Midyear 2017

bird IBON

talk
Economic and Political Briefing

Dutertenomics:
Loose Change, Lost Cause

July 19, 2017

Malcolm Theater, College of Law,
University of the Philippines Diliman, Quezon City

IBON Economic and Political Briefing l 19 July 2017 1

 114 Timog Avenue
Quezon City 1103
Philippines
Tel. nos: +63 2 927-7060 to 61
Fax: +63 2 929-2496
www.ibon.org

2 IBON Economic and Political Briefing l 19 July 2017

T
here were reasons to be both optimistic and pessimistic at the start of the Duterte
administration in mid-2016. The unconventional president appeared open to Leftist
pro-poor measures, altering foreign policy, and disrupting ossified Philippine politics.
However, he also clearly laid out a neoliberal economic agenda and a worrying war on
drugs. His bombast and inconsistency did not make it easy to see how these would play out.
A year later, the bombast and inconsistency is still there but the direction and character of
the administration is clear.

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.

IBON Economic and Political Briefing l 19 July 2017 3

 NEOLIBERAL, ANTI-DEVELOPMENT, ANTI-PEOPLE
The Duterte administration came to power with an economy and economic performance only partly
inherited from the previous Aquino government. The economy was on a trajectory determined not
just by the administration it replaced but by nearly four decades of neoliberalism. The policy choice
for economic managers was not just about whether or not to continue Aquino policies but more
fundamentally whether or not to continue implementing and adding neoliberal free market globalization
policies.

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?

Neoliberal past: Unsound fundamentals In particular, the share of agriculture and

The countrys economic managers take delight in
recent economic growth, which has been hailed
as the second fastest in Asia and 10th fastest in
the world. Growth in gross domestic product
(GDP) at an average of 6.7% over the five-year
period 2012-2016 is well above the historical
average of 5.3% since 1947. However there are
serious structural problems underneath the
headline-friendly growth figures. These have
greater implications on the lives of the people
and the prospects for sustained and sustainable
development.
The most basic is that the foundations of
economic development have steadily declined
since the start of the globalization era in the
1980s. The domestic production sectors are
agriculture, manufacturing, construction, and
mining. These accounted for over 60% of GDP
from the 1950s to the 1970s before starting to fall
in the 1980s upon the onset of globalization and
the steady implementation of neoliberal policies.
(See Chart 1) Production steadily fell as more and
more neoliberal policies were implemented and
was down to just 39.2% of the economy in 2016.
The Philippines became a service economy more
than a producing economy in the mid-1990s.
manufacturing in the economy has unquestionably
and markedly fallen because of trade and
investment liberalization. Their combined share
in GDP fell from an annual average of some 54%
in the three decade period 1950-1970 to just
32% in 2016. Farms and Filipino firms weakened
from lack of government support and protection
against imports. Failed agrarian reform programs
stymied rural equity and development, while the
absence of a strategy for national industrialization
prevented real industrial growth.
The deterioration of domestic production resulted
in anemic domestic job generation, which drove
unemployment rates up and millions of Filipinos
abroad. (See Chart 2) The steepest increase in the
unemployment rate happened, not coincidentally,
as the domestic production sectors started to
decline in the late 1970s; unemployment rates
since then have generally risen as production
generally falls.
Unemployment that averaged 5.1% in the 1970s
more than doubled to 11.2% in the 2000s.
Correcting for a change in the official definition of
unemployment in 2005, which removed millions
of discouraged jobless Filipinos from the labor
force, IBON estimates unemployment at an annual

4 IBON Economic and Political Briefing l 19 July 2017

 Chart 1 average of some 10.2% in the
59.2 period 2010-2016. (The chart uses
59.2
59.2 Gross Domestic Product by production, 1946-2016 IBON estimates correcting for this
59.2 (at constant prices*; in %) to make comparison with previous
100
59.2 48.9 periods possible.)
48.9
48.9
90 Services

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

underestimate the failure of

Production
40.4 40.1
Manufacturing
Production
Services
Production
domestic job generation because
40.4
35.9 40.1
70 Public
ManufacturingUtilities
Production

35.9 59.2 they do not reflect the millions

35.9 Agriculture
of Filipinos forced to find work
Manufacturing
Production
Manufacturing
35.9 60
overseas.
Manufacturing
7.1 Public utilities

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 (%)

