Exclusionary Economics: How Aquino and Arroyo economics are the same

July 22, 2012

by superadmin

IBON Features | COMMENTARY | The reality behind the so-called gains must however be assessed before concluding that the Aquino administration has indeed been the much-sought change following former Pres. Arroyo’s legacy of corruption

IBON Features— In his upcoming third State of the Nation Address (SONA), President Benigno Aquino III will surely attempt to highlight how the Philippine economy has improved under his watch to show how his administration is an improvement over its predecessor.

Pres. Aquino will bring to the fore supposed economic successes such as the 6.4% first quarter growth in gross domestic product (GDP), increased budgets for social services, expanded coverage of the conditional cash transfers, and progress under the Public-Private Partnership (PPP) program. The president may also highlight the country’s so-called creditor nation status with the International Monetary Fund (IMF). The SONA may also be an occasion to boast about more Filipinos being lifted from poverty, more lands distributed to farmers, and additional living allowances for workers.

The reality behind the so-called gains must however be assessed before concluding that the Aquino administration has indeed been the much-sought change following former Pres. Arroyo’s legacy of corruption and erosion of the people’s general welfare. Nearly ten years of the Arroyo regime saw an unprecedented rise in joblessness and poverty, growing inequality, eroding domestic production and fiscal troubles all anchored on a chain of policies that catered to local and foreign business interests. Do current indicators show a reversal of trends? More importantly, have government policies done an about-face in favor of the Filipino people?

Economic direction

Like the Arroyo administration, the Aquino government has refused to reverse any of the neoliberal policies that have caused such damage to the economy. These policies have kept the Philippine economy underdeveloped and are designed to suit the needs of the domestic elite and foreign business rather than of the Filipino people.

The entrenchment of globalization policies that have made the Philippine economy up for grabs by local and transnational firms cannot be downplayed. The removal of trade barriers has resulted in the unabated importation of cheap goods including those which the country can produce. The Philippines now has among the lowest tariffs in Asia. Under Aquino’s term, quantitative restrictions on the importation of rice are set to be lifted in accordance with commitments under the World Trade Organization (WTO). The government has also become even more liberal towards investments in agriculture, industries and services.

Like Arroyo, Aquino has not questioned the globalization spree since way back in the early 90s until the first years of the new millennium. Key industries such as banking, shipping, telecoms and airlines were opened-up to foreign investors and crucial people’s utilities such as water and power were privatized. Philippine power and water rates are among the highest in Asia while the ordinary Filipino suffers less affordable and accessible basic utilities. Aquino’s centrepiece PPP strategy will only aggravate the inimical effects of privatization as the private sector further takes over social services as well.

Like Arroyo, Aquino explicitly refused to reverse the oil deregulation law which sanctioned historic oil price hikes that drove up the prices of other basic commodities, burdening the people all the more. Aquino also would not undo the 12% value added tax (VAT) on oil which Arroyo instituted. Moreover, his administration continues to implement the Electric Power Industry Reform Act (Epira), which after a decade of implementation has made power rates in the country among the most expensive in Asia.

The Arroyo administration inked the Japan-Philippines Economic Partnership Agreement (JPEPA) and the ASEAN Trade in Goods Agreement (ATIGA), which featured lopsided economic benefits favoring Japan and other ASEAN countries over Philippine interests. The Aquino government in turn plans to sign another bilateral deal, the European Union-Republic of the Philippines (EU-RP) Free Trade Agreement (FTA), and is seeking to join the United States (US)-dominated Trans-Pacific Partnership (TPP) agreement. Among the conditions the US has set for the Philippines to join the TPP agreement is to remove the remaining nationalist economic provisions of the Philippine Constitution.

Perception economics

Following the tradition of Arroyo and the administrations before it, the Aquino government keeps debt service as the top item in terms of budget allocation while social services remain wanting and replete with cuts in important sub-items such as operating expenses and capital outlay. The 2012 budget boasted of increased allocation for social services although a large portion was for the implementation of CCTs whose real effectiveness in reducing poverty is questionable. The Arroyo government concluded its term without an assessment of the CCT program. Yet the Aquino administration adopted it as its anti-poverty flagship, allocating even more borrowed funds to the shallow projects and heedless of criticisms from concerned parties. There are mounting accounts from the field of the anti-poor character of the CCT program.

As under the Arroyo administration, land distribution has been sluggish under the Aquino administration. The citizenry is reminded of the president’s haciendero origin by the snag in the Hacienda Luisita distribution issue. While the Supreme Court has decided in favor of the peasants claiming the 6,000-hectare sugar land, the Cojuangco-Aquinos are demanding billions in landlord compensation – affirming that the extended Comprehensive Agrarian Reform Program (CARP) is biased for landlords and their ownership of vast lands.

Yet the Aquino administration not just refused to reverse neoliberal policies and instead set nationalist and protectionist measures in place. Its brand of economics actually strengthens these policies and institutionalizes even more gains and profits for foreign investors and elite big business. Only recently, Executive Order (EO) 79 on mining extends the Mining Act of 1995 merely towards ensuring that the government gets a bigger cut from the exploitation of the country’s vast mineral resources. The aggressiveness in upholding globalization policies is exemplified by how the government’s Philippine Development Plan (PDP) economic blueprint unabashedly adopts foreign business prescriptions. This is also consistent with the administration’s arrangements with the US under the Partnership for Growth (PfG) and Millennium Challenge Corporation (MCC).

It is the Filipino workers, peasants, women, youth and students, urban poor, small businesses and professionals who bear the onslaught of this same old brand of discredited policies designed to keep the globalization ball rolling. The greatest challenge to globalization policies behind chronic poverty and underdevelopment will come from these sectors as they stand up to assert their right to real reforms. IBON Features