Session 2.

NOTES ON PHILIPPINE ECONOMY

Philippines Regional Position Indices

I. World Economic Forum’s Global Competitive Report

A. Infrastructure

B. Strength of Government Institutions

C. Macroeconomic Conditions

D. Quality of primary and higher education

E. Efficiency of work force

Philippines :

- 85th in 2010 (out of 139 countries ranked

- 47th in 2015

- 56th in 2017

- Lower rung of competitive nations

- Better only than Laos,

Cambodia, Myanmar

II. International Finance Corp.’s Ease in Doing Business Report

- Referred to by potential investors

- Measures number of hours and steps to:

1. Register a business

2. Obtain govt permits

3. Install electricity

4. Apply for credit

5. Pay taxes

6. Trade across borders

Philippines:
 - 148th position in 2010 (out of 183 countries evaluated)

- 99th in 2016

- 113rd in 2017

- In ASEAN, better only than Laos, Cambodia, Myanmar

III. Transparency International’s Corruption Perception Index

- shows how corrupt a nation by perception

- indicates good governance

IV. Global Innovation Index

Assessment of innovation performance (128 countries) :

- Nation’s policies on Innovation

- Ability to innovate

- Level of education

- infrastructure

- business sophistication
Philippines (out of 128 countries) : - 91st in 2010

- 73rd in 2018

POLITICAL HISTORY

 Marcos Regime

Martial Law, Sept 21, 1972

Enrile assasination

 30,000 detainees

 Newspapers were shut down

 Congress was abolished

 NPA and Muslim insurgents

 New Society
  Imelda MarcoS

 Cronyism

- Newpaper, broadcast

network, Meralco

- Armed Forces of the

Philippines

- US Military Bases

 Aquino Administration

- Transition period

- Severe recession in 1984-85

- Coup d'etat

- Davide Commission

 Ramos Administration

- One of the Philippines’ highest GDP rates

- Liberalization, privatization and deregulation

 Estrada Administration

- Vice President Joseph Estrada, a former movie actor, was elected to the presidency with
a landslide victory in the 1998 elections,

- Erap para sa Mahirap

- Under the cloud of the Asian financial crisis which began in 1997, Estrada's wayward governance
took a heavy toll on the economy. Unemployment worsened, the budget deficit grew, the
currency fell. Eventually, the economy recovered but at a much slower pace than its Asian
neighbors.

In late 1999, Estrada waged an all-out war against the separatist Moro Islamic Liberation Front
in Central Mindanao, which displaced half a million people. In March 2000, the bandit group Abu
Sayyaf kidnapped to Basilan 21 hostages, including 10 foreign tourists, from the Sipadan Island
resort in neighboring Sabah, Malaysia. They were freed in batches after over $20 million ransom
were reportedly paid by the Libyan government.
 In October 2000, Estrada was charged of receiving millions of dollars in illegal gambling payoffs.
He was impeached by the House of Representatives, but his impeachment trial in the Senate
broke down when the senate voted to block examination of the president's bank records. In
response, masses of people protested and demanded Estrada's resignation. Estrada's cabinet
resigned en masse and the military and police withdrew their support. On January 20, 2001, the
Supreme Court declared the presidency vacant and swore in Vice President Gloria Macapagal-
Arroyo as the country's fourteenth President.

 Arroyo Administration

President Arroyo was named the 14th president of the Philippines during the People Power II,
January 20, 2001 in Edsa when former President Joseph Estrada was forced out of office because
of allegations of plunder and corruption.

Problems: unstable economy and protests by the supporters of Estrada.

- ongoing battle between the government and the rebels. Despite the problems and issues
regarding her administration, she has also done a lot for the Philippines including lifting the
Philippines out of its financial crisis.

In 2004, she won the elections and was elected to a full term presidency until 2010. During her
inaugural speech, she vowed to create 10 million jobs in the next six years, balance the budget of
the Philippines, improve tax collection through computerization, provide cheap medicine for the
poor and unite the country.

Until now, she has been arguably the most unpopular president of the Philippines. This is
because of her numerous unanswered issues and controversies like the Hello Garci scandal,
expensive dinners during her visit to the United States, and many more.

The scandal involved former president GMA who allegedly rigged the 2004 national elections in
her favor. The official results of that election gave Arroyo and Noli de Castro the presidency and
vice-presidency, respectively. Hundreds of national and local positions were also contested
during this election. The scandal and crisis began in June 2005 when audio recordings of a phone
call conversation between President Arroyo and then Election Commissioner Virgilio Garcillano
allegedly talking about the rigging of the 2004 national election results, were released to the
public. This escalated, when the minority of the lower house of Congress attempted to impeach
Arroyo.

NBN-ZTE Controversy (April 2007)

The NBN-ZTE controversy is about a deal between the Philippines and XTE Corporation, a
company in china. The deal was worth $329.59 Million and was aimed at improving the
communication capabilities of the Philippines.
 August 29, 2007, Nueva Vizcaya Rep. Carlos Padilla, disclosed on his privilege speech that
COMELEC chairman Benjamin Abalos has been going to China not just for leisure but to broker a
deal with the XTE Corporation. He also said that there were two other corporations willing to do
the job for the Philippines at lower prices but was turned down. These two other private
companies offered cheaper prices than ZTE Corporation.

Abalos denied these accusations but also admitted that he knew some of the officials in ZTE
Corporation.

During the hearings the Senate ordered Rodolfo “Jun” Lozada, who was the President of
Philippine Forest Corporation

On February 7, 2008, Jun Lozada appeared in a pre-dawn conference in La Salle Greenhills and
narrated his experience on how he was taken away against his will. In the following weeks Jun
Lozada testified in the senate, fearing for his life. He said that Abalos threatened to have him
killed and that when he left the NBN project the project was priced at $262 million but it
ballooned to $329.5 Million when it was approved.

He hid in La Salle GH.

In August 2016, The Sandiganbayan Fourth Division on Tuesday convicted whistleblower Rodolfo
“Jun” Lozada Jr. of graft over a corrupt act when he was president and chief executive officer of
the state-owned Philippine Forest Corp. (PFC) in 2007 and 2008.

In July 23, 2018, she was elected as the Speaker of the House of Representatives of the
Philippines under the Duterte administration, replacing Pantaleon Alvarez.

 Benigno Aquino Jr. Administration

To sustain the country’s momentum, the Aquino administration has been continuously improving
upon the good governance

The government has reformed its procurement and budgeting processes to promote efficiency
and reduce opportunities for corruption, preventing the waste of billions of pesos in taxpayers’
money.

This, in turn, has allowed the national government to channel funds to the most immediate
needs of the public—into programs that include massive investments in social services, health,
and education, in order to enhance and empower our human capital, which then encourages
expansive, equitable growth.

In 2012, the Philippines recorded one of its strongest years for growth, surpassing all
expectations; the first quarter GDP of 2013, recorded at 7.8%, further raised the bar among the
community of nations and exceeding even our growth trend. Lead credit ratings agencies have
 placed the Philippines at the investment grade level, even as they predict continued favorable
economic prospects for our future. And these gains of good governance are being translated into
the improvement of the quality of the life of all Filipinos, particularly the poor and the vulnerable.
Social services continue to receive the highest share of the national budget, with social
intervention and protection programs at the core of our poverty reduction thrust.

- PPP

- P 127bn in projects for renewable energy

- Top priorities: Fighting corruption and improving project transparency

ISSUES

- Danding Cojuangco

- San Miguel Corporation

- 1983, allegedly using coco levy funds

- P 2B with intricate corporate schemes

- SMC : P220B today

Several groups on Friday filed charges against former President Benigno Aquino III and former
Budget Secretary Florencio Abad with the Office of the Ombudsman over the implementation of
the Disbursement Acceleration Program, some parts of which were declared unconstitutional by
the Supreme Court in 2014.

Aquino and Abad were charged with technical malversation, usurpation of legislative powers,
and graft and corruption by complainants led by Bayan Muna Rep. Carlos Zarate, Bagong
Alyansang Makabayan and Volunteers Against Crime and Corruption.

- See more at: http://www.gmanetwork.com/news/story/572879/news/nation/groups-file-

cases-vs-aquino-abad-over-dap#sthash.5tkXXBTe.dpuf

Duterte Administration

ISSUES

since June 30, 2016 - suspected drug dealers or pushers (“tulak”). This KILL LIST is an attempt to
document the names and other particulars of the

As of sept 8, at least 134 dead who remain unidentified and at least 58 who are identified only
by an alias;

The Philippines is hardly alone. Executing people for drug-related offenses, judicially or
otherwise, is characteristic of the region. According to a report last year by drug policy NGO
Harm Reduction International, the only countries other than Iran and Saudi Arabia known to
have executed drug traffickers since 2010 are all Asian: China, Malaysia, Vietnam, Singapore and
Indonesia.

Thailand conducted its own war on drugs in 2003 under then Prime Minister Thaksin Shinawatra,
and the events then — more than 13,000 arrests, over 36,000 cases of people surrendering to
police, and nearly 1,200 deaths in its first month — will feel eerily familiar to Filipinos.

There are private rehab facilities, but most are full. The Bridges of Hope facility, for example, has
room for just 92 patients divided between its two Manila branches. Its $650 monthly fee is well
beyond the means of the average Filipino,

We now have to create a waiting list of some sort, which we didn’t have to do before,” says
Guillermo Gomez, a program director. Since May 9 this year — the day Duterte got elected — he
estimates there have been 500 inquiries from drug users or their families, an average of six a
day. Before then, he says, the center received about three inquiries a week.

Filipinos surrendering to the authorities, but unable to afford or get a place in private rehab, are
often placed in community rehabilitation programs, where they can go to Zumba classes, or are
taught trades like hairdressing or soapmaking. They also undergo weekly “value formation”
sessions that serve as a barometer of their sincerity.

“If these people will no longer attend [the sessions], it means they are already on the other side
of the mountains, so we will be again running after them,” says Jemar Modequillo, the chief of
police in the city of Las Piñas,

Besides rehab, or the grave, the other destination for drug users is prison, which, even by the
standards of the Philippines, is a special kind of hell.

Besides rehab, or the grave, the other destination for drug users is prison, which, even by the
standards of the Philippines, is a special kind of hell.

On a visit to Las Piñas City Jail, TIME estimated that about 50 men were sharing a roughly 10-by-
10-sq.-ft. cell.

“Even prior to President Duterte’s assumption of office there was a steady increase in the
number of convicts admitted, but no increase in the facilities,” says Resurrecion Morales, who
coordinates, on behalf of the Philippines Bureau of Corrections, efforts to reform inmates.

The bureau runs seven facilities across the country that collectively house over 41,000 prisoners,
which means they are already well past their tipping point, at 158% overcapacity.

The current Justice Secretary, Vitaliano Aguirre II, estimated in June that 75% of the country’s
drug deals could be traced back to New Bilibid.
Our program of infrastructure build-up will entail trillions in economic investments. We need to
undertake these investments for the sake of the next generation of Filipinos – or else they will
remain in the same poverty trap that we found ourselves in," Finance Secretary Carlos
Dominguez III said during the forum on "Dutertenomics," which the President's economic
managers pitched as their plan to transform the Philippines into a high middle-income economy
by 2022.

According to Dominguez, the administration is veering away from the public-private partnership
(PPP) thrust, which he said had cost delays in most badly-needed infrastructure projects.

"Projects will be financed by our taxes, ODA funds, and commercial loans. We plan to start
projects ourselves then bid out operations and maintenance once completed," he added.

Another project that was previously in the PPP pipeline is the Mega Manila Subway. Tugade said
during the forum that the P227 billion will be financed through ODA and funds from the national
budget.

*This is a compilation of articles from Time magazine, Inquirer, Star and other current events
publications/ newspapers and are in no way claimed to be written by DTMadrid.

(TEN RICHEST FILIPINOS AS RATED BY FORBES)

Gross Domestic Product (GDP)

Market value of all final goods and services made within the country in a given period

1. Equal to the total expenditures for all final goods and services

2. Equal to the sum of the value added at every stage of production

3. Equal to the sum of the income generated by production

Gross National Product (GNP)

- the total value of all final goods and services produced within a nation in a particular year, plus
income earned by its citizens minus income of non-residents located in the country

- measures the value of goods and services that the country's citizens produced regardless of
their location

Recession

- if a country records 2 consecutive quarters of year-on-year decline in domestic product

- Fared better than regional peers

- minimal exposure to securities issued by troubled global financial institution

 – Lower dependence on exports

– Resilient domestic consumption

– Remittances from 4 to 5M OFW

– Growing outsourcing industry

Poverty Line

- Measurement based on incomes or consumptions levels

- Benchmark to identify the “POOR”

- Varies in time and country

Poverty threshold for a family of 5

- P6,365.00 per month in 2015

- P9,063.75 per month in 2016 (P60.43 / day)

Income distribution : 20 percent of the population or the poorest segment accounts for only six
percent of total national income

Upper 20 percent accounts for nearly 50 percent of the total national income.

Poverty incidence : highest in Mindanao and lowest in the National Capital Region as well as in
Regions III and IV.