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

IBON Economic and Political Briefing l 19 July 2017 5

 The diverse service sector has grown
disproportionately, pushed by remittance-driven
spending and, since the 2000s, by the expansion of
business process outsourcing (BPOs). Remittances
from overseas Filipinos injected spending power
in the economy and boosted consumption.
But because this was work and wages
disconnected from any local economic activity,
there was no meaningful contribution to long-
term domestic economic development even if
recipient household spending improved. The
labors of millions of Filipinos abroad did not
make farms more productive or set up industrial
firms, did not cause economic enterprises to
dynamically interact with each other, did not
improve Filipino science and technology, did
not generate local jobs or result in any of the
other myriad benefits of building real domestic
production capacity.
It is a similar situation with BPOs. They are
physically located in the country and increase
the spending power and consumption of their
employees and their families. But this is very
low value-added work largely disconnected from
local economic activity and not contributing
to domestic production. The disconnect is
only underscored in being located in special
economic zones (SEZs) detached by a host of fiscal
incentives and exemptions and by work hours not
even following the regular work day of the rest of
the country.
Large income flows from overseas work and
BPOs combined with marginal contributions from
Philippine-based manufacturing to feed demand
for imported goods (which boosted malls and
retailing), for real estate (which boosted property
and construction), and for basic utilities (which
boosted telecommunications, water, power, and
transport). The multiplier effects from these
services were minimal and did not stimulate
domestic agriculture and manufacturing hence
the disproportionately large service sector.
The economic impact was also mostly restricted
to a few sectors and a few major urban centers
especially in and around the National Capital
Region (NCR). Nearly two-thirds (65%) of GDP is
in just the three adjoining regions of NCR, Central
Luzon (CL), and Southern Tagalog (ST) out of the
countrys 18 administrative regions.
6 IBON Economic and Political Briefing l 19 July 2017
Such tilted concentration of economic activity
is also reflected in other ways. A handful of
corporations dominate economic activity. By
2014, the top 1,000 corporations or barely 0.1%
of over one million establishments accounted for
some two-thirds (65%) of economic activity in the
country. The general conclusion is unaffected even
if each corporation is considered as encompassing
different establishments. Another indication of
the growing domination of elite corporate power
is how the gross revenue of just the top 100
corporations increased from being equivalent to
59% of GDP in 2010 to 71% in 2015.
Foreign transnational corporations (TNCs)
have disproportionate control of the domestic
economy. They accounted for nearly half
(49%) of top 1,000 revenues including 79%
of manufacturing revenues as recently as in
2007. Although this moderated to 37% of total
revenues and 63% of manufacturing revenues
by 2015, these ownership figures do not capture
non-ownership means of control by TNCs. This
includes their hold on production technologies,
sources of inputs and users of outputs, branding,
and other key aspects of the global production
and value chain. Foreign investors moreover
accounted for 43% of total approved investments
including 70% of approved manufacturing
investment over the long 2000-2015 period.
There is also the increased concentration of
income and wealth in a few individuals. For
instance, by 2015, the net worth of just the 15
richest Filipinos of US$57 billion was equal to the
combined income in the entire year of the poorest
79.6 million Filipinos. The growing centralization
of economic power is also implied in how the net
worth of just the 40 richest Filipinos grew from
being equivalent to 14% of GDP in 2010 to 26% in
2016.
On the other hand, IBON estimates at least
56 million Filipinos as poor with a poverty line
of around Php100 per person per day; some
66 million or two-thirds of Filipinos also make
do with just around Php125 or less per day.
These include the 21.9 million Filipinos that
the government officially counts as poor by a
poverty line of Php60 per person per day but
should be considered as only those in deep
poverty.
In broad strokes, these are
the unsound neoliberalism-
Table 1
driven fundamentals that National Accounts of the Philippines by industry group and by
the Duterte administration type of expenditure, 2015-2016 and 1st quarter 2015-2016 and
has to deal with: declining 2016-2017 (growth rates; at constant 2000 prices; in %)
production, a domestic jobs 1st 1st
crisis also driving massive Industry group / Expenditure share
2015- Quarter Quarter
migration, low-earning and 2016 2015- 2016-
poor quality work, undue 2016 2017
concentration of economic By industry group
power and wealth, and 1. Agriculture, Hunting, Forestry, and Fishing (1.3) (4.3) 4.9
massive poverty. a. Agriculture, Hunting, Forestry (0.6) (4.0) 5.7
b. Fishing (4.3) (5.9) 0.7
The current episode of
2. Industry Sector 8.4 9.3 6.1
relatively high economic
growth is not changing any a. Mining and Quarrying 3.2 11.4 (20.0)
of this. If anything, there b. Manufacturing 7.0 8.0 7.5
are signs that at least some c. Construction 13.7 14.2 8.2
aspects are even getting d. Electricity, Gas, and Water Supply 9.8 10.2 1.4
worse. 3. Service Sector 7.4 7.5 6.8
a. Transportation, Storage, and
5.9 5.3 4.9
Neoliberal present: Communication
Transitory growth b. Trade and Repair of Motor Vehicles,
7.2 7.5 7.1
Motorcycles, Personal and Household Goods
The basic problem is that the c. Financial Intermediation 7.6 9.7 7.4
growth is of an economic d. Real Estate, Renting and Business
8.9 8.7 6.9
structure distorted by Activities
neoliberalism backward e. Public Administration and Defense:
agriculture, declining foreign- 7.2 5.2 5.5
Compulsory Social Security
dominated manufacturing, f. Other Services 7.3 7.3 7.6
and a bloated services sector. By expenditure share
The economy grew at an
1. Household Final Consumption Expenditure 7.0 7.1 5.7
annual average of 6.7% over
2. Government Final Consumption Expenditure 8.4 11.8 0.2
the five-year period 2012-
2016, including 6.9% in 2016, 3. Capital Formation 23.7 31.5 7.9
and then by 6.4% in the first a. Fixed Capital 25.2 28.3 11.8
quarter of 2017 from the i. Construction 15.1 15.1 9.9
same period the year before. ii. Durable Equipment 34.5 37.4 12.5
(See Table 1) iii. Breeding Stock and Orchard
3.6 3.8 3.1
Development
But the growth is mainly due iv. Intellectual Property Products 34.2 50.4 27.2
to external and transitory 4. Exports of Goods and Services 10.7 10.2 20.3
circumstances because the a. Export of Goods 9.2 8.7 22.3
foundations for domestic
b. Export of Services 16.2 15.3 14.3
internally-driven economic
5. Less: Imports of Goods and Non-Factor
growth are absent. It is 18.5 21.1 17.5
Services
catalyzed by investments
spurred by low post-crisis a. Import of Goods 20.8 23.9 20.8
interest rates, which fuels b. Import of Services 10.0 11.4 4.4
debt, and stoked with hype Gross Domestic Product 6.9 6.9 6.4
by foreign finance capital Gross National Income 6.7 7.3 5.9
needing the next emerging Source: Philippine Statistics Authority National Accounts of the Philippines
market to play up as an
investment opportunity. (See

