Elitist politics and economics: the real Aquino legacy

July 1, 2016

by IBON Foundation

The next presidency is challenged  to tackle a worst-ever jobs crisis, heightened inequality,and  pro-foreign and pro-business policies sown under Aquino’s leadership


Towards the end of its six years in office, the Aquino government boasted its legacy of inclusive growth. Indeed for its neoliberal thrusts the Aquino administration may have achieved certain economic outcomes. But for the Filipino people, an unprecedented jobs crisis, using public funds to guarantee private profits, an even wider gap between rich and poor and economic subservience to foreign dictates highlight Aquino’s brand of governance and economics. This is what the past administration has left behind and passed on to the next presidency.

Aquino, poster-child of neoliberalism

Throughout President Benigno Simeon Aquino’s term, the Philippines has time and again been hailed as one of Asia’s fastest growing economies. The 5.9% average growth rate in the past five years is undeniably strong-looking compared to past administrations’, notwithstanding slowdown in the beginning of 2014.

Foreign direct investments (FDI) in the country, which are believed to deliver employment and growth, have risen through the years under Aquino: US$2.0 billion in 2011, US$3.2 billion in 2012, US$3.7 billion in 2013, US$5.7 billion in 2014, and US$5.7 billion in 2015. Official employment figures indicate an increase from 93.6% in April 2015 to 93.9% to April 2016. Government also recently reported having lifted 1 million poor Filipinos from poverty.

These so-called achievements build up the image of the Philippines as the poster-child of neoliberal economics where the role of the free market in the control and use of resources, utilities and industries are given prominence. International financial institutions and credit agencies have periodically commended the Philippine economy’s stability amid global currents. Recently, NICE Investor Services raised the country’s investment grade from BBB- to BBB based on improved transparency, expanded infrastructure and social overhead capitals in the form of public private partnerships (PPPs). During the last Asia Pacific Economic Cooperation (APEC), high-level meetings held in the Philippines in November 2015, the Philippines was regarded among others as a model in disaster risk reduction, promoting micro, small and medium enterprises, maximizing the blue economy and human capital development.

Not felt by the people

The people’s worsening conditions however belie the Aquino government’s claims of inclusive growth. Growth mostly happened in sectors with heavy oligarch and foreign company investments such as the real estate, construction, business process outsourcing, and financial intermediation sectors. Farmers and workers could have benefited from growth in the production sectors but these have shrunk further under the Aquino administration, with agriculture’s share in the economy down to 9% and with manufacturing still on about the same level as it was decades ago, as of early 2016.

Even if FDI increased and employment grew, jobs creation has fallen from 1.1 million in 2011 to just 638,000 in 2015.  There has also been a 543,000 addition to the number of underemployed Filipinos in the same period, showing that there are now more temporary, low-paying and insecure jobs in the business-biased economy. Moreover, 63% of the total employed are non-regular, agency-hired, informal sector, or unpaid family workers. Wages have also been very insufficient: the P481 National Capital Region minimum wage, which is the highest across all regions, make less than half of the P1,093 family living wage or the amount needed by a family of six for subsistence. Aquino vetoed proposed increases in nurses’ salaries and the elderly’s pensions.

Despite almost P300 billion being spent on conditional cash transfers or the Pamilyang Pantawid Pilipino program (4Ps) from 2011-2016, the number of Filipinos in extreme poverty remains unchanged at 27 million as of the first half of 2015. More than 2 of 3 Filipinos live on just P125 or less per day which has become more difficult with the increasing cost of basic goods and services from food to transportation, education and health.

The Aquino administration continued a sham land reform program that further fortified large landowners’ landholdings, converted agricultural land to commercial purposes including big and foreign corporate plantations and  financialized land distribution. This has further entrenched tillers’ landlessness and poverty and ruined any prospects for food security. Aquino’s defiance of the Supreme Court decision to distribute the Cojuangco-Aquino-owned Hacienda Luisita to farmers remains the stark example of land non-distribution under the past administration. It also upheld a plunderous and destructive mining policy and merely sought greater government shares from mining revenues while more big local and foreign companies coveted resource-rich land. Worse, the Aquino administration did not heed calls to pull out abusive government troops from indigenous peoples’ and farmers’ communities such as those in Mindanao in spite of popular clamor.

Under Aquino, social services and utilities were further commodified instead of delivering the people’s basic needs. Because low-cost housing is a component of real-estate business, it remains unaffordable to many homeless Filipinos. Instead of strengthening the public school system to make education accessible to all, the Aquino administration allocated billions to private education and pushed K-to-12 to train cheap labor for the global market while allowing thousands of private schools to increase tuition. That PhilHealth coverage has reportedly grown to 93 million Filipinos does not guarantee to wipe out the huge out-of-pocket expenses shelled out even by indigent patients. Despite protests, Aquino allowed public hospitals like the Philippine Orthopedic Hospital and the Fabella Hospital, patients of which were mostly indigent, to be closed down. Meanwhile, privatized public utilities such as power and water remained espensive if not unaffordable and delivered in questionable quality to Filipinos.

Benefited the rich

At the end of Aquino’s term, majority of the Filipino people remain at the margins of apparent growth and international acclaim for the Philippines’ purportedly sound economics and governance. It is clear who benefited from the hyped improvements: under Aquino the net worth of the 40 richest Filipinos grew from 14% of the gross domestic product (GDP) in 2010 to 24% in 2015. The gross revenue of the top 100 corporations also rose from 59% of the GDP in 2010 to 69% in 2014. That the net income of the 25 richest Filipinos ($44.1 billion) is equivalent to the combined income of the country’s poorest 76 million Filipinos marks shows the grossly inequitable distribution of the nation’s wealth.

The Aquino government’s policies favored businesses over people’s welfare. The centerpiece PPP program for instance has allowed the private sector to profit immensely from people’s money even in public utilities and social services such as education, health and housing. Presidential uncle Eduardo Cojuangco’s San Miguel Corporation has bagged P149 billion-worth PPP contracts. Twelve projects worth P217 billion have been awarded to only a number of the country’s biggest business names aside from Cojuangco: Ayala, Pangilinan group, and Sy. The 2015 and 2016 national budgets allocated P53 and 66 billion, respectively to PPPs involving these oligarchs. Various sectors oppose these projects such as the MRT-7 construction and the Quezon City Business District that stand to displace farmers and urban poor settlers from their homes and livelihood.

Beholden to foreign dictates

Like its predecessors, the Aquino government’s economic policy was largely defined by foreign interests such as the US government and international financial institutions such as the World Bank (WB) and the Asian Development Bank (ADB). Of all the policy recommendations of US Agency for International Development (USAID)-funded The Arangkada Philippines Project (TAPP), 75% or 471 have begun or have been completed in 2015. The WB also used US$1 billion in development policy loans from 2006-2014 to push privatization in the health, education and power sectors and increase value added tax (VAT) and other taxes, among others.

The country has not benefited from free trade agreements (FTAs) such as the Japan Philippine Economic Partnership Agreement (JPEPA) and especially not from the World Trade Organization (WTO). The latter has inflicted damage on the country’s economy, particularly eroding the agriculture and industry sectors. Yet, the Aquino administration actively pursued FTAs that seek to further liberalize trade and investment, willing to abide by foreign countries’ impositions at the expense of public interest. It has actively sought the US-dominated Trans-Pacific Partnership (TPP) agreement and started formal talks for the European Union-Philippines (EU-PH) FTA. Through the Association of Southeast Asian Nations (ASEAN), it is also involved in the China-dominated Regional Comprehensive Economic Partnership (RCEP).

Not only once under the Aquino administration has easing restrictions to foreign ownership of strategic industries and sectors by altering Constitutional provisions been pushed. FTA especially TPP proponents have also recommended Charter change, described by nationalists as an affront to Philippine sovereignty.

Way forward?

Notwithstanding the anomalies and notoriety of Philippine automated elections, the results of the 2016 national polls reflected the Filipino people’s rejection of the Aquino administration’s elitism and pro-business policies. Evidences of bureaucrat capitalism through the priority development assistance fund (PDAF) and disbursement acceleration program (DAP), heightened human rights violations with a copied anti-insurgency program, neglect of overseas Filipino workers’ rights, undermining labor rights, selective prosecution of allegedly corrupt officials and allowing US imperialist aggression in legalizing a gravely lopsided defense agreement add to Aquino’s long list of offenses against the Filipino people, and for which he should be held accountable.

It is important to note that the newly-seated Duterte administration in its Ten-point Economic Agenda lists as priorities easing foreign restrictions, gearing human capital development to meet private sector needs, making PPPs play a key role in driving growth and promoting rural tourism. In these stipulations resonate the past regime’s unpopular measures. Yet, the list mentions plans that may suggest possible pro-people inclinations such as increasing rural productivity, making taxation more progressive by easing the burden on lower-income brackets, beefing-up social protection to be more effective in protecting the people against economic shocks, and directing science and technology as well as the creative arts towards self-sustaining, inclusive development.

The Duterte administration, whose electoral victory is attributed to the President-elect’s strong pro-people pronouncements, is challenged to do the opposite of what the Aquino government had done. Still, the neoliberal framework prevails. Big local and global corporate and political interests are intact and doing business as usual. On the other hand, strong public support for the resumption of peace negotiations which will tackle socio-eonomic reforms, and the people’s continued assertion of their rights, remains the constant force that will create the momentum for any genuine change. [end]