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Birdtalk 2017 Midyear PDF
Birdtalk 2017 Midyear PDF
Birdtalk 2017 Midyear PDF
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Economic and Political Briefing
Dutertenomics:
Loose Change, Lost Cause
The Duterte administration is using populism and growing authoritarianism to carry out
anti-development neoliberal policies. This resulted in flimsy changes for the people in
the year gone by and will result in more underdevelopment in the years to come. Greater
authoritarianism also brings the danger of even more severe neoliberal measures being
pushed.
Reported economic growth appears to be rapid. But just beneath the surface is an unabated
growing socioeconomic crisis for the majority of Filipinos. Neoliberalism has long been
exposed as a futile effort for bringing development. The economy is, from a development
perspective, in breakdown rather than breakout mode.
Pres. Rodrigo Duterte did things that previous national leaders either never did or at least
did not do as showily. Foremost was the strident posturing against United States imperialist
intervention and against oligarchic elites. Cabinet positions were offered to members of
the revolutionary underground Left, albeit to positions peripheral to the core of economic
policymaking. These had some symbolic significance especially coming from the head of
state.
Yet despite much bluster, established structures of elite power clearly remain ascendant,
and the Duterte administration is not the catalyst for accelerated change that it projected
itself to be. Far from it. Progressive pro-people economic policies would have gone far
in improving the lives of tens of millions of Filipinos. Yet these were avoided for being
objectionable to foreign capital and domestic ruling elites. More than the presidents
idiosyncrasies, this defines the administrations character.
There were fragments of unthreatening reform in agriculture, social welfare, labor, and
education. The peace process with the revolutionary Left resumed after years of inactivity.
Foreign policy has appeared to shift vis--vis the US but only ever so slightly. But many still
remain tentative including those that do not even really infringe on elite rule or their narrow
economic and political interests.
A year into the new administration, the changes are scant for the countrys millions of
small farmers, workers, urban poor, indigenous peoples, and other working people. There
have even been serious setbacks in the course of the controversial war on drugs and since
the declaration of all-out war against the New Peoples Army (NPA) and of martial law in
Mindanao.
They chose to stay the course, which makes one year enough to assess Dutertenomics. From the very
start, Pres. Duterte said that he saw nothing wrong with the countrys economic policies; his economic
managers also immediately announced that they would continue macroeconomic policies from the
previous administration. They confirmed this with the neoliberal Philippine Development Plan (PDP)
2017-2022 and dutiful market-oriented policies over the past year.
The government and business press portray the economy as on some kind of a roll. Dutertenomics and
the coming golden age of infrastructure will supposedly bring even greater things the Philippines will
be an upper-middle income country and a prosperous middle-class society where no one is poor by
the end of Pres. Dutertes term in 2022.
The important questions to ask then are: Is the Philippines on the road to real economic development?
What explains the apparent high economic growth? What has the growth meant for the people? What is
Dutertenomics and what will this mean for the country?
40.4 48.9
40.1 These high domestic
40.4
Services
Services
Services
unemployment rates even
40.4 48.9
40.1
40.1
80 Production
Services
35.9
% of GDP
7.1
7.1 11.0 Public utilities
Manufacturing
Public utilities
50 48.9
7.1 11.0
11.0 Public utilities
Agriculture
Employment conditions also
7.1 40.4 11.0
9.2 Agriculture
Public utilities
Agriculture remained poor with repressed
40 39.2
4.9 9.2
4.9
11.0
9.2 Agriculture
real wages, low benefits, growing
4.9 9.2
61950
4.9
1960 1970
30 35.9 1980 1990 2000 2010 2016 Agriculture
contractualization and other
61950
61950 1960
1960 1970
1970 1980
Year
1980 1990
1990 2000
2000 2010 2016
9.2
2010 2016 24.3 irregular work, and a large
4.9
61950 1960 1970
20 1980
Year
Year 1990 2000 2010 2016 informal sector. These were
7.1
61950 1960 1970 Year
1980 1990 2000 2010 2016 partly reflected in stubbornly high
10 Year
11.0
9.2 underemployment rates since
4.9
the 1990s, some one-in-five (20%)
- of employed Filipinos are looking
1946 1950 1960 1970 1980 1990 2000 2010 2016
for additional work because of
Year
their inadequate earnings from
* - data for 1946-1997 are based on estimates at constant 1985 prices, while the work they have. This figure
data for 1998-2016 at constant 2000 prices moderated only slightly to an
Source: Philippine Statistics Authority National Accounts of the Philippines annual average of 18.9% in the
period 2010-2016.
Chart 2
Unemployment rate, 1956-2016 (in %)
15
15
11.2 10.9
11.2 10.9
Unemployment rate (%)
10
Unemployment rate (%)
10
IBON
IBONIBON estimated
estimated
estimated
9.0 9.0 unemployment rate
unemployment
unemployment rate
rate
7.4 7.4
Official
Ocial
5 5 Ocial
5.5 5.5 unemployment
unemployment
unemployment rate
rate
rate
-
- 19561960 1970 1980 1990 2000 2010 2016
19561960 1970 1980 1990Year 2000 2010 2016
Year
Year
Note: There have been many changes in the official methodology for estimating the unemployment rate in the country. The most
significant was in 2005 when additional criteria to count as unemployed was added that drastically reduced the number of unemployed
and the unemployment rate. IBON computes an alternate estimate to make comparisons with previous periods possible. Other changes in
methodology in 2013 and 2016 would, strictly speaking, also prevent comparison but the discrepancy here is much less.
Source: Philippine Statistics Authority Labor Force Survey
Interest
15.0
20.0
Government debt measured as a share
Interest rates
of GDP has been falling from 68.5% 10.0
15.0
in 2005 to 42.1% in 2016. (See Table
2) On the other hand, private debt 5.0
10.0
increased from from 33% of GDP to
46.3% over the same period. Overall
5.0-
debt in the economy fell with the 1986 1990 1995 2000 2005 2010 20152017
Arroyo governments aggressive fiscal May
-
management after 2005, but then 1986 1990 1995 Year
2000 2005 2010 20152017
started to rise after 2010 to reach May
Year
88.4% of GDP in 2016. Government Bank Average RRP Rates Interbank Call
Year (Overnight)
investment spending has also been
Lending Rates Loan Rates
Chart 5) By industrial
14.6
origin, the 4.9% first 10
4.5
quarter 2017 growth in
agriculture is the fastest -
since 2012. (See Table 1) 1989 1995 2000 2005 2010 Jan-May 2017
This is welcome although
(10) Year
not likely to be sustained
without any signs of
major changes in the (20)
Chart 6
Nominal and real average daily basic pay of wage and salary workers, 2001-2016 (real value in
2006=100; in Php)
500
400.95
400 Nominal
Amount (Php)
200 222.29
100
-
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Philippine Statistics Authority Year
Table 5
Gross domestic capital formation in durable equipment by major type, 2016 and 1st quarter
2016 and 2017 (at constant 2000 prices; in Php million)
Type of equipment 2016 1st Quarter 2016 1st Quarter 2017
Durable Equipment 1,262,541 335,642 377,722
A. Machinery specialized for particular industries 259,110 84,177 86,109
1. Agricultural machineries 4,828 2,221 3,139
2. Tractor other than steam 392 130 189
3. Mining, construction machineries 41,653 9,848 11,950
4. Textile machineries 3,729 1,416 1,867
5. Sawmill and logging machineries - - -
6. Sugarmill machineries 635 297 31
7. Pulp and paper machineries 3,010 568 367
8. Metal working machineries 15,515 4,237 5,396
9. Telecommunications and sound recording/reporting equipment 93,827 29,889 30,995
10.Other special industrial machinery 95,522 35,572 32,174
B. General industrial machinery and equipment 193,906 49,391 60,412
1. Aircon & refrigeration equipment 33,872 10,782 13,184
2. Pumps and compressor 24,110 11,002 10,407
3. Other electrical machinery and apparatus 50,515 3,317 4,615
4. Other general industrial machinery 85,410 24,290 32,207
C. Transport equipment 618,360 147,857 164,563
1. Road vehicles 559,704 142,480 154,889
2. Railway transport 5,915 130 178
3. Air transport 27,025 1,329 1,104
4. Water transport 25,717 3,917 8,391
D. Miscellaneous equipment 191,165 54,217 66,638
1. Office machines and data processing 44,748 7,473 6,188
2. Other miscellaneous durable equipment 146,417 46,744 60,451
Source: Philippine Statistics Authority National Accounts of the Philippines
Chart 7
Selected fiscal indicators, 2007-2016 (in % of GDP)
20
17.6
16.7 Expenditure effort
10
GDP ratio (%)
(0.2)
-
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
(2.4)
GDP ratio
(5)
Year
China has been reported to be willing to provide Dutertenomics does not change that flawed
anywhere from US$24 billion to over US$50 economics. Quite the opposite, it is preoccupied
billion in ready and cheap financing from ODA with looking for what else can be done to
and commercial tied loans. This seems to be make the economy more profitable for foreign
mainly from the China Development Bank and capital and domestic big business. Decades of
the Export-Import Bank of China. This does not globalization have already drastically altered the
yet include possible financing from the China- Philippine economic policy landscape and led to
dominated Asian Infrastructure Investment Bank further underdevelopment. The administration
(AIIB). The Philippines is also an active member is just building on these policies and has lined up
of the AIIB and is pitching to be part of Chinas the next wave of pro-business and anti-people
One Belt, One Road infrastructure offensive neoliberal measures.
particularly its maritime Silk Road component.
These are distinct from the US$15 billion in The Duterte administrations neoliberal agenda is
investment pledges mostly made between private central to getting the strategic support of foreign
Philippine and Chinese companies. and domestic big business, on top of the smaller
Mindanao-based landlords and Filipino-Chinese
Japan has long been the single-biggest country capitalists he relied on during the elections. The
source of ODA. This appears likely to continue administrations 0+10-point Economic Program
with the Japan International Cooperation Agency and PDP 2017-2022 is a conventional package of
(JICA) considering the financing of Php457 billion policies to increase the profits of foreign investors
worth of primarily railway projects Php230 and protect the wealth of Filipino oligarchs. Pres.
billion Manila Metro Line 9 (Mega Manila Subway Duterte himself is in favor of relaxing the 60-40
Project - Phase 1) and Php212 billion PNR North 2 Filipino-foreign ownership rule in the Constitution
(Malolos-Clark Airport-Clark Green City Rail) but and of up to 100% foreign ownership even of
also a few water projects. There is also reportedly utilities.
US$17.2 billion in investment pledges for mass
transport, roads, water, and power projects. The PDP 2017-2022 will fail to develop the
Philippines as declared by the government. This
Economic relations with Russia, meanwhile, is because it does not offer anything new. (See
are still developing. The presidents high-profile IBONs PDP 2017-2022: Unchanged Market
trip to Russia resulted in new agreements on Fundamentalism [Jun 06, 2017]) It is still afraid
defense and economic cooperation, but, so far, to reform inequities in assets, wealth, income,
few financial or economic commitments. It is not and opportunities. It still equates development
clear what the Russian commitment to purchase with growing businesses and profits even if only
US$2.5 billion in fruits and vegetables means in for just a few. It is still fixated on attracting foreign
practice. Likewise with business-to-business deals investors over making domestic capital flourish. It
worth US$875 million reported to be in progress. still refuses to acknowledge that the government
Foreign capital will continue its control over The anti-poor pro-rich CTRP deserves special
Philippine-located manufacturing directly and attention. The proposed tax reform program
through local adjuncts subordinated in global reduces taxes on wealthy families, domestic big
value chains. Filipino oligarchs will remain business, and foreign investors and offsets this
entrenched in natural resource extraction with higher consumption taxes on the countrys
(e.g. mining, agricultural exports) as well as in poor majority. The first part of the Duterte
utilities (e.g. telecommunications, power, water, administrations CTRP was passed by the House
transport), social services (e.g. schools, health), of Representatives (HOR) as House Bill No. 5636
retail trade, real estate, construction, and finance. or the Tax Reform for Acceleration and Inclusion
Investment liberalization will let foreign capital Act (TRAIN). The main opposition to the grossly
make even deeper inroads in partnership with inequitable law from the progressive Makabayan
domestic capital. All these will result in growing bloc was routed by 246 lawmakers from the
inequality and worsening material insecurity. presidents supermajority voting in favor. The
measure is up for deliberations at the Senate.
This is not Marcos-type authoritarian rule Looked at this way, the current populist
with prominent crony-driven state enterprises administration seems the logical result of decades
Presidential discretion has a disproportionate One factor is certainly how the US has counter-
influence in the president-centric political system maneuvered to ensure that the Philippines
of the Philippines. This context of relatively weak remains in its orbit. The levers of US influence in
political institutions is among the reasons that the country remain far-reaching and, aside from
the unconventional Pres. Duterte could give the the Armed Forces of the Philippines (AFP), include
impression that some kind of pro-poor and anti- politicians and technocrats, big business interests,
elite change could emanate from him. mass media, the diplomatic community, and many
others. The presidents one-dimensional anti-US
The impulses against overbearing US intervention, stance has all too easily folded into standard US
for the resumption of peace talks with the NDFP, priorities: anti-terrorism, counter-insurgency, US
and to offer Cabinet positions to members troops and military facilities, and affirmation of
the Communist Party of the Philippines (CPP) the defense agreements, namely Visiting Forces
were, for instance, projected as changes for Agreement (VFA), Mutual Logistics Support
the better. They were certainly in stark contrast Agreement (MLSA), and Enhanced Defense
to the positions taken by the previous Aquino Cooperation Agreement (EDCA). Nationalist
administration, which was rabidly pro-US and protests against the US military presence
extremely anti-Left. continued in Manila as well as in Mindanao.
However, by the start of 2017 and especially by The US government reduced its programmed
the middle of the year, it became clear that these assistance to the Philippines in line with
were calculated moves with more pragmatic developments in US-Philippines relations.
motives. The opposition to these measures is Economic, military, and security aid was reduced
considerable, so the extent to which real reform to US$70.3 million for 2018, which is less than
efforts would have produced meaningful results half the US$188.0 million for 2017 and the lowest
was always going to be uncertain. In any case, there since 2001. (See Table 8) This is not likely to be a
was no genuine presidential will to press these long-term thing though. Although Pres. Duterte
initiatives to their logical conclusions, so the has said that he is willing to reject aid to assert
results have at best been exceptionally sparing. the countrys independence, the administration
was quick to accept US assistance upon the
Pretended independent foreign policy Marawi crisis. It also by no means certain that
China and Russia will be providing enough
The verbal tirades against US interventions in the support, and especially the kind of support that
country and global abuses were meaningful in the AFP demands.
coming from the head of the neocolonial state.
The most immediate motivation for The Supreme Court has on two occasions now
authoritarianism is likely to be able to more supported rather than challenged the president
aggressively put down opposition to advance the first being on the burial of the dictator
its neoliberal economic agenda higher taxes Ferdinand Marcos in the Libingan ng mga
opposed by the poor, wage and union repression Bayani and the second being the support for his
opposed by workers, land conversion and declaration of martial law across the whole of
reconcentration being opposed by farmers, Mindanao. Eleven of 15 justices ruled to dismiss
debt-driven short-term stimulus opposed by the the challenges to the presidents declaration
public bearing the burden of repayment, big-ticket for 60 days beginning on May 23. The AFP is
infrastructure projects opposed by communities seeking an extension of martial law in Mindanao
to be displaced or by oligarchs bypassed and left that Congress is discussing. The Speaker of the
out, charter change opposed by nationalists out to House of Representatives has even floated the
preserve economic sovereignty, and others. There idea of extending martial law until the end of the
is also the presidents still unformed federalist presidents term in office.
project.
Human rights violations and militarization
There are already many signs of the are long-standing features in the Philippines,
administrations authoritarian character especially, but not only in the countryside. The
and actively projected by Pres. Duterte. The independent human rights group Karapatan has
presidents reputed links to death squads, while monitored 68 extrajudicial killings and 4 enforced
he was still Davao City mayor was an early, but disappearances since the start of the Duterte
small sign. Upon taking office, however, Pres. administration, from July 2016 to June 2017. (See
Duterte has repeatedly flaunted his penchant Table 9) The most number of rights violations
for using force starting with his banner war on were the 416,005 victims of forced evacuation,
drugs. He has been vocal about his disdain for followed by 357,569 victims of indiscriminate
human rights especially civil liberties and political firing, 42,894 victims of threat, harassment and
rights. He has spoken recklessly of shutting down intimidation, and 26,666 victims of violations
Congress and ignoring the Supreme Court if they of the use of schools and other public places
go against him. for military purposes. Karapatans human rights
statistics reveal that the Duterte administrations
He repeatedly and publicly gives signals to first year was generally worse compared with the
the military and police that they can act with first year of the previous Aquino administration.
impunity putting this into visible practice with
the reinstatement of the 19 police officers who This does not yet include another wave of
killed mayor Rolando Espinosa last year. More evacuations by Lumad communities of Lianga,
subtly, Pres. Duterte has appointed at least 59 Surigao del Sur in July just weeks before the
retired military generals, police directors, admirals president delivers his state-of-the-nation address
and colonels to his Cabinet and other agencies, (SONA). These are organized communities fighting
including government-owned corporations. This against land-grabbing, militarization, and plunder
helps him build loyalties and networks among the of their mineral resources who only recently
military as well as potentially facilitates stronger returned and started rebuilding their schools.
control of the civilian bureaucracy if such need Renewed military operations including the use of
arises. aerial assets have driven 442 families with some
2,046 people back to evacuation centers. There
Further potential conditions for authoritarianism are also reports of the military blocking donations
are the supermajority in both houses of Congress of food and medicines.
and the intimidation of the traditional political
Table 9
Number of victims of violation of civil and political rights, July 2010-June 2011 and July 2016-
June 2017
July 2010- July 2016-
Violations
June 2011 June 2017
Extrajudicial killing 48 68
Enforced disappearance 5 4
Torture 29 52
Frustrated extrajudicial killing 13 123
Illegal arrest without detention 56 842
Illegal arrest and detention 95 127
Illegal search and seizure 78 55
Physical assault and injury 32 126
Demolition 5,722 114
Violation of domicile 87 216
Destruction of property 5,006 3,477
Divestment of property 52 109
Forced evacuation 3,010 416,005
Threat / Harassment / Intimidation 9,589 42,894
Indiscriminate firing 5,047 357,569
Forced / Fake surrender 32 76
Forced labor / Involuntary servitude 33 17
Use of civilians in police and/or military
operations as guides and/or shield 15 65
Use of schools, medical, religious and other
public places for military purpose 5,245 26,666
Restriction or violent dispersal of mass actions,
public assemblies and gatherings 803 1,812
Source: KARAPATAN Alliance for the Advancement for People's Rights
a
- These figures do not include an additional undetermined number due to incomplete reports.
b
- These include civilians merely alleged or accused by the AFP as NPA members and supporters but still killed, wounded or
illegally detained. Details can be provided upon request.
c
- All monitored incidents took place outside the declared unilateral ceasefire period separately announced by the
Government of the Repulic of the Philippines (GRP) and the Communist Party of the Philippines-New People's Army (CPP-
NPA) in light of the resumption of the formal peace talks beginning in August 21, 2016.
d
- Includes 52 incidents that are within the declared unilateral ceasefire period separately announced by the GRP and the
CPP-NPA. The GRP announced that its unilateral ceasefire ends on February 3, 2017, while the CPP-NPA on February 11,
2017.
AFP - Armed Forces of the Philippines
CAFGU - Citizens Armed Forces Geographical Unit
NPA - New People's Army
PNP - Philippine National Police
Source: Various publications monitored by IBON