IBON Economic and Political Briefing l 19 July 2017 7

 Chart 3) Overseas remittances and
earnings from export-oriented BPOs Chart
30.0 3
and manufacturing in short, from Selected domestic interest rates, 1986-2017 May (in %)
Filipino labor exploitation created 25.0
30.0
the temporary material economic

(%) rates (%)

conditions for this hype to gain 20.0
25.0
traction.

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

particularly significant as a driver of RRP - reverse repurchase rate

growth.
Bank Average RRP Rates Interbank Call
Source: Bangko Sentral ng Pilipinas Lending Rates (Overnight) Loan Rates

These are however unsustainable Table 2

sources of growth. The record Philippine bank loans and national government outstanding
low global interest rates and debt, 2005-2016 (amount in Php million; as percentage of
Philippine miracle hype will not GDP in %)
last forever. The worlds central
Total bank loans NG outstanding debt
banks, led by the US Federal
Year Amount As % of Amount As % of
Reserve, already started to
reverse from their easy post- (in Php million) GDP (in Php million) GDP
crisis monetary policies last year 2005 1,872,743 33.0 3,888,231 68.5
with further rate hikes in the 2006 2,073,348 33.1 3,851,506 61.4
latter part of 2017. This makes 2007 2,194,780 31.8 3,712,487 53.9
debt-financing of investments
more expensive. Hype can also 2008 2,502,332 32.4 4,220,903 54.7
go on for just so long and can 2009 2,724,870 33.9 4,396,640 54.8
easily evaporate, whether from 2010 2,801,711 31.1 4,718,171 52.4
a renewed intensification of 2011 3,221,775 33.2 4,951,188 51.0
the global economic crisis or
2012 3,650,760 34.6 5,437,104 51.5
from growing domestic political
turmoil. 2013 4,256,963 36.9 5,681,153 49.2
2014 5,117,884 40.5 5,735,242 45.4
Dark clouds are already starting 2015 5,719,665 42.9 5,954,537 44.7
to appear. Slowing growth
2016 6,706,312 46.3 6,090,262 42.1
in overseas remittances and
now also in BPO revenues will Sources: Bangko Sentral ng Pilipinas, Bureau of the Treasury and Philippine
weaken growth in consumption Statistics Authority
spending and correspondingly
business prospects. Year-on-year
remittance growth has slowed down dramatically The underlying risk is of a downward spiral of
to 5% in 2016 from recent peaks of 25% in 2005 lower investment (from rising interest rates
and 8.2% in 2010. (See Chart 4) Its contributions and more expensive financing), fading hype,
to the countrys foreign exchange reserves will dampened consumption, diminished business
also slacken. confidence, and again lower investments. As

8 IBON Economic and Political Briefing l 19 July 2017

investments slow, the debt
burden that has rapidly Chart 4
accumulated will tend Growth rates of overseas Filipino remittances, 1989-2016 and as of
to become onerous as May502017 (in %)
interest rates start to rise.
40
The 6.4% GDP growth in
the first quarter of 2017
30
has slowed from 7.1%
in the second and third

Growth rate (%)

quarters of 2016. (See 20

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)

rural economy. Backward p

- preliminary
agriculture means that Source: Bangko Sentral ng Pilipinas
agricultural growth
is generally low and
chronically erratic from being overly dependent
on weather conditions.
However most industry and service subsectors
slowed from the year before with the biggest
impact on aggregate growth from slowdowns
in construction, real estate, trade, and
manufacturing. (See Table 1) Construction slowed
to 8.2% in the first quarter of 2017 from 14.2%
growth in the same period last year, real estate
to 6.9% from 8.7%, trade to 7.1% from 7.5%, and
manufacturing to 7.5% from 8 percent. These are
the biggest industrial and service subsectors.
By expenditure, growth slowed in all categories
with the biggest impact due to slowdowns
in investments, government spending, and
household consumption. (See Table 1) Capital
formation, or investment, slowed to 7.9% in the
first quarter of 2017 from 31.5% growth in the
same period last year, government spending to
0.2% from 11.8%, and household consumption to
5.7% from 7.1 percent.
Unemployment crisis
The worsening jobs crisis despite supposedly rapid
GDP growth highlights the exclusionary nature
of this economic growth. Jobs have actually
been lost rather than created since last year.
The number of employed Filipinos dropped by
393,000 to 40.3 million in April 2017 from 40.7
million in the same period the year before. (See
Table 3) If this trend holds for the whole year, this
will only be the third time in the post-Marcos era
that this has happened, after 1997 and 2000.
The biggest job losses were in the services sector
which apparently shed 557,000 jobs since last
year. This was mainly due to some 448,000
jobs lost in wholesale and retail trade, followed
by 74,000 lost in education and 65,000 in
accommodation and food service activities. The
125,000 increase in agricultural employment and
56,000 increase in manufacturing, among others,
only slightly compensated for jobs lost.
The Philippine Statistics Authority (PSA)
reported 5.7% unemployment and 16.1%
underemployment in April 2017, both of which
were lower than in the same period in the year
before. The number of unemployed Filipinos was
reported to have declined by some 182,000 (to
2.4 million) and the number of underemployed by
a large 963,000 (to 6.5 million).
However, these favorable unemployment and
underemployment figures are only a statistical
illusion. The seeming improvement is only
because millions of jobless Filipinos are no longer
counted as unemployed and dropped from

IBON Economic and Political Briefing l 19 July 2017 9

 estimates of the
labor force.
Chart 5
Quarterly Gross Domestic Product growth rate, 1st quarter 2007-1st
Correcting for the quarter 2017 (at constant 2000 prices; in %)
aforementioned 10
change in the
official definition of
unemployment, 8
IBON instead
6.6
estimates that
the number of Growth rate (%) 6 6.4
unemployed
including discouraged
workers may have 4
increased to as much
as 4.6 million or
more in April 2017, 2
or much more than
officially reported
unemployment
-
according to a narrow 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 p
definition. Year
p
- preliminary
The labor force Source: Philippine Statistics Authority National Accounts of the Philippines
participation rate
fell to 61.4% in April
2017, which is the lowest in 36 years Table 3
or since the 60.1% recorded during Selected labor force statistics, April 2016 and April 2017
the countrys severe economic crisis in (population in thousands; rate in %)
1982 under the Marcos dictatorship. Change, April
The lower labor force participation Indicator April 2016 April 2017 p
2016-April 2017
rate reflects the drastic shrinking of
the labor force by 575,000 in April Total 15 years old and
68,167 69,605 1,438
2017 from the year before despite the over
1.4 million increase in the population Labor Force 43,289 42,714 (575)
15 years old and over. Given the Employed 40,664 40,271 (393)
chronic poverty and low incomes in Underemployed 7,431 6,468 (963)
the country, this is most likely due to
Unemployed 2,625 2,443 (182)
ever-growing numbers of discouraged
workers dropping out of the labor Not in the Labor Force 24,878 26,891 2,013
force after failing to find jobs. Participation Rate 63.5 61.4 (2.1)
Employment Rate 93.9 94.3 0.4
The dramatic rise in the number
Underemployment Rate 18.3 16.1 (2.2)
of Filipinos forced overseas for
ever-lower paying work is another Unemployment Rate 6.1 5.7 (0.4)
sign of the worsening crisis of p
- preliminary
domestic joblessness. Average daily Source: Philippine Statistics Authority Labor Force Survey
deployments of land-based and sea-
based workers plateaued at around 2015, implying an increase in daily deployments
5,000 per day in the period 2012-2015, with to 5,771 in 2016 from 5,053 the year before.
average annual deployment of some 1.8 million.
The 2.1 million deployed in 2016 is however a The reported second fastest economic growth
15% increase from the 1.8 million deployed in in Asia, after China, has then not changed

10 IBON Economic and Political Briefing l 19 July 2017

how the country ironically still has the worst
unemployment in the region. Even using the
underestimated official unemployment rate,
Philippine unemployment of 5.7% is higher
than the latest reported from Indonesia (5.3%),
China (4%), South Korea (3.6%), Malaysia (3.4%),
Vietnam (2.3%), Singapore (2.2%), and Thailand
(1.3%). The prospects for improving this situation
will be dim as long as domestic agriculture and
Filipino industry are in long-term decline.
Employment crisis
The quality of available work, moreover, remains
poor. In April 2017, 15.6 million or 38.7% of
employed were in the informal sector and unpaid
family work. They would be part of IBONs
estimation that around two out of three employed
Filipinos are non-regular, agency-hired, informal
sector, or unpaid family workers meaning two
out of three employed Filipinos in low-paying and
insecure work with poor or no benefits.
Wages remain low. Taking away the effects of
inflation, the average daily basic pay (ADBP)
actually received by workers is virtually
unchanged from its level in 2001. (See Chart 6)
The real value of ADBP in 2016 of some Php278,
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
Amount (Php)
300 275.11
200 222.29
100
-
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Philippine Statistics Authority
IBON Economic and Political Briefing l 19 July 2017
measured at 2006 prices, is virtually unchanged
from the Php275 in 2001 over a decade-and-a-half
ago. This is a clear example of how workers are
not benefiting from the recent years of acclaimed
high economic growth.
The administration has been sparing with its wage
hikes with just half of the countrys regional wage
boards granting increases averaging less than Php20.
The NCR has the highest mandated minimum
wage in the country. The daily minimum wage
in NCR, however, remains at Php491 and its real
value is constantly eroded by inflation falling by
3% in June 2017 from the same period the year
before. (See Table 4) This erosion is also reflected
in the growing gap between the minimum wage
and the family living wage, estimated by IBON at
Php1,130 for a family of six in June 2017 the
wage gap increased from 55% in June 2016 to 57%
in June 2017. The family living wage for a family
of five may correspondingly be around Php941 in
June 2017.
Worsening contractualization is among the
conditions that repress wages, aside from denying
workers security of tenure and their due benefits.
IBON estimates that the share of non-regular
400.95
Nominal
278.44
Real
Year
11
 Table 4 labor non-government
organization Center
Daily wage indicators for the National Capital Region, June 2010-2017 for Trade Union
Real minimum Estimated and Human Rights
Daily Wage gap (CTUHR), for instance,
wage family living
Period minimum reports 193 cases of
(2006=100; in wage
wage (in Php)
Php) (in Php) (in Php) (in %) violations of workers
rights involving 66,962
June 2010 382 330 955 (573) 60
workers in the first
June 2011 426 351 1,000 (574) 57 year of the Duterte
June 2012 446 359 1,023 (577) 56 administration. The
June 2013 456 361 1,040 (584) 56 most number of
affected workers were
June 2014 466 357 1,077 (611) 57
victims of long-term
June 2015 481 366 1,083 (602) 56 contractualization and
June 2016 491 369 1,096 (605) 55 labor-only contracting,
underpayment of
June 2017 491 358 1,130 (639) 57
minimum wages,
Sources: National Wages and Productivity Commission and Philippine Statistics Authority non-receipt of
statutory benefits,
work has markedly increased from around 10% of forced overtime/undertime/leaves and reduced
rank and file workers in the early 1990s to 35% in workdays, and union-busting.
2014, the latest year for which data is available.
The CTUHR also tