overseas Filipinos. Retrieved 28 February 2013, from http://www.census.gov.ph/content/2011-survey-overseas-filipinos-sof 29 Data from the Bangko Sentral ng Pilipinas. Economic and Financial Statistics. 30 National Economic and Development Authority. (2011). Philippine Development Plan, 20112016. Retrieved 17 March 2014, from http://www.neda.gov.ph/wp-content/uploads/2013/10/ pdprm2011-2016.pdf. 31 According to the 2009 CES Survey results, 95.2 percent of respondents said they spent on food, while 65.8 percent, 49 percent and 10.5 percent said they spent on education, debt repayment and the purchase of a house, respectively. Bangko Sentral ng Pilipinas, Overseas filipinos’ remittances. Economic and Financial Statistics. Retrieved 14 February 2013, from http://www.bsp.gov.ph/statistics/efs_ext3.asp. 32 National Economic and Development Authority. (2011). Philippine Development Plan, 20112016. Retrieved 17 March 2014, from http://www.neda.gov.ph/wp-content/uploads/2013/10/ pdprm2011-2016.pdf 33 Western Union. (2011). Western Union Annual Report 2011. Retrieved 17 March 2014, from http:// ir.westernunion.com/files/doc_financials/WU2011AR.pdf. 34 ABS-CBN. (2009). BDO named RPs top remittance bank in 2008. ABS-CBN News. Retrieved 17 March 2014, from http://www.abs-cbnnews.com/business/07/18/09/bdo-named-rps-top-remittance-bank-2008 35 Bank of the Philippine Islands charges USD 11-13 to send $ 1 to $ 1000 dollars door to door from the US to Metro Manila, while Banco de Oro charges between $ 9-11 dollars. 36 Ayala Corporation. (2011). Ayala Corporation Annual Report. Retrieved 17 March 2014 from http:// annualreport.ayala.com.ph/uploads/Ayala_2011_Annual_Report.pdf 37 Ordinario, 2012. Philippine economy can’t do without OFW remittances – Neda. Rappler.com. Retrieved 17 March 2014, from http://www.rappler.com/business/12143-philippine-economy-can-t-do-withoutofw-remittances-neda 38 While migration is improving household incomes and quality of life, it is doing little to improve inequality in the country, with the disparity among different household groupings remaining high. See Pernia, E. (2008). Migration, remittances, poverty and inequality: The Philippines. Discussion Paper No. 01. UP School of Economics, University of the Philippines. 39 Even a recent ADB report concluded, “In the near term, the Philippines’ services-led growth can be sustained by strong consumption backed by remittance inflows and the BPO industry. However, strong growth of manufacturing is needed to deal with the country’s long term development challenges of job creation and poverty reduction.” In this regard, migration has served as a crutch, which generated vibrant activity in the service sector, while diverting attention away from industry-led growth. In fact, in the era of the remittance driven economy, the industry component has shrank, from 38.8 percent of GDP in 1980 to 31.7 percent in 2009. Meanwhile, the service sector has grown to comprise 55.2 percent of GDP in 2009, from only 36.1 percent in 1980. (Usui, N. (2012). Taking the right road to inclusive growth: industrial upgrading and diversification in the Philippines. Metro Manila, Philippines: Asian Development Bank). 40 Executive Order No. 797 Reorganizing the Ministry of Labor and Employment, creating the Philippine Overseas Employment Administration, and for other purposes, Malacañang, Manila, 01 May 1982. 41 Overseas Workers Welfare Administration. Migrant Workers and Overseas Filipinos Act of 1995 (RA 8042). Retrieved 17 March 2014, from http://www.poea.gov.ph/rules/ra8042.html 42 Mandatory Remittances (EO 857) The deliberate thrust to reap benefits of the lucrative overseas employment project can be gleaned from government intervention such as Executive Order 857, which in 1982 compelled OFWs to remit a percentage of their earnings through the formal banking system. This was later revoked in 1983 following the outcry from migrants and from international agencies such as the ILO (Tigno, J. (1990). International Migration as State Policy: The Philippine Experience as Model and Myth. Kasarinlan, 6, 1-2).


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43 By virtue of Batas Pambansa 79, the Commission on Filipinos Overseas (CFO) was also earlier formed in 1980 to promote the interests and well-being of Filipino emigrants and permanent residents abroad, while preserving and strengthening ties with Filipino communities overseas. The commission provides orientation seminars and offers programs and services for Filipino immigrants which encourage ties with the motherland and diaspora pilanthrophy. More recently, in 2010, a Joint Congressional Oversight Committee has been established, as per provisions in the recent amendments of RA 9042. The committee is comprised of members of the Senate and the House of Representatives, and steered by the chairperson of the Senate committee on labor, employment and human resources and the House committee on overseas worker affairs.

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C h apter

5

A Fragile Frontier: Environmental Vulnerability and Conflicts over Natural Commons

The Philippines is on the brink of an ecological crisis; its already fragile ecosystems continue to be pushed to the limits. On the surface, the situation appears to be the classic Garret Hardin concept of the “tragedy of the commons,”1 a caution against the unabated consumption of ecological resources that are open for exploitation by all. Thus, although moneyed interests and corporations have been accused of ecological exploitation, it has also become fashionable to blame the poor for the destruction of the country’s natural environment and its ecosystems.2 Allegedly, poor swidden farmers cause the deforestation of the upland areas; poor fishers with their unsustainable practice of trawling and dynamite fishing overfish coastal waters and deplete marine resources; informal settlers pollute waterways and rivers; and so on. To manage the resources efficiently, Hardin’s notion guided policies that centered on exclusion via market mechanisms. The belief is that privatizing access will regulate and optimize extraction of natural wealth. The two key assumptions here are that one, common tenurial systems lead to overexploitation; and two, that the state can act as responsible regulator that can harmonize community interests with private interests. The country’s experience, unfortunately, has been about increased private, particularly corporate, extraction of common pool resources producing the crisis and systematically eroding community and environmental rights. In the recent decade, concerns over climate change have drawn the Philippines into 159


global adaptation efforts, roping it into international negotiations and attracting it to incentives-based initiatives. In the meantime, enclosures, or what Karl Polanyi referred to as “a revolution of the rich against the poor,”3 have highlighted equity and social justice issues that underlie growing activism among communities.

Deepening crisis of the Commons The Philippines experienced environmental vulnerability so massive that in the 1990s “the plunder of resources…(was) at a rate that is fastest in the world…(so that) there are a few places you can go in the Philippines without meeting some sort of ecological disaster.”4 (See Figure 1) The Philippines depends on many vital ecological resources and functions for the country’s economic activities and the survival of its people. Many of these resources are threatened. From 50 percent in the 1950s, the country’s forest cover and frontiers has shrunk to 24.27 percent by the advent of the new millennium5, and further declining to 19 percent in 2007.6 The loss of forest cover has led to disastrous consequences, such as flashfloods (Ormoc, November 1991; Cagayan de Oro, Iligan City and parts of northern Mindanao, December 2011) which has claimed thousands of lives, displaced hundreds of thousands of people from their homes, and destroyed livelihoods. Freshwater resources are getting exhausted fast. Many regions are experiencing, or are expected to experience by 2015, water shortages. Aggravating scarcity is the worsening contamination of available freshwater sources, through leaching of industrial, agrochemicals, and animal wastes in agro-industrial areas; and through sub-surface discharges from latrines and septic systems, and infiltration of polluted urban run-off. More than half of the country’s groundwater used for drinking is contaminated with coliform, while 50 of its rivers are considered biologically dead.7

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S t a t e o f Fr a g m e n t a t i o n : T h e P h i l i pp i nes i n T r ans i t i o n

The decline and degradation of coastal and marine resources are evident in the depletion of fish stocks caused by overfishing and harmful fishing methods, destruction of corals and mangroves, and pollution of waterways. Sedimentation as a result of deforestation is deemed a major cause of coral damage, with other factors such as mine tailings, direct extraction, and destructive fishing methods contributing. Official (government) and alternative reports predict that sustainable yield limits for fisheries may have already been breached8, affecting the economic yield of our seas. Extractive industries worsen watershed stress. It is estimated that one-seventh of the mining and exploration concessions in the country contribute highly to watershed stress; demand for water exceeds the available supply by at least one-third.9 From 1986 to 2005, at least 10 mining operations were involved in 15 cases of water pollution and environmental degradation.10 A series of super typhoons that hit the country–Sendong in 2010, Bopha in 2011, and Haiyan in November 2013–further exposed the perils that extreme weather events pose for the Philippines.11 Severe climatic anomalies such as droughts, huge volumes of rains and floods, and increase in the number of typhoons and tropical storms that visit the country annually, have also been recorded. The Philippines ranks third in the list of countries most vulnerable to climate change, only trailing behind Vanuatu and Tonga.12 The country’s vulnerability is expected to increase in the future. This is a worrying prospect as the coping capacity of most of the population is constrained by poverty and limited access to social capital. Worse, environmental governance is bogged down by institutional fragmentation and lack of coherence.

Governing the environment With relevant laws and policies that can be traced way back to the colonial period, the Philippines is said to have among the best environmental protection laws and regulations in the world. (See Table 1) However, it is not only in the implementation that the country has fared poorly. The country’s environmental governance has also been encumbered by its economic logic. A Fragile Frontier: Environmental Vulnerability and Conflicts over Natural Commons

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Environmental laws have been clearly linked to basic development policies. They were crafted in response to increasing urbanization, industrialization, and the pressure of rapidly growing population. After the Marcos regime, the Philippine government under former President Corazon Aquino renewed hopes for solving the country’s worsening environmental crisis. The government then passed an impressive array of groundbreaking laws aiming to address various ecological problems. President Cory Aquino’s main contribution was the creation of the Department of Environment and Natural Resources as the main government agency responsible for the sustainable use, management, and disposal of the country’s resources and ecosystems. This was a departure from the Martial Law years when environmental concerns had been addressed by small agencies with limited resources and narrow mandates. In recognition of the enormity of the problem and the limited capacity of the state to respond to the environmental crisis, the 1991 Local Government Code assigned power to the local government units to help solve environmental problems.13 The LGC decentralized certain powers and devolved functions, programs and projects on forest management, protected areas and wildlife, environmental management, mines and geo-sciences development, and land management. In principle and theory, such decentralization should encourage local community and citizens’ participation in decision-making, planning, and implementation of projects and programs, and should serve as their protection against further environmental destruction. However, environmental programs have provided little space for local communities, especially forest users and dwellers, to be effective participants. Local communities continue to be treated as passive receivers of projects, which have been often donor-driven, and have fixed approach and methodology and limited timeframe. Many state-led community-based forest management programs are also paternalistic in their approach toward local forest users, subsistence farmers, and indigenous people’s own practices and land claims. This is reflected in the way that the state treats them: as occupants of state protected lands, whose practices have to be restricted and who oftentimes have to be evicted, especially from contested fertile lands.14 162

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The `90s represented a watershed in environmental planning and policy making. President Fidel V. Ramos presented himself as the president who would make the Philippines an economic tiger without compromising the environment. Under his term, a string of relevant policies were institutionalized: the National Integrated Protected Areas System of 1992; the Philippine Fisheries Reform Code of 1998; and the Indigenous People’s Reform Act of 1997. President Joseph Estrada focused on pollution control through the Comprehensive Air Pollution Control and the Solid Waste Management Act of 2000. President Gloria Macapagal-Arroyo’s legacy was the Clean Water Act of 2004 and the Climate Change Act of 2009. The current administration of President Benigno S. Aquino III issued Executive Order No. 23 against illegal logging. However, the overall neoliberal economic model has over-determined the direction of environmental governance in the country. The loosening of restrictions on foreign trade and investments, the privatization of most state-owned companies, and the deregulation of markets, all responded to the high global demand for raw materials such as wood, minerals, and natural resource products. The government’s development framework has also paved the way for the dominance of resource-extraction and corporate interests in the Philippine Commons. Under President Fidel V. Ramos, this was highlighted by the Mining Act of 1995, which introduced aggressive minerals development across the country and relaxed long-standing mining restrictions, allowing for 100 percent foreign ownership of mining properties and auxiliary entitlements to water, timber, and easement rights. In 2004, the Supreme Court declared the Mining Act unconstitutional on the basis of its foreign ownership clauses, but this was later on reversed due to the strong lobby by the Chamber of Mines and President Gloria Macapagal-Arroyo. President Benigno S. Aquino III’s administration continues the friendly approach towards mining, aiming at an almost fourfold increase in investments in mineral development, processing, and exploration projects. Executive Order No 79, issued in 2012, made some concessions to the concerns of rural and indigenous A Fragile Frontier: Environmental Vulnerability and Conflicts over Natural Commons

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communities by closing off some sensitive areas to future mining, but has legitimized most existing mining licenses, including the most controversial ones. Riding on a strong anti-corruption and anti-poverty agenda, the government is also aggressively pursuing private-public partnerships as the key strategy to generate “opportunities for job creation and human resource development,” virtually the same framework as the build-operate-transfer schemes in the 1990s that bankrolled the government’s privatization and public investment program.15 Significant attempts to adapt to new challenges have been frustrated by business considerations. With the threat of climate change in the mind of legislators, the 2008 Renewable Energy Act was passed with the aim of transforming the country’s energy mix to one that would be predominantly reliant on renewable sources like hydropower, solar, wind, and biomass. However, half-hearted commitment on the part of the Executive and resistance from business, which said renewable energy development would make power even more expensive, stalemated any move in the direction of renewable energy. Instead, business interests, notably that of the Aboitiz group’s, took advantage of projections of electricity demand to promote coal, the dirtiest energy source—both in terms of its impact on health and climate change—as the answer to the power crisis. From less than 10 per cent in 1991, coal plants now generate over 30 percent of the country’s power. There are currently 11 coal-fired plants in the country, and plans are being accelerated to set up more.16 The Aquino III administration has not stopped the momentum for coal production and use. Indeed, the president’s first Secretary of Energy, Rene Almendras, publicly proclaimed his goal of making the Philippines’ self sufficient in coal and his plan of exploring “30 coal areas” in the country.17 While the expansion of coal industry is being justified as a temporary step while renewable energy projects are waiting to come on stream, the reality is that a massive fossilfuel based energy infrastructure is becoming permanent, together with all the damaging consequences for the environment and public health. Decades of environmental damage are, therefore, not simply inevitable results of rapid population growth, or economic and human activities. To a large extent, they are consequences of a development model that relies on the corporate 164

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private sector and the market as the arbiter of value and best allocator of resources, which is often incompatible with environmental protection and sustainable development. The Philippines subscribes to “ecological modernization,”18 where economic growth and environmental conservation/protection are made to work side by side. Unfortunately, economic growth and a consumption-heavy pattern of development have only made the environment a casualty, and the people relying on them for livelihood and sustenance, virtual environmental refugees.

The agents of plunder Population growth and the intensification of land use through agricultural expansion and land conversion have been the convenient explanation for the environmental stress experienced in the country. The country’s population almost tripled since the `70s, exerting tremendous pressure on natural resources. Not only has there been over-extraction, increasingly dense population centers have also contributed to massive pollution and solid waste generation.19 In the countryside, intensive pesticides and chemical fertilizers use has been associated with long-term decline in land productivity. This has been compounded by threats of soil erosion as one of the most serious forms of land degradation.20 As the population grows, economic competition for land also intensifies, prompting the conversion of prime productive lands into non-agricultural purposes. Climate change has recently entered the picture as the new culprit. But hardly is the grave environmental vulnerability solely attributable to the usual suspects. There is a great deal of truth in the claim that in the Philippines “money easily translates into economic power, dealing with the men who make enormous profits out of nature would eventually lead… to dealing with politicians and military officials [whom] they control.”21 The experience in post-EDSA, and especially in the last decade, confirms exactly just that.


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Big money in natural exploitation Access to natural resources through license agreements and permits has been dominated by large-scale operators. In 1992, the Asian Development Bank estimated that a commercial logger could earn up to a net of PhP100,000 per hectare at first cutting. In the same year, a study by the Washington-based Environmental Policy Institute revealed that only 97 companies or families are parties to timber license agreements.22 TLAs were purchased at low prices, and were called by a former DENR Secretary as the “privilege of the powerful”.23 The low prices were part of the incentive scheme instituted to attract private participation in the forestry sector. Efforts to democratize forestry reforms24 reduced the number of TLAs to only four by 2012, and only one of them is still in actual operation. But commercial loggers still have found ways to circumvent this.25 By 1999, a TLA could be automatically converted into an Integrated Forest Management Agreement granting a 25-year renewable contract to “develop, manage, protect and utilize” 500 to 40,000 hectares of forest land.26 IFMA holders were exempted from forest charges on plantation products and could claim all relevant incentives under the Omnibus Investment Act.27 IFMAs also enabled TLA holders to renew, for another 25 years, their tenure over state forest land. Multinational corporations have continuously cornered TLAs and IFMAs in upland areas. Large-scale conversion of forests was originally intended to ease population pressure, increase agricultural output, and extinguish pressures from the peasantry and communist insurgents seeking agrarian reform.28 But forest conversion has now become the main tool for expanding agribusiness. More recently, this was augmented by the Biofuels Act of 2007 (RA 9367) as it has allowed the expansion of plantation and non-food monocrop agriculture, necessitating the clearing of forests. As expected, multinational companies, mostly emerging ethanol producers from East Asia, in joint ventures with local businesses have been the ones able to take advantage of the law.29

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Decentralized development of special economic zones has also led to largescale land conversion, often involving cleared forest lands. The Aurora Pacific Economic Zone and Freeport Authority is a case in point. Created through RA 10083, the APECO seeks to convert 12,923 hectares of the Casiguran municipality into an eco-tourism, agro-industrial, and commercial hub. Despite protests from residents and advocates that the proposed ecozone would undermine agrarian reform, lay to waste prime irrigated land, and displace indigenous communities30, and despite too the project’s temporary suspension in February 201331, APECO is expected to eventually proceed as it comes with appealing economic projections. Finally, government’s promotion of mining proceeds from expected windfalls from investments. While advocates decry their measly contribution (less than one percent of GDP and 0.5 percent of total employment in 20082011),32 mining companies have enjoyed full concessions allowed by law. As of June 2012, six large-scale mining explorations were fully owned by foreign companies. The explorations required more than US$50 million and cover 108,872.5 hectares of land in the country.33

The captured climate agenda Given its currency, and the international support it generates, climate change adaptation has become the newest opportunity for mitigating environmental stress. Unfortunately, even this has been hijacked by big players. Marketbased climate change solutions, like the Reduction in Forest Degradation and Deforestation and the Clean Development Mechanisms, are schemes by which developed countries can buy ‘credits’ from projects that supposedly reduce greenhouse gas emissions in developing countries, instead of cutting their own emissions in their own backyards. The government prioritizes them both as climate-mitigation strategies and as sources of climate finance.34 However, the investment angle seems to have overtaken the environmental goals these programs are supposed to encourage, with the Philippine government packaging them to attract foreign investors. There were 16 REDD-ready projects in the country as of 201235, which the government hoped to leverage to attract other investments in ecosystem services.


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The promotion of REDD as forest conservation and climate change mitigation strategy is clouded by concerns over its impact on community rights and control over forest use, as well as on the broader issue of the ‘commodification’ of nature. The offset mechanism in REDD allows high greenhouse gas emitters such as developed countries and corporations to purchase forest carbon credits and avoid their responsibilities to cut emissions. It is a “new permit to pollute”36 that “exposes precious natural resources to the risks of market volatility and instability... and promotes new ways to extract revenues from nature... whereby ecosystems and biodiversity are valued more in monetary terms than for the varieties of life that they sustain.”37 The CDM has not fared better. A Focus on the Global South special report found that, not only has CDM benefitted mainly the country’s oligarchs—the richest families and largest corporations that have interests in “dirty industries” which have huge carbon footprints such as oil, gas and coal-based energy, aviation and extractive industries like mining and logging–but that some projects funded by the CDM have had unclear climate change mitigation value.38 CDM projects have become money-making schemes for corporations and local elites.39 In fact, the multi-billion peso CDM may be promoting rather than mitigating climate change by rewarding polluters with additional stream of revenues. The CDM has also been linked to the privatization of state-owned power generation projects. Two CDM registered projects—the Ambuklao and Binga Hydro-electric Power Plants—were privatized under EPIRA and sold to SNAboitiz Power Benguet in 2008.40 These CDM projects involved the revival of the grid-connected Ambuklao dam and the upgrading of the Binga Hydroelectric Power Plant.41 In September 2007, a month after the Philippine government opened the bidding process, SN Aboitiz enlisted the services of a private firm, Point Carbon, to advise the company on the CDM possibilities of Ambuklao and Binga. The joint venture won the contract for the AmbuklaoBinga hydro power plants in May 2008; in September 2008 it submitted both projects to the CDM Board.42 They qualified as CDM projects, as offsets to fossil fuels.

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An ominous alliance with IFIs The policy thrust towards open access and exploitation did not just come naturally. International financial institutions such as the World Bank and the Asian Development Bank, in a bid to broaden the country’s sources of finance, have supported these policies. These two IFIs provided technical assistance and loans for the privatization and reform of the power, water, forestry, and fisheries sectors. The ADB, for example, financed every Forestry Sector Program in the period 1986-2012 amounting to US$100-120 million.43 The Philippines is also considered a pioneer of sorts in the ADB’s private sector operations. The country is one of the largest users of private sector loans covering all modalities from equity investments to complementary financing in the most significant sectors. The ADB’s private sector operations extended loans to two Philippine companies, the Masinloc Coal-Fired Power Station and Marinduque Copper Mining Corporation, which became notorious for causing massive and irreversible environmental destruction, human displacement, and loss of livelihoods for host communities.44 The WB, on the other hand, was one of the major actors that pushed for the passage of the Mining Act of 1995 and therefore was partly responsible for the expansion of mining in the Philippines.45 Its private sector arm, the International Finance Corporation, also extended loans and investments to private mining explorations in the country. In 2012, the IFC approved an equity investment of US$9.4 million to Mindoro Resources Ltd., a junior mining company based in Edmonton, Canada operating in the Philippines. IFC’s equity investment supported MRL’s resource drilling, feasibility and other studies, and exploration activities for its nickel, copper, and gold prospects in Agata, Agusan del Norte.46 Moreover, to bankroll the SN-Aboitiz Benguet Power projects that already got CDM financing, the IFC provided it with a US$100 million loan.47


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Inequity and exclusion from accessing resource Celso Roque, former president of Haribon Foundation and Cory Aquino’s DENR Undersecretary, bluntly put it: “poverty and the distorted distributional aspects of the political economy have grave ecological consequences.”48 Punctuated by structural problems, the ecological crisis manifests as “an equity issue.”49 Negative impacts vary across sectors, but indigenous peoples, women, and the rural and urban poor carry a disproportionately heavier weight.

Marginalizing indigenous peoples Unequal land rights and deforestation intersect in the uplands50, aggravating social injustices.51 Government usually assumes that forest lands and uplands are uninhabited, marginal or unproductive, therefore justifying their appropriation and conversion to other uses. Such assumption has effectively displaced subsistence farmers, forest communities, and indigenous peoples, and has disregarded their particular tenancy arrangements and production patterns.52 There are real physical changes in communities’ landscapes when a forest is felled by logging, when minerals are extracted from the ground or when large tracts of land are converted from agricultural to commercial, tourism, and industrial uses. With communities lacking recourse, these changes have had similar effects brought about by resource grabbing. Indigenous peoples are among the most heavily affected by the ecological crisis. Despite the safeguards provided by the Indigenous People’s Reform Act, IPs rights are routinely violated by mining companies. No less than the United Nations Special Rapporteur for the human rights and fundamental freedoms of indigenous peoples raised the alarm on this situation, noting: “Of particular concern are the long-term devastating effects of mining operations on the livelihood of indigenous peoples and their environment. The activities are often carried without their free, prior and informed consent, as the law stipulates. Communities resist development projects that destroy their traditional autonomy, community structures and cultural values, a process described as development aggression. Indigenous

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resistance and protest are frequently countered by military force involving human rights abuses, such as arbitrary detention, persecution, killings of community representatives, coercion, torture, demolition of houses, destruction of property, rape and forced recruitment by the armed forces, the police or so-called paramilitaries.”53 By 2008, more than half of ancestral domains of IPs have been directly affected by mining and logging operations, a great majority of which (72 percent) operated without securing free prior and informed consent or FPIC.54 Cases of misinformation, bribery, intimidation, and harassment in the operations of mining in ancestral lands have been documented, as have been the increasing number of killings and human rights abuses perpetrated on anti-mining communities over the years.55 Unfortunately, the government has been slow in responding. For instance, it has yet to act on the 2009 recommendation of the UN Commission on the Elimination of Racial Discrimination on the complaint of Subanen leaders against Toronto Ventures, Inc., a Canada-based mining company. The United Tribal Council of Elders, representing IPs in Monkayo, Compostela Valley elevated an FPIC violation case and desecration of sacred sites complaint against the mining company to the UNCERD. The slow response of government has meant the continued harassment of the IPs.56 The financial opportunities opened up by recent climate mitigation projects have also contributed their share of threats, including exposing IPs and forest dwellers to corruption by private interests. The Shift2Neutral company headed by Brett Goldsworthy became notorious when it was found by an Australian Court to have operated a fake carbon credits scheme by “shifting paper certificates instead of saving forests and cutting greenhouse emissions”57. The company allegedly operated in Malaysia, Indonesia, the Solomon Islands, the Democratic Republic of Congo, and Brazil. By 2009, it has penetrated Mindanao and Samar, signing deals with IPs to supply certification services of indigenous rainforest lands for the sale of carbon credits. Goldsworthy promised the IPs money to preserve 1.7 million hectares of their land. It turned out to be a fake undertaking, generating no carbon credits and providing no details about how


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to reduce deforestation in the project area. The company was exploiting the IP community by taking money off the supposed carbon credits generated from the IP areas, but there were no actual reforestation or offset projects operating.58 Shift2Neutral and TVI certainly do not tell the whole story of REDD or mining, but it highlights how prone to exploitation forest dwellers and IPs can be in the face of big investments and unscrupulous private operators. The uneven flow of information and the divide-and-rule tactics employed by some officials from government and the extractive industry create confusion and foment conflicts within IP communities. Some of the worst problems arise when corporations and even formal administrative hierarchies of the government manage to coopt traditional leaders, driving wedges within communities.59

Impact on women Women are considered a vulnerable group primarily due to their unique role as food producers and providers. They are “involved in every stage of food production… do most of the work involved in sowing, weeding, fertilizing and harvesting the staple crops–such as rice, wheat and maize–which allows for more than 90 percent of the rural poor’s diet.”60 Rural women rely mostly on natural resources and the immediate environment for their sustenance. Seventy-five percent of households in Asian countries (including the Philippines) rely on firewood and “biomass” such as wood, agricultural crops, wastes, and forest resources for their energy and livelihood.61 With resources dwindling, the ability of women to rely on these resources has been diminished. The large-scale conversion of agricultural lands has introduced women into new forms of production relations. Women farmers displaced by the Cavite Export Processing Zone in the 1990s, for instance, were also converted into cheap labor for industries as part of the strategy to depress wages. Women represented the biggest chunk (77 percent) of shopkeepers in the factories of CEPZ except for metalwork.62 Farmers opposing APECO anticipate that this will also become their story once the special economic zone pushes through.63

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More vulnerable sectors Environmental stress reduces the poor’s already limited access to resources. Poor communities comprise the “waterless areas” in the country, accounting for more than 1.5 million households with no access to safe drinking water.64 Due to their inability to pay, the poor have either less access to water services or they access lower quality water, or both. In certain cases, lack of access is due to governance issues, involving unresolved contested land and right-ofway issues, as well as water access conflicts. Like logging and mining permits, water rights through water permits or certificates of public convenience have to be secured to extract and use water resources. The National Water Resources Board issues water permits as a tool to allocate rights and resource use. However, NWRB’s principle and practice of ‘first come, first served’ in the water permit application process is problematic in light of competing water uses (e.g. competition between mining and domestic use, and among water service providers). Government’s failure to manage and coordinate competing claims often marginalizes the poorer sections of the population. Mining permits overlap with protected areas, public agricultural lands and areas for commercial logging.65 Mining tenements also overlap with ancestral domains. This has been a result of a confusing permit application and award process, land conversion and poor enforcement of environmental laws.66 Unresolved conflicts and the poor implementation of laws can only result in perverse outcomes. The province of Palawan is a particularly egregious example. Despite being declared by UNESCO as a “Man and Biosphere Reserve”67, the province has received 429 mining applications, and now hosts two large-scale (Rio Tuba Nickel Mining Corporation and Citinickel Mines and Development Corporation) and several small-scale mines.68 Mining even in core and restricted areas, where extractive activities are supposedly not allowed, have been given a go-signal, resulting in the destruction of forest, agricultural and coastal areas, and the desecration of Palawan tribes’ sacred grounds and worship sites.69


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The future of environmental activism and search for just alternatives When the power to allocate resources and to define who gets to own or exploit land, forests, and waters rests solely with the state and its agencies, and corporate and private interests influence these choices and decisions, sociocultural and environmental ends are undermined. Genuine devolution, decentralized power, and community-based comanagement of resources have remained incomplete two decades after the passage of the LGC. Community-based management of resources has long been introduced. In the `70s the irrigation sector formed local irrigators associations; the `80s saw the rise of community-based forest management; while coastal-based resource management was introduced in the `90s. However, co-management of resources has remained piecemeal and has yet to be fully realized in the country.70 Resource use continues to generate tension and contentions between state and society. By and large, local governments lack autonomy from entrenched interests and the dominant classes. Local officials usually rely on local bosses and patrons to finance their electoral campaigns, making them either perpetrators or accomplices in the destruction of the commons. Yet local governments can also be mechanisms for popular interventions and pro-environment policies. To date, 40 provinces have issued local ordinances that restrict, regulate, or oppose mining, especially metallic and large-scale mining.71 The South Cotabato Environmental Code which bans mining and the 25-year moratorium on mining issued by the province of Mindoro in 199972, are notable examples. Such local initiatives are, however, undermined by national issuances. EO 79 calls for the harmonization of local issuances with national laws, weakening local autonomy in favor of national laws and policies. Notwithstanding various constraints, and perhaps because of them, local environmental activism has seen resurgence in recent years. Slain tribal leader Macli-ing Dulag has become the icon of the IP struggle against incursions on ancestral lands and resource grabbing since the `80s. 174

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Direct community action has increased in variety and militancy. Blockades, hunger strikes, and land marches have been introduced. Environmental activism has also been able to tap changes in public policies and agrarian relations, the availability of influential political allies, and the existence of divisions and splits within the elites for the advantage of many advocacies.73 Reacting to weak government presence in water services, public and community actors have banded together to implement innovative models of water management. Bacolod’s public water utility signed a not-for-profit partnership with the Residents Association of Tinagong Paraiso and a local NGO to establish community tap stands. The Philippine Association of Water Districts has encouraged communities to manage and maintain water sources for the cities. Some public water utilities have also started to invest in agroecological farming practices and in community livelihoods, believing that a “good environment will produce good water.”74 Local groups work with IP communities to preserve unique systems of resource management and conservation rooted in the indigenous culture. One such system is the internationally-recognized muyong of the Ifugaos.75 Others have deployed modern technology to enhance community participation. With the aid of three-dimensional (3-D) mapping, the Philippine Association for Intercultural Development has helped the Tagbanwas of Palawan recover 22,400 hectares of ancestral land and water bodies from local government control.76 Activists have also used the the legal and judicial route, like the Subaanen people of Zamboanga Peninsula who were able to secure a Writ of Kalikasan from the Supreme Court in August 2011.77 Still others have gone through the legislative route to push for policy reforms. The Pambansang Koalisyon ng mga Kababaihan sa Kanayunan (National Coalition of Philippine Rural Women) has successfully pushed for the recognition of rural women’s rights to land.78 Social movements have also done the more radical forms of land occupation or self-installation to claim their stake on land. Organized groups such as the Task Force Mapalad, Negros Farmers’ Council and KATARUNGAN have launched land occupations in agrarian hotspots, like Negros Island. However, such forms A Fragile Frontier: Environmental Vulnerability and Conflicts over Natural Commons

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have usually been met with violence, as what happened to Dexter Condez, indigenous youth leader and spokesperson of the Ati community that occupied their ancestral land, who was killed in February 2013 by suspected goons of local land prospectors.79 These acts of “common-ing”80 are acts of active citizenship to protect and safeguard vital resources, to restore some control over these resources to the politically and economically marginalized. They advance ‘just alternatives’ that aim to reconfigure relationships between state and society; debunking Hardin’s “tragedy of the commons,” while underscoring successful community management of common pool resources. At the same time, they prove to be practical and workable solutions that do not rely on market mechanisms or the corporate private sector. Transnational resistance and activism is also the mark of contemporary environmental struggles. As a response to socio-economic and political processes associated with globalization, agrarian transformations and escalating ecological crisis, transnational networks have increased in the past decade.81 More and more, local and national struggles and movements are linked with other social movements and networks throughout Southeast Asia and other parts of the world. An example is the growing climate justice movement. In the country, the Philippine Climate Justice Movement82 emerged from the need to respond to climate change and the proliferation of limited market-based solutions. PMCJ has links with other movements working in Asia and globally. Its interest lies in creating linkages and coalitions among diverse types of actors in an effort to weave local and national issues into regional and global advocacies. These acts of common-ing operate on four fundamental principles. One, a conservation-first approach takes precedence over a “return on investment” approach. Two, the role of the state (e.g. in public utilities and the building of technical capacity) is crucial in ensuring the protection of the environment and in guaranteeing people’s rights over corporate profits. Three, unrestrained activities by large-scale mining and logging companies undermine the rights of forest dwellers, indigenous peoples, farmers, women, and other basic sectors, and bring tremendous risks to the commons. And therefore, the power of corporations, especially in the extractive industries, must be rolled back. 176

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Land, natural resources, and the ‘commons’ have become sites of intense social and political actions, conflicts, mobilization, and activism. The “threatened resistance”83 of communities has prompted networks of civil society organizations and social movements of the poor to stand up in defense of the commons and the common property systems that sustain them.


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Table 1. Evolution of Environmental Policy in the Philippines 1866-2012 Period

Laws/Policy

Year

Spanish Period

Article 268 of the Law of Waters of 1866

1866

Suspended operations of industrial establishments found contaminating and polluting water.

American Period

Spooner Amendment to the Army Appropriations Bill

1901

Disallowed disposition of timber, public lands or mining rights until the establishment of a permanent civil government.

Strengthening of Forestry Bureau

1902

Delimited lands for forest and agricultural purposes.

Act 4003 Fisheries Act of 1932

1932

Prohibited the use of explosives and toxic substances for fishing, and other illegal fishing practices.

Commonwealth Act 137 Mining Act of 1936

1936

Regulated the use, exploration, disposition and development of mineral lands and ores; the policing and sanitation of mines, easements and drainage; and disposal of wastes/tailings.

Commonwealth Act 383 Anti-dumping Law of 1938

1938

First law to directly deal with waste disposal, prohibited the dumping into waterways of any substance that may cause an elevation of river beds or block streams.

RA 3931

1964

Created the National Water and Air Pollution Control Commission; set the national policy to maintain reasonable standards of purity for the country’s waters and air for domestic, agricultural, industrial and other legitimate purposes. It was later re-organized into the National Pollution Control Commission.

RA 4850 Laguna Lake Development Authority Act

1966

Created Laguna Lake Development Authority for the specific natural resource management of Laguna de Bay. Amendment in 1975 through P.D. 813 included explicit environmental management and prevention of ecological disturbance and pollution as a mandate.

Commonwealth Period

Pre-Martial Law Period

Amended by PD 813, 1975

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Objective/Coverage


Martial Law Period

RA 6234

1973

Created the Metro Waterworks and Sewerage System (MWSS), with mandate to construct, operate and maintain the sewerage and sanitation and water supply of Metro Manila.

PD 198

1973

Created the Provincial Water Utilities – water districts to operate and administer water supply and wastewater disposal in provincial areas.

PD 463 Mineral Resources Development Decree

1974

Revised Commonwealth Act 137 (Mining Act); modernized the system of administration and disposition of minerals; promoted and encouraged the development and exploitation of mineral resources.

PD 389 Forestry Reform Code of the Philippines

1974

Instituted the system (criteria, guidelines and methods) for the classification of lands; recognized areas needed for forest covers and promulgated the reforestation program of government. The Code instituted 16 various special permits and leases for the use or occupancy of forests. The revision through PD705 in 1975 updated the proper classification and delimitation of the lands in public domain and the management, utilization and development of forest lands. In 1982, through PD 705, the Integrated Social Forestry Programs, the first community-focused forest management strategy in the country, was established. The program featured 25-year Community Forest Stewardship Agreements with communities for communal or household-level agroforestry farms; encouraged the formation of local forest associations.

PD 281

1975

Created the Pasig River Development Council for the regulation and control of pollution in the Pasig River.

PD 856 Sanitation Code

1976

Required cities and municipalities to provide an adequate and efficient system for sewage collection, transport and disposal in their areas of jurisdiction.

Amended by PD 705, 1975?


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PD 600 Marine Pollution Control Amended by PD 979, 1976

1976

Regulates and controls the pollution of seas.

PD 984 Pollution Control Law

1976

Provides guidelines for the control of water pollution from industrial sources, requires provision of sanitation, and sets penalties for violations; requires all polluters to secure permits.

PD 1067 The Water Code of the Philippines

1976

Establishes the basic principles and framework relating to the appropriation, control and conservation of water resources; defines the rights and obligations of water users and owners; and identifies the agencies to administer the Code.

PD 1121

1977

Created the National Environmental Protection Council), an inter-agency committee that oversaw the implementation of projects, policy formulation, research and monitoring of environmental issues, under the President.

PD 1096 National Building Code

1977

Requires new buildings to be connected to a waterborne sewerage system.

PD 1151 Philippine Environmental Policy

1977

Recognized the right of peoples to a healthy environment; environmental management defined as a major policy focus; required Environmental Impact Assessment for all activities which have impacts on the environment.

PD 1152 Philippine Environment Code

1978

Comprehensive state policy on environmental management covering air, water, land use, natural resource management and conservation, wildlife, use of fertilizers and pesticides, forest, flood control and calamities, mineral resource use, waste management, etc. and the role of local government and private individuals.

PD 1586 Environmental Impact Assessment

1978

Established an Environmental Impact Statement System as required under Section 4 of PD 1151.


1986-1992 (Corazon Aquino Presidency)

Proclamation 2146

1981

Proclaimed certain areas and types of projects as environmentally critical such as heavy industries, resource extractives, and infrastructure. The proclamation declared 12 types of environmentally critical areas such as mangroves, coral reefs, areas declared by national laws, etc.

PD 1899

1984

Established small scale mining as a new dimension in mineral development; defined small scale mining as using maximum of 20 hectares, using intensive labor and manual input, without heavy mechanized or heavy equipments or explosives, and moving a maximum of 50,000 dry metric tons of ore annually.

Philippine Constitution of 1987

1987

Mandates the State as the caretaker of public domain and provider of access to natural resources; puts social equity at the center of forest policy agenda.

EO 192

1987

Reorganized the Department of Environment, Energy and Natural Resources, created on January 30,m 1987 under EO 131, into the Department of Environment and Natural Resources; abolished the NEPC and absorbed functions of policy formulation, program planning and implementation of Environmental Impact Assessment system into the Environmental Management Bureau.

RA 6716 Rainwater Harvesting Act

1989

Mandates the construction of water wells and rainwater collectors in all barangays.

RA 7160 Local Government Code

1989

Identifies the role of local government in environmental management; gives mandate for the position of an Environmental and Natural Resource Officer; and upholds the role of LGUs in mineral use management.

RA 6969 Toxic Hazardous, and Nuclear Waste Act

1990

Regulates the use and disposal of toxic, hazardous and nuclear wastes.


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1992-1998 (Fidel V. Ramos Presidency)

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RA 7076 Peoples’ Small-Scale Mining Law

1991

Replaced PD 1899. Mandates the State to promote, develop, protect and rationalize viable small-scale mining activities for employment and an equitable sharing of the nation’s wealth and natural resources. Excludes protected areas such as forest parks and marine reserves and ancestral domains without the FPIC of indigenous people from possible small scale mining areas. Created the Peoples’ Small Scale Mining Protection Fund.

Philippine Agenda 21

1992

Integrates sustainable development into official policy; a response to the Agenda 21 of the original Earth Summit in 1992.

RA 7586 National Integrated Protected Areas System (NIPAS) Act

1992

Gives protection to outstandingly remarkable areas and biologically important public lands; establishes strict nature reserve, park, monument, sanctuary, reserve, etc. as established by law, conventions or international agreements which the Philippine Government is a signatory to; and buffer zones. Prohibited a range of activities in these protected areas.

RA 7942 Philippine Mining Act

1995

Liberalizes the mineral industry; promotes the utilization, exploration, development and conservation of mineral resources.

DENR Administrative Order 96-40 DENR Administrative Order 99-34

1995

DENR AO no.96-40 gives the Revised Implementing Rules and Regulations of RA 7942, specifically contains guidelines on Financial or Technical Assistance Agreements. AO 99-34 gives clarificatory guidelines for AO 96-40, specifically on area status and clearance of application for exploration permit, mineral agreement and FTAAs; renewal and requirements.

EO 263

1995

Adopts community-based forest management (CBFM) as the national strategy; seeks to deepen community management of forests; allocates use rights to upland communities through communal leases of 25-years, renewable for another 25 years.


1998-2001 (Joseph E. Estrada Presidency)

RA 8435 Agriculture and Fisheries Modernization Act

1995

Promotes development compatible with the preservation of the ecosystem in areas where agriculture and fisheries activities are carried out. Promotes rational and equitable use of natural resources, prevention of the further destruction of watersheds, and rehabilitation of existing irrigation systems.

RA 8041 National Water Crisis Act

1995

Authorized the President to address the nationwide water crisis relating to issues of water supply, distribution and finance, the protection and conservation of watersheds, the waste and pilferage of water, and graft and corruption in the water agencies; paved the way for the privatization of the MWSS.

RA 8371 Indigenous Peoples Rights Act

1997

Recognizes the rights of indigenous peoples to ancestral lands and selfdetermination and empowerment. Contains several rights including the right to free prior and informed consent (FPIC). Creates the Ancestral Domains Management Program (ADMP), a resource management program focusing on indigenous peoples awarded with tenurial rights under the Certificate of Ancestral Domains Claims (CADCs).

RA 8550 Philippine Fisheries Code

1998

Recognizes the rights of marginalized sectors in natural resources management; encourages the formation of local associations in the fisheries sector; identifies and delineates municipal waters for artisanal fishing.

RA 8749 Comprehensive Air Pollution Control Act

1999

Bans incinerators and allows communities and citizens to file suit against polluters.

RA 9003 Ecological Solid Waste Management Act

2000

Provides the legal framework for the management, control, transfer, transport, processing and disposal of solid waste in the country.

RA 9147 Wildlife Resources Conservation and Protection Act

2001

Mandates the conservation and protection of wildlife species and their habitats to promote ecological balance and enhance biological biodiversity.


183


2001-2010 (Gloria MacapagalArroyo Presidency)

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Proclamation 396

2003

Enjoins government agencies, including government-owned and controlled corporations, and the private sector, schools, civil society groups and the citizenry to engage in tree planting activity. Proclamation 643 declares June 25 as Philippine Arbor Day and upholds tree planting as essential to the re-greening of the country.

RA 9275 Clean Water Act

2004

Provides a comprehensive and integrated strategy to prevent and minimize water pollution from landbased sources.

EO 318

2004

Adopts Sustainable Forest Management as a national strategy based on the World Summit on Sustainable Development in Johannesburg.

EO 481

2005

Creates the National Organic Agriculture Program, which aims to promote organic agriculture development, conserve environmental resources and promote social equity.

RA 9627 Philippine Biofuels Act

2007

Promotes the local production and development of biofuels from coconut, jathropa, sugarcane, cassava and corn, through the expansion of plantation and nonfood monocrop agriculture; identifies the target blend of bioethanol and biodiesel for the country; places biofuels development as a major strategy for energy security of the country

RA 9729 Climate Change Act

2009

Institutionalizes the government’s climate change response mechanisms; harmonizes existing policies and programs; provides a framework for the National Climate Change Strategy; created the Philippine Climate Change Commission.

Amended by Proclamation 643, 2004


2010-2012 (Benigno S. Aquino III Presidency)

EO 23

2011

Declares a moratorium on the cutting and harvesting of timber in the natural and residual forests; creates the Anti-Illegal Logging Task Force.

EO 26

2011

Establishes the National Greening Program which aims to plant 1.5 billion trees covering about 1.5 million hectares from 2011 to 2016 in public lands.

EO 79

2012

Harmonizes local and national laws on mining and specifies revenue sharing between national and local governments.

Office of the President, Administrative Order 34

2012

Creates the Inter-Agency Committee on Institutional Arrangements for Land Management and Agricultural Support Services Delivery to harmonize agency functions on land, agriculture and natural resources.


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Environmental Vulnerability Map Data on Forest, Water Balance and Quality, Coastal and Fishery Resources and Natural Hazards

Ilocos Region Region 1

F

Cordillera Administrative Region CAR

X

Cagayan Valley Region 2

F

Central Luzon Region 3

A National Capital Region NCR

X

CALABARZON Region 4-A

B Bicol Region Region 5

C

F

Eastern Visayas Region 8

D MIMAROPA Region 4-B

X

Western Visayas Region 6

Central Visayas Region 7

F

Caraga Region 13

F Zamboanga Peninsula Region 9

F

Northern Mindanao Region 10

F E

X Autonomous Region in Muslim Mindanao ARMM

E

Davao Region Region 11

SOCCSKSARGEN Region 12

Water Demand in 2025 (in Million cu metre; High growth) X 186

A 21328 21835 4638 B C D 12135 4362 Others E F Chapter 5


F Ilocos Region Region 1 Density of Forest (2003): 17.29% Water Demand in 2025 (in Million cu metre; High growth): 4427 Water Pollution % of share Domestic Use: 5.20% Water Pollution % share Industrial Use: 3.30% Water Pollution % share Agricultural Use: 11.50%

X Cordillera Administrative Region CAR Density of Forest (2003): 39.90% Water Pollution % of share Domestic Use: 1.70% Water Pollution % share Industrial Use: 0.60% Water Pollution % share Agricultural Use: 2.30%

F Cagayan Valley Region 2 Density of Forest (2003): 42.78% Water Demand in 2025 (in Million cu metre; High growth): 12429 Water Pollution % of share Domestic Use: 3.50% Water Pollution % share Industrial Use: 0.20% Water Pollution % share Agricultural Use: 6.10%

A Central Luzon Region 3 Density of Forest (2003): 27.46% Water Demand in 2025 (in Million cu metre; High growth): 21328 Water Pollution % of share Domestic Use: 9.90% Water Pollution % share Industrial Use: 9% Water Pollution % share Agricultural Use: 9.10%

B CALABARZON Region 4-A Density of Forest (2003): 17.85% Water Demand in 2025 (in Million cu metre; High growth): 21835 Water Pollution % of share Domestic Use: 14.60% Water Pollution % share Industrial Use: 14.10%

X MIMAROPA Region 4-B Density of Forest (2003): 43.53%


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C Bicol Region Region 5 Density of Forest (2003): 8.87% Water Demand in 2025 (in Million cu metre; High growth): 4638 Water Pollution % of share Domestic Use: 5.80% Water Pollution % share Industrial Use: 3.10% Water Pollution % share Agricultural Use: 5.40%

X National Capital Region NCR Density of Forest (2003): 4.43% Water Pollution % of share Domestic Use: 17.60% Water Pollution % share Industrial Use: 42.50% Water Pollution % share Agricultural Use: 0%

D Western Visayas Region 6 Density of Forest (2003): 13.08% Water Demand in 2025 (in Million cu metre; High growth): 12135 Water Pollution % of share Domestic Use: 7.70% Water Pollution % share Industrial Use: 5.10% Water Pollution % share Agricultural Use: 8.10%

F Central Visayas Region 7 Density of Forest (2003): 5.03% Water Demand in 2025 (in Million cu metre; High growth): 3405 Water Pollution % of share Domestic Use: 7.10% Water Pollution % share Industrial Use: 7.40% Water Pollution % share Agricultural Use: 10.60%

F Eastern Visayas Region 8 Density of Forest (2003): 24.26% Water Demand in 2025 (in Million cu metre; High growth): 2953 Water Pollution % of share Domestic Use: 4.50% Water Pollution % share Industrial Use: 1.10% Water Pollution % share Agricultural Use: 2.60%

F Zamboanga Peninsula Region 9 Density of Forest (2003): 12.19% Water Demand in 2025 (in Million cu metre; High growth): 2944 Water Pollution % of share Domestic Use: 3.80% Water Pollution % share Industrial Use: 3.30% Water Pollution % share Agricultural Use: 5.20%

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F Northern Mindanao Region 10 Density of Forest (2003): 19.68% Water Demand in 2025 (in Million cu metre; High growth): 3980 Water Pollution % of share Domestic Use: 3.40% Water Pollution % share Industrial Use: 2.20% Water Pollution % share Agricultural Use: 9.10%

E Davao Region Region 11 Density of Forest (2003): 21.40% Water Demand in 2025 (in Million cu metre; High growth): 4362 Water Pollution % of share Domestic Use: 6.40% Water Pollution % share Industrial Use: 6.60% Water Pollution % share Agricultural Use: 8.60%

E SOCCSKSARGEN Region 12 Density of Forest (2003): 18.58% Water Demand in 2025 (in Million cu metre; High growth): 4362 Water Pollution % of share Domestic Use: 3.20% Water Pollution % share Industrial Use: 0.50% Water Pollution % share Agricultural Use: 3.90%

F Caraga Region 13 Density of Forest (2003): 27.77% Water Demand in 2025 (in Million cu metre; High growth): 11847 Water Pollution % of share Domestic Use: 2.60% Water Pollution % share Industrial Use: 0.90% Water Pollution % share Agricultural Use: 1.20%

X Autonomous Region in Muslim Mindanao ARMM Density of Forest (2003): 19.69% Water Pollution % of share Domestic Use: 3.20% Water Pollution % share Industrial Use: 0% Water Pollution % share Agricultural Use: 3%


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Notes 1

The commons as used in this chapter refers to collective ecological resources such as water, land, biodiversity, forests, air, and other natural resources. Hardin, G. (1968). The tragedy of the commons. Science 16, 1243–1248. 2 Magno, M. (1993). The growth of Philippine environmentalism. Kasarinlan, 9(1), 7-18. 3 Polanyi, K. (1944). The great transformation. New York: Rinehart, 35. 4 Cavanagh, J. and Broad, R. as cited in Bello et al. (2004). The Anti-development State: The Political Economy of Permanent Crisis in the Philippines. Quezon City: UP Sociology Department and Focus on the Global South, 217. 5 The latest available forest cover data based on satellite images date back to 2003. Prior to that, there were only estimates from government, academic, and non-governmental organizations. The consensus for the 1950s was that the country’s forest cover stood at 50 percent and it declined in the 1960s due to the logging boom. The current forest cover includes plantations and other mono-crop farms. For more details, see Department of Environment and Natural Resources- Forest Management Bureau. Philippine forestry statistics 2011. 6 National Economic and Development Authority. (2011). Philippine development plan 2010-2016. 7 National Water Resources Board. (1998). Master plan study on water resources management in the Republic of the Philippines:final report. Japanese International Cooperation Agency Report. 8 Tambuyog Development Center. (1997). Coastal resource management: the fishers way. Lundayan Journal Special Issue. Retrieved 17 March 2013, from http://www.tambuyog.org/cgi-bin/downloads/default. asp?categ=1 9 Miranda, M. et al. (2003). Mining and critical ecosystems: mapping the risks. Washington D.C.: World Resources Institute, 23. 10 Landingin, R. and Aguilar, J. (2008, July/September). Dirty past. Newsbreak Special Edition: The Big Dig: Mining Rush Rakes Up Tons of Conflict. Retrieved 17 March 2014, from http://www.slideshare.net/ no2mininginpalawan/newsbreak-special-issue-onmining 11 Allison, S. (2013, November 12). Analysis: did climate change cause super typhoon Haiyan? Daily Maverick. Retrieved 17 March 2014, from http://www.dailymaverick.co.za/article/2013-11-12-analysis-did-climatechange-cause-super-typhoon-haiyan/#.UtPXT_bYmhl 12 United Nations University, Institute for Environment and Human Security and The Nature Conservancy. (2012). World Risk Report 2012. Berlin : Bündnis Entwicklung Hilft. 13 Ragragio, R. M. (1993). Sustainable development, environmental planning and people’s initiatives. Kasarinlan: Philippine Journal of Third World Studies, 9(1), 35-53. 14 Rotz, S. (2011). Governing forests, carbon and climate change: deconstructing the carbon commodification project and the application of REDD in Philippine forestlands. Master Dissertation, York University. 15 Ofreneo, R. (2011). Panalo ba ang Pilipino?: three decades of privatization. Development Roundtable Series Papers. Quezon City: Focus on the Global South and DRTS. 16 Questions for Department of Energy, Office of Representative Walden Bello, House of Representatives, Sept 12, 2012. 17 Questions for Department of Energy, Office of Representative Walden Bello, House of Representatives, Sept 12, 2012. 18 Ecological modernization is a perspective in environmental social science. See, for example, Buttel, F.H. (2000). Ecological modernization as social theory. Geoforum, 31, 57-65. Retrieved 17 March 2014, from http://www.ic.ucsc.edu/~rlipsch/EE80S/Buttel.pdf 19 Aguinaldo, E. (2009, Philippine national report . Presentation at the Regional 3R Forum in Asia Toward a Resource Efficient, Sound Material-Cycle Society, November 11-12, 2009, Tokyo, 11-12; World Bank. (2004). Philippines environment monitor 2004: assessing progress. Washington D.C.: World Bank. 20 Francisco, H. A. and delos Angeles, M. S. (1998). Soil Resources depreciation and deforestation: Philippine case study in resource accounting. (n.p.): Food and Agriculture Organization. Retrieved 17 March 2014, from http://www.fao.org/DOCREP/006/AB604E/AB604E03.htm

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21 Gutierrez, E. (1989, August). Girding for a green offensive. Conjuncture, 8, 15. In J. Teehankee, The state, illegal logging, and environmental NGOs in the Philippines. Kasarinlan, 9(1), 20. Quezon City: Third World Studies Center, 1993. 22 Teehankee, J. (1993). The state, illegal logging, and environmental NGOs in the Philippines. Kasarinlan, 9(1), 19-24. Quezon City: Third World Studies Center. 23 Teehankee, J. (1993). The state, illegal logging, and environmental NGOs in the Philippines. Kasarinlan, 9(1), 22. Quezon City: Third World Studies Center. 24 E.g. the Integrated Social Forestry Programme, the Forest Land Management Agreement, and CommunityBased Forest Management. 25 Acosta, R. (2004). Impacts of incentives on the development of forest plantation resources in the Philippines. In T. Enters and P. B. Durst (Eds.), What does it take?: the role of incentives in forest plantation development in Asia and the Pacific. Bangkok: Food and Agriculture Organization. Retrieved 13 November 2012, from http://www.fao.org/docrep/007/ae535e/ae535e0c.htm#fn116 26 IFMA Primer. . Retrieved 4 September 2013, from http://forestry.denr.gov.ph/primer.htm#ifma 27 Acosta, R. (2004). Impacts of incentives on the development of forest plantation resources in the Philippines. In T. Enters and P. B. Durst (Eds.), What does it take?: the role of incentives in forest plantation development in Asia and the Pacific. Bangkok: Food and Agriculture Organization. Retrieved 13 November 2012, from http://www.fao.org/docrep/007/ae535e/ae535e0c.htm#fn116 28 Coxhead, I. and Jayasuriya, S. (2003). Environment and natural Resources. In Balisacan, A. and Hall, H., (Eds.), The Philippine Economy: Development, Policies, and Challenges, (400). New York: Oxford University Press. 29 Corpuz, P. G. (2013, July 10). Philippines: biofuels annual, biofuels industry situation and outlook. Global Agricultural Information Network Report. USDA Foreign Agricultural Service: Manila. 30 Roman Catholic Prelature of Infanta, Fastenopfer (Swiss Catholic Lenten Fund) and Mensen met een Missie–Netherlands. (2012). The APECO Imbroglio and the anti-APECO struggle: a special report of the international solidarity mission to Casiguran, Philippines, February 6-12, 2012. 31 Cevalio, C. (2013, July 8). Aquino to discern Apeco’s fate, awaits NEDA’s full report. The Guidon. Retrieved 5 September 2013, from http://www.theguidon.com/2013/07/aquino-to-discern-apecos-fate-awaitsnedas-full-report 32 Alyansa Tigil Mina (ATM). (2011, September). Position Paper on the Continued adoption of the Aquino government of the revitalization of the Philippine mineral industry policy, 5. 33 Department of Environment and Natural Resources, Mines and Geosciences Bureau. Complete list of existing financial or technical assistance agreements as of June 30, 2012. MRMS Report. 004-A. 34 Purugganan, J. (2010). Case study of CDM governance in the Philippines. In T. Reddy, (Ed.), Governing climate finance: Critical perspectives from Africa, Asia and Latin America. ISS Roundtable Report: Capetown. 35 Asian Development Bank and the Center for People and Forests. (2010). National REDD + strategies in Asia and the Pacific: progress and challenges, Background Paper. Mandaluyong City: Asian Development Bank, 1. Retrieved 19 June 2012, from http://www.adb.org/sites/default/files/pub/2010/national-redd-strategies.pdf 36 Guttal, S. (2012, June). New permits to pollute: REDD and the green economy. Focus on Trade, No. 160. Retrieved 6 September 2013, from http://focusweb.org/content/new-permits-pollute-redd-and-greeneconomy 37 Guttal, S. (2012, June). New permits to pollute: REDD and the green economy. Focus on Trade, No. 160. Retrieved 6 September 2013, from http://focusweb.org/content/new-permits-pollute-redd-and-greeneconomy 38 Docena, H. (2010). The clean development mechanism projects in the Philippines: costly, dirty, moneymaking Schemes. Focus on the Philippines Special Reports. Quezon City: Focus on the Global South, 1. 39 Docena, H. (2010). The clean development mechanism projects in the Philippines: costly, dirty, moneymaking Schemes. Focus on the Philippines Special Reports. Quezon City: Focus on the Global South, 1. 40 A joint venture between Filipino Aboitiz Power Corporation and Norwegian Statkraft Norfund Power Invest. 41 Focus on the Global South. (2012). Whose clean development?: communities speak out. (Bangkok: Focus on the Global South, 2012). 42 SN-Aboitiz Power Benguet Inc. Binga Hydroelectric Power Plant, Project Design Document Form (CDM PDD) Version 3, 14.


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43 See Asian Development Bank. Projects in the Philippines. Retrieved 12 September 2013, from http://www. adb.org/countries/philippines/projects. 44 Manahan, M.A. and Chavez, J.J. (2005). An ominous alliance: the Philippine-ADB development partnership. In The ADB and policy (mis) governance in Asia. Quezon City: Focus on the Global South. 45 Doyle, C. et al. (2011). Mining in the Philippines concerns and conflicts. Fact finding mission to the Philippines report. West Midlands, UK: Society of St. Columban. 46 Manahan, M.A. (2011). The international finance corporation in the Philippines: an overview. Retrieved 2 July 2012, from http://focusweb.org/philippines/deglobalization/articles/502-the-international-financecorporations-involvement-in-the-philippines-an-overview 47 SN-Aboitiz Power Benguet Inc. Binga Hydroelectric Power Plant, Project Design Document Form (CDM PDD) Version 3, 14. 48 Manila Bulletin, October 24, 1990 as cited in Magno, M. (1993). The growth of Philippine environmentalism. Kasarinlan, 9(1), 13. 49 Magno, M. (1993). The growth of Philippine environmentalism. Kasarinlan, 9(1), 7-18. 50 Leonen, M. (1993). The Philippines: dwindling frontiers and agrarian reform. In M. Colchester and L. Lohmann, (Eds.), The struggle for land and the fate of the forests, (278). London: The Rainforest Movement, the Ecologist and Zed Books. 51 Colchester, M. (2013). Colonizing the rainforests: the agents and causes of deforestation. In M. Colchester and L. Lohmann, (Eds.), The struggle for land and the fate of the forests, (1-15). London: The Rainforest Movement, the Ecologist and Zed Books. 52 Borras, S. (2006). Redistributive land reform in ‘public’ (forest) lands? lessons from the Philippines and their implications for land reform theory and practice. Progress in Development Studies, 6(2), 123-145. 53 Stavenhagen, R., as quoted in Alyansa Tigil Mina (ATM). (2011, September). Position Paper on the Continued adoption of the Aquino government of the revitalization of the Philippine mineral industry policy, 6. 54 Philippine Partnership for the Developmentof Human Resources in Rural Areas. (2008). Philippine Asset Reform Report Card. Quezon City. 55 Position Paper on the Continued adoption of the Aquino government of the revitalization of the Philippine mineral industry policy, 6. 56 In 2011, TVI issued a public apology for operating in the Subanen ancestral domain without FPIC. As of this writing, the Philippine government has yet to issue an official response to the UNCERD. 57 Lang, C. (2012, June 9). The strange case of Brett Goldsworthy. REDD-Monitor. Retrieved 5 September 2013, from http://www.redd-monitor.org/2012/06/29/the-strange-case-of-brett-goldsworthy/ 58 Lang, C. (2012, June 9). The strange case of Brett Goldsworthy. REDD-Monitor. Retrieved 5 September 2013, from http://www.redd-monitor.org/2012/06/29/the-strange-case-of-brett-goldsworthy/ 59 Advocates of indigenous peoples’ rights know these stories too well. Recent trend shows indigenous peoples’ leaders being recruited as “PR” managers and consultants for mining companies, as can be observed from advertisements on television and in social media. 60 Association for Women’s Right in Development (AWID). (2011, October 2). Africa’s latest land rush: the effect of land grabs on women’s rights. Retrieved 21 July 2012, from http://www.awid.org/News-Analysis/ Friday-Files/Africa-s-Latest-Land-Rush-The-Effect-of-Land-Grabs-on-Women-s-Rights 61 United Nations Statistics Division. (2010). World’s women 2010: trends and statistics. New York: United Nations. 62 Kelly, P. (2000). Landscapes of globalization: human geographies of economic exchange in the Philippines. London: Routledge, 55. 63 Roman Catholic Prelature of Infanta, Fastenopfer (Swiss Catholic Lenten Fund) and Mensen met een Missie–Netherlands. (2012). The APECO Imbroglio and the anti-APECO struggle: a special report of the international solidarity mission to Casiguran, Philippines, February 6-12, 2012 64 Dargantes, B. Manahan, M.M. and Batistel, C. (2011). Treading troubled waters. Development Roundtable Series Papers. Quezon City: Focus on the Global South and DRTS. 65 Data from the Philippine Association for Intercultural Development website. Retrieved 7 July 2012 from http://www.pafid.org

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66 Malayang III, B. (2000). The changing role of government in forest protection. In P. Utting, (Ed), Forest policy and politics in the Philippines: the dynamics of participatory conservation. Quezon City: Ateneo de Manila University Press. 67 Conservation International. (2006). Priority Sites for Conservation in the Philippines: Key Biodiversity Areas. Retrieved 3 August 2012 from http://www.conservation.org/global/philippines/publications/Documents/ MKBA_Overview.pdf 68 Alyansa Tigil Mina (ATM). (2011, September). Position Paper on the Continued adoption of the Aquino government of the revitalization of the Philippine mineral industry policy, 9-10. 69 Alyansa Tigil Mina (ATM). (2011, September). Position Paper on the Continued adoption of the Aquino government of the revitalization of the Philippine mineral industry policy, 10. 70 Prof. Ernesto Serote of the University of the Philippines’ School of Urban and Rural Planning made this remark as part of his input at a workshop on national land use organized by KAISAHAN on June 1, 2010. 71 Alve, K. (2012, June 1). Governors brace for court battle over mining EO. Philippine Daily Inquirer. Retrieved 6 July 2012, from http://newsinfo.inquirer.net/218033/governors-brace-for-court-battle-over-mining-eo 72 Pasimio, J. (2012). Investments on mining and their impacts: our story. Presentation at the Roundtable Discussion on Investments, Risk and Dangerous Legacies, organized by Focus on the Global South, Alyansa Tigil Mina, FIAN-Philippines, Pambansang Koalisyon ng Kababaihan sa Kanayunan, Peoples Development Initiative, Alternative Forum for Research in Mindanao, November 20, 2012, Balay Kalinaw, UP Diliman, Quezon City. 73 Caouette, D. and Turner, S. (Eds.). (2009). Rural Resistance and the Art of Domination. In D. Caouette and S. Turner, Agrarian angst and rural resistance in contemporary Southeast Asia, 34-35. New York: Routledge, 32-33. 74 Dargantes, B. Manahan, M.M. and Batistel, C. (2012). Of water justice and democracy: alternatives to commercialization and privatization of water in Asia. Bangkok: Focus on the Global South. 75 Rotz, S. (2011). Governing forests, carbon and climate change: deconstructing the carbon commodification project and the application of REDD in Philippine forestlands. Master Dissertation, York University, 95. 76 Land Watch Asia. (2009). Defending the gains of tenurial reforms: Philippines country paper. Securing the Right to Land. ANGOC, 148. 77 The Writ of Kalikasan is a legal remedy that ensures the protection of Filipinos’ right to “a balanced and healthful ecology in accord with the rhythm and harmony of nature” enshrined in Section 16, Article II of the Philippine Constitution. The Subaanen’s petition sought the protection of the environment of the whole Zamboanga Peninsula, especially its sacred places, mountains and tropical forests against mining, illegal logging and other extractive industries. 78 See Section 2, 14 and 15 of Republic Act 9700, Comprehensive Agrarian Reform Program Extension with Reforms (CARPER), Retrieved 12 July 2012 from http://www.lawphil.net/statutes/repacts/ra2009/ ra_9700_2009.html 79 Data from field research by Mary Ann Manahan, April 16-17, 2012. 80 Elinor Ostrom, 2009 the Nobel Prize winner for Economics, popularized the concept of the “commons” in contemporary times. She brings forward the dual challenges of sustainability: protecting and safeguarding vital resources from growing pressures of exploitation and equity: ensuring that the politically and economically marginalized groups have access and control to these resources. Ostrom stresses that people steward a resource when they take part in collectively deciding for whom and how the resources are used and shared. This act of stewardship is called “common-ing”, or exercising active citizenship. See Ostrom, E. (1990). Governing the commons. New York: Cambridge University Press. 81 Caouette, D. and Turner, S. (Eds.). (2009). Rural Resistance and the Art of Domination. In D. Caouette and S. Turner, Agrarian angst and rural resistance in contemporary Southeast Asia, 34-35. New York: Routledge. 82 For more information, visit the Philippine Movement for Climate Justice website: http://climatejustice.ph/ 83 Focus on the Global South uses the term “threatened resistance” to mean that communities defending their lands, lives and livelihoods are always under threat from various anti-reform forces, the state and its military, and private and corporate entities. The term first appeared in an internal document/concept note for a workshop on land in 2010. Also see Manahan, Mary A. (2010). Is Asia for sale? trends, issues, and strategies against land grabbing. In Land Struggles: LRAN Brieﬁ ng Paper Series. Quezon City: LRAN.


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6

Shantytown Nation: The Urban Underclass and Struggle for Space

Urbanization in the Philippines has been unfolding at breakneck pace, with state policies favoring city growth, waves of rural-to-urban migration, and property development surges transforming vast swathes of the countryside and cities all contributing to this kind of urbanization. Metro Manila today qualifies as one of the world’s teeming megacities; in 2010, the metropolis ranked as the 6th most populated urban region in the globe, ranking below only the Tokyo-Yokohama, Jakarta, Seoul-Incheon, Delhi, and Shanghai metropolises.1 Yet views on the Philippines’ urbanization experience amidst the atrophy of agriculture and industry remain deeply divided. On the one hand, rapid urban expansion has been viewed by numerous city dwellers as beacon of ‘progress’ and ‘globalization’; but from the other view, urbanization has also brought yawning gaps between urban gentrification and the decay of a significant portion of the cities, as well as the unfettered growth of the underclass. The urban underclass has not only generated tensions with respect to the gentrified districts of the cities; it has also been the target and victim of increasing ‘accumulation by dispossession’ and urban ‘disaster-proofing’. At the root of these resurgent tensions lay fierce disputes over scarce urban space: over those who own and determine its use, over those who stand to benefit or to be excluded from its development, and over how it will shape and reshape the city in the years to come.

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Yet Manila’s experience in urban expansion has also called attention to unprecedented problems in urbanization found not only in the Philippines but in other developing countries. National and city governments have systematically neglected public spaces and infrastructure. Metro Manila’s carrying-capacity for public and private vehicles has been strained, leading to losses from traffic congestion daily4 of a projected PhP2.4 billion in potential income, and to the deterioration of the urban environment. Of all the contradictions afflicting contemporary Metro Manila, however, the most divisive has been the rise in slums and the expanding ranks of the city’s underclass–whose population in 2010 was estimated at 4.57 million persons or 37 percent of total population.5

Urban underclass6 The Philippines has long been recognized as a country characterized by high degree of urbanization, given its prevailing level of socio-economic development. With 65.7 percent of Filipinos (60 million people) recorded to be dwelling in towns and cities in 2010, the Philippines is the top lower-middle income country in Asia-Pacific in terms of its share of urban to total population.7 It is the second most urbanized country in Southeast Asia, after Malaysia, and the seventh most urbanized country in the entire Asian continent.8 Alongside population growth explosion of the past few decades, the radical transformation of the city landscape has also become one of the main signals of rapid urbanization in Metro Manila and outlying areas from the mid- `70s to the 2000s. Metro Manila reached a 100 percent level of urban land use in the `70s9, and experienced several construction booms in the periods 19931997, 2003-2008, and 2010-2013. Metro Manila’s peripheries—namely the provinces of Cavite, Laguna, and Rizal to its south and Bulacan to the north—had been largely agricultural until the early `80s, but they afterwards experienced rapid sub-urbanization, marked by the development of leisure estates (e.g. golf courses and luxury resorts), memorial parks, residential communities, commercial hubs, and industrial zones. By 2000, 67.4 percent of these provinces’ population was living in urban areas10, from only 36.5 percent in 1970.11

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S t a t e o f Fr a g m e n t a t i o n : T h e P h i l i pp i n e s i n T r a ns i t i o n

While traditionally seen as a sign of economic development, the country’s urban expansion has been characterized by patterns of uneven development. Most significantly, it has been marked with the growth of a proletariat and sub-proletariat population living in more than 500 dispersed shantytown communities12—particularly in Quezon City, Manila, Caloocan, Navotas, Las Piñas, Parañaque, Marikina, and Makati City13. The growth of the slum population from 2000 to 2006 (3.4 percent annually) has significantly exceeded the population growth of urban and metropolitan areas (2.3 percent).14 Urban poverty is generally lower than rural poverty (12.8 percent versus 36.7 percent for farmers and 41.4 percent for fisherfolk in 2009) but its magnitude is much greater (5.7 million urban individuals versus 1.68 million farmers and 0.35 million fisherfolk). Its growth too has been faster (30 percent versus -4.9 and -13.5 percent from 2006-2009).15 Not all the poor are in the slums, and neither are those living in the slums all qualify as poor (based on official income classification). Nevertheless, the slums present additional precariousness, exhibited in the lack of access to adequate shelter and basic services, and overall deplorable environmental conditions. Without adequate intervention, Metro Manila’s slums will increase to 53.6 percent of its population, and one-third of all residents of large towns and cities (33.7 percent) will likely be slum dwellers by 2050, estimated by the Philippine Institute for Development Studies.16

Pool of cheap urban labor Slum dwellers and the urban poor have occasionally been believed to be un-integrated into the larger urban economy. The reality, however, is that participation in the urban labor markets has been one of the main reasons why most of the urban underclass have settled in Metro Manila and other big cities through the phenomenon of rural-to-urban migration. Chapter 2 discussed how the urban areas captured the biggest shares of formal employment and formal establishments, while Chapter 3 showed the slow progress in addressing rural problems, in terms of access to land, inequity, Shantytown Nation: The Urban Underclass and Struggle for Space

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and economic exclusion. This has compelled the rural poor to flock to urban centers in search of better economic opportunities and higher wages. From the `50s onwards, the population growth rate and net migration inflow into Metro Manila have outstripped almost all other regions. In the period 19751980, the net interregional migration rate into NCR was 3.70 percent, settling into a still high 2.12, throughout 1985-1990.17 The economic preference for the Greater Metro Manila region also precipitated a significant movement of less affluent populations to the fast-urbanizing cities of adjacent provinces. This partly explains why the provinces that registered the greatest population growth in the two decade period 1990-2010 were those directly adjacent to Metro Manila: Cavite (5.05 percent), Rizal (4.77 percent), Laguna (3.77 percent) and Bulacan (3.37 percent).18 Their pattern of participation in urban labor markets defies common perceptions that the urban poor are ‘lazy parasites’ that feed off the heightened productivity of cities while contributing little economic value in return. Indeed, from the very beginning of Manila’s post-War reconstruction, it was through the cheap labor of the urban underclass that the metropolis’ infrastructure was built; its industries and retail outlets manned at the more menial levels; its public commuting systems operated; and its homes and commercial complexes maintained and protected. In his 1997 study of Manila urban poor organizations and movements, sociologist Erhard Berner cited a passage by the late Jaime Cardinal Sin to emphasize the significant role that the urban poor played in the day-to-day workings of the metropolis: “When these people from the provinces come to Manila, when they become this grand metropolis’ cooks, waiters, market vendors, tailors, sewers [sic], carpenters, plumbers, masons, jeepney drivers, policemen, soldiers, teachers, even when they get a job and earn P3000 monthly, where are they to live legally? Our urban and national economy profits from their presence. Our basic needs for food, clothing, shelter, transportation, security, personal services, and even foreign exchange would be seriously frustrated were our urban poor to hold back their contribution to their economy.” 19

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Given the record of jobless growth in the past decade, it is true that unemployment and underemployment have deeply affected the urban underclass, even as they contribute to the daily sustenance and development of the urban economy. Still, many of them find employment in the limited formal sector as construction workers, security providers, factory workers, porters, and shipping and transport operators. Occasionally they have even served as military and police personnel, as well as rank-and-file government employees. Urban economist Marife Ballesteros cited that only a third (32 percent) of the urban population living in shantytowns and other blighted areas actually fell below the national poverty line in 2006. Most slum dwellers, according to Ballesteros, consisted of minimum wage earners and casual laborers who were forced to live in slums due to the discouraging transport costs of settling in peri-urban areas where residential properties were more affordable.20 Still other families living in the slums were of middle-class standing, income- and occupation-wise. Those members of the urban underclass who have been unable to successfully enter Metro Manila’s narrow formal labor markets have been constrained to eke out their living in the informal sector, where they have served as the metropolis’ main pool of domestic workers, tricycle and jeepney drivers, unskilled laborers, street vendors, automobile repairers, as well as self-employed micro-entrepreneurs and small-scale home-based producers (ex. handicrafts).21 In 2007, one-fifth (22 percent) of all employment in Metro Manila took place in the informal sector; since 1995, the informal economy has been estimated to comprise more than one-third of the Philippines’ non-agricultural GDP.22 A significant portion of this has been serviced by the urban underclass, without whose labor the urban economy would have encountered severe bottlenecks and setbacks. For all the important functions that they perform for Metro Manila’s economy, the work of the underclass is rarely compensated at levels that enable them to purchase decent living spaces that will allow accessibility of the urban labor markets that they seek. Wages for formal laborers and the everyday incomes of informal workers in NCR have failed to keep pace with the rising costs of living in the city. The gap between minimum wages and average daily expenses were estimated by different groups to be anywhere from over 100 percent23 Shantytown Nation: The Urban Underclass and Struggle for Space

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to roughly 260 percent in 2013.24 In two decades that preceded this, the increasing casualization of labor, which took severe toll on formal employees compounded this. In June 2008, the Bureau of Labor Statistics reported that around 25 percent of the 3.01 million workers in non-agricultural firms had nonregular status, with the manufacturing sector leading the way in “flexibilizing” their work arrangements.25

The slum dwellers Real estate speculation and rising demand for property development have occasioned the skyrocketing of land prices in Metro Manila. (Refer to Chapter 1 for details) Noted Ballesteros: “Majority of households are unable to pay for the cost of housing and land… Average annual housing price appreciation in the Philippines (i.e. Manila) is 32 percent per year, the highest among other major cities in Asia.”26 During the second quarter of 2013, a single square meter of property in key business centers of Metro Manila such as Makati, Fort Bonifacio, and Ortigas Center was estimated by Collier’s International to cost up to PhP325,27527—easily worth more than a lifetime’s savings for poor households. In 2003 a JICA survey reported that commercially-oriented renters in Mandaluyong city offered an average monthly rental rate of PhP6,940 per apartment to their tenants, who were likely to have come from the top quintile of households in NCR.28 The fundamental dilemma of the urban underclass is being deprived of or disconnected from the assets that can offer them a means of subsistence in the countryside on the one hand and being fully dependent on their continued ability to access limited markets for their goods, services, and/or labor on the other. Yet their main obstacle for being able to live near where these markets are located is the same precondition that discourages them from residing in the city in the first place—the prohibitive price of urban land. For many, to fully forgo the economic openings of Metro Manila, or to locate their homes in provinces and city fringes where land is more affordable, are both difficult options. Left with few options, extralegal slum dwelling emerges as a way to access urban markets and circumvent prohibitive land prices. By setting up makeshift 200

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residences within once-idle public/private properties or high-risk areas, slum dwellers are able to sustain their livelihoods and employment, propping up particular segments of the urban informal economy in the process. In this way, the emergence of shantytowns create two solutions in one stroke—first, the underclass find provisional shelter and subsistence, and secondly, they provide cheap labor for the lower-ranked, yet essential activities of the urban economy. In 2010, the Metro Manila Development Authority reported that 44.9 percent of Metro Manila’s shantytown population was residing in neglected government lands while 33.6 percent lived on privately-owned properties; 15.8 percent were along danger zones such as floodways and riverbanks; 3.3 percent were in areas slated for priority development; and 2.3 percent were in areas already affected by government priority projects.29 Of all the residential districts of Metro Manila, slum areas generally have the most unhealthy and hazardous living conditions, being located oftentimes along dead rivers (ex. the Manggahan Floodway), trash-lined coastal regions (Manila’s port area district), across traffic-ridden major thoroughfares (Sitio San Roque of North Triangle), and within dumpsites and landfills (Payatas in Quezon City).30 Such slum communities are bombarded daily with the worst forms of water, air, noise, and solid waste pollution; they are also the most affected by flashfloods, and sea and river surges. Shantytown dwellers are the most vulnerable of all populations in the city, and with the growing impacts of climate change, that vulnerability is only poised to increase into the future. The extralegal status of slums scarcely eases the ordeal of members of the urban underclass. Typically excluded from government registries and regulatory instruments, they are also marginalized in terms of basic services, such as education and health, potable water and sanitation, power and telecommunications, infrastructure, public security mechanisms, and so on. In general, public facilities in Metro Manila’s shantytowns are resource-deficit: in public schools, the average pupil-classroom ratio for the whole of NCR in 2012-2013 was 75.89 students per class31; likewise, in a 2003 study of UNHabitat it was revealed that slums were significantly correlated with poor public delivery of potable water, sanitation services, and quality of homes and other Shantytown Nation: The Urban Underclass and Struggle for Space

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infrastructures32. The slums have often been bypassed by the formal water providers, leaving residents to spend up to one-fifth of their income to pay independent water providers that charge them more than seven times the usual cost.33 Not only are the shantytown inhabitants more vulnerable to disease because of their environment, insecurity, and malnutrition; the systematic neglect of slums by public authorities compromises their levels of capabilities, e.g. as human capital. Such neglect also ensures that this situation persists across generations.

Urban apartheid Control over urban space is the crucial dividing line between the city’s haves and have-nots, and in Metro Manila it is represented by skewed land ownership (according to a survey in 1983, 44 percent of land was in the control of a small coterie of families).34 As stated in Chapter 1, urban land has emerged as strategic commodity and real estate development an enduring money making machine in the Philippines. This has effectively intensified the struggle for urban space. Housing is a key development issue, and not just for the urban underclass. The Greater Manila Region (NCR, Central Luzon, and CALABARZON) is projected to account for half (49.9 percent) of the total (5.8 million housing units) national housing backlog by 2016.35 This is a big challenge as state spending on housing has been less than 0.1 percent of GDP, trailing far behind neighboring countries such as Singapore (2.089 percent), Indonesia (1.012 percent), Thailand (0.742 percent), and Malaysia (0.383 percent).36 As a result, the country’s housing program has been dismal; weak project targeting and monitoring mechanisms, rising resettlement and administrative costs, unreliable data on poverty, and self-interested interventions by politicians and unscrupulous public officials have often been cited too as reasons for this outcome.37 In the period 20042010, government was only able to accomplish 21 percent (812,463 out of 3.7 million units needed) of its target.38 Less than two out of 10 recipients of socialized housing and housing subsidies came from the poorest 40 percent. Almost half went to the richest 20 percent.39 202

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It was, however, the privatization of housing development that sealed the segmented housing market for the private developers. Although often regarded as a ‘crowning achievement in the struggles of urban poor organizations, NGOs, and church groups’40, the Urban Development and Housing Act, enacted in 1992, clipped the state’s responsibilities as a direct provider of housing, leaving the responsibility to private developers to allocate only 20 percent of their residential projects for socialized housing.41 Numerous incentives such as tax exemptions were extended to attract private investment in the socialized housing sector. In 1994, the approval of the Comprehensive Shelter Finance Act similarly strengthened the foothold of private companies in socialized housing. The strategy failed to alleviate the housing situation; the high cost of land instead became a disincentive for socialized housing and kept it at the peri-urban areas, as seen in the number of socialized housing licenses granted by the Housing and Land Use Regulatory Board. While only 11.13 percent of total licenses issued for NCR, 2007-2009, were for socialized housing, the corresponding figure for Regions III and IV-A was 66.42 percent42. It also did not help that the financing assistance schemes for these projects, via the Social Security System and the Pag-IBIG Fund, have been more suited to formal sector employees rather than those with informal income sources.43 Similarly, the privatized and decentralized nature of urban administration, characterized by the high degree of influence exercised by private developers over public urban planning and management processes, has precluded a more comprehensive and equitable approach to urban housing and development. The state has mainly functioned as an enabler of property firms, with realtors enjoying an expanded and privileged capacity to realign government plans for urban development uses. In the case of Makati, for example, interfacing bodies between the public sector and leading members of the business community (e.g. the Makati Commercial Estates Association and Ayala Land) have been put up to institutionalize the private sector’s considerable influence in urban planning, development, investment, and upgrading of activities.44 Private contractors for the provision of services have also been tapped for integrated traffic, security, Shantytown Nation: The Urban Underclass and Struggle for Space

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and environmental management mechanisms; their standards were considered well above those in other parts of the metropolis. The enactment of the BuildOperate-Transfer law, the diminution of centralized metropolitan authority, the delegation of land use zoning powers to LGUs, and the implementation of successive privatization and deregulation programs worked towards reinforcing this trend. This private sector-driven development has partially insulated the consumer classes from poor urban planning and chronically-underfunded infrastructure, and translated into the creation of strategically-located urban spaces and systems away from the slum ‘eyesore’. As a result, in the words of urban scholar Gavin Shatkin, the form that Manila’s market-driven urban development has taken is one of ‘bypass-implant urbanism’: “bypassing the congested arteries of the ‘public city’ and ‘implanting’ new spaces for capital accumulation that are designed for consumerism and export-oriented production.” 45 From privately-managed cities like Makati, Ortigas Center, and Fort Bonifacio to individual residential enclaves, select segments of the city have been ‘implanted’ in accordance to international standards of urban living esteemed by the upper and middle classes of the metropolis, while ‘bypassing’ the rest of Metro Manila’s woes and its poorer inhabitants. These ‘bypass-implant’ efforts have also been a factor in the continuing stagnation of other ‘public’ districts in the city-region. Public systems and infrastructure used by more urban dwellers—the bus and jeepney system, public highways and thoroughfares, etc.—enjoy limited government attention and/or resources, partly as a result of extensive fiscal support that has been lavished on public-private partnerships’s and privatized projects. Public projects that aimed to address road traffic have been designed to ease private vehicle traffic and restrict public mass transportation modes. Explains Shatkin: “[…] the public sector is essentially subsidizing the privatization of transportation and land development on a significant scale. This has drawn public subsidy away from public space and transportation for lower-income groups, and the consequences are evident in the steady decline and blight experienced in the city’s public spaces and the 204

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continuing transportation crisis. The public rationale for transportation privatization is that segregating automobile traffic and getting people out of cars and into mass transit will contribute to decongestion that benefits all travelers. However, anecdotal evidence suggests that, with the explosion in the number of automobiles, the meager road space dedicated to affordable modes, and the irregular enforcement of traffic regulations, the commuting experiences of low-income urban residents has seen little improvement.” 46 On the whole, this has been the trajectory of urban development: a small number of privately-planned and managed upscale areas, on one hand, and the seemingly endless, neglected, and poverty-ridden landscapes of the ‘public city’ on the other. At its most extreme, the fragmentation resembles a form of social and spatial apartheid, except here the underlying principle of segregation lies not in race and ethnicity, but in class, wealth, and the market. “What is new is the apartheid of contrasting elements [in Metro Manila]—their segregation and mutual exclusion…” claims Berner, “(w)hat is taking place is the exhaustive emergence of enclaves, a de-differentiation of urban space.”47 The segregation is made palpable by walls, gates and road blocks, iron bars on windows, and security checkpoints in middle-class, and at times even workingclass subdivisions. Bomb detection devices, state-of-the-art round-the-clock surveillance, and implicit dress codes have been adopted in nearly all high-end shopping centers, business districts, and occasionally in public transport hubs. Anti-squatting, anti-informal vending, and anti-begging policies are enforced by city governments; and more recently, high-technology security apparatuses, such as CCTV cameras, have been installed at key junctions, intersections, and central business district entry points with the expressed purpose of strengthening city security.48 Even electric fences have gradually become parts of this ubiquitous security landscape, as has been the case with recent subdivisions and residences surrounded by depressed communities in Quezon City. All these carry the implicit intention of limiting interpersonal interactions between those who live in their highly-policed residential and business enclaves and those outside of them. Shantytown Nation: The Urban Underclass and Struggle for Space

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The social fabric of the metropolis has become increasingly polarized and fragmented, fuelling growing anti-squatter sentiments by those who view them as perennial security threats and dangers. Many otherwise liberal middle class people share these sentiments. For instance, Neal Cruz, a respected columnist, has this to say: “As for the owner, he is forced by the local government to pay realty taxes but the local government does not help him reclaim his property. Instead, the taxes he paid are used to pamper the squatters. Officialdom has even changed the term “squatter” to “informal settler” so as not to offend the sensibilities of the squatters. But a squatter, by any other name, is still a squatter. Squatting, by any other name, is robbery in band. A person or group of persons takes over, by force, somebody else’s property without his knowledge and permission. Yet under present laws, there is no punishment for this type of robbery in band. And the government, national or local, does nothing to help the victims. They are afraid of the lawbreakers. That is like a whole town in the old American West afraid of a gang of bandits terrorizing its citizens. Who is the Lone Ranger or Wyatt Earp who would fight the lawbreakers?”49 With urban space and the quality of urban life becoming scarce commodities, spatial segregation—and the latent class tensions that issue from it—has restructured the contemporary cityscape.

Clash of urban populations Some of Manila’s slum communities, such as those in the Tondo district, and until recently, in Quezon City’s Sitio San Roque, have successfully managed to survive intact for decades. This is a fact that should not be taken for granted. If slum communities are to retain control over the lands they have settled in despite their lack of legal titles, they must successfully negotiate through a maze of competing and overlapping interests on a regular basis. When they fail to do so, they become victims of forcible evictions. 206

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The Sitio San Roque incident illustrates the crisis brewing within and around the embattled shantytowns of Metro Manila’s urban poor. In the early morning of September 23, 2010, long before first light, throngs of slum dwellers barricaded the entrance to Sitio San Roque along the metropolitan thoroughfare of EDSA. Massing together by the hundreds, they were soon confronted by 300 policemen in full riot gear, two SWAT teams and 600 other government personnel who had come to tear down their homes to give way to Vertis North—a PhP65 billion joint venture project of real estate colossus Ayala Land, Inc. and the National Housing Authority2, within the budding, World Bank-planned Quezon City Central Business District3. Violence and pandemonium punctuated the seven-hour stand-off between the distressed residents and the demolition teams. Before long, rocks, hollow blocks, and glass bottles were raining in that part of EDSA. Heaps of furniture, metal structures, and whole barangay security outposts were mounted on the highway to obstruct traffic; high-pressure water cannons were loosed upon the protesters. By the time the government-backed demolition ceased, at least 14 people, protesters and police alike, had been injured, and more than 130 homes had been dismantled by the NHA. The official policy on the informal settler problem has evolved from the time when squatting was made a criminal offense via PD 27 during Martial Law; this was repealed in 1997. UDHA formally discourages the eviction of informal settlers, except when they encroached on prescribed danger zones, when alreadyfunded government infrastructure projects are to be put up, or when court orders have authorized such demolitions in private lands. Even with these preconditions, the demolition process is mandated to fulfill numerous requirements, such as adequate consultation, a 30-day prior notice of eviction, and the provision of decent relocation sites.50 Unfortunately, these requirements have been routinely violated. The Urban Poor Associates, a leading church-allied NGO advocating the rights of the urban poor since 1992, estimates that only half of all displaced slum households have received some form of relocation support, whether from the national or local government.51 The relocation sites located in the peri-urban periphery of most Shantytown Nation: The Urban Underclass and Struggle for Space

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market-oriented socialized housing projects enabled by UDHA have also not been viable, giving rise to the phenomenon of ‘slum returnees’ to where they were evicted. Exact figures are elusive, but existing information suggests that the toll of demolitions on informal settlers has been considerable. From 1996 to 2008 UPA noted the forcibly displacement of more than 85,000 families from their homes.52 Throughout the first two years of the Benigno Aquino III’s presidency, 73,000 urban families were evicted from their homes, estimated Demolition Watch, a member of the International Network of Economic, Social, and Cultural Rights .53 (See Tables 1 and 2) Available documentation also reveals distinct patterns in these demolitions. First, they have tended to take place in government-owned properties, with UPA estimating that roughly seven out of 10 eviction incidents happening on public properties.54 Only in 1999 were evictions from private lands higher than those from public lands.55 Second, these demolitions on public lands have been justified as necessary for establishing (a) large-scale infrastructure and government projects (e.g. the Pasig River Rehabilitation Program, the R-10 Road Widening Project, the Northrail-Southrail Linkage and Rehabilitation Project, the Rehabilitation of the New Bilibid Prison), (b) city-wide beautification initiatives (e.g. the APEC-related demolitions of 1996, the 2007 ASEAN Summit in Cebu, the MMDA’s Metro Gwapo Program from 2003 to 2009), and (c) commercial zones and business centers (e.g. the Bonifacio Global City, the Quezon City Central Business District). Third, while in the past it may have been easier for slum dwellers located in lessconspicuous danger zones, like sewer canals, to evade eviction56, the October 2009 floods caused by Typhoon ‘Ondoy’ (Ketsana) significantly escalated pressures to demolish shantytowns in such zones in the name of ‘disaster risk reduction’ and ‘climate-proofing’. In June 2013, the government committed to relocate 100,000 slum families residing within the San Juan, Tullahan, Mangahan, Maricaban, Tripa de Gallina, Pasig, Estero de Sunog and Estero de Maypajo waterways over a five-year period (2013-2018) to implement new flood mitigation projects.57 The eviction and relocation effort, if successful, will be the largest planned displacement in the history of the Philippines. This 208

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will top the relocation under the Northrail-Southrail linkage project, where more than 80,000 families have been affected since 2006.58 Fourth, a number of high-profile infrastructure projects for which large-scale demolitions have been executed are Public-private Partnerships and privatization efforts. These include but are not limited to: Sitio San Roque for Vertis North in the Quezon City Central Business District, a 29.1-hectare joint-venture project between Ayala Land Inc. and NHA59; R-10 (Tondo) and Baseco60 for the new passenger terminal in the privatized Manila North Harbor, a joint venture between the Harbor Centre Port Terminal Inc. and the San Miguel Corp.-led Petron Corp.61; parts of Caloocan City and San Jose del Monte, Bulacan62 for the Department of Transportation and Communication-approved Metro Rail Transit Line 7 that would cost US$1.235 billion, and also involving San Miguel Corp.63. The clearing of shantytowns underscores the competing demands for urban space. For the underclass, urban space, albeit in the slums, is a precondition for subsisting in the city. For private land developers, the freeing up of strategicallylocated yet unmarketable slum lands and public properties presents a prime opportunity for great profits. Normally, the presence of shantytowns and slum dwellers significantly dampens the market value of any piece of urban space64, yet during every property boom, pressures for the aggressive development of shantytown land escalate. For local governments, urban development comes with the promise of better local tax revenues and land rents, the occasional kickback, as well as heightened prestige. The longstanding legal dispute between the Taguig and Makati city governments over the control of Fort Bonfacio illustrates this.65 Often, the interests of private developers and local governments coincide, like in the case of the Quezon City Central Business District. When this happens, the local government becomes an instrument in the demolition of shantytowns. A cycle of ‘accumulation by dispossession’ of slum dwellers may therefore occur—i.e., the extra-economic exercise of state power to overcome barriers to capitalist accumulation.66 The interests of the consumer classes oftentimes overlap with that of developergovernment partnership. As asserted by urban geographer Boris Michel, slum demolitions and repressive urban governance strategies “demonstrate to Shantytown Nation: The Urban Underclass and Struggle for Space

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urban middle classes and investors that something is going on, that the state undertakes efforts to revitalize urban misery…[They] are used as a sign of the state’s power as a means to foster investments by freeing urban space from hindrances.”67 Not surprisingly, the measures often succeed in raking in approval from the consumer public. Indeed, an editorial of one noted business newspaper is symbolic of commonplace perceptions on the slum dwellers affected by the estero relocation issue: “To begin with, they [slum dwellers] should not have been allowed to build illegal structures along our waterways, clogging them with trash, worsening pollution and causing floods. Aside from the ecological damage and health issues, the government also has to contend with the violence and crime that have become part and parcel of these squatter colonies. Squatters should appreciate that the government is doing this for their benefit… They should also appreciate that the government is spending a huge chunk of its already meagre resources to provide a humane way of relocating them, even if most of them are not taxpayers and even steal electricity and water, which utilities companies charge to legal consumers as losses from pilferage. […] Squatters should recognize the rule of law and the government’s responsibility to enforce property rights, which are essential to an orderly and peaceful society and also for business investments to pour into the economy.” 68 Limited urban space, the threats of disaster and the need for order require focused planning, and dealing with shantytowns are central issues. But as slums are products of massive disparities in development across economic sectors, between social classes and within cities, there is the substantial issue of equity that also needs to be addressed. What should be the state’s role in urbanization—can it just continue parceling and selling tracts of lands for private development? If the streets cannot be occupied by the underclass 210

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to ply their wares, practice their trade or live in proximity to their livelihoods, if public transportation is deficient so as to marginalize non-private vehicle owning classes—for whom then is the city?

Constraints and possibilities The underclass displays extraordinary resilience in the face of state hostility. Stories abound of families who, in the aftermath of demolitions, simply resettle on cleared lands again and again after authorities leave; or who, amid crackdowns on their informal livelihoods (e.g. vending), engage in protracted ‘games’ of ‘cat and mouse’ with members of the police or the Metropolitan Manila Development Authority.69 These resistances, however, do not always put the community in a sympathetic light to other city residents. For example, the use of pillboxes, urine, and human feces by San Roque settlers against the police during a riot in July 2013 elicited condemnations from government officials, media commentators, and the various segments of the public.70 However, the forms of resistance deployed by shantytown communities are not always as extreme. Their struggle against dispossession and exclusion has taken shape in both organized and unorganized manners; with or without civil society advocacy organizations; and with or without disadvantageous long-term effects. Social scientists like Erhard Berner and Wataru Kusaka have documented three important modes by which ‘everyday forms of resistance’ of shantytown residents manifest. One, their associations are able to penetrate law enforcement processes by bribing local authorities and street-level bureaucrats (the ‘lagay’ or ‘kotong’ system) in order to get approval for their ‘informal interests’ (such as informal vending).71 Two, they are able to turn patronage relationships in their favor by pledging their votes to the politician that poses as the protector of their interests. The importance of patronage as a tactic to evade or delay eviction is clear in displacement trends: election years see lower levels of demolitions than non-election years.72 Three, by simply tying up a private slum land dispute in the courts (by UDHA, a court order is necessary for these evictions), slum dwellers with support Shantytown Nation: The Urban Underclass and Struggle for Space

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from non-government or civil society organizations can impose huge costs on private urban landowners and developers. This strategy has proven to be a highly effective strategy by slum associations and urban poor advocates.73 As long as slum dwellers are able to continue occupying their lands, the market value of the lot in question remains significantly depressed. Time, in this sense, is on the side of the slum dwellers. These considerable costs partly explain why demolitions on government-owned properties have consistently outnumbered those on private lands over the years, and why mega-developers partnering with government are privileged evictors. When slum organizations are able to successfully execute such strategies in appropriate contexts, their chances of weathering demolition threats and the coalitions behind them considerably increase. Unfortunately, as attested by veteran urban poor advocates themselves such as UPA’s Dennis Murphy, there are limitations to the organizing among the urban poor. While access to urban space, livelihoods, and public goods remain at the core of the urban underclass’ interests, there is a marked lack of cohesion in the agenda of the urban poor. At times it can even be doubted whether there is something that can be called an urban poor agenda74, and whether they are on the way to developing some form of coherent ‘class consciousness.’ One of the greatest obstacles to the formation of an integrated urban poor agenda is the place- and locality-based nature of their struggle. Urban poor anti-eviction movements almost always gravitate towards defending a particular locality, a particular community, within its particular history, livelihoods, and social networks. Beyond the bounds of that particular locality, however, the bonds of solidarity typically remain weak and diffused; and given the extreme scarcity of urban resources—jobs in the formal sector, public facilities in proximity, substantial attention from patrons, development and social welfare project—it is normally competition between slum communities over such limited public and private goods that obtains.75 While the efforts of enterprising individuals and associations may translate into common gains at the level of one shantytown community (e.g. petitioning the local government to construct a new school facility), at levels beyond the 212

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community in question, they may feed intense envy among other settler areas. Differences in the main dialects spoken between shantytowns, regions, and provinces of origin, as well as allegiances to particular politicians and ideological groups tend to aggravate these rivalries.76 It is important not to romanticize the urban underclass. The urban underclass, while common in their dilemma of accessing decent urban space and livelihoods, are still far from demonstrating anything resembling a unified ‘class agency.’ Their predominant strategies for defending their lands in the metropolis remain focused on developing vertical, rather than horizontal linkages; on cultivating ties to those with more power and influence such as local officials, elected politicians, the socially influential, and NGOs. For the most part, they do not seek to transcend their particularistic, place-based struggles, in order to build multilayered, expansive alliances with other shantytown communities. They are at most risk of being exploited, at the same time that many of them knowingly play into patronage and corruption. As a result, they are difficult to unite, with some falling into transactional strategies, even as a few might aim for strategic transformation. But the political order quakes when the urban poor enter the arena as a force, albeit spontaneously. This was the case in early 2001, when they were mobilized to protest the arrest of President Joseph Estrada who, more than any president, had assiduously cultivated their support with populist rhetoric and programs. For over a month, the country was wracked by what was virtually a mass uprising against the new administration of Gloria Macapagal-Arroyo “EDSA 3,” as the event came to be known, underlined how much the urban underclass felt alienated from the social and economic order.77 EDSA 3 exposed the need to fully appreciate the place and function of the urban underclass: seemingly un-integrated into the city fabric, but in reality connected to it economically and politically. Their cheap labor and squalid living conditions indirectly subsidize the current level of economic development of the metropolis at large, but increasingly, it appears to others that not even walls, gates, and private security aides will suffice to keep at bay the threats and risks they represent. The view that sustains is that for the good and safety of the city, they must be resettled—an effort that has failed many times before. Shantytown Nation: The Urban Underclass and Struggle for Space

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The slum dwellers have put up staunch resistance, but they are divided among themselves, with limited solidarity for the fate of others like them. It hardly helps that sympathy from other classes for their collective plight appears to have been drying up. Indeed, most of them may be beginning to face a new concerted, unified threat in their continued ability to access their urban lands. How will they and other city dwellers respond to the fast-transforming urban conjuncture? In the absence of a reorientation of the state’s role in the metropolis, a reworking of the public housing and urban land regime, and a heightened degree of organizing among slum dwellers, the dilemma of the urban underclass, like the residents of Sitio San Roque, will likely deepen. Key to a healthy integration of the urban underclass is a shift on the part of government. Officials in the Aquino administration have talked about in-city or on-site relocation instead of the usual off-city and off-site relocation that is really a euphemism for mass eviction. To ensure the success of such an approach will, however, necessitate not only amendments to UDHA to institutionalize it, along with the social services that will be necessary to make it compulsory. It will also require the development of a real partnership among informal settlers, government, and civil society organizations. As Joel Rocamora, head of the National Anti-Poverty Commission, explained: “This is an entirely new scheme, and the bureaucracy is not used to this… Even the urban poor are new to this.”78 Time is running out for programs like in-city, on-site relocation. Unlike in EDSA 3, the resistance and political intervention next time may no longer just be about defending a popular politician but their own rights and interests.

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Table 1. Total Evicted Slum Families: 1996-2007 Number of Demolitions

Year

Families Affected

Comments

1996

72

6,975

APEC-related demolitions

1997

16

8,067

Sta. Elena Compound; Binondo; R-10; Sitio Mendez; Smokey Mountain

1998

20

3,882

National Election

1999

36

7,873

New Bilibid Prison eviction of land invaders; more demolitions in private lands than government

2000

29

6,056

Pasig River Flood Control; R-10

2001

13

2,073

EDSA II; PGMA instruction: no demolition without in-city relocation, a de facto moratorium on demolitions

2002

15

1,043

PGMA instruction: no demolition without in-city relocation, a de facto moratorium on demolitions

2003

26

4,315

MMDA clearing operations

2004

8

925

National elections

2005

26

22,074

Northrail project (Valenzuela and Bulacan); MMDA demolitions

2006

-

7,635

Southrail project; Fort Bonifacio proclaimed lands; R-10

2007 (Jan.-June)

-

5,785

Southrail project; Metro Gwapo; Road widening and flood control project of MMDA

Source: Urban Poor Associates. Eviction monitoring. Retrieved 17 March 2014 from http://urbanpoorassociates.org/


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Table 2. High-Profile Demolition Cases in the Administration of President Benigno Aquino III (inclusive years) Place of Incident

Date of Incident

Estimated Affected Families

Reason of Demolition

Silverio Compound, San Dionisio, Paranaque

March 7, 2012 April 23, 2012

25,000 families

Commercial Development Project in the guise of a socialized housing project

Corazon de Jesus, San Juan City

January 25, 2011 January 11, 2012

122 families 121 families

Construction of City Hall and Commercial Development Project

Interior Dama de Noche, Kadiwa, Brgy. San Roque, Navotas City

February 23, 24,25,28 March 1-2 May 5-6 May 11,12,17, 18, 2011

466 families

Government Project

Philippine National Railway Site, Muntinlupa

2009-2012 (10+)

23,000 families were demolished on 2009 and 355 families remain in makeshift tents

Government Project, PNR Modernization

Laperal Compound, Guadalupe, Makati City

April 28, 2011

4,000 families

Dypac Compound, Juan Luna, Tondo, Manila

December 12, 2011

300 families

Private Land

Brgy. Commonwealth, Batasan, Holy Spirit, Payatas, National Government Center, Quezon City

2008-2012 (10+)

3,000 families

Reblocking, Selling of Lots

Barangay SipacAlmacen and Navotas West Navotas City

August-September 2010 (5 times)

4,000 families

North Bay Modernization

Brgy. Mariana, New Manila, Quezon City

August 11 and 12, 2010

200 families

Private Land

Manggahan, Kawayanan, Paranaque

August 5 and 15, 2011

16 families

Sitio Fatima, Paranaque

October 5, 2011

42 families

Fastrack, Sitio Fatima, Paranaque

October 21, 24, 28 November 8 December 21, 2011

200 families

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San Roque, North September 23, 2011 Triangle, BagongPag-asa, Quezon City

3,000 families

Bagbag, Novaliches

February 2012

500 families

Old Balara, Quezon City

August 26, 2011

1,000 families

Welfareville, Mandaluyong City

October 17, 2011

46 families

Pangarap Village, Caloocan

April 28, 2011

8,000 families

For Quezon City Business District and Vertis Norte

MRT 7 and Business Center

Source: Demolition Watch. (n.d.). Forced eviction incidents. Retrieved 17 March 2014, from http:// demolitionwatch.wordpress.com/forced-eviction-and-demolition-incidents-and-affected-families-2010-2012/


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Notes 1

Demographia.(2013). Demographiaworld urban areas.(9th ed.)Retrieved 17 March 2014, from http:// www.demographia.com/db-worldua.pdf 2 Rappler.Com. (2012, July 5) Ayala Land to spend P65-B for Quezon City business district. Retrieved 17 March 2014, from http://www.rappler.com/business/8114-ayala-land-to-spend-p65-b-for-quezon-citybusiness-district 3 Quezon City Government. (n.d.). Triangle park: the Quezon City Business District. Retrieved 17 March 2014, from http://housecondophil.files.wordpress.com/2012/08/tri-park-brochure.pdf 4 Remo, M. (2013, July 6). Traffic costs P2.4B daily. Philippine Daily Inquirer. Retrieved 17 March 2104, from http://business.inquirer.net/130649/traffic-costs-p2-4b-daily 5 Ballesteros, M. (2010). Linking Poverty and Environment: Evidence from Slums in Philippine Cities. Philippine Institute for Development Studies Discussion Paper, No. 2010-33. 6 We use urban underclass broadly, covering not just the urban poor but also informal settlers who may not be classified as poor but experience precarious economic and employment conditions. 7 Data derived from The World Bank (2012). World development indicators and Global development finance. World DataBank. Retrieved 20 February 2013, from http://databank.worldbank.org/ddp/home.do 8 Data derived from The World Bank (2012). World development indicators and Global development finance. World DataBank. Retrieved 20 February 2013, from http://databank.worldbank.org/ddp/home. do; Carino, B. andCorpuz, A. (2009). Towards a strategic urban development and housing policy for the Philippines. Philippine Institute for Development Studies Discussion Paper, No. 2009-21. Retrieved 17 March 2014, from http://dirp4.pids.gov.ph/ris/dps/pidsdps0921.pdf 9 Ballesteros, M. (2000). Land use planning in Metro Manila and the urban fringe: implications on the land and real estate market. Philippine Institute for Development Studies Discussion Paper, No. 2000-20. Retrieved 17 March 2014, from http://dirp4.pids.gov.ph/ris/dps/pidsdps0020.pdf 10 National Economic Development Authority Regional IV-A (Calabarzon).Regional physical framework plan 2004-2030. Retrieved 17 March 2014, from http://calabarzon.neda.gov.ph/rpfp0430/rpfp_3.pdf, e-page 2 11 Ballesteros, M. (2000). Land use planning in Metro Manila and the urban fringe: implications on the land and real estate market. Philippine Institute for Development Studies Discussion Paper, No. 2000-20. Retrieved 17 March 2014, from http://dirp4.pids.gov.ph/ris/dps/pidsdps0020.pdf 12 Ragragio, J. (2003). Understanding Slums: Case Studies for the Global Report 2003. Retrieved 17 March 2014, from http://www.ucl.ac.uk/dpu-projects/Global_Report/cities/manila.htm. 13 Ballesteros, M. (2010). Linking poverty and environment: evidence from slums in Philippine cities. Philippine Institute for Development Studies Discussion Paper, No. 2010-33,8. 14 Ballesteros, M. (2010).Linking poverty and environment: evidence from slums in Philippine cities. Philippine Institute for Development Studies Discussion Paper, No. 2010-33. 15 National Statistical Coordination Board. (2012). Fishermen still the poorest sector in 2009. Retrieved 17 March 2014, from http://www.nscb.gov.ph/pressreleases/2012/PR-201206-SS2-01_pov2009.asp. 16 Ballesteros, M. (2010).Linking poverty and environment: evidence from slums in Philippine cities. Philippine Institute for Development Studies Discussion Paper, No. 2010-3. 17 Porio, M. (2009). Urban transition, poverty, and development in the Philippines: apreliminary draft,31. Retrieved 17 March 2014, fromhttp://pubs.iied.org/pdfs/G02570.pdf 18 National Statistics Office. (2010). Population and annual growth rates for the Philippines and its regions, provinces, and highly urbanized cities based on 1990, 2000, and 2010 censuses. 2010 Census and Housing Population. Retrieved 17 March 204, from www.census.gov.ph/sites/default/files/attachments/ hsd/pressrelease/Population and Annual Growth Rates for The Philippines and Its Regions%2C Provinces%2C and Highly Urbanized Cities Based on 1990%2C 2000%2C and 2010 Censuses.pdf 19 Berner, E. (1997). Defending a place in the city: localities and the struggle for urban land in Metro Manila. Quezon City: Ateneo de Manila University Press, 4. 20 Berner, E. (1997). Defending a place in the city: localities and the struggle for urban land in Metro Manila. Quezon City: Ateneo de Manila University Press, 8-9.

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21 Ragragio, J. (n.d.). The case of Metro Manila, Philippines. Retrieved 17 March 2014, from http://www.ucl. ac.uk/dpu-projects/Global_Report/pdfs/Manila.pdf 22 House of Representatives. Profile of informal sector. Retrieved 17 March 2014, from http://www. congress.gov.ph/download/cpbd/fnf_112008_profsector.pdf 23 IBON. (n.d.). Substantial wage hike urgent: gap between minimum wage, cost of living widens. Retrieved 17 March 2014, from http://www.ibon.org/ibon_articles.php?id=296. 24 Tubeza, P. (2013). NCR cost of living almost triple minimum wage. Philippine Daily Inquirer. Retrieved 17 March 2014, from http://newsinfo.inquirer.net/398567/ncr-cost-of-living-almost-triple-minimum-wage. 25 Pastrana, C. (2009). The informal sector and non-regular employment in the Philippines. Retrieved 17 March 2014, from http://www.adbi.org/files/2009.12.15.cpp.sess2.3.pastrana.paper.non.regular. employment.philippines.pdf. 26 Ballesteros, M. (2002). The dynamics of housing demand in the Philippines: income and lifestyle effects. Philippine Institute for Development Studies, No. 2002-01, 3. Retrieved 17 March 2014, from http://dirp3. pids.gov.ph/ris/rps/pidsrp0201.pdf 27 Colliers International. (2013). Philippine real estate market. Research and Forecast Report No. 4Q 2013, 3. Retrieved 17 March 2014, from http://www.colliers.com/-/media/Files/MarketResearch/APAC/ Philippines/2013/RealEstateMarketReport_4Q13.pdf 28 Ballesteros, M. (2004). Rental housing for urban low-income households in the Philippines. Philippine Institute for Development Studies Discussion Paper, No. 2004-47, 40. Retrieved 17 March 2014, from http://dirp4.pids.gov.ph/ris/dps/pidsdps0447.pdf 29 ABS-CBN. (2010, March 3). Metro Manila squatters balloon to half a million families. ABS-CBN News. Retrieved 17 March 2014, from http://www.abs-cbnnews.com/nation/metro-manila/03/03/10/metromanila-squatters-balloon-half-million-families 30 Ballesteros, M. (2010). Linking Poverty and Environment: Evidence from Slums in Philippine Cities. Philippine Institute for Development Studies Discussion Paper, No. 2010-33, 10-12. 31 Money Politics. (2013). Facts & features: data a day. Retrieved 17 March 2014, from http://moneypolitics. pcij.org/data-a-day/which-is-the-only-school-division-in-metro-manila-where-elementary-schools-meetthe-legal-requirement-of-having-a-maximum-of-45-pupils-per-classroom/ 32 UN Habitat. (n.d.). Urban health inequities: Manila, Philippines. Cities & Citizens Series 6. Retrieved 17 March 2014, from www.unhabitat.org/downloads/docs/9178_19910_manilareport.pdf 33 Karaos, A.M. and Nicolas, G. M. (n.d.) The state of Philippine cities. Intersect, 24. 34 Berner, E. (1997). Defending a place in the city: localities and the struggle for urban land in Metro Manila. Quezon City: Ateneo de Manila University Press, 21. 35 National Economic and Development Authority. (2011). Accelerating infrastructural development and social development section. Philippine Development Plan 2011-2016. 36 Ballesteros, M. (2009) Housing policy for the poor: revisiting UDHA and CISFA. Philippine Institute for Development Studies Policy Notes, No. 2009-04, 6. Retrieved 17 March 2014, from http://dirp4.pids.gov. ph/ris/pn/pidspn0904.pdf 37 Aldaba, F. (2009). Poverty in the Philippines. Mandaluyong City: Asian Development Bank, 73. 38 National Economic and Development Authority. (2011). Accelerating infrastructural development and social development section. Philippine Development Plan 2011-2016. 39 Aldaba, F. (2009). Poverty in the Philippines. Mandaluyong City: Asian Development Bank, 73. 40 Porio, E. (1997). Urban governance and poverty alleviation in Southeast Asia: trends and prospects. Quezon City: Center for Social Policy and Public Affairs, Ateneo de Manila University, 23. 41 Cardenas, K. (2011). Globalization, Housing Markets and the Transformation of a South City: The Case of 21st-Century Manila. Paper presented at the International RC21 Conference Session 20: housing markets, urban transformations, 16. 42 Cardenas, K. (2011). Globalization, Housing Markets and the Transformation of a South City: The Case of 21st-Century Manila. Paper presented at the International RC21 Conference Session 20: housing markets, urban transformations,18-19. 43 Ballesteros, M. (2009) Housing policy for the poor: revisiting UDHA and CISFA. Philippine Institute for Development Studies Policy Notes, No. 2009-04, 6. Retrieved 17 March 2014, from http://dirp4.pids.gov. ph/ris/pn/pidspn0904.pdf


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44 For a longer discussion, See: Boris, M. (2010). Going global, veiling the poor: global city imaginaries in Metro Manila. Philippine Studies58 (3), 388. 45 Shatkin, G. (2008). The city and the bottom line: urban megaprojects and the privatization of planning in Southeast Asia. Environment and Planning A 40(2), 10. 46 Shatkin, G. (2008). The city and the bottom line: urban megaprojects and the privatization of planning in Southeast Asia. Environment and Planning A 40(2), 18-19. 47 Berner, E. (1997). Defending a place in the city: localities and the struggle for urban land in Metro Manila. Quezon City: Ateneo de Manila University Press 7-8. 48 The Official Web Portal of Makati. (2013). Makati beefs up surveillance system with 115 new CCTV cameras. Retrieved 17 March 2014, from http://www.makati.gov.ph/portal/news/view.jsp?id=3038. 49 Cruz, N. (2012, July 26).Squatting is robbery in band. Philippine Daily Inquirer. Retrieved 17 March 2014, fromhttp://opinion.inquirer.net/33429/squatting-is-robbery-in-band#ixzz2qMhSqEgm 50 Nicolas, G. (2011). Laperal demolition: where gov’t failed. Philippine Daily Inquirer. Retrieved 17 March 2014, from http://opinion.inquirer.net/5043/laperal-demolition-where-gov%E2%80%99t-failed 51 Karaos, A.M. and Nicolas, G. M. (n.d.)The state of Philippine cities. Intersect, 19-20. 52 Karaos, A.M. and Nicolas, G. M. (n.d.)The state of Philippine cities. Intersect,19. 53 Demolition Watch. (n.d.). Forced eviction incidents.Retrieved 17 March 2014, from http:// demolitionwatch.wordpress.com/forced-eviction-and-demolition-incidents-and-affectedfamilies-2010-2012/ 54 Karaos, A.M. and Nicolas, G. M. (n.d.) The state of Philippine cities. Intersect,19. 55 Philippine Human Rights Information Center. (2010). Without a roofover their heads, 63. Retrieved 17 March 2014, from http://philrights.org/wp-content/uploads/2010/10/Without-a-Roof-Over-their-Heads.pdf 56 Berner, E. (1997). Defending a place in the city: localities and the struggle for urban land in Metro Manila. Quezon City: Ateneo de Manila University Press, 185. 57 Calica, A. (2013, June 20). Estero settlers must go. The Philippine Star. Retrieved 17 March 2014, fromhttp://www.philstar.com/headlines/2013/06/20/956008/estero-settlers-must-go 58 Philippine Human Rights Information Center. (2010). Without a roof over their heads, 56. Retrieved 17 March 2014, from http://philrights.org/wp-content/uploads/2010/10/Without-a-Roof-Over-their-Heads.pdf 59 Quezon City Official Website. (n.d.). The Quezon City business district. Retrieved 17 March 2014, fromhttp://www.quezoncity.gov.ph/index.php?option=com_content&id=561:the-quezon-city-centralbusiness-district. 60 Asian Human Rights Commission. (2013). Philippines: immediately stop eviction drive against 250 poor families of R10, Tondo. Retrieved 17 March 2014, fromhttp://www.humanrights.asia/news/hunger-alerts/ AHRC-HAC-013-2013. 61 Montecillo, P. (2012, April 2). North Harbor to put up newterminal. Philippine Daily Inquirer. Retrieved 17 March 2014, fromhttp://business.inquirer.net/52205/north-harbor-operator-to-put-up-new-terminal 62 Conde, C. (2011, June 7). PNoy names Mar to DOTC post. Interaksiyon.Com. Retrieved 17 March 2014, from http://www.interAksyon.com/article/5100/pnoy-names-mar-to-dotc-post 63 Lectura, L. (2013, September 11). San Miguel still waiting for PNoy’s nod on start of MRT 7 construction” ABS-CBN News. Retrieved 17 March 2014, from http://www.abs-cbnnews.com/business/09/11/13/ san-miguel-still-waiting-pnoys-nod-start-mrt-7-construction. 64 Berner, E. (1997). Defending a place in the city: localities and the struggle for urban land in Metro Manila. Quezon City: Ateneo de Manila University Press, 186. 65 Cupin, B. (2013). Makati offers Taguig income-sharing deal over Fort Bonifacio. Rappler.Com. Retrieved 17 March 2014, from http://www.rappler.com/nation/38464-makati-taguig-fort-bonifacio-income-sharing. 66 Levien, M. (2009). The land question: special economic zones and the political economy of dispossession in India. Paper presented at the International Conference on Global Land Grabbing, 6-8 April 2009. Retrieved 17 March 2014, from http://www.iss.nl/fileadmin/ASSETS/iss/Documents/Conference_papers/ LDPI/55_Michael_Levien.pdf 67 Boris, M. (2010). Going global, veiling the poor: global city imaginaries in Metro Manila. Philippine Studies 58 (3),393. 68 Business Mirror. (2013, March 24). Moving out of harm’s way. Business Mirror. Retrieved 17 March 2014 from http://www.businessmirror.com.ph/index.php/en/news/opinion/11105-moving-out-of-harm-s-way

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69 Kusaka, W. (2010). Governing informalities of the urban poor: street vendors and social order making in Metro Manila. In Y. Kasuya and N. Quimpo (Eds.), The politics of change in the Philippines (p. 380). Pasig City: Anvil Publisher, 2010. 70 Lozada, D. (2013). CHR: Informal settlers went too far by throwing feces. Rappler.Com. Retrieved 17 March 2014, from http://www.rappler.com/move-ph/32798-libel-case-against-qc-mayor. 71 Kusaka, W. (2010). Governing informalities of the urban poor: street vendors and social order making in Metro Manila. In Y. Kasuya and N. Quimpo (Eds.), The politics of change in the Philippines (p. 373). Pasig City: Anvil Publisher, 2010. 72 Philippine Human Rights Information Center. (2010). Without a roof over their heads, 63. Retrieved 17 March 2014, from http://philrights.org/wp-content/uploads/2010/10/Without-a-Roof-Over-their-Heads. pdf 73 Berner, E. (1997). Defending a place in the city: localities and the struggle for urban land in Metro Manila. Quezon City: Ateneo de Manila University Press, 186-187. 74 Focus on the Global South. (2011). Roundtable discussion on Philippine political-economy. Retrieved 17 March 2014, from http://focusweb.org/publications 75 Berner, E. (1997). Defending a place in the city: localities and the struggle for urban land in Metro Manila. Quezon City: Ateneo de Manila University Press, 193. 76 Berner, E. (1997). Defending a place in the city: localities and the struggle for urban land in Metro Manila. Quezon City: Ateneo de Manila University Press, 192. 77 See Focus on the Global South. (2001, May 7). EDSA 3: asurprising uprising. Focus on the Philippines No. 20-2001. Retrieved 17 March 2014, from http://focusweb.org/publications/Bulletins/Fop/2001/FOP20. htm 78 Esplanada, J. and Burgonio, T. (2012, August 16). Urban poor: Aquino OKd ‘on-site, in-city’ housing. Philippine Daily Inquirer. Retrieved 17 March 2014 from http://newsinfo.inquirer.net/250807/urban-pooraquino-okd-on-site-in-city-housing#ixzz2qMqnL05n


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C h apter

7

Population Pressure, Poverty, and Development

Together with the rest of developing Southeast Asia, the Philippines in the `70s suffered from high rates of poverty, but it would be remembered for the impressive growth that it would achieve. It would be the fastest growing in ASEAN, with industrial growth of 7.8 percent and national output growth of 5.9 percent in the period 1971-1980.1 However, a massive structural adjustment program would sweep the country in the `80s, ushering in the decline of industry and the stagnation of agriculture. The massive resource outflows occasioned by huge debt repayments would deprive the country of much needed funds for social services, the demands for which would be made greater by shrinking employment, declining incomes, and clamor of people both in and outside government who have become more aware of the spoils of corruption of former President Ferdinand Marcos and his cohorts. Poverty alleviation would become central in government policy on economic reform, and as main response to the need for safety nets in the post-EDSA governments. But while addressing poverty would gain some prominence in policy making, it would largely be subsumed within broader economic imperatives. Overall, anti-poverty would be juxtaposed with the macroeconomic themes of the post-EDSA governments, as seen in the notable anti-poverty programs that would be adopted. (See Table 1)

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The evolution of anti-poverty strategy, post-EDSA Corazon Aquino (1986-1992) Corazon Aquino elevated poverty alleviation to a serious governmental imperative, the first time that it became the overarching objective of the Medium-Term Philippine Plan, with specific poverty reduction targets included in the country’s medium-term program. Yet with the daunting debt burden accumulated throughout the Marcos years, and intimidated by international creditors, Aquino’s government immersed itself in economic stabilization policies pushed by the International Monetary Fund and the World Bank. It maintained that poverty, inequality, and high unemployment “have been brought about by continued structural inefficiencies in the economy,” such as the unbridled abuse of state power, high tariffs, industrial protectionism, and other forms of “economic mismanagement,” which could only be redressed through the elimination of cronyism, the dismantling of monopolies, and the realignment of government processes around “free and fair competition.”2 Seeing poverty as principally a lack of jobs and incomes, jumpstarting “demand-driven, employment-oriented” growth was thus seen to be the most immediate task. This was locally supplemented by social services and employment-generation projects, reaching their peak with the Tulong sa Tao program, which reportedly benefitted 110,000 rural Filipinos by means of small enterprise development and credit-extension initiatives.3 Gender was introduced and would gradually be embedded in national and sub-national planning processes. Commitments to strengthen labor’s bargaining power were made; non-government organizations were recognized as “the prime mover of development… the lead in undertaking and sustaining programs and projects aimed at improving the Philippine socioeconomic situation”4; and the Comprehensive Agrarian Reform Program was enshrined, at least rhetorically, as the centerpiece program. As the economic adjustment exerted tremendous pressure, the entrenched traditional elites also tore at the resolve of government, resulting in government’s vacillation towards land reform in the President’s own landholdings in Hacienda Luisita, presaging CARP’s eventual sabotage by established landlords and dynastic politicians.

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Fidel V. Ramos (1992-1998) The Ramos administration blended continuity and change in the anti-poverty paradigm. With depth and consistency unmatched by any administration until then or since, the country underwent even more macroeconomic readjustments—all in the name of spurring global competitiveness in the private sector, and of transporting the Philippines into the ranks of other Newly-Industrializing Countries by the year 2000. There was an equally ambitious and innovative shift in the MTPDP’s antipoverty programs, with Ramos declaring: “In poverty alleviation, we have moved away from the old ‘trickle down’ policies to a ‘positive bias’ for our poorest provinces…Our object is to help the poor help themselves— by expanding their access to health care, basic education, decent housing, credit, jobs…”5 Even as neoliberal restructuring of the Philippine economy escalated, there also emerged massive, coordinated, nationwide poverty reduction programs. Ramos’ Social Reform Agenda integrated the delivery of social services, asset reforms, and social protection to address the minimum basic needs of the 20 poorest provinces in the country. The SRA harnessed a “localized” and “convergent” alleviation strategy. “Localized” because it targeted clearly defined and mapped localities; “convergent” as it sought to bring together national and local agencies, peoples organizations, NGOs and other development stakeholders throughout the planning, execution, and monitoring stages of poverty interventions. There had been efforts by the previous Aquino administration to incorporate the MBN paradigm—yet none of these efforts approached the scale, breadth, and level of consolidation of the SRA. It has been claimed that, “(t)hrough the SRA, the language of reform and poverty reduction was mainstreamed in national and local governance.”6 Ramos also institutionalized the “basic sectors” in anti-poverty thinking and discourse. The localities targeted for implementation were known to be heterogeneous in terms of their concrete demands and necessities; farmers, coastal fisherfolk, urban poor, informal workers, and indigenous peoples especially required modified interventions to guarantee their contextual


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importance. To discriminate between these demands, a set of 33 MBN indicators spanning basic survival needs, security, and capability considerations was employed throughout project prioritization and development. By means of this Comprehensive and Integrated Delivery of Social Services, the social services were based on those communities’ and sectors’ 10 most unmet basic necessities. These same indicators were then used to monitor progress over time by the program’s stakeholders. Ramos’ legacy included the creation of special anti-poverty infrastructure. The National Anti-Poverty Commission became active during the first month of Estrada, but its overall architecture was earlier laid out with the passage of the Social Reform and Poverty Alleviation Act of 1997 (R.A. 8425). A strengthened poverty information-gathering, resource-tracking, and monitoring apparatus was also put in place at the Department of Social Welfare and Development and the National Statistical Coordination Board. The revamped anti-poverty platform facilitated a marked improvement in outcomes. Yet under Ramos, the economy was not spared from the impacts of its more liberal program. Towards the end of Ramos’ term, the Asian financial crisis hit, wiping out most of the social gains achieved in the past half-decade.7 Land conversions and industrial estates mushroomed all over the countryside, subverting fervent hopes for agrarian reform. The Philippines’ Mining Act was legislated in 1995, subjecting hundreds of indigenous communities to the possibility of permanent dislocation. Joseph Estrada (1998-2001) Joseph Estrada inherited the worst concussions of the 1997 Asian Financial Crisis. To the electorate who had raised him to the presidency with a landslide mandate, his incumbency signaled a populist sidestep of neoliberal policy in favor of the poor, as his campaign slogan “Erap para sa Mahirap” seemed to signify. Estrada’s medium term program would claim to advance a “preferential option for the poor” by enabling a more “equitable” stream of revenues to LGUs for additional poverty projects and initiatives.8 But while the ADB claimed that “for the first time, an attempt is made to make the plan revolve around a common theme of sustaining growth and reducing poverty”9 (Sustainable Development and Growth with Social Equity was its 226

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slogan), the theme itself had already been present, if less explicitly articulated, in the MTPDP of the Ramos administration, and the Aquinos’ PRO-Poor Initiative. The main difference, perhaps, was Estrada’s overriding focus on rural development, which was elevated as central tenet of his program. Rural development was the first priority area specified in the administration’s development plan, where it asserted that apart from the continuation of land redistribution, “it is equally important to adopt the proper policies to attract greater domestic and foreign capital and technology.”10 Mass housing earned considerable governmental attention—from receiving significantly higher budgetary support compared to the Ramos government;11 Estrada’s Executive Order No. 159 would decree it outright “as the centerpiece program of the Estrada Administration.”12 Whatever original hopes Estrada may have had nourished were soon bogged down by insipid outgrowths and by the brewing political crisis, triggered by corruption issues, which would eventually kick him out of the presidential palace. The administration’s Lingap para sa Mahihirap program delivered an omnibus package of social services to the 100 poorest families in each LGU nationwide. Even during that time, however allegations were rife that the Lingap program constituted nothing more than additional pork barrel funds. Future stories of Estrada’s “midnight cabinet” would do little to deodorize the regime and remove the stigma of graft and corruption. Gloria Macapagal-Arroyo (2001-2010) Arroyo herself was a neoliberal economist, and author of several market-oriented laws; expectedly her new medium term program placed weight on generating macroeconomic stability to nurture global competitiveness. Through structural and regulatory reforms, her administration privatized the blue chips of government corporations—National Power Corporation, Philippine National Oil Company-Energy Development Corporation, Philippine National Construction Corporation, the National Food Authority, and the Metropolitan Waterworks and Sewerage System. It concentrated on the “the fast-growing ICT sector” and the tourism industry as lead employment generators which it expected to generate jobs in the private sector—the “key to winning the war against poverty.”13 Arroyo also emphasized microenterprise development, microfinance initiatives, and the livelihood projects for the self-employed poor. Through the work of Population Pressure, Poverty, and Development

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DSWD and NAPC, Arroyo’s Kapit-Bisig Laban sa Kahirapan program financed projects conceived, managed, and implemented by community stakeholders themselves: 4,583 barangays in the 42 poorest provinces and municipalities in the Philippines were recipients of such grants in 2010.14 Arroyo also recognized poverty as an issue of vulnerability, and the contexts of especially-vulnerable sectors in poverty reduction such as indigenous peoples (IPs) became central components of development plans. A variety of shocks that prevented the poor from reaping their proper share of benefits like economic dislocation, natural calamities, price fluctuations and even structural adjustment were noted. An array of safety net, socialized health, food subsidy, and refined targeting mechanisms were put in place to “bring the poor and vulnerable back into the mainstream development process.”15 Midway through 2008, the conditional cash transfers of the Pantawid Pamilya Pilipino Program (4Ps), officially commenced, becoming Arroyo’s second most hailed poverty alleviation program, but also most criticized for allegedly becoming a tool of patronage and corruption. CCTs are safety net programs that provided cash to poor households on the condition that they make specified investments in their children’s human capital, particularly in health and education. First launched in the late 1990s, according to the World Bank, over 30 countries now have some form of CCT program.16 Implemented as the 4Ps in the Philippines, the program gives household beneficiaries PhP500 monthly cash grant and an additional PhP300 per school-going child below 14 years old (who are required to maintain an 85 percent minimum monthly school attendance17). Each household is subsidized for up to three children, for a maximum total monthly subsidy of PhP1,400. Under Arroyo the 4Ps benefited 700,000 families.18 Benigno S. Aquino III (2010- ) Whereas his predecessors framed poverty reduction clearly within overarching economic programs, Aquino III presents it within an overwhelmingly governance lens. His mantra has been “Kung walang corrupt, walang mahirap.” Working on the belief that corruption is the major reason for rampant poverty in the Philippines, the government focuses on good

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governance and the eradication of corruption, as a necessary prerequisite for poverty alleviation. While Aquino III enjoys great confidence from the general public because of this, the preoccupation with anti-corruption has been dampening both government spending and private investments related to public works and services, at least in his first two years in office. Notwithstanding the big noise raised against and the doubts cast upon it during Arroyo’s time, the 4Ps/CCT continues under Aquino III’s government and has in fact become its biggest anti-poverty platform. The program received a budget of PhP21 billion in 2011, which increased to PhP39.4 billion in 2012, and further to PhP44.25 billion in 2013, more than doubling in just two years. DSWD data as of May 2013 showed a 4Ps enrolment of 3.9 million householdbeneficiaries, covering 9.2 million children, nationwide.19 The program is again expected to increase by more than 40 percent in 2014 to PhP62.6 billion to expand coverage to poor children’s school education.20 Human resource endowments account for the Filipinos’ ability to sustain themselves, so that the conditions of the 4Ps targeting education and health are on the mark, as there is a historical negative correlation between educational attainment and poverty.21 A family whose head has had no schooling is four times more likely to be poor than a family whose head is a high school graduate. The picture becomes brighter as heads of family climb higher in the education ladder. Less than two in a hundred families whose head is a college graduate is poor. Thus far, debates have focused on if and how long the 4Ps/CCT can help keep the poor afloat while waiting for more structural responses to kick in, and around whether government resources are appropriately prioritized, including the slashing of regular budgets for social services in favor of the 4Ps/CCT. The real challenge, however, is in precisely identifying the structural changes that would sustain the poverty gains expected from the 4Ps/CCT. Even a World Bank report concedes that, while CCTs “have been an effective way to redistribute income to the poor…even the best-designed and best-managed program cannot fulfill all of the needs of a comprehensive social protection system. CCTs therefore need to be complemented with other interventions.”22


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The continued focus on poverty has produced mixed results. The proportion of poor people, based on the national poverty line, has been slashed by a third since 1985. The slight reverse swing, from 1991 to 1994, and the constant increase in the period 2003-2009, which coincided with periods of relative growth, indicated that the gains in poverty reduction were unstable. The cause of much concern lately is the fact that the poverty situation in the Philippines has not improved. According to the National Statistics Coordination Board, 25.2 percent of the population currently lives below the poverty line, a figure that was practically unchanged from the figure of 26.3 percent and 26.6 in the whole of 2009 and 2006, respectively. The figures are all the more disturbing because globally, the poverty situation has actually improved since 2005. According to the World Bank, the proportion of people living in extreme poverty—on less than $1.25 a day—fell in every developing region from 2005 to 2008.23

The population issue24 Along with its neighbors in the Southeast Asian region, the Philippines was burdened with a high poverty rate and faced the same challenge of overcoming underdevelopment four decades ago. Today, Malaysia, Vietnam, Indonesia, and Thailand have drastically reduced poverty and possess vigorous economies. In contrast, one in four Filipinos is still trapped in poverty, almost double the proportion of the poor in Vietnam. What accounts for the difference? All five countries have adopted virtually the same neoliberal economic policy; perhaps with varying degree of vigor and push from outside, but all have had similar directions in the last decade. Corruption, another favorite variable for comparing countries in the region, is also common among the five, with Indonesia being a consistent topnotcher in annual surveys. State-promoted asset and income redistribution programs in the Philippines, Thailand, Malaysia, and Indonesia have either been weak or nonexistent.

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There is, in fact, one very distinctive feature that separates the Philippines from three of its neighbors: Vietnam, Indonesia, and Thailand managed to rein in the growth of their populations through effective state-sponsored family planning programs. And while successful family planning is not the whole story, economists and demographers have a consensus that it is an essential element in the narrative of economic advance in Southeast Asia. One might compare the Philippines to an overloaded passenger plane that is trying very hard to take off but cannot quite get more than a few feet above the ground, and is fast approaching the end of the runway. The country’s GDP grew by only 4.7 percent in the last decade. With population growing at 1.9 percent on average per annum, the average yearly growth rate of GDP per capita (GDP divided by total population) was only 2.3 percent. In contrast, Thailand was able to keep average population growth at below one percent, while Vietnam’s GDP grew at a fast 7.2 percent.25 Indeed, while Malaysia, Indonesia, Vietnam, and Thailand have reached the MDG of halving the number of people living in poverty by 2015 ahead of schedule, the Philippines is definitely going to miss it. Many studies have affirmed the negative relationship between population growth rate and economic growth. Not only is the relationship negative, it is also significant; one estimate puts the Philippines would have achieved per capita income 0.77 percentage points higher every year had it had the same population growth as Thailand. This would have, in turn, translated into more than four million people escaping poverty.26 The inability to address the population issue has given rise to another aspect of inequality. The most damning evidence is given by the Philippine Family Income and Expenditure Survey, which gives information on poverty every three years. Consistently, poverty rates increase as family size also increases. More significantly, poverty of larger families (those with 5-8 and 10 members) has also been on the increase. A family with 10 or more members is five times more likely to be poor than a family of only three members.27


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Beyond carrying capacity The challenge is enormous. Even if the fertility rate were to be brought down to the replacement level of two births per reproductively active woman in the next decade, owing to population momentum—or the tendency of a population to grow despite a rapid decline in fertility owing to a simultaneous decline in the death rate—the Philippines will probably not see its population stabilize until the latter part of this century. Had the country attained replacement level fertility in 2010, the population would still have continued to grow and reach 150 million in 2060, after which it would have stabilized. If the replacement level fertility is achieved in 2030—which is more realistic, according to demographers—the population will stabilize at 200 million in 2080. Under a less optimistic scenario of replacement level fertility being attained even later, say in 2050, the population will stabilize at more than 250 million people towards the last years of the century.28 The numbers are worrisome since a population of 200 million or 250 million would be a tremendous burden on the country’s carrying capacity, or the number of people a region can support without suffering significant environmental degradation. When carrying capacity is outstripped by population growth, an ecological crisis develops, and then erupts in many directions. Chapter 5 discussed the continuous decline in the country’s ecological integrity, burdened by so many factors, not least of which is population pressure. With the countryside unable to support a rapidly expanding population, migration to urban areas, especially Metro-Manila, has escalated. And with uncontrolled expansion of shantytown communities, waterways were clogged and polluted, with the Pasig River nearing biological death and Laguna Lake in irreversible ecological decline by the mid-`90s. There were two things that were new with the population shifts that began in the late `70s and early `80s. An important study by Robert Repetto and Wilfredo Cruz found that prior to that period the direction of internal migration had been from the depressed rural areas to the cities. Since then, however,

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internal migration also pushed people to the upland areas, open access forests, and artisanal fisheries. Deforestation accelerated, with the country losing, by 2005, over a third of its already much reduced forest cover of about 10 million hectares back in 1990. The Philippines now has the distinction of having the third highest deforestation rate in the world, after Honduras and Nigeria.29 The second new feature of the population movements at the end of the `70s was the massive exodus of Filipinos to foreign climes to work. As discussed in Chapter 4, the labor export program was originally a small affair involving 50,000 workers when it was instituted in 1975. But with the push factor of unrestrained population growth, it soon ballooned to become one of the main absorbers of surplus labor, with 6.3 million Filipinos being deployed for overseas work from 1984 to 1995. By 2011, with an estimated eight million of its labor force overseas, the Philippines became the world’s second largest labor exporting country. Remittances from abroad became a key source of survival for millions of families and served as the mainstay of an economy crippled by a combination of wrongheaded economic policies, unrestrained population growth, and permanent ecological crisis.

Population growth and social conflict Runaway population growth correlates negatively with economic growth, but there is another uncomfortable correlation, but this time a positive one—high population growth and social conflict. It is a threat looming in countries that have failed to manage their population wisely, like the Philippines. In Rwanda, the genocide that took place in that country in 1994 was one of the most tragic events of our times. The common explanation is that it was precipitated by an ethnic conflict between Hutus and Tutsis. However, the famous environmentalist Jared Diamond’s careful study of the Rwanda genocide in his book Collapse revealed that in many cases, fellow Hutus were also victims of the Hutu rampage. One of the main factors behind the genocide, he argued, was population pressure, noting how even among Rwandans, there was talk about “how a war is necessary to wipe out an excess of population and to bring numbers into line with the available land resources.” Diamond is not a Malthusian, but he concludes that,


233


“[P]opulation pressure was one of the important factors behind the Rwandan genocide that Malthus’ worst-case scenario may sometimes be realized, and that Rwanda may be a distressing model of that scenario in operation. Severe problems of overpopulation, environmental impact, and climate change cannot persist indefinitely: sooner or later they are likely to resolve themselves, whether in the manner of Rwanda or in some other manner not of our own devising, if we don’t succeed in solving them by our own actions.”30 Rwanda may be an extreme case. But we have had similar dynamics of conflict related to population pressure in the Philippines. Beginning in the `50s there were state-sponsored and spontaneous migrations from overpopulated Luzon and Visayas to relatively under-populated Mindanao, known in the `60s as “virgin land.” Policymakers of that period routinely pronounced Mindanao as a “safety valve” for demographic pressure as the population-land ratio declined from one cultivated hectare per worker in the agricultural hinterland in the `50s to 0.5 hectare by the early `80s. The resulting mass migrations to the agricultural frontier intensified conflicts over land and territory, with Muslims and indigenous peoples marginalized from their lands by Christian settlers and becoming a minority in their own homeland.31 A key indicator of the acuteness of the demographic crisis was the flaring up of the Moro rebellion from the `70s on, with its understandable demand for an independent or autonomous homeland for the Bangsa Moro people to stop the massive encroachment of thousands of impoverished non-Muslim settlers into their ancestral homeland. The consequences of the population-related wars in Mindanao may not be as ghastly as the Rwandan genocide but they have nevertheless been horrific: some 150,000 killed and over two million displaced, with Muslim Filipinos scattered to the four winds, many finding refuge in Sabah where they are now subject to persecution by Malaysian authorities. The conflicts have doomed a once promising region to underdevelopment, with the World Bank estimating the total economic costs to surpass US$10 billion.32

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Like Diamond in the case of Rwanda, we are not claiming that population pressure was the only factor in the massive crisis in Mindanao that broke out in the `70s and continues until today. Undoubtedly, inequality, religion, and culture also played a role. But looking at these figures, one cannot but conclude that unrestrained population growth has been a major factor in the conflicts in the Southern Philippines, and a major variable behind its poverty.

The role of the state As asserted earlier, population management alone does not explain why some countries develop and others don’t. In the five Southeast Asian countries cited above, Malaysia was the country with a higher average population growth rate than the Philippines in the period 2000-2010. It was also only 0.3 percentage points ahead of the country in terms of average GDP growth rate in the same period. And most astounding, income inequality in Malaysia was worse than in the Philippines, and was highest among the five countries. Yet less than four in 100 Malaysians were poor, and all of them earned at least US$1.25 a day. What was different about Malaysia, and is it something that countries like the Philippines already have missed out on? The key factors that seem to spell the difference between Malaysia and the Philippines were structural adjustment and the role of government. When the Philippines started its economic decline in the `80s, bent by a heavy debt burden and enslaved by structural adjustment, Malaysia was just starting to find its footing. While there were privatization initiatives in Malaysia in the `80s, for the most part government remained an active force in the economy. Not only did public enterprises like the state oil company Petronas served as engines of growth, but the government promoted a “local content” policy to build up an automobile industry that would also trigger upstream industries designed not only to supply the car manufacturing sector but other industries as well. Government also undertook the controversial bumiputra program designed to redistribute more wealth towards what the Mahathir government regarded as the economically disadvantaged—relative to the Chinese minority—Malay population. Government’s leading role was one of the reasons Malaysia Population Pressure, Poverty, and Development

235


became one of the fastest growing countries in Southeast and the entire Asian region during the `80s and for the first half of `90s. During the Asian financial crisis of 1997-98, and beginning this new century, it grew moderately. Whereas Malaysia was able to take hold of its economic adjustment, the Philippines did its own through an almost complete dereliction of the state’s role, making the structural adjustment harsher and more debilitating for some sectors. So, while in both the Malaysian and Philippine cases inequality has not abated, absolute poverty has almost been eradicated in Malaysia, but not in the Philippines.

Deep-seated inequalities Due to the Philippine economy’s openness and exposure, growth has been volatile and anti-poverty gains susceptible to external shocks, especially during the `80s debt crisis, the 1997 Asian financial crisis, and the 2008 global financial crisis. On top of this, population growth was not tamed. As a result, the number of poor Filipinos still increased by almost a million since 2006 from 22.6 million to 23.7 million people in 2012. (See Table 2) In terms of inequality reduction, while some slight progress was made between 1985 and 2000, since 2002 the proportion of poor in the population has remained stable. The fortunes of Filipino capitalists also give us a glimpse of the dynamics of exclusive growth in the country. According to Forbes magazine, for instance, Henry Sy’s family net worth of US$9.1 billion (as of June 2012) increased by US$1.9 billion from 2011, an amount equivalent to 10 percent of the total growth of the Philippine economy over the same period. Moreover, examining the net worth of the 40 richest Filipinos on the Forbes list, the accumulated income growth of these 40 families alone already added up to US$13 billion, more than three-fourths of the total US$17 billion income growth of the Philippine economy in 2011.33 The flip side of this exclusive accumulation has been the incremental increase in overall household incomes and the continued dependence of more Filipino families on OFW transfers, which have not been going towards investments or 236

Chapter 7


savings, but largely served as the primary income source for daily household expenditures. According to the Family Income and Expenditure Survey, in terms of overseas income, from 3.6 million in 2003, almost two million more families reported receiving income from abroad, bringing the number up to five million families. Over the last decade, the percentage of households receiving income from abroad increased from 18 percent in 2000 to 27 percent in 2009.34 The volatile poverty reduction and exclusive growth have been punctuated by unalleviated inequality since 1985. In 2012, the richest 10 percent captured a share of the national income that was only slightly less than the combined shares of the poorer 60 percent of the population. Worse, the shares of income of the poorest 60 percent have hardly increased since 1985; it has been roughly 70 percent of national income remains at the hands of the top 40 percent. (See Table 4) This deep-seated inequality is explained by the various disparities in the country. Economic activity has traditionally been cornered by a few industrialized hubs. The demise of agriculture since the `70s also meant the immiseration of the rural population, who to this day constitutes bulk of the country’s poor. We have seen in Chapter 2 that industry and employment are concentrated in the NCR and a few other metro centers, a bias mimicked by the regional sources of growth in the country. Put simply, the 25-year trend would show that economic growth has failed to reach the poor. This has been most pronounced in the lack of employment opportunities. Three regions, all in the main island of Luzon, capture a third of total employment. It is, however, not the case that the poor just sit around all day doing nothing. In fact, the high-poverty regions are not necessarily the high-unemployment regions. The regions that consistently rank high in poverty rates register lower unemployment compared to the national average. The consistent high-poverty regions—Bicol Region (45.1 percent), Eastern Visayas (41.4 percent), Zamboanga Peninsula (43.1 percent), Caraga (47.8 percent) and ARMM (45.9 percent)—all have unemployment rates below the national average, with ARMM registering less than one-fourth the rate of the region with the highest unemployment rate (2.3 percent versus NCR’s 10.4 percent). They do, however, register higher Population Pressure, Poverty, and Development

237


underemployment, with the Bicol Region having nearly twice the national underemployment rate. A clear exception is ARMM, with over half of the national underemployment rate (9.9 percent versus 19.1 percent). (See Table 3) That the people in the poorest regions tended to hold jobs highlights a grim picture. The poor may be employed, but they are either unpaid family workers, or earn very low incomes. Most of them can also be safely assumed to have informal work status. The regions of Mindanao, all with poverty rates higher than the national average, also had population growth rates higher than the national average especially in the period 1990-2000. This tapered off in 2000-2010, especially for Caraga and ARMM. For the industrial hubs, NCR, Calabarzon, Central Visayas and Davao Region, population growth rates had been either very close to or higher than the national average. (See Table 3) The data give a glimpse of internal migration patterns—away from conflict and high-poverty areas, and into lowpoverty areas known for high economic activity.

Losing the war on poverty In sum, the Philippines have made little progress in the war against poverty that successive administrations have proclaimed since the EDSA Revolution in 1986. Two initiatives, the Reproductive Health Law and the Conditional Cash Transfer Program, may contribute to breaking the impasse. Nonetheless, an RH program is more in the nature of a necessary but not sufficient condition to reduce poverty. Bringing down the fertility rate will only result in poverty reduction in combination with other factors. Similarly, the CCT program may contain poverty in the short term but it will not reduce it. Its main impact will be felt in the long-term since its main thrust is to break the intergenerational cycle of poverty. Without decisive efforts to effect redistribution of assets and a more active role on the part of government to reverse the destructive consequences of doctrinaire neoliberal policies and place the country on the path of sustainable development with the adoption of activist strategies like industrial policy, the evidence suggests that the struggle against poverty and inequality shall not be won. 238

Chapter 7


Table 1. Major Anti-Poverty Programs Post-1986 Administration

Key AntiPoverty Programs

Macroeconomic Themes

Anti-Poverty Themes

Corazon Aquino (1986-1992)

• Program to Refocus Orientation on the Poor • Tulong sa Tao Program

• Diminished the arbitrary abuse of state power and rent-seeking • Correction of protectionist forms of economic mismanagement • Emphasis on promoting “free and fair competition” through privatization and deregulation • Promotion of the private business sector and civil society involvement in development

• Poverty reduction is equally concerned with equity and social justice • Gender equity concerns introduced into development planning • Promotion of labor’s bargaining power • Significant space of civil society engagement in the formation of government policies • Enshrining asset reforms (CARP) as the centerpiece program of government

Fidel V. Ramos (1992-1998)

• Social Reform Agenda • Community Integrated Delivery of Social Services (CIDSS)

• Intensifying market reforms of liberalization, privatization and deregulation • The private sector as the main driver of development • Emphasis on the government as providing a ripe environment for global competitiveness

• Mainstreaming of the Minimum Basic Needs approach to poverty reduction • Introduction of comprehensive, localized and convergent poverty reduction programs • Institutionalization of the concept and collaboration with the “Basic Sectors” • Establishing of groundwork of future anti-poverty infrastructures

Joseph Estrada (1998-2001)

• Lingap para sa Mahirap

• Sectoral focus on agricultural modernization • Role of government to provide institutional architecture for competitive markets, and help ease transitions in disadvantaged population • Continuation of market reforms of privatization, deregulation and liberalization

• Maintenance of MBN approach to povertyreduction • Operationalization of the National Anti-Poverty Commission • Renewed emphases of land redistribution and the provision of socialized housing


239


Gloria MacapagalArroyo (2001-2010)

• Kapit-Bisig Laban sa Kahirapan / KALAHICIDSS • Pantawid Pamilya Pilipino Program (4Ps)

• Government to provide the enabling environment where private enterprise can serve the public good • Action on employment and livelihoods as the key to addressing poverty reduction • Focus on agriculture, ICT’s and Tourism as prime growth sectors • Continuation of structural and regulatory reforms

Benigno S. Aquino III (2010- )

• Continuation • Strong emphasis and given to public-private expansion partnerships (PPP) of donorfunded and supported anti-poverty program (CCT / 4Ps)

• Central focus on the vulnerable aspects of poverty and the differing contexts of vulnerable groups • Mainstreaming of community-driven, bottom-up methods of anti-poverty interventions • Initial attempts with conditional cash transfer interventions

• Transparency and anti-corruption as a cross-cutting priority; in direct response to the President’s rallying cry “Kung walang corrupt, walang mahirap”.

Source: Urban Poor Associates. Eviction monitoring. Retrieved 17 March 2014 from http://urbanpoorassociates.org/

Table 2. Philippine Poverty Indicators Headcount Poverty (% of Population)

(In Million)

1985

41.0

22.2

1988

40.2

19.2

1991

39.9

21.7

1994

40.6

21.6

1997

36.8

18.2

2000

33.0

21.5

2003

24.9

20.6

2006

26.6

22.6

2009

26.3

23.3

2012

25.2

23.7

Sources: NSCB, FIES, various years.

240

Number of Poor

Chapter 7


Table 3. Population, Employment and Poverty, By Region Population (in Million and %, 2010)

Average Population Growth Rate (%)

Total

% Share

19902000

20002010

19902010

PHILIPPINES

92.34

100.0

2.34

1.90

2.12

National Capital Region

11.86

12.8

2.25

1.78

2.02

CAR

1.62

1.8

1.76

1.70

1.73

Ilocos Region

4.75

5.1

1.69

1.23

1.46

Cagayan Valley

3.23

3.5

1.85

1.39

1.62

Central Luzon

10.14

11.0

2.61

2.14

2.37

CALABARZON

12.61

13.7

3.91

3.07

3.49

MIMAROPA

2.74

3.0

2.62

1.79

2.20

Bicol Region

5.42

5.9

1.83

1.46

1.65

Western Visayas

7.10

7.7

1.42

1.35

1.68

Central Visayas

6.80

7.4

2.19

1.77

1.98

Eastern Visayas

4.10

4.4

1.68

1.28

1.48

Zamboanga Peninsula

3.41

3.7

2.18

1.87

2.03

Northern Mindanao

4.29

4.6

2.23

2.06

2.14

Davao Region

4.47

4.8

2.28

1.97

2.12

SOCCSKARGEN

4.11

4.5

2.99

2.46

2.72

Caraga

3.26

3.5

1.73

1.49

1.61

ARMM

2.43

2.6

2.89

1.51

2.20


241


Poverty Incidence and Number of Poor 2009

2012

(% of Population)

Number of Poor (in Million and %)

Employment in October 2013 (in %) Employed

Unemployed

Underemployed

PHILIPPINES

26.3

25.2

23.7M (100.0%)

38.5M (93.6%)

2.6M (6.4%)

7.4M (18.1%)

National Capital Region

3.6

3.9

0.46M (1.9%)

89.8

10.2

10.4

CAR

25.1

22.8

0.37M (1.5%)

96.2

3.8

12.3

Ilocos Region

22.0

18.5

0.88M (3.7%)

92.4

7.6

19.0

Cagayan Valley

25.5

22.1

0.71M (3.0%)

97.4

2.6

10.2

Central Luzon

13.7

12.9

1.34M (5.6%)

92.2

7.8

10.3

CALABARZON

11.9

10.9

1.43M (6.0%)

91.9

8.1

18.9

MIMAROPA

34.5

31.0

0.88M (3.7%)

95.9

4.1

24.1

Bicol Region

44.2

41.1

2.28M (9.6%)

93.8

6.2

37.7

Western Visayas

30.8

29.1

2.09M (8.8%)

93.8

6.2

22.4

Central Visayas

31.0

30.2

2.09M (8.8%)

95.1

4.9

13.6

Eastern Visayas

42.6

45.2

1.88M (7.9%)

94.8

5.2

24.7

Zamboanga Peninsula

45.8

40.1

1.41M (5.9%)

97.1

2.9

20.3

Northern Mindanao

40.1

39.5

1.76M (7.4%)

94.5

5.5

21.8

Davao Region

31.4

30.7

1.41M (5.9%)

93.3

6.7

14.9

SOCCSKARGEN

38.3

44.7

1.90M (8.0%)

97.0

3.0

24.3

Caraga

54.4

40.3

1.00M (4.2%)

96.1

3.9

19.9

ARMM

47.4

45.9

1.85M (7.8%)

96.4

3.6

13.8

Sources of Basic Data: NSCB, FIES 2009 and 2012 (First Semester Estimates); NSO, Census of Population, 1990, 2000 and 2010; NSO, Labor Force Survey, October 2011 * Details may not add up due to rounding.

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Table 4. Income Shares, By Income Group, 1985-2009 1985

1988

1991

1994

1997 2000 2003 2006 2009 2012

Highest 10%

32.73

32.05

34.69

33.59

36.6

36.4

34.29

33.9

33.62

30.5

Highest 20%

48.08

47.77

50.46

49.54

52.33

52.3

50.68

50.41

49.69

46.8

Fourth 20%

20.95

21.21

20.68

21.05

20.33

20.41

21.17

21.23

21.04

21.9

Third 20%

14.42

14.43

13.67

13.96

13.2

13.17

13.68

13.68

13.87

17.9

Second 20%

10.12

10.08

9.31

9.5

8.78

8.75

9.03

9.08

9.42

10.1

Lowest 20%

6.43

6.51

5.88

5.95

5.36

5.37

5.44

5.6

5.98

6.8

Lowest 10%

2.77

2.83

2.55

2.56

2.28

2.3

2.31

2.41

2.59

2.9

GINI Index

41.0

40.6

43.8

42.9

46.2

46.1

44.5

44.0

46.4

46.1

Sources: National Statistical Coordination Board. Family Income and Expenditures Survey, various years.


243


Notes 1

Chavez, J.J. and Fabros, A. (2012). Philippine industry and employment: a snapshot. Issues Views, Action. Quezon City: AER. 2 National Economic and Development Authority. (1987). Medium term Philippine development plan, 19871992. Makati City: National Economic and Development Authority, 3. 3 Asian Development Bank. (2007). Philippines: critical development constraints. Manduluyong City: Asian Development Bank, 2007, 60. 4 Presidential Management Staff Office of the President. (1992, June). The Aquino management of the presidency: president’s report, 1986-1992. Retrieved 22 January 2012, from http://www.coryaquino.ph/ coryaquino/assets/images/ThePresidentReport.pdf 5 Philippine Government Official Website. (1994). Fidel V. Ramos, Third state of the nation address, July 25, 1994. Official Gazette. Retrieved 22 January 2012, from http://www.gov.ph/1994/07/25/fidel-v-ramosthird-state-of-the-nation-address-july-25-199 6 National Anti-Poverty Commission. (2005). Kalahi convergence: working together for poverty reduction. Quezon City: National Anti-Poverty Commission, 27. 7 A full account of how the Ramos reforms led to the Philippines’ vulnerability in the Asian Financial Crisis is discussed in Bello, W. et al. (2009). The anti-development state: the political economy of permanent crisis in the Philippines. Pasig City: Anvil Publishing. 8 National Economic and Development Authority. (2001). Medium term Philippine development plan, 20012004. Makati City: National Economic and Development Authority. 9 Asian Development Bank. (2005). Poverty in the Philippines: incomes, assets and access. Mandaluyong City: Asian Development Bank, 110. 10 National Economic and Development Authority. (1999). Medium term Philippine development plan,19992004. Makati City: National Economic and Development Authority. 11 (source?) 12 Philippine Government Official Website. (1999). Executive order no. 159, s. 1999. Official Gazette. Retrieved 23 January 2012, from http://www.gov.ph/1999/10/12/executive-order-no-159-s-1999/ 13 National Economic and Development Authority. (2001). Medium term Philippine development plan, 20012004. Makati City: National Economic and Development Authority. 14 Gudmalin, C. G. (2011). The Kalahi-CIDSS Project: impact on impoverished communities. Diaspora Philanthropy. Retrieved 23 January 2012, from http://diasporaphilanthropy.cfo.gov.ph/Files/Diaspora2011/ Gudmalin_KALAHI-CIDSS_Project.pdf 15 National Economic and Development Authority. (2001). Medium term Philippine development plan,20012004. Makati City: National Economic and Development Authority. 16 The World Bank. (n.d.). Safety nets and transfers: conditional cash transfers. Retrieved 2 July 2013, from http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTSOCIALPROTECTION/ EXTSAFETYNETSANDTRANSFERS/0,,contentMDK:20615138~menuPK:282766~pagePK:148956~piPK: 216618~theSitePK:282761,00.html 17 Philippine Daily Inquirer. (2013, June 25). In the know: conditional cash transfer scheme. Philippine Daily Inquirer. Retrieved 2 July 2012, from http://newsinfo.inquirer.net/432371/in-the-know-conditional-cashtransfer-scheme 18 Bello, W. (2011). The Conditional Cash Transfer Debate and the Coalition against the Poor. In V. C. Militante (ed.), Focus on the Philippines yearbook 2010: transitions (133-140). Quezon City: Focus on the Global South-Philippines. 19 Philippine Daily Inquirer. (2013, June 25). In the know: conditional cash transfer scheme. Philippine Daily Inquirer. Retrieved 2 July 2012, from http://newsinfo.inquirer.net/432371/in-the-know-conditional-cashtransfer-scheme 20 Philippine Information Agency. (2013, September 2). CCT expansion in 2014 budget seen to lower high school dropout rate. Information to Empower Filipinos. Retrieved 2 September 2013, from http://news.pia. gov.ph/index.php?article=1781378088691

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21 Josef Yap presentation, see deleted Figure 1/2 22 Fiszbein, A. and Schady, N. (2009). Conditional cash transfers: reducing present and future poverty. Washington DC: The World Bank. 23 See Bello, W. (2013, June 10). Global poverty down, Philippine poverty remains high. Philippine Daily Inquirer. Retrieved 2 July 2012, from http://opinion.inquirer.net/54331/global-poverty-down-philippinepoverty-remains-high#ixzz2qN8AbsgF 24 Earlier versions of this section appeared in Bello, W. (2011, August 27). Rwanda in the Pacific: population pressure, development, and conflict in the Philippines. Philippine Daily Inquirer. Retrieved 2 July 2012, from http://opinion.inquirer.net/10769/rwanda-in-the-pacific 24 Data from the World Bank (please refer to deleted table 2) 26 Balisacan, A. (2007). Why does poverty persist in the Philippines? facts, fancies, and policies? SEARCA Agriculture and Development Discussion Paper, Series 2007-1, 21. 27 Josef Yap presentation. 28 Source?? 29 Repetto, R. and Cruz, W. (1992). The environmental effects of stabilization and structural adjustment programs: the Philippines case. Washington, DC : World Resources Institute 30 Diamond, J. M. (2005). Collapse: how societies choose to fail or succeed. New York : Viking. 31 Source??? 32 Source??? 33 For a better sense of the nature of exclusive growth in the Philippines’ read Habito, C. (2012, June 25). No free lunch: economic growth for all. Philippine Daily Inquirer. “For comparison, the wealth of the 40 richest people in Japan rose by $10.7 billion, a mere 2.8% of the economy-wide increase in income (GDP) of $ 381 billion. Closer to home, Thailand’s 40 richest increased their fortunes by $9 billion to $45 billion (a 25% increase), with the rise equivalent to 33.7% or one-third of their overall income growth. Malaysia’s top 40 got richer by $2.3 billion (to $64.4 billion), a 3.7% rise (a measly one-tenth of the rate at which our own billionaires’ fortunes grew). This is equivalent to a mere 5.6% of the total increase in the Malaysians’ incomes in 2011. 34 Over the same period, the proportion of overseas income in relation to total income also grew from 9% in 2000 to 10.8% in 2009. Total income received from overseas registered at Php 441 billion in 2009FIES figures regarding remittance-receiving households offer even more insight when viewed according to income groupings. The survey indicates that higher deciles received more income from abroad. Richer households reported a higher proportion of overseas income receipts compared to lower income brackets. For instance, in 2006, overseas income made up almost half (44.09%) of total income of the richest households, compared to only 7.06% of the total income of the poorest households. In this regard, overseas income spells an important distinction between those who are relatively better off and those who are not.


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Three decades into People Power, Whither Philippine Civil Society, Social Movements, Citizens?

The broad citizenry that took part in the 1986 EDSA uprising did not only seek to end the Marcos dictatorship, they also hoped for democracy, though this vision might have had varying articulations in the minds of the main actors. In post-EDSA history, civil society and other non-state entities would assume new roles and occupy significant spaces in politics and governance. Social movements which were at the forefront of the anti-dictatorship struggle before 1986 would remain a political force, but presented with a more democratic social-political environment, they would undergo reckoning among their ranks. Meanwhile, the two other ‘EDSAs’ that would follow 1986 would co-opt the democracy project and would have narrower political aims that tended to favor certain fractions of the political elite. The main question now: what happened to ‘democracy’?

Legacies of people power The split within the Communist Party and National Democratic Front fragmented the Philippine left and contributed to the formation and emergence of civil society groups possessing political bases and various capacities and skills that would be used in pursuing reforms even as they continued struggle for structural changes. As more and more CSOs and groups advocating sector-based interests became deeply interested in interceding in the implementation of public programs 247


and projects after EDSA, the relative openness of the Cory Aquino and Fidel Ramos’ governments successfully catalysed a vibrant atmosphere for critical collaboration between government and civil society.1 This new relationship between government and non-state groups is reflected in the vocabulary that has entered public discourse–“people empowerment,” “democratization,” “nongovernment organizations,” “people’s organizations” and “civil society.”2 This progressive movement that now thrives outside the CPP/NDF and CPP/ NDF-influenced organizations has paved the way for these CSOs with a range of distinct tactics and political persuasions to engage in various political arenas. Over the years, their campaigns have led to the passage of landmark legislations such as the Referendum Referendum Act/R.A. 6735, Voters’ Registration Act/R.A. 8189, the Election Modernization Act/R.A. 8436, the Amended Automated Electoral System Act/RA 9369, the Party List System Act/RA 7941, and Overseas Absentee Voting Act/RA 9189, among others. The more progressive laws, including CARPER and Reproductive Health, however, also saw social movements (peasants and women’s groups; more massbased organizations) at the forefront of the campaigns. CSOs have also been instrumental in the creation of sector-oriented state agencies like the National Anti-Poverty Commission, the Commission on Human Rights, the National Agricultural and Fisheries Council, the Commission on Women, as well as civil society liaison desks across state departments and agencies. They were able to forge a far more “cooperative and porous”3 relationship with well-intentioned bureaucrats of the Philippine state and other cause-oriented civil society actors. The participation of some of these groups in electoral politics have helped put in office reform-oriented politicians and some new blood in politics. In the early `90s, Philippine civil society was already being hailed as one of the “largest, best organized, and most politically active in the developing world.”4 The climate of openness for government collaboration with CSOs that Cory Aquino introduced at the onset of her administration set an example that most future chief executives would emulate. The single largest precedent for these new state-civil society dynamics in the revitalized democracy had been set by no less than the framers of the 1987 Constitution, who had been instrumental in laying down a more liberal climate for people’s participation in governance. 248

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The new Charter viewed civil society as means to “enable the people to pursue and protect, within the democratic framework, their legitimate and collective interests,” and affirmed CSOs’ right to “effective and reasonable participation at all levels of social, political and economic decision-making.”5 Many provisions in the 1987 Constitution, affirmed by 76.3 percent6 of the populace in a plebiscite, institutionalized the legacies People Power. The new Charter re-installed a republican system of government and the institutions of electoral democracy. It expanded the bill of rights and provided firm, nationalist positions on the once-thorny matters of peace, foreign policy, ownership of national resources. It paved the way for a party-list system of representation in the Lower House of Congress, and instituted additional checks and balances on executive powers, including the application of more stringent term limits. It also upheld the people’s right to information and prohibited political dynasties. Though many of the Constitution’s mandates, including the provisions for the right to information and the prohibition of political dynasties, are still without enabling legislation and failed to get the full commitment of different post-`86 administrations, the wider political space has undergone certain major shifts made possible only by the dismantling of the 20-year authoritarian regime. Personalities from CSOs also started penetrating the government bureaucracy via appointments into office particularly in agencies concerned with social services such as the Departments of Agrarian Reform, Social Welfare and Development; and Health. Under the watch of these cross-over reformist appointees, the relations between CSOs and these respective government bureaus flourished. Many of these cross-over public officials have remained recognizable allies of the so-called moderate Left, sector-based and middle class movements, and the “spirit of dialogue with civil society”7 and practice of directly consulting with organized constituencies have become an accepted state strategy for improving governance.8 (See Table 1) Non-government organizations and people’s organizations entered into agreements with government agencies during the Corazon Aquino administration to secure institutional and project partnerships9, which further reinforced collaborative state-civil society dynamics post-EDSA `86. Examples of these are programs such as the PhP5 billion-Community Employment and Development Three decades into People Power, Whither Philippine Civil Society, Social Movements, Citizens?

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Program, several small-enterprise initiatives of the Department of Trade and Industry, and the Department of Agriculture’s Livelihood Enhancement for Agricultural Development Program.10 Other CSOs, during both the Aquino and Ramos administrations, contributed constructive sectoral perspectives and inputs in the crafting of key state documents, including the Policy Agenda for People-Powered Development of 1986 and the Medium-Term Philippine Development Plan of 1987-1992.11 But fragilities in still-emerging relationships between CSOs and the government have not been easy to overcome. “More sophisticated measures of semiclientelism whereby bargaining and co-optation involving social-movement leaders emerged during the mid- to late- `90s,” noted scholar Ben Reid of the growing tendency of successive, patronage-ridden governments to incorporate reform-oriented personalities into their fold to secure the greater support of marginalized populations.12 For instance, President Joseph Estrada was criticized for his “authoritarian tendencies,” “little appreciation for the painstaking processes of dialogues and consultations,” and his penchant for transforming “governmental bodies into patronage machines meant to buy poor people’s support for his administration.”13 Despite the recruitment of progressive CSO personalities to their governments, presidents would be targets of civil society’s ire when their clientelist moves became apparent. In the case of Estrada, it was links to an illegal numbers game that led to his impeachment and eventual conviction for plunder. Support for Gloria Macapagal-Arroyo likewise dissolved because of the “Hello Garci” election scandal in 2005; came July of said year, 10 of Arroyo’s top officials staged a highly-publicized resignation from the government. The Hyatt10 as they were called had included most of the crossover administrators from the NGO community as well as most other key reform-oriented officials in the Arroyo government.14 Unlike Estrada, though, Arroyo demonstrated a major facility for staying in power, allowing her to finish her term albeit as disgraced president. The recent movement against corruption in government that the Priority Development Assistance Fund scandal triggered in 2013 would not directly target President P-Noy, but citizens would demand from him to make good on his commitment to “tuwid na daan” (straight path) by prosecuting the guilty and abolishing the so-called pork barrel, a budgeting and funding system vulnerable 250

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to corruption. Also, a large section of the CSO community that supported the candidacy of P-Noy still believes in his presidency and is consciously setting him apart from the kind of presidencies Estrada and Macapagal-Arroyo established. From their nascent years until today, these groups have had to grapple with whether and to what extent have they been able to effect reforms and institutionalize these reforms. Occasionally, their participation in political spaces within government—e.g. lobbying in the legislature and partnerships with specific government agencies for specific development projects—has been criticized as a form of co-optation.15 Some rue that their participation in these political spaces or engagement with government has been used by the political and economic elite to prevent the consolidation of what they perceive as ‘more radical’ anti-government, anti-systemic movements. Yet it cannot be denied that CSOs have been responsible for some steps forward in governance and legislative reforms. For progressive movements that emerged during the `60s and `70s, the postEDSA political agenda has remained that towards systemic change, and though engagement with government continues to be seen as opportunity to advance varying political agenda and advocacies, it is still viewed as limiting. At various moments of political crises, civil society organizations and people’s organizations would adopt differing messages and forms of protest, but these would not prevent them from engaging and even coalescing in campaigns directed at scoring reforms in both the executive and legislature.

Public realms, re-shaped? Despite the increasing prominence of CSOs in the political landscape, the arena for political contests would not change radically. Called mostly unflattering names—cacique democracy, booty capitalism, electoral clientelism—the country’s political system borne out of EDSA `86 continues to limit democratic participation of most citizens to voting in periodic elections. Perhaps, the more dramatic change has been in the way the political elites have conducted themselves and manage their perpetuation in power. In the nearly Three decades into People Power, Whither Philippine Civil Society, Social Movements, Citizens?

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three decades since `86, the everyday practice of Philippine politics by politicians has become all the more akin to the running of a business enterprise, rather than the mere upkeep of time-honored patron-client relations, or the methodical espousal of public causes, issues, and concerns. Faced with periodic threats to their hold on public office, they have needed to reinvent themselves, their strategies, and their tactics from time to time. Politicians and their kin have increasingly functioned in the mould of political entrepreneurs and brokers of backroom maneuverings.16 At the same time, these tactics have not eliminated the use of force and terror—including through private armies—against rivals and constituencies in bouts of “equal-opportunity violence.”17 Even in the most recent elections (2013), 15 provinces were identified as election hotspots due to their exceptional proneness to election-related violence, fraud, and fear-mongering.18 As a result, the legislature has become less representative, with not less than three in five District Representatives elected coming from political dynasties since 1987.19 During the 15th Congress (elected in 2010) this percentage even rose to 67.7 percent of Lower House membership.20 These figures fare dismally against the rates of political clan dominance in Congress in other democracies such as the United States (six percent), Argentina (10 percent), Japan (33 percent), and Mexico (40 percent).21 In the Philippine Senate, a quarter up to 42 percent of those elected is related to former Senators. (See Table 2) Not only has the capture of formal political spaces by those coming from these dynastiesundermined key reforms, e.g. asset redistribution, a recent study has also shown that congressional districts with dynastic legislators are also poorer on average.22 The legislative arena has opened up for CSO engagement, and has enabled CSOs to navigate the depth and breadth of debate on public issues from agrarian reform to reproductive rights, to commercial logging, thus affecting the outcomes of legislators’ voting behavior.23 This engagement has, from time to time, produced successes. (SeeTable 3) During the (Cory) Aquino administration, both the Urban Land Reform Task Force and the Philippine Drug Action Network, for example, were critical in the signing into law of urban land reform and generic drugs laws that would benefit disadvantaged and impoverished constituencies, even if these laws 252

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were still flawed.24 In the same vein, women’s groups scored victory with the legislation of the Women in Development and Nation-Building Act of 1991, which mainstreamed gender concerns into national development projects. Through their coordinated, nationwide advocacy efforts and lobbying at the legislature and executive branch of government, Task Force Total Commercial Log Ban similarly managed to secure the banning of all commercial logging in virgin forests throughout the archipelago through the passage of RA 7611 in 1992.25 Capping these was “their biggest victory in policy-making participation during Aquino’s time”26 when anti-US bases senators, by only a narrow margin, refused the extension of the US Military Bases Agreement in 1991, forcing American military forces to withdraw from bases that they had operated for 45 years (such victory now overturned by the recent signing of the Enhanced Defense Cooperation Agreement by the Obama and Aquino governments). With the election of Fidel Ramos in 1992, the center of gravity of civil society involvements shifted conspicuously from the legislative to the executive arena. Soon after assuming office, Ramos’ government espoused a “summit approach” for directly engaging organizations representing and supporting the basic sectors in the overall process of governance. Beginning with nationwide consultations in 1992 through the National Peace Conference to move forward the Philippines’ peace negotiations with Maoist and Muslim rebels, the new administration organized one multi-sector summit after another over the next few years, in which a number of sector-oriented proposals were scrutinized and adopted by government. Such summits included the Social Pact on Empowered Economic Development Summit in September 1993, the People’s Empowerment Caucus and Social Reform Summit in June and September 1994, and the National AntiPoverty Summit in March 1996. This cooperative climate would be supplemented by more pro-active instruments, incorporating non-elite formations in the shaping of state policy like the Presidential Council for Countryside Development and the Philippine Council for Sustainable Development.27 Among the newly-created participatory bodies that it established, however, the Ramos government would be most remembered for launching its Social Reform Agenda in 1994. Hailed during its time as perhaps the most consultative and reform-oriented social reform and anti-poverty platform in Philippine history, the SRA channelled the outputs of Three decades into People Power, Whither Philippine Civil Society, Social Movements, Citizens?

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multi-sector consultations of the SRA Summit of 1994 into no less than nine government flagship programs aimed to alleviate the socio-economic conditions of the basic sectors. On a general one-department, one-sector basis, CSOs and sector representatives were able to directly liaise with state agencies on poverty reduction matters in ways unparalleled in the past. Through their participation in SRA interfaces, civil society and sector-based groups were able to pressure the country’s chief executive to directly oversee the passage of crucial, if at times highly imperfect, pieces of sector-oriented legislation in the last few months of the Ramos administration such as the AntiRape Law (RA 8353), the controversial Fisheries Code (RA 8550) and Indigenous Peoples’ Rights Act (RA 8371), the Family and Child Court’s Law (RA 8369), and the Social Reform Agenda and Anti-Poverty Alleviation Act (RA 8425).28 In the view of many of the participating organizations in the SRA, these legislative advances comprised the single most important step towards institutionalizing social reform in the country. Yet in themselves, these arenas for participation of the new actors in Congressional debates have not guaranteed that legislative process would always be in favor of marginalized classes and sectors. To be sure, there have been serious losses. Despite the unification of 12 different ideological, territorial, and regional farmer federations from across the Philippines—the broadest coalition in the history of the Philippine peasant struggle29—the Congress for a Peoples Agrarian Reform which had campaigned for the passage of a progressive agrarian reform law during the Cory Aquino administration were subjected to dilutions engineered by a landowners-dominated Lower House.30 Regardless of the efforts of newfound umbrella bodies like the Labor Advisory and Consultative Council and the Freedom from Debt Coalition, CSOs likewise failed to secure progressive objectives, like a pro-labor Labor Code31 as well as the selective cancellation of illegitimate foreign liabilities contracted during the Marcos years, and the imposition of a cap on debt repayments.32 Civil society and sector-based groups participating in the SRA process also encountered obstacles in Ramos government’s social reform commitment. Even as these organizations pushed consistently for the more effective implementation of asset and equity reforms that would fundamentally reshape the Philippines’ 254

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enduring socio-economic power structures (such as the legislation of a basic sector-friendly Land and Water Code, the distribution of targeted lands under CARP), official rhetoric from the Ramos regime clearly manifested a “removal of explicit reference to asset reform in the earlier SRA documents, including the 1996 NAPS agreements…,” indicating an deliberate evasion of the sector’s asset reform agenda. More resentments stemmed from the apparent incapacity, unpreparedness, or even the unwillingness of government agencies to act upon civil society inputs into the SRA process: resources and personnel for implementing jointly-agreed projects and programs commonly proved insufficient; monitoring instruments for following the concrete fulfilment of commitments remained rudimentary; and there was, additionally, a marked callousness towards “sectoral dynamics and processes” that was noted by numerous CSO representatives.33 Worse, even the government continued to sprout accolades for “social reform” and “people’s participation” in the creation and implementation of anti-poverty framework, various other policies contradicted the promotion of the wellbeing and livelihoods of the already-marginalized sectors. Conversions of agricultural lands skyrocketed by an alarming 1098.27 percent between 1991 and 199734; the neoliberal agenda of the administration repeatedly aggravated the vulnerability and economic inequities confronted by the very populations acknowledged by the SRA, while the Philippine Mining Act of 1995 (RA 7942) trumped the protection of indigenous peoples’ ancestral domain purportedly mandated by the IPRA law.35 All told, spaces for policy advocacy have opened up, and CSOs have been recruited to various government social reform processes or platforms no matter how selective these might seem on occasion. However, other substantive policy agenda, particularly critical economic and hard political issues, have remained out of reach of CSOs. Trade negotiations, for instance, have always been closed to CSOs, some of whom even had to go to court to ask for the release of information on trade agreements deemed harmful to certain sectors of society; one such case that can be cited is that of the Japan–Philippines Economic Partnership Agreement. Similarly, while CSOs have been enlisted to help with some governance reforms, hard political imperatives that strike at elite power have remained unrealized, such as the constitutional ban on political dynasties. Three decades into People Power, Whither Philippine Civil Society, Social Movements, Citizens?

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Breaking into the electoral arena: the party-list system Intended by the 1986 Constitutional Commissioners to shepherd “the equalization of political power” and to guarantee the right of disempowered sectors and populations to directly intervene in the decision-making processes of the legislature36, the Party-List System Act of 1995 (RA 7941)37 paved the way for the participation of newly-formed left, left-of-center and sector-oriented political parties and party-list groups in congressional elections. Acclaimed by observers as “major innovation”38 in reforming the Philippines’ political system—a game changer, as it grants marginalized populations a wider platform for parliamentary participation—the formal enactment of the new system invited numerous sector-based and moderate left groups to recast themselves as electoral formations, even while being looked upon with skepticism by the more radical groups. However, when 14 candidates, including the candidates from Akbayan Citizen’s Action Party, Sanlakas and Abanse Pinay, garnered seats in the Philippines’ 11th Congress, even the radical left was persuaded of the significance of the quickly-expanding arena of “parliamentary struggle,” and thus it established its own legal mass party, Bayan Muna, in 1999.39 Other ideological and sectoral formations, such as Gabriela Women’s Party and Partidong Mangagawa, soon followed suit. From 123 party-list groups joining, and 14 seats won, in the 1991 elections (11th Congress), ___ party-list groups, and ___ seats won, in 2013 (16th Congress). (See Table 4) The Party-List groups prove particularly prolific: in the 11th Congress, the 14 seats they won yielded 3,698 bills and resolutions filed, although only 20 of these bills reached Second Reading and none were signed into law.40 In the 12th and 13th Congresses, no less than eight pieces of legislation were passed mainly with the efforts of party-list representatives: the Anti-Death Penalty Act (RA 9346), the Juvenile Justice and Welfare Act (RA 9344), the Anti-Trafficking in Persons Act (RA 9208), the Anti-Violence Against Women and Children Act (RA 9262), the Overseas Absentee Voting Act (RA 9189), the Philippine Overseas Employment and Administration Strengthening Act (RA 9422), the Public Attorney’s Office Reorganization Act (RA 9406), and the Amended Automated Election System Act (RA 9369).41

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In the 14th Congress, party-list groups saw the ratification of more progressive and forward-looking laws like the Cheaper Medicines Act (RA 9502), the Renewable Energy Act (RA 9513), the Magna Carta on Women (RA 9710), the Anti-Torture Act (RA 9745), the CARPER Act (RA 9700), the Expanded Senior Citizens Act (RA 9994), and the Rent Control Act (RA 9653).42 In the 15th Congress, though, the biggest victory for party-list groups was the passage of the Reproductive Health Bill. Indeed, there was, as one legislator noted, a “a bumper crop of progressive measures strengthening social, political, and human rights.”43 This included the so-called Sin Tax, which raised taxes on cigarettes and alcohol, Kasambahay Act recognizing the rights of domestic workers, Marcos Compensation Act granting reparations to human rights victims of the Marcos dictatorship, amendment to the Overseas Voting Act removing onerous restrictions to overseas voting, Ant-Enforced or Involuntary Disappearance Act, and amendment to the Anti-Trafficking Act making easier the apprehension of traffickers of women and children. Other bills filed by these party-lists (such as a P125 wage-hike bill, and consecutive attempts to realize the constitutional right to information) were left unlegislated due to intractable opposing interests in Congress—but the gains, albeit limited, decisively changed past mind-sets about congressional politics. From being merely a citadel of the ruling elite, the Philippine legislature has become one of the main theaters for political struggle. Beyond the filing and sponsorship of bills, party-list groups have also used the legislature as platform for broad advocacy and public presence. The same partylist organizations and their civil society allies, for instance, were at the forefront of campaigns to jettison Arroyo from Malacanang from 2005 onwards, though when efforts for Arroyo’s ouster eventually fizzled out, they gradually began to focus on ensuring that more palatable politicians would be able to capture the presidency in 2010, even while thwarting Arroyo and her allies’ continued attempts to restructure the 1987 Constitution to prolong hold on power. Even as these organizations meshed with powerful social blocs such as the Catholic church, the ‘progressive’ enterprisers of the Makati Business Club, professional associations, prominent universities, and anti-administration political elites in repelling the Arroyo regime’s continued efforts to revise the Three decades into People Power, Whither Philippine Civil Society, Social Movements, Citizens?

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Constitution, more and more of these party-list and civil society formations gradually built organizational infrastructures for ensuring that candidates with an acceptable reform agenda could successfully get elected to the country’s top posts. Fired up by an unprecedented level of youth civic involvement in the 2007 polls by the million-strong Volunteers for Clean Elections, and the triumphs of non-traditional contenders such as priest Eddie Panlilio (who clinched the governorship of Arroyo’s home province of Pampanga), it suddenly seemed that the possibilities of success for leftist and left-of-centre forces in the roughand-tumble domain of mainstream electoral politics have vastly improved since the early `90s. While Akbayan and its allied movements in civil society chose to support the presidential bid of Benigno Aquino III during the 2010 national polls, Bayan Muna and its allies threw their lots behind former Senate President Manuel Villar of the Nacionalista Party.

The hijacking of reform An April 2009 Supreme Court decision significantly altering the system’s seatallocation formula (in essence: a restrictive two percent of total votes per seat threshold was modified to allocate seats to non-two percent groups) instilled some measure of hope among advocates of sector-based representatation that the 20 percent of House seats constitutionally dedicated to the party-lists would finally be filled up. Yet the actual implementation of this ruling by the COMELEC in the 2010 elections proved to be a setback for bodies genuinely advocating alternative political platforms or the interests of marginalized, underrepresented sectors. Even as many party-list stalwarts such as Akbayan, Bayan Muna, COOPNATCCO, Gabriela, Butil and Anakpawis found themselves back in office, and were joined by new leftist organizations like Kabataan and ACT Teachers party-list, more questionable party-lists than ever had wormed their way past COMELEC accreditation procedures. According to estimates by the University of the Philippines-based think tank Center for People Empowerment in Governance, 79 percent of all party-lists that successfully garnered seats in the 258

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15th Congress were classifiable as “traditional” political entities, or as having extensive association with patronage-oriented political oligarchs, previouslyelected officials and administrations, business corporations, and religious denominations.44 Disturbingly, the son of Former President Gloria MacapagalArroyo, Mikey Arroyo, won as a sectoral representative of tricycle drivers and security guards via Ang Galing Pinoy. But on the whole, the participatory potential of the party-list system for non-elite sectors has already been hijacked. A powerful, though indirect, indicator of how unrepresentative the mechanism has become for the marginalized populations lay in the overwhelming number of sectoral representatives boasting net worth of more than PhP10M, a development which COMELEC officials have, since 1998, failed to address. By July 2012, 32 out of the 56 party-list representatives were of indubitable multi-millionaire status—the richest among them (Catalina Bagasina of ALE) boasting a net worth of PhP133.9 million. (See Table 5)

The future of political participation The significant contribution of Filipinos in the arena of protest politics and in marshalling political change has been People Power, marked by massive demonstrations affecting change without shedding blood. The 1986 and 2001 episodes ousted sitting presidents, though a largely urban poor-based uprising in late April 2001 was brushed aside. But what has been evident is the capacity of Philippine social movements, although in fluctuating capacities, to shore up massive mobilizations that demand change and retribution. In each of these crises, the capacity of existing regimes and the overall electoral process to elicit the consent of large and/or influential segments of the Philippine body politic has been weakened. While some try to dismiss the mass assemblies provoked by these participatory crises as exercises of “mob rule,”45 they have been among the most vivid actions demanding structural change. At the very least, they pose a continuing challenge to the elite consensus and have sustained the movement seeking more substantive reforms. They have also highlighted the increasing involvement of new actors that have started occupying political spaces for various ends. Three decades into People Power, Whither Philippine Civil Society, Social Movements, Citizens?

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In more than two and a half decades since the People Power Revolution of 1986, the limited democracy laid down by the 1987 Constitution has generally prevailed. While elements of continuity in terms of the ascendancy of political elites and the exclusivity of the political process have stayed, there have been on the other hand wide-ranging changes in state-society relations, relations among social forces, political tactics and techniques, and currents in public culture. The achievements of civil society have not been insignificant. Beyond the laws that have been passed with their support, their efforts have shifted the appreciation of political participation; and their relatively more programmatic and cause-oriented politics has pushed the bounds of political behaviour among ruling elites themselves.46 While this has not always translated into immediate legal gains on the part of the party-list groups, it has fostered a more conducive atmosphere for the development of a bloc of reform-oriented politicians and state administrators over the long run. The prospects for reforming the formal political process have remained mixed. Entry into and control of the political arena is still captured by a narrow elite, mutant NGOs have arisen (some bogus ones have been set up to siphon money off from appropriate public use), and sector representation has been hijacked by questionable party-list groups. By contrast, new democratic spaces have been opened up by new media and social networks, affording citizens new organizing and mobilizing tactics, and new platforms for political participation. A major achievement in the democratic landscape is the capacity of CSOs to forge larger, cross-cutting yet temporary constellations of social power that have at separate times brought together a variety of occasionally clashing interests to push for common goals: ousting (and electing) presidents, securing passage of policies and laws, reshaping the trajectory of government agendas and actions. This has been facilitated by the accumulation of competencies by CSOs and their party-list allies, such as in pressure politics, negotiation, lobbying, policy advocacy, media projection, programmatic research, election campaigning, and movement leadership.47 The dynamics of civil society and party-list groups have exposed them to both opportunities and risks. They have articulated clearer principles and procedures, not to mention exhibiting greater 260

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capacity, including in political bargaining and negotiation processes in recent years. These successes on the part of reform minded lawmakers, however, have also pushed the political-economic elite to be more formidable in the face of efforts to impinge on its interests. The recent Million People March in August 2013 against the pork barrel funds or Priority Development Assistance Funds has captured anew the imagination of political pundits, media, civil society formations as well as the general public. There have been efforts to initiate follow-up protest activities calling for the prosecution of those who have been involved and for the abolition of the source of corruption—the pork barrel. Though attempts at differentiation among the organizers and more established CSOs were witnessed in the lead up to the and even in the aftermath of Million People March, this emerging movement/s can be seen as an episode of the long tradition of People Power even as it also presents an interesting point for study. Organizers of the march claimed ownership by ‘citizens’ of the Luneta event versus the more political and organized groups or veterans of protest actions. Was this a conscious attempt to ‘break away’ from the People Power mould; will this generate a positive force towards change? One might also point out the contrast to previous ways of organizing, the march being mobilized mainly via the social media by new, previously unknown political actors. A final note has to be made of the potential new political constituencies that have emerged in recent years and are still emerging. Overseas Filipino Workers and their families, and the larger community of overseas Filipinos—despite their much-discussed ambivalence to national politics—comprise one such constituency, aided by their exposure to different cultures and the realization of their significant contribution to the national economy. The scores of idealistic youth who mobilized in the hundreds of thousands across the archipelago during the 2007 and 2010 elections, and who have since taken helm of ‘good governance’ and ‘anti-trapo’ movements form another. Still others may be emergent local business classes and small entrepreneurs in rural towns and districts, professionalizing and meritocratic segments of the civil service and the armed forces, and even some urban poor populations.


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Much easier said than done, but building political constituencies among these different publics have been and will continue to be indispensable in the years to come. The very success and institutionalization of political reform ultimately hinges not upon current institutions themselves, but upon the balance of power and relations between social forces driving— and opposing— them. If the strength of CSOs and allied party-lists to press for democratic consolidation has proven to be insufficient in itself, then the political clout of forces committed to political reforms, the infusion of ‘new politics’ and the attainment of ‘good governance’ must continue to be magnified, whether this takes the mode of party or movement-building endeavors or both. Building such a bloc of social forces, within and beyond the confines of activist civil society, leftist political parties, and social movements will form the foundation of any long-term strategy to attain political reform and decisively transform the political system of the Philippines. However much easier said than done building political constituencies among these different publics may be expected to be, these efforts have and will continue to be indispensable in the years to come, for the very success and institutionalization of political reform efforts ultimately hinges not upon those institutions themselves, but upon the balance-of-power and relations between social forces driving— and opposing— them. If the strength of CSO’s and allied party-lists to press for democratic consolidation has proven to be insufficient in itself, then the political clout of forces committed to political reforms, the infusion of ‘new politics’ and the attainment of ‘good governance’ must continue to be magnified, whether this takes the mode of party or movementbuilding endeavours or both.. Building such a bloc of social forces, within and beyond the confines of activist civil society, leftist political parties, and social movements will lie at the base of any long-term strategy at attaining political reform and decisively transforming the political system of the Philippines.

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Table 1. Selected Crossover Appointees during the Post-EDSA Presidencies* Presidency Corazon Cojuangco-Aquino (1986-1992)a

Fidel V. Ramos (1992-1998)a

Joseph EjercitoEstrada (1998-2001)b

Position

Person

Previous Organization

Executive Secretary

Joker Arroyo

FLAG

Labour Secretary

Augusto Sanchez

FLAG

Presidential Spokesperson

Rene Saguisag

FLAG

Social Welfare Secretary

Dr. Mita Pardo de Tavera

AKAP

Social Welfare Undersecretary

Karina ConstantinoDavid

PhilDHRRA

Environment and Natural Resources Secretary

Fulgencio Factoran

EMJP

Environment and Natural Resources Undersecretary

Delfin Ganapan

PFEC

Commission on Human Rights Chair

Jose Diokno

FLAG

Commission on Human Rights Commissioner

Sr. Mariani Dimaranan

TFDP

Secretary for Agrarian Reform

Ernesto Garilao

PBSP

Undersecretary for Agrarian Reform

Butch Olano

PhilDHRRA

Secretary for Environment and National Resources

Dr. Angel Alcala

Haribon

Undersecretary for Environment and Natural Resources

Delfin Ganapin

PFEC

Secretary for Health

Dr. Juan Flavier

PRRM / IIRR

Undersecretary for Labour and Employment

Dr. Rene Ofreneo

UP CIDS

Secretary for Agrarian Reform

Horacio Morales

PRRM

National Treasurer

Leonor Briones

Freedom from Debt Coalition

Housing and Urban Development Coordinating Council Chairperson

Karina ConstantinoDavid

HASIK / CODE-NGO

Technical and Educational Skills Development Authority DirectorGeneral

Ediciodela Torre

PRRM


263


Gloria MacapagalArroyo (2001-2010)b

Benigno “Noynoy” Aquino III (2010)c

Secretary of Agriulture

William Dar

ICRISAT / IRRI

Chairperson of Commission on Higher Education

Angel Alcala

Haribon

Presidential Assistant for Poverty Alleviation

Atty. Donna Gasgonia

FPE

Secretary for Agriculture

Leonardo Montemayor

FFF / ABA

Secretary for Social Welfare and Development

Corazon JulianoSoliman

CODE-NGO

Presidential Management Staff Head

Vicky Garchitorena

CODE-NGO / Ayala Foundation

NAPC Vice-Chair

Teresita Deles

NPC / GZO

NAPC Lead Convenor

Imelda Nicolas

WIN / UKP

Secretary for Social Welfare and Development

Corazon JulianoSoliman

CODE-NGO

Secretary for Budget and Management

Florencio Abad

FFF / KAISAHAN / ACSPPA

Presidential Adviser on Political Affairs

Ronaldo Llamas

BISIG / Akbayan

Presidential Adviser on the Peace Process

Teresita Deles

GZO / NPC

Undersecretary for Tourism

Vicente Romano (Resigned 2010)

Black and White Movement

NAPC Lead Convenor

Joel Rocamora

IPD

NAPC Undersecretary

Jude Esguerra

IPD

NAPC Undersecretary

Oyen Dorotan

WAND

Chairperson for Overseas Filipino Commission

Imelda Nicolas

WIN / UKP

Chairperson for Human Rights Commission

Loretta Rosales

IPER / FDC / Akbayan

Chairperson for Higher Education Commission

Dr. Patricia Licuanan

CAPWIP / APWW / SEAWWatch

Chairperson for Philippine Women Commission

Remedios IgnacioRikken

CAPWIP / PILIPINA

*Cabinet positions down to Undersecretary level only; Heads of Constitutional Commissions and select offices only Source: a— Clarke, G. (1998). The politics of NGO’s in South-East Asia: participation and protest in the Philippines. New York: Routeledge. b— Reid, B. (2008). Development NGOs, semiclientelism, and the state in the Philippines: from “crossover” to double-crossed. Kasarinlan, 23(1), 4-42. c— Various news reports from Philippine Daily Inquirer, Government Websites, etc.

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Table 2. Political Dynasties in Selected Philippine Congresses

Congressional Term

Number of Representatives with Relatives in Elective Office (House of Representatives)

Number of Senators with Previous Senator Family-Members (Senate)*

%

%

8th (1987-1992)

128

62%

6 (of 24)

25%

9th (1992-1995)

128

64%

-

-

11th (1998-2001)

136

62%

-

-

12th (2001-2004)

140

61%

7 (of 24)

29%

15th (2010-2013)

155

68%

10 (of 23)

42%

*Note: This estimate for Senators is based only for Senators with relatives who were previously elected to the Senate— this does not cover Senators with relatives in other elective positions Source: The Rulemakers: How the Wealthy and Well-Born Dominate Congress, PCIJ (2007) An Empirical Analysis of Political Dynasties in the 15th Philippine Congress, AIM Policy Center (2012) “An Even More Exclusive Senate?”, Rappler, AIM Policy Center (22 August 2013)


265


Table 3. Major Political Crises from 1986 to Present Year 1986

a

1997b

266

President

Tension Points

Form of Resolution

Ferdinand Marcos

• Lifting of Martial Law in 1981 but reduction of elections to publicity exercises • Tripling of size of AFP compared to pre-Martial Law figures • Indiscriminate politics of plunder by First family and associated cronies, with the extreme alienation of the traditional oligarchy • Protracted recession contraction with the onset of the Economic Crisis of 1983 • Amplified public resistance prompted by the assassination of Benigno Aquino Jr. in 1983, and the continued growth of the CPP-NPA

• NAMFREL reorganized to deter and publicize electoral fraud and violence in the 1986 snap elections • Launching of the Reform the Armed Forces Movement, and the mobilization of the 1986 People Power Revolution with the support of the Church and the US government • Ascent of Corazon Aquino to the Philippine presidency after Marcos’ flight from the Philippines

Fidel Ramos

• The first and foremost • The largest churcheffort to rewrite the 1987 supported mobilization Constitution, mainly on since the EDSA Revolution the basis of bringing major in 1986 was held on institutional changes to the September 21, 1997, Philippine political system bringing around 600,000 • The most prominent to the people to Rizal Park alone, proposed revisions to the and more than a million 1987 Charter included a individuals to the streets shift from a presidential to across the country a parliamentary system, the • On September 23, lifting of term limits on public 1997, the justices of the officials Supreme Court thumbed • The official attempts down the PIRMA initiative of Ramos and his allies on the basis of there being were paralleled by PIRMA no enabling law for it, (Peoples’ Initiative for Reform and glaring defects in the Modernization and Action)— petition an effort that purportedly gathered 6 million signatures supporting Constitution reform • The PIRMA initiative was hounded by numerous anomalies, and accused by critics of being orchestrated by Ramos himself

Chapter 8


2001a

Joseph Estrada

• Involvement in severe corruption scandals, illegal gambling operations and other “immoral” affairs • Alienation of majority of elites, middle class and segments of the poor due to exclusionary and non-professional presidential style • Resurgence of cronyism and cultivation of close ties with former coup plotters and military adventurists • Promotion of excessive military aggression and “total war” policy against insurgents

• Impeachment of Estrada by Congress in October 2000, and massive mobilization People Power II, with the support of the Catholic church, business elites, civil society groups, media and the military • Succession of VicePresident Gloria Macapagal Arroyo to the presidency • Retaliation of pro-Estrada urban poor population and elites through EDSA III protests and Malacañang riots in late April 2001 • Suppression of urban poor unrest through mobilization of presidential security forces and through extensive Arroyo political rebranding

20052006c

Gloria MacapagalArroyo

• Implication of First family and associates in corruption scandals and misuses of public office • Release of wiretapped evidence in 2005 solidifying accusations against widespread electoral fraud in the 2004 election • Moderate resurgence of the CPP-NPA and persisting security threats in Muslim Mindanao from Muslim secessionists and “terrorist” groups

• Use of pro-Arroyo Congress majority to abort impeachment processes • Slapping of restriction on permits for rallying and public protests • Temporary curtailment of civil liberties on FebruaryMarch 2006 to clamp down on coup attempts and urban mobilizations • Extrajudicial killings of radical provincial activists to prevent consolidation of the CPP-NPA

Source: a— Hedman, E.L. (2006). In the name of civil society: from free election movements to people power in the Philippines. Honolulu: University of Hawaii Press b— various news sources including the Philippine Daily Inquirer, GMA News Online, and KASAMA (the newsletter of the Solidarity Philippines Australia Network) c— various reports from the Philippine Center for Investigative Journalism


267


Table 4. Qualified Party-Lists and Number of Seats, 11th to 16th Congresses 11th Congress

12th Congress

13th Congress

Party-List

Seats

Party-List

Seats

Party-List

Seats

APEC

2

BAYAN MUNA

3

BAYAN MUNA

3

ABA

1

APEC

3

APEC

3

ALAGAD

1

AKBAYAN!

2

AKBAYAN!

3

VETERANS

1

BUTIL

2

BUHAY

2

PROMDI

1

CIBAC

2

ANAKPAWIS

2

AKO

1

BUHAY

2

CIBAC

1

NCSFSO

1

AMIN

1

GABRIELA

1

ABANSE! PINAY

1

ABA

1

PM

1

AKBAYAN!

1

COCOFED

1

BUTIL

1

BUTIL

1

PM

1

AVE

1

SANLAKAS

1

SANLAKAS

1

ALAGAD

1

COOP-NATCCO

1

ABANSE! PINAY

1

VFP

1

COCOFED

1

COOP-NATCCO

1

AMIN

1

ALIF

1

TOTAL

AN WARAY

1

20

TOTAL

24

Party-List

Seats

Party-List

14

TOTAL

Party-List

Seats

14th Congress

15th Congress

16th Congress Seats

BUHAY

3

AKO BICOL

3

BUHAY

3

BAYAN MUNA

2

COALITION OF ASSOCIATIONS OF SENIOR CITIZENS

2

A TEACHER

2

CIBAC

2

BUHAY

2

BAYAN MUNA

2

GABRIELA

2

AKBAYAN

2

1-CARE

2

APEC

2

GABRIELA

2

AKBAYAN

2

A TEACHER

1

COOP-NATCCO

2

ABONO

2

AKBAYAN!

1

1-CARE

2

AKB

2

ALAGAD

1

ABONO

2

OFW FAMILY

2

COOP-NATCCO

1

BAYAN MUNA

2

GABRIELA

2

268

BUTIL

1

AN WARAY

2

COOP-NATCO

2

BATAS

1

CIBAC

2

AGAP

2

ARC

1

A TEACHER

2

CIBAC

2

Chapter 8


ANAKPAWIS

1

AGAP

1

MAGDALO

2

AMIN ABONO

1

BUTIL

1

AN WARAY

2

1

ANAKPAWIS

1

ABAMIN

1

YACAP

1

KABATAAN

1

ACT TEACHERS

1

AGAP

1

LPG MARKETERS ASSOCIATION

1

BUTIL

1

AN WARAY

1

ABANTE MINDANAO

1

AMIN

1

ACT TEACHERS

1

ACT-CIS

1

AAMBIS-OWA

1

LPGMA

1

YACAP

1

KALINGA

1

APEC

1

YACAP

1

TOTAL

24

ANAD

1

AGRI

1

ANG KASANGGA

1

ANGKLA

1

BAGONG HENERASYON

1

ABS

1

ANG GALING PINOY

1

DIWA

1

AGBIAG!

1

KABATAAN

1

PUWERSA NG BAYANING ATLETA

1

ANAKPAWIS

1

ARTS, BUSINESS AND SCIENCE PROFESSIONALS

1

ALAY BUHAY

1

TUCP

1

AAMBIS-OWA

1

AGHAM

1

1-SAGIP

1

DIWA

1

AVE

1

KAKUSA

1

ATING KOOP

1

KALINGA

1

AMA

1

ALIF

1

1-BAP

1

ALAGAD

1

ABAKADA

1

1-UTAK

1

ANG NARS

1

1 ANG PAMILYA

1

ANAC-IP

1

AVE

1

AGBIAG!

1

AANGAT TAYO

1

APPEND

1

ATING KOOP

1

TOTAL

40

AA-KASOSYO

1

ALE

1

TOTAL

57

Source: Commission on Elections, Tuazon, B. M. (2011). 12 years of the party list system: marginalizing people’s representation. Diliman, Quezon City, Philippines: CenPEG Books.


269


Table 5. The Wealth of Party-List Representatives Average Wealth of Party-List Representatives by Congress Congress 11th Congress 12th Congress 13th Congress 14th Congress 15th Congress

Average Wealth of Party-List Representatives (PHP) 8,594,529.34 8,947,860.63 8,620,121.18 14,957,234.86 22,935,261.82

Net Worths of Party-List Representatives in the 15th Congress in Excess of P10-million Representative Mercado, Homer Cortuna, Julieta Pangandaman, Nasser Garin, Sharon Abayon, Daryl Grace Estrella, Robert Raymund Ortega, Francisco Emmanuel III Leonen-Pizarro, Catalina Briones, Nicanor Antonio, Patricio Palmones, Angelo Macapagal Arroyo, Juan Miguel Batocabe, Rodel Co, Christopher S. Marcoleta, Rodante Bagasina, Catalina Tomawis, Acmad Montejo, Neil Benedict Noel, Florencio Lico, Isidro Magsaysay, Eulogio Tieng, Irwin Velarde, Mariano Michael Jr. M. Guanlao, Agapito H. Cruz-Gonzales, Cinchona Ping-ay, Jose R. Ty, Arnel U. Sambar, Mark Aeron H. Arquiza, Godofredo Kho, David Lopez, Carol Jayne

Party-list 1-UTAK A TEACHER AA KASOSYO AAMBIS-OWA AANGAT TAYO ABONO ABONO ABS AGAP AGBIAG AGHAM AGP AKO BICOL AKO BICOL ALAGAD ALE ALIF AN WARAY AN WARAY ATING KOOP AVE BUHAY BUHAY BUTIL CIBAC COOP NATCCO LPGMA PBA SENIOR CITIZENS SENIOR CITIZENS YACAP

Net Worth (PHP) 65,014,804.52 15,244,000.00 14,655,000.00 25,868,194.23 23,443,903.76 12,597,927.00 17,200,743.36 40,375,377.50 46,018,319.00 55,641,886.76 17,966,567.60 99,254,309.00 30,237,702.50 91,063,195.68 12,200,000.00 133,938,000.00 48,530,000.00 19,690,000.00 13,105,000.00 14,114,222.68 24,240,000.00 20,054,633.83 53,326,935.26 15,691,000.00 11,022,340.30 19,400,000.00 15,184,112.50 11,640,820.00 19,985,000.00 59,521,695.31 29,444,000.00

Source: Cayabyab, M.J. and Flores, M.F. (2012, December 17). Millionaires, not marginalized Pinoys, dominate party-list seats in Congress. GMA News Online. (Based on an Undergraduate Thesis at the University of the Philippines College of Mass Communications)

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Notes 1 International Center for Innovation, Transformation and Excellence in Governance. (2008). Crossover leadership in Asia: staying whole in two halves (from civil society to government). Pasig City: INCITEGov, 25-26. 2 Abinales, P. N. and Amoroso, D. J. (2005). State and Society in the Philippines. Lanham, MD : Rowman & Littlefield Publishers, 237. 3 Pinches, M.D. (2010). The making of middle class civil society in the Philippines. In Y. Kasuya and N. G. Quimpo, The politics of change in the Philippines. Manila: Anvil Publishing, Inc., 295. 4 Clarke, G. (1998). The politics of NGOs in South-East Asia: participation and protest in the Philippines. London: Routeledge, 136. 5 Presidential Management Staff Office of the President. (1992, June). The Aquino management of the presidency: people empowerment, 3. Retrieved 17 March 2014, from http://www.coryaquino.ph/ coryaquino/assets/images/PeopleEmpowerment.pdf 6 ABS-CBN News. (2011, February 24). Milestones after EDSA 1: events that shaped the Philippines and the world. ABS-CBN News. Retrieved 17 September 2012, fromhttp://www.abs-cbnnews.com/depth/02/24/11/Post-EDSA-I-milestones-2 7 Magadia, J. (2003). State-society dynamics: policy making in a restored democracy. Quezon City: Ateneo de Manila University Press, 31. 8 Magadia, J. (2003). State-society dynamics: policy making in a restored democracy. Quezon City: Ateneo de Manila University Press, 30. 9 Lopa-Perez, M. et al. (2008). Crossover leadership in Asia: staying whole in two halves: from civil society to government. Pasig City, Philippines: International Center for Innovation, Transformation and Excellence in Governance, 24. 10 Clarke, G. (1998). The politics of NGOs in South-East Asia: participation and protest in the Philippines. London: Routeledge, 76-77 11 State-Society Dynamics, 32. 12 Reid, B. (2008). Development NGOs, semiclientelism, and the state in the Philippines: from “crossover” to double-crossed. Kasarinlan, 23(1), 21. 13 Karaos, A. M. (2003). Manipulating poverty with patronage, 2001 as cited J. Magadia, State-society dynamics: policy making in a restored democracy. Quezon City: Ateneo de Manila University Press, 165-166. 14 Reid, B. (2008). Development NGOs, semiclientelism, and the state in the Philippines: from “crossover” to double-crossed. Kasarinlan, 23(1), 32. 15 Reid, B. (n.d.). EDSA II, the Arroyo government and the ‘democratic left’ in the Philippines. Links International Journal of Socialist Renewal, Issue 25. Retrieved 17 September 2012, from http://links.org.au/node/36 16 Gutierrez, E. (1994). The ties that bind. Pasig City: Philippine Center for Investigative Journalism and Institute for Popular Democracy, 6. 17 Rocamora, J. (2007, February 6). Equal-opportunity violence. Philippine Center for Investigative Journalism iReport. Retrieved 17 September 2012, from http://pcij.org/stories/equal-opportunity-violence/ 18 Pedrasa, I. (2013, April 30). PNP monitors 15 ‘election hotspots. ABS-CBN News. Retrieved 1 May 2013, from http://www.abs-cbnnews.com/nation/04/30/13/pnp-monitors-15-election-hotspots 19 Coronel, S.S. et al. The rulemakers: how the wealthy and well-born dominate Congress. Quezon City, Philippines: Philippine Center for Investigative Journalism, 48. 20 Mendoza, R. U. et al. (2012). An empirical analysis of political dynasties in the 15th congress. Working Paper 12-001. Asian Institute of Management, January 1, 2012, 24. 21 Mendoza, R. U. et al. (2012). An empirical analysis of political dynasties in the 15th congress. Working Paper 12-001. Asian Institute of Management, January 1, 2012. 24. 22 In dynastic districts, poverty incidences are higher by five percentage points), poverty gaps by one percentage point, and poverty severity by half a percentage point than in non-dynastic districts. Mendoza, R. U. et al. (2012). An empirical analysis of political dynasties in the 15th congress. Working Paper 12-001. Asian Institute of Management, January 1, 2012. 27. 23 Silliman, G.S. and Noble, L.G. (1998). Organizing for democracy: NGOs, civil society and the Philippine state. Quezon City: Ateneo de Manila University Press, 291; 301. 24 Quimpo, N.G. (2008). Contested democracy and the left in the Philippines after Marcos. New Haven, CT: Yale University Southeast Asia Studies, 110.


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25 Silliman, G.S. and Noble, L.G. (1998). Organizing for democracy: NGOs, civil society and the Philippine state. Quezon City: Ateneo de Manila University Press, 302. 26 Quimpo, N.G. (2008). Contested democracy and the left in the Philippines after Marcos. New Haven, CT: Yale University Southeast Asia Studies, 110. 27 Clarke, G. (1998). The politics of NGOs in South-East Asia: participation and protest in the Philippines. London: Routeledge, 79. 28 National Peace Conference. (1999). The basic sector’s agenda for the post-Ramos administration. Kasarinlan, (14)3, 196-198. 29 Bello, W. et al. (2004). The anti-development state: the political economy of permanent crisis in the Philippines. London: Zed, 73-74 30 Quimpo, N.G. (2008). Contested democracy and the left in the Philippines after Marcos. New Haven, CT: Yale University Southeast Asia Studies, 109. 31 Quimpo, N.G. (2008). Contested democracy and the left in the Philippines after Marcos. New Haven, CT: Yale University Southeast Asia Studies, 110. 32 Ariate, J. and Molmisa, R. (2009). Two decades of the freedom from debt Coalition. In T.E. S. Tadem, (Ed.), Localizing and transnationalizing contentious politics: global civil society movements in the Philippines. Plymouth: Lexington Books, 34. 33 National Peace Conference. (1999). The basic sector’s agenda for the post-Ramos administration. Kasarinlan, (14)3, 196-198. 34 Ochoa, C.L. (1999). The rural sector and the Ramos administration. Kasarinlan, (14)3, 171. 35 National Peace Conference. (1999). The basic sector’s agenda for the post-Ramos administration. Kasarinlan, (14)3, 197-198. 36 Tuazon, B. M. (2011). 12 years of the party list system: marginalizing people’s representation. Diliman, Quezon City, Philippines: CenPEG Books, 3. 37 Convert this into a note which had been passed midway through the Ramos presidency due to the efforts of groups like the Consortium on Electoral Reforms and the Kilusang Mamamayan para sa Repormang Elektoral— provided that up to 20% (52 in absolute terms) of the total seats of the House of Representatives could be made available for elected party-list representatives from labour, farmers, urban poor, indigenous peoples, women, and other under-represented sectors, as subject to a voting scheme of proportional representation. Quimpo, N.G. (2008). Contested democracy and the left in the Philippines after Marcos. New Haven, CT: Yale University Southeast Asia Studies, 142. 38 Wurfel, J. (2008). Cited in N.G. Quimpo. Contested democracy and the left in the Philippines after Marcos. New Haven, CT: Yale University Southeast Asia Studies, 142. 39 Abinales, P. (2008).Notes on the disappearing middle in post-authoritarian Philippine politics, Kyoto Area Studies on Asia, Conference Paper, 184. 40 Tuazon, B. M. (2011). 12 years of the party list system: marginalizing people’s representation. Diliman, Quezon City, Philippines: CenPEG Books, 38. 41 Tuazon, B. M. (2011). 12 years of the party list system: marginalizing people’s representation. Diliman, Quezon City, Philippines: CenPEG Books, 37-38. 42 Navarro, A. and Elumbre, A. (2011, January-June). Labindalawang taon ng makakaliwang grupong party-list sa Kongresong Pilipino. Philippine Social Science Review, 63(1), 73-74. 43 Bello, W. (2013, February 11). The 15th Congress’ surprising output: a bumper crop of reform measures. Philippine Daily Inquirer. Retrieved 17 July 2013, from http://opinion.inquirer.net/46663/the-15th-congresssurprising-output-a-bumper-crop-of-reform-measures 44 Tuazon, B. M. (2011). 12 years of the party list system: marginalizing people’s representation. Diliman, Quezon City, Philippines: CenPEG Books, 152. 45 Mydans, S. (2001, February 5). People Power II’ doesn’t give Filipinos the same glow. The New York Times. Retrieved 17 September 2012, from http://www.nytimes.com/2001/02/05/world/people-power-ii-doesn-tgive-filipinos-the-same-glow.html 46 Bello, W. (2010, April 25). Is congress worth running for? Philippine Daily Inquirer, Retrieved 17 September 2012, from http://opinion.inquirer.net/viewpoints/columns/view/20100425-266394/Is-Congress-WorthRunning-for 47 Abao, C. V. (2011). Mapping and analyzing Philippine civil society organizations. In L. N. Yu-Jose, Civil society organizations in the Philippines: a mapping and strategic assessment. Quezon City: Civil Society Resource Institute, 5-8.

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conclusi on Nearly 30 years after the EDSA Revolution that was supposed to herald not only democratic change but economic prosperity, the Philippines is now experiencing a spurt of growth that has made it the economy to watch for according to the World Bank, the Asian Development Bank, and the ratings agencies. The president’s clean personal record and his commitment to root out corruption has provided the administration with an aura of good governance that gives positive signals to investors, although in 2013, a few members of his team were tarred by the pork barrel scandal. But that the country is on the verge of sustained development is a feeling that is not widely shared, except perhaps in business circles In the second decade of the 20th century, it might be said that the country underwent crony capitalism cum World Bank-promoted export oriented industrialization under Marcos; structural adjustment and debt-service-focused economics under Corazon Aquino; doctrinal neoliberalism under Fidel Ramos; and continuing commitment to neoliberal policies, though with less ideological rhetoric, on through the 21st century under the presidencies of Joseph Estrada and Gloria Macapagal-Arroyo. By 2010, when Aquino ascended to the presidency, neoliberal policies in the Philippines had been solidly entrenched, yet 25 years of neoliberal adjustment delivered precious little benefits to the Philippines, institutionalizing instead a low-growth economy. With the growth in GDP per capita averaging 1.6 per 273


cent per annum in the period 1990 to 2005, the Philippines’ economic growth record was the worst in Southeast Asia, with even all the so-called lower-tier ASEAN countries—Vietnam (5.9 per cent), Laos (3.8 per cent), Cambodia (5.5 per cent), and Myanmar (6.6 per cent)—significantly outstripping it.

The Corruption Question Neoliberalism still has few active defenders, but the popular explanation for the Philippines’ failure to launch is corruption. Corruption discourse is simple. It has villains that are all too obviously guilty, such as Gloria Macapagal Arroyo and Joseph Estrada. Corruption did divert cash from development to politicians’ pockets. And the key to sustained development is, especially for the middle class, obvious: eliminate corruption. Since corruption has become the most influential explanation for the Philippines’ underdevelopment, it might be worthwhile to devote some space to discussing it. Now, there is no doubt that corruption erodes governance, subverts democracy, and is morally corrosive. However, it is another thing to say that corruption and cronyism are mainly responsible for the Philippines’ failure to get out of the stagnation in which it is mired. The reason why one must be skeptical of this explanation is that in many other societies, periods of rapid growth have also been periods of endemic corruption in politics, and this observation includes England in the 18th century, the US in the 19th and early 20th centuries, and Korea in the late `60s to the `80s. Closer to home, corruption pervaded the politics of our Southeast Asian neighbors, such as Thailand, Malaysia, and Indonesia during their period of rapid industrialization from the mid-`80s to the mid-`90s, when they experienced six to 10 percent growth rates. Indonesia under Suharto, for instance, occupied the position the Philippines is now in, being regularly rated as the most corrupt government in Asia. Double-entry book-keeping, tax evasion, bribing of politicians and bureaucrats, and massive fraud were legendary in Thailand in its boom decade. 274

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Observations casting doubt on the correlation between stagnation and corruption have received confirmation from more systematic studies. Focusing on Southeast Asia, Mustaq Khan and Jomo K.S. found no simple correlation between the extent of rent-seeking and long-running economic performance, and found the thesis that crony capitalism caused the Asian financial crisis of 1997 a rather dubious one.1 Working with a bigger global sample, I.A. Brunetti, G. Kisunku, and B.Weder’s research found that, if at all, the impact of corruption on GDP growth is not significant.2 Other studies have found that, as in the case with population growth and poverty, the direction of causation is more likely to be from poverty to corruption rather than the other way around. Summing up the conclusion of a slew of studies on growth and corruption, Herbert Docena says, “Too many empirical anomalies undermine the conclusion” that corruption is a significant explanation for economic backwardness.3 What research has done is simply to confirm the intuitive sense that the customs agent that builds a house with ill-gotten wealth stimulates the economy as much as the middle manager who builds one with her legitimate savings. The difference between them lies not in their economic effects but in what their ethical and legal destinies should be: the former deserves to go to jail while the other deserves to enjoy the fruits of his/her labor. There is an added problem with the corruption explanation for stagnation, Docena argues.4 The popular discourse that attributes economic backwardness to corruption and cronyism plays into the dynamics of elite politics and that of multilateral institutions like the World Bank. “Corruption discourse” is the preferred weapon in the political competition among the different factions of the elite. It is discourse that performs the function of allowing elites to compete and succeed one another in office without fatally destabilizing a social structure that is shot through with inequity or taking on the massive task of reversing the unequal integration of the Philippines to the global capitalist economy through neoliberal policies. All this is not to say that corruption must be tolerated. Indeed, it is to be condemned. But let us be clear as to the reason why: it is because it erodes and eventually destroys the democratic social contract between the people and those they place in public office. Conclusion

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An Alternative Paradigm In the following section, we sketch out an alternative economic paradigm with the following key elements: • Development through equity • Reversing neoliberal policies • Ending debt-service economics • Employment-oriented fiscal and monetary policy • Agriculture First strategy • Industrial invigoration • Developing sustainability • Activist government

Development through Equity Dealing decisively with inequity and poverty is not just a question of justice. Creating consumers with purchasing power that would be the engine of economic growth is a critical element, especially as the country’s export markets are facing a long period of stagnation as consequence of the global recession. That economic growth is not enough to reduce inequity and poverty is shown by the fact that as of 2012, the level of poverty in the Philippines was practically the same as in 2006. The figures show that while the CCT program may play an important role in breaking the intergenerational cycle of poverty, it is limited in its impact in the short and medium term. There is no going around the fact that asset reforms that would entail a redistribution of wealth are indispensable to a sustainable development path, and agrarian reform is the most important of these measures.

Reversing Neoliberal Policies Asset reform is one conditio sine qua non for the launch into sustainable development. Another is reversal of the destructive neoliberal policies of indiscriminate trade liberalization, deregulation, and privatization. In the energy sector, this would mean radical amendment of the 2001 EPIRA Act, which 276

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would pave the way for government to once more have a direct role in energy generation and transmission. In trade, this would entail not only not entering into new free trade agreements with big powers like the US and European Union, but reinstituting quotas and pushing for exemptions from bad commitments. Among other things, this would mean freezing commitments to comply with the World Trade Organization’s Agreement on Agriculture and the ASEAN Economic Community’s reduction of tariffs within the region to zero by 2015.

Ending Debt Service Economics A third thrust must be to put an end to debt service economics, and key to this is repealing the Automatic Appropriations Law, which institutionalized servicing the foreign debt as the top priority of the annual government budget. With debt servicing now taking up from 20 to25 per cent of the national budget, this law gives the government relatively little resources for investment and little room for fiscal maneuver. It also has a depressing effect on consumption, since it is passed on to consumers in the form of the expanded value-added tax.

Employment-oriented Fiscal and Monetary Policy Fiscal and monetary policy is another critical area of reform. Right now, the paradigm in this area is the usual, obsolete IMF formula: inflation is the enemy. In the Philippines, where some 20 per cent of the work force is employed or underemployed, lack of decent jobs is the key problem. It is what drives the most dynamic of our workers overseas. A more flexible Keynesian manipulation of fiscal and monetary instruments, with bias towards low unemployment, is what is required at this point.

Agriculture First Strategy The country is in real need of a macroeconomic development strategy. “PublicPrivate-Partnerships” are not a strategy. They are an instrument for implementing a strategy, and one with a not very good record. As for “Inclusive Growth,” it Conclusion

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simply is a convenient, vacuous World Bank mantra. The key challenge is the hard decisions one must take to achieve inclusive growth, and those are the ones government tries to avoid, which is why a six to seven percent GDP growth rate does not translate into significant reduction of poverty and inequality. A strategy for development means making the hard decision of choosing the leading sector of the economy, based on a calculation that developing that sector would result in the maximum social and economic gains for the country as a whole compared to other strategies. It means pouring a significant amount of scarce resources into developing that sector. It does not mean though that other sectors will be neglected. In fact, another sector might also be accorded a strong emphasis and significant resources, but it must be subordinated to and integrated into the dynamics of the leading sector. In the last four decades, three sectors have been prioritized, though government technocrats were often not clear or were deliberately unclear they were prioritizing these: export-oriented industrialization under Marcos; labor export, which became very marked during the nine-year-reign of Gloria Macapagal Arroyo; and Business Processes Outsourcing (BPO’s), which, along with labor export, has dominated over the last decade, including in the first three years of the current Aquino presidency. Export-oriented industrialization has failed to develop backward linkages to create industrial suppliers to finished goods assemblers. Labor export has resulted in massive outflow of workers, including skilled workers, contributing to the failure to significantly develop high-value-added manufacturing industries; while the ability of BPO firms to get contracts has been notoriously dependent on global wage differentials. For a country like the Philippines, where the largest portion of the work force remains in agriculture and which has a large fund of agricultural knowledge in both its work force and its scientists, agriculture is well positioned to become the lead industry in a development strategy. At the same time, one of the key lessons of the last three decades is that deindustrialization via trade liberalization imposes severe costs in terms of job creation, skills transmission, and the integration of the economy. Thus, an appropriate strategy could be an 278

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agriculture-led strategy with a secondary though strong emphasis on industrial reinvigoration. The agricultural thrust of such a strategy would consist of the following elements:5 • Completion of the agrarian reform program, with a strong complement of support services;

• Substantially increasing public investments in the sector to ensure the delivery of essential support services. Priority must be accorded to the expansion of irrigation facilities so that these cover, at the very least, 80 percent of total irrigable areas.

• Engaging in agricultural trade policy to safeguard the economic viability of key sectors. The government must review free trade agreements with the end in view of reversing commitments that have negative impacts on local producers and declaring a moratorium on the implementation of liberalization schedules pending the results of the review.

Government must also explore all existing trade mechanisms to support small men and women farmers. These include: (1) pushing for maximum flexibility, such as exemption from tariff reduction, in the treatment of special products in agriculture in the WTO negotiations; (2) negotiating for special safeguard mechanisms that will enable the country to go beyond its current tariff bindings, also in the WTO and in other free trade agreements; (3) increasing government’s capability to use Sanitary and Phytosanitary Measures (SPS) in regulating agricultural imports.

• Systematically tapping the country’s huge domestic market for processed and unprocessed agricultural products by improving competitiveness in key commodity sectors while reducing dependence on agricultural imports. A task force can be created with the authority to draw up and implement a plan aimed at providing the necessary support and incentives, including for the creation of important forward and backward linkages, to produce, process, and manufacture agricultural commodities for the local market.

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• Provision of social protection for small farmers and fishers in the form of pension for seniors and educational scholarship for their children. Providing pension to men and women farmers aged 65 years old and above will not only help improve poverty conditions among the most vulnerable segment of farmers and fishers, this will also create incentives for others to engage in agricultural production.

• Strengthening of the regulatory framework for private sector agricultural investments to incorporate safeguards for small men and women farmers, food security, and environmental sustainability. Private investors can indeed help channel capital and other resources into the agricultural sector. However, government must ensure that these investments arrangements and partnership agreements are structured in a way that safeguards the welfare and livelihood of small farmers while ensuring that important socioeconomic goals such as food security and environmental sustainability are not compromised.

• Re-orienting other sectors to support agricultural development. Putting agriculture at the front and center of the country’s development agenda and strategy requires re-orienting key aspects of government’s development program so that these support agricultural development. In education, for instance, more scholarships can be provided for short and long term courses on agricultural production and agro-processing, and primary, secondary, and tertiary curricula can be recast to create appreciation for sustainable agriculture and agriculture related activities. In the energy sector, public and private investments can be leveraged to support the establishment of renewable sources of energy—such as smallscale hydro dams, windmills, and solar panels among others to support agricultural production, storage, and processing, especially in remote areas.

• In line with the complementary emphasis of industrial invigoration, developing a development of an agro-industrial sector that will specialize in providing inputs to agriculture, such as locally produced farm machinery and in the processing of primary products such as virgin oil. 280

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• Implementation of sustainable fisheries policies. The government must institute and implement policies to regulate aquaculture development in order to prevent unsustainable and ecologically harmful aquaculture practices, such as overstocking and overfeeding, which lead to overcapacity, fish kills, and marine pollution. Government must also take the lead in developing and adopting clear and comprehensive criteria to promote good aquaculture practices. These criteria should consider the short and long term, social, economic and environmental impacts of aquaculture projects on coastal communities. Additionally, government must increase its efforts to promote sustainable community-based coastal resources management as a sustainable way of supporting the livelihood of small fishers in coastal communities.

Industrial Invigoration The structural adjustment of the 1980s and 1990s devastated our industrial sector and savaged the ranks of the urban working class. The list of industrial casualties included paper products, textiles, ceramics, rubber products, furniture and fixtures, petrochemicals, beverage, wood, shoes, petroleum oils, clothing accessories, and leather goods. The textile industry shrank from 200 firms in the late `70s to less than 10 today. The shoe industry centered in Marikina is struggling for its life owing to the surge of Chinese-made shoes resulting from trade liberalization and smuggling. The key elements of industrial invigoration will be 1) an inventory of the status of the different sectors of industry, which will seek to determine which sectors can be salvaged and which should be let go; 2) a capital subsidy and trade protection program for selected industries which are deemed to be viable and can relatively easily regain competitiveness; 3) an increase in tariff rates in selected industries making use of the space afforded by the difference between applied and bound rates in the World Trade Organization agreements; 4) as mentioned above, development of an agro-industrial sector that will specialize in providing inputs to agriculture such as locally produced farm machinery and in the processing of primary products such as virgin oil; and 5) industrial policy. A smart industrial policy would aim at providing state support for pioneer Conclusion

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industries and services or industrial and service subsectors where the country is deemed to have initial advantages, especially in green technologies and information technology, e.g., web design and animation. Industrial policy need not focus solely on innovating in labor-intensive industries. As UN expert Manuel Montes explains, “industrial policy is all about technology that can be scaled up” with selective government support. Articulating linkages among the sectors of the economy will also be a key feature of the new industrial policy. As Montes puts it, “good policies in health and education, while they cannot strictly be considered industrial policy, could be relevant ingredients of industrial policy. For instance, government can put more support to science and technology research in the universities, and harness the country’s substantial healthcare work force towards the adoption of higher technology.”6

Developing Sustainability Any economic strategy must build in sustainability as an integral element. The lack of this has been a central feature of all development strategies that have been adopted till now. In agriculture, this means using local knowledge and local scientific expertise, promoting organic agricultural methods in place of both chemical-intensive agriculture, with its high environmental costs, and GMO technology, with the still unknown dangers it poses. When it comes to energy policy, moving away from a future dependent on greenhouse-gas-intensive coal-fired plants, which is the current policy, is essential. This means seriously implementing the Renewable Energy Act by developing solar, wind, geothermal, and other renewable energy sources. This will mean not only adapting to local use technologies developed abroad but also harnessing and cultivating local technical talent to set up a renewable energy production network that could become one of the pillars of an industrial renaissance. Climate proofing our communities is an urgent task that we have been taught by Yolanda, Pablo, and Sendong. This will be financed both with local 282

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appropriations and with funds the country will be entitled to from the Green Climate Fund established through the climate negotiations. Climate proofing can also serve as a stimulus for economic activity, not only for construction but also the manufacture of materials especially suited for extreme weather events.

Activist Government In his assessment of the failure of neoliberal economics, Justin Lin, former chief economist of the World Bank, asserts that the greatest flaw of the paradigm was its inability to recognize the role of the state as a “strategic facilitator” of development. “[I]t is important for a country to have a committed, credible, and capable government to perform the information, coordination, and externality compensation functions…By playing such a role, the state can overcome market failures and facilitate industrial upgrading and structural transformation.”7 “Import substitution,” says Lin, “is a natural phenomenon for a developing country climbing the industrial ladder,” one that must be supported by the state.8 Articulating his conception of the role of the state in what he calls the “New Structural Economics,” Lin says it must aim at actively promoting a country’s “comparative advantage” and push” industrial diversification.” In many ways, his vision of the state’s role is breathtaking, including “providing information about new industries, coordinating related investments across different firms in the same industries, compensating for information externalities of the pioneer firms, and nurturing new industries through incubation, attracting foreign investment, and encouraging clustering. The state also needs to lead in improving hard and soft infrastructure to reduce transaction costs for individual firms and facilitate the economy’s industrial development process.”9 One may not agree with some aspects of Lin’s proposed paradigm, such as placing the focus on gaining comparative advantage for export markets, but his renewed emphasis on the strategic role of the state resonates at a time that market-driven corporate globalization has failed to deliver sustained growth and sustainable development. Conclusion

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More than ever, development in the Philippines demands an activist government. Yet distrust of government has never been highest, undoubtedly because of the pork barrel scandal where key politicians were found to be channeling their priority development assistance funds to themselves via fake NGOs. The anti-corruption campaign today, influenced undoubtedly by key neoliberal institutions like the World Bank, has a message that amounts to throwing out the baby with the bath water: eliminate corruption by radically reducing the role of government in the economy. Nonetheless, there is also no question of returning to the Marcos era practice of crony capitalism with its incestuous ties between government elites and private monopolists. The solution to this development dilemma is not easy, but whatever solution will be eventually arrived at will involve more democracy. Democratic consultation of civil society on economic issues must be institutionalized at all levels of government. Indeed, all key economic decisions, such as which industries to prioritize or how much foreign debt the country can contract must be subject to direct democratic approval via referenda and similar mechanisms. Also essential will be the institutionalization of greater transparency through the passage of a Freedom of Information Law. A mobilized civil society is not in contradiction but is actually complementary to a strong, effective, activist government.

A Final Note Nineteen years of crony capitalism under a dictatorship followed by nearly thirty years of neoliberalism cum structural adjustment under an elite democratic system have left the country in dire straits. The old paradigm has failed. It is time for the country not only to talk about embarking on a new path but to actually begin doing so. If this book contributes in some way to this task, it will have fulfilled its objective.

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Notes 1

Mushtaq H. Khan and Jomo Kwame Sundaram, eds., Rents, Rent-seeking, and Economic Development: Theory and Evidence in Asia (Cambridge: Cambridge University Press, 2000), p. 4. 2 A. Brunetti, G. Kisunku, and B. Weder, “Credibility of Rules and Economic Growth—Evidence from a Worldwide Private Sector Survey,” background paper for the World Development Report 1997), cited in Jens Cher Andvig and Odd-Helge Fjelstad, Corruption: A Review of Comparative Research (Bergen, Norway: Chr. Michelsen Institute, 2001), p. 74. 3 The Anti-Development State: the Political Economy of Permanent Crisis in the Philippines (Manila: Anvil, 2009), p. 281 4 Ibid., pp. 285-286. 5 The following section is largely drawn from “Putting Agriculture in the Center of P-Noys’ Development Strategy and Agenda,” a policy paper for Akbayan (Citizens’ Action Party) authored by Riza Bernabe and Walden Bello, Nov 2012 6 Focus on the Global South, Media Release, Aug 2, 2011 7 Justin Yifu Lin, The Quest for Prosperity: How Developing Economies Can Take Off (Princeton: Princeton University Press, 2012), p. 93. 8 Ibid., p. 119. 9 Ibid., pp. 119-120.

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AC RONYM S ADB - Asian Development Bank AFMA - Agriculture and Fisheries Modernization Act of 1997 AFRIM - Alternative Forum for Research in Mindanao AFTA - ASEAN Free Trade Area AFTA-CEPT - ASEAN Free Trade Area-Common Effective Preferential Tariff AICO - ASEAN Industrial Cooperation Scheme AMCFP - Agri-Industry Modernization Credit and Financing Program APECO - The Aurora Pacific Economic Zone and Freeport ARC - Agrarian Reform Community ARMM - Autonomous Region in Muslim Mindanao ASEAN - Association of Southeast Asian Nations AVA - Alternative Venture Arrangement BCDA - Bases Conversion and Development Authority BGC - Bonifacio Global City BOI - Board of Investments BPO - Business Process Outsourcing CALABARZON - Cavite, Laguna, Batangas, Rizal & Quezon CARP - Comprehensive Agrarian Reform Program CARPER - CARP Extension with Reform CCT - Conditional Cash Transfer CDM - Clean Development Mechanisms CenPEG - Center for People Empowerment in Governance CES - Consumer Expectations Survey CFO - Commission for Filipinos Overseas CIDSS - Comprehensive and Integrated Delivery of Social Services 287


CISFA CLOA COMELEC CSO DA DAR DCP DENR DFA DOE DOJ DOLE DRTS DSWD EPIRA EPZ FDI FGD FIAS FINL FPIC FTI GDP GNI GOCC GTZ IFC IFI IFMA ILP IMF IP IPRA JPEPA K-Water LGC 288

- Comprehensive Shelter Finance Act of 1994 - Certificates of Land Ownership - Commissions on Elections - Civil Society Organizations - Department of Agriculture - Department of Agrarian Reform - Directed Credit Program - Department of the Environment and Natural Resources - Department of Foreign Affairs - Department of Energy - Department of Justice - Department of Labor and Employment - Development Roundtable Series - Department of Social Welfare and Development - Electric Power Industry Reform Act of 2001 - Export Processing Zone - Foreign Direct Investments - Focused Group Discussion - Foreign Investment Advisory Services - Foreign Investment Negative List - Free Prior and Informed Consent - Food Terminal Incorporated - Gross Domestic Product - Gross National Income - Government-Owned and Controlled Corporation - German Technical Cooperation - International Financial Corporation - International Financial Institutions - Integrated Forest Management Agreement - Import Liberalization Program - International Monetary Fund - Indigenous people - Indigenous Peoples’ Rights Act of 1997 - Japan-Philippines Economic Partnership Agreement - Korea Water Resources Corporation - Local Government Code

Ac r o n y m s


LGU MCBD MDG MFN MMDA MOLE MTPDP MW MWSS NAPC NCR NEDA NGO NHA NHMFC NIC NPC NPI NSCB NSO O&O ODA OECD OFW OWWA PADCC PAFID PARC PBGEA PDAF PEZA PIDS PKKK PMCJ PNOC

- Local Government Unit - Makati Central Business District - Millennium Development Goals - Most Favored Nation - Metro Manila Development Authority - Ministry of Labor and Employment - Medium Term Philippine Development Plan - Manila Water - Metropolitan Waterworks and Sewerage System - National Anti-Poverty Commission - National Capital Region - National Economic Development Authority - Non-governmental Organization - National Housing Authority - National Home Mortgage Finance Corporation - Newly Industrializing Country - National Power Corporation - Net Primary Income - National Statistics Coordination Board - National Statistics Office - Off-Shoring & Outsourcing - Official Development Assistance - Organisation for Economic Co-operation and Development - Overseas Filipino Workers - Overseas Workers Welfare Administration - Philippine Agricultural Development and Commercial Corporation - Philippine Association for Intercultural Development - Presidential Agrarian Reform Council - Philippine Banana Growers and Exporters Association - Priority Development Assistance Fund - Philippine Economic Zone Authority - Philippine Institute for Development Studies - Pambansang Koalisyon ng mga Kababaihan sa Kanayunan - Philippine Movement for Climate Justice - Philippine National Oil Company Ac r o n y m s

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POEA POLO PSE REDD SAP SEZ SMDC SME SMIC SRA TESDA TLA TRIMS TRP UCTEL UDHA UNCERD UNESCO UPA UPLB VLL WTO

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- Philippine Overseas Employment Administration - Philippine Overseas Labor Offices - Philippine Stock Exchange - Reduction in Forest Degradation and Deforestation - Structural Adjustment Program - Special Economic Zones - SM Development Corporation - Small and Medium Enterprises - SM Investments Corporation - Social Reform Agenda - Technical Education and Skills Development Authority - Timber License Agreement - Trade-Related Investment Measures - Tariff Reform Program - United Tribal Council of Elders - The Urban Development and Housing Act of 1992 - UN Commission on the Elimination of Racial Discrimination - United Nations Educational, Scientific and Cultural Organization - Urban Poor Associates - University of the Philippines Los Banos - Vista Land & Lifescapes Inc. - World Trade Organization

Ac r o n y m s

About the AUTHORS Walden Bello is a representative of Akbayan (Citizens’ Action Party) in the House of Representatives of the Philippines. He was founding Executive Director of Focus on the Global South and formerly a professor at the University of the Philippines. He is the author of 18 books, the latest of which are Capitalism’s Last Stand? Deglobalization in an Age of Austerity (London: Zed Books, 2013) and Food Wars (London: Verso, 2009).

Kenneth Cardenas taught sociology at the University of the Philippines Diliman from 2008 to 2010, and from 2011 to 2012. He received his MA (distinction) in Sociology from the University of Manchester and is BA, also in Sociology, from UP Diliman. He is presently working on a PhD in human geography at York University, Toronto. He studies the big business of building big new cities in the global South, the use and abuse of disaster risk management in defining, controlling, and expelling unwanted urban populations, and ways to create and claim new urban commons.

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Jerik Cruz has been a researcher at Focus on the Global South since 2010. He is an advocacy communications specialist focused on issues of poverty and inequality, land/environmental rights, and democratization. In various engagements with citizens’ movements, he has handled media advocacy campaigns fostering national interest on matters of land rights, land-grabbing, and tobacco tax reforms. He will be pursuing a Master’sdegree at the Graduate Institute of International and Development Studies in Geneva, Switzerland, starting August 2014.

Aya Fabrosis currently pursuing her PhD (Sociology) at the University of California, Berkeley. Prior to this, she was a research associate and editor at Focus on the Global South. She holds a Bachelor of Science degree in Economics and a Master’s degree in Sociology, both from the University of the Philippines Diliman. She was granted fellowship by the Asian Public Intellectuals Fellowship in 2010 for her study on migration.

Mary Ann Manahan is a program officerat Focus on the Global South, and works on the natural ‘commons,’ investments, social and environmental justice and gender issues. She has a Bachelor’s degree in Sociology and has taken core graduate courses on Women and Development Studies at the University of the Philippines Diliman. She was the first Initiatives in Critical Agrarian Studies (ICAS) Activist Fellow hosted by the Institute of Social Studies in The Hague, Netherlands. She contributed to the Anti-Development State: Political Economy of Permanent Crisis in the Philippines and co-authored the chapter, “Springs of Hope: Alternatives to Privatization and Commercialization of Water in Asia”, in Alternatives to Privatizations: Public Options for Essential Services in Global South.

Clarissa Militante is currently Head of the Philippines Office of Focus on the Global South, where she also served as Communications and Outreach Officer in 2010-2011. She has just completed (as scholar) her MFA in Creative Writing at the De La Salle University Taft, where she also got her AB Literature

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degree in 1985. Her debut novel Different Countries (Anvil, 2010) was longlisted in the 2009 Man Asia Literary Prize, and was a finalist in the 2011 UPMadrigal Gonzalez Best First Book Award. Her second novel We Who Cannot Be Daughters (UST Publishing House) is coming out inAugust 2014.

Joseph Purugganan is program officer at Focus on the Global South, coordinating its trade and investment, and climate justice programs in the Philippines. He coordinated the Stop the New Round (SNR) Coalition in 20032005. He currently co-coordinates the EU-ASEAN FTA regional campaign network, and is a member of the Asian Peoples’ Music collective.

Jenina Joy Chavez was Senior Associate and Coordinator of Focus Philippines Programme until 2011. She now coordinates the Industrial Policy Team of Action for Economic Reforms, and volunteers for campaigns on freedom of information and alternative regionalisms.

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ACK NOW LE DGE ME NTS This book is a work of genuine collaboration. While specific authors (Walden Bello for the Introduction and Conclusion, Kenneth Cardenas for Chapter 1, and Aya Fabros for Chapter 4) were mainly responsible for some of the chapters, the entire book benefitted from many hours of discussion by the team of authors on structure, content, sources, and even tone. The manuscripts went back and forth among several members of the team to undergo editing and copyediting. The arguments presented here were drawn and redrawn over the course of countless conversations, and the authors owe their heartfelt thanks and to many minds, and whose kindness the authors hope to return one day. We are particularly grateful to Dennis Murphy, Gus Cerdeña, Omi Royandoyan, Nepo Malaluan, Judy Pasimio who discussed with us during the inception workshop for this book. Buenaventura Dargantes, Cheryl Batistel, Jaybee Garganera, Bong Baltazar, Lirio Cordova, Manuel Aalbers, Cynch Bautista, Alvin Camba, Ging Gutierrez, Jess Hermosa, Philip Kelly, Hansley Juliano, Erick Javier and Rafaela David provided intellectual stimulation all throughout. We also thank friends, colleagues, and kindred spirits from the Urban Poor Associates, Action for Economic Reforms, Task Force Anti-APECO, and FES Academy of Political Management, the women of Pambansang Koalisyon ng mga Kababaihan sa Kanayunan (Rural Women’s Coalition) and the Atis of Boracay. 295


Menchie Flores-Obanil and Cess Celestino provided valuable research assistance for this project. Joy Manahan meticulously checked the endnotes and proofread the manuscripts. Amy Tejada did the book layout and cover. Qiqo Simbol did the tough job of rendering tons of data into a cohesive, comprehensible environmental vulnerability map, and downloaded digital materials for the team. This project would not have been possible without the generous book grant from Friedrich Ebert Stiftung, and we especially thank Berthold Leimbach and Gus Cerdeña for their huge encouragement and support. We also express gratitude to the staunch supportersof Focus Philippines Programme: Hanneke van EldikThieme, Frances Lo and the entire 11.11.11 team; Daphne Villanueva and the Christian Aid Philippine country office; Genevieve Talbot, Jess Agustin and Aida Vidal of Development and Peace. Our colleagues in Focus, past and present, provided not only inspiration, but served us good role models for us. Our deep appreciation to the other members of the current Focus team: Pablo, Shal, Afsar, Andrew, Megan, Lyn, Mansi, Soon, Note, Hamdi. Special thanks should also go to former members of this team: JC, Chanida, Praphai, Benny, Meena,… Mary Lou Malig. Marissa de Guzman, Julie delos Reyes and Herbert Docena deserve special mention for their invaluable contribution to Focus’ work in the Philippines that laid the foundation for this book. Finally, we thank our partners and children—our families—for their ineffable presence and inspiration especially when we were going through those grueling hours of writing, rewriting, editing our work. 296

Walden Bello Kenneth Cardenas Jerik Cruz Aya Fabros Mary Ann Manahan Clarissa V. Militante Joseph Purugganan Jenina Joy Chavez June 10, 2014

Ac k n ow l e d g e m e n t s

INdEX

A Agrarian reform…10, 16-18, 39, 117 Agribusiness… 123-126 Agriculture…15-18, 39, 105-111, 124-127, 270-272 Alternative economic paradigm….268-276 Civil Society Organizations (CSO)…240-243 Climate change…. 18-19, 126, 162-163, 166 Comprehensive Agrarian Reform (CARP)…. 16, 112-116 Comprehensive Agrarian Reform Extension with Reforms Act (CARPER)….17 Conditional Cash Transfer Program (CCTP)….9-10 Corruption… 266-267

D Debt service economics…. 12-14 Domestic manufacturing…39, 79 Automotive….39, 80-81 Textile industry…40, 79-80 Ecological crisis… 161-166 Forest conversion…169-170 Mining…165-166, 171, 175 Electricity Power Industry Reform Act (EPIRA)…21-22 Employment…82-83

E Environmental activism…176-179 297

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F Filipino capitalism…37-42, 58

G Global financial crisis…. 7 Globalization…. 15, 22, 25, 44 Business Processing Outsource (BPO)…23, 45 Electronics…23, 45 Growth statistics….. 8

I Indigenous people… 172-174 Inequality…228-230 Investment policy… 74-75

L Labor export….24-27, 45, 133-140, 144-152 Human trafficking….27 Labor migration problems…140-143 Remittances…145-146, 149

M Model debtor strategy…. 12

N Neoliberal path…. 11 Neoliberal restructuring….11 Neoliberalization…42, 47, 52-54

P Party-List system…248-250 People power… 239-240, 250-251 Philippine Overseas Employment Administration (POEA)…. 138, 153-154 Philippine politics…244 Philippine state…30-32

298

INDex

S t a t e o f Fr a g m e n t a t i o n : T h e P h i l ippin e s in T r a nsiti o n

Population control…222-223 Pork barrel….9 Poverty alleviation…215-221, 230 Aquino, Benigno … 220-221 Aquino, Corazon … 216 Arroyo, Gloria Macapagal…219-220 Estrada, Joseph… 218-219 Ramos, Fidel… 217-218, 246-247 Priority Development Assistance Fund (PDAF)….9 Privatization…. 20-22, 42-43, 76-77 Energy privatization…21 Water privatization….20, 170

R Real estate…. 48-52, 56-57 Rural migrants…119-122, 190

S State of poverty…12 Structural adjustment…. 14-15, 227

T Tariff Reform Program (TRP)…70, 73 Trade liberalization….19, 44, 73-75, 78-79, 110

U Urban development… 48-52, 56-58 Urbanization… 187-199 Housing…195 Slum dwellers…188-189, 192, 199-202 Urban underclass…191-192, 194, 203

INDex

299

Bello Et. Al - State of Fragmentation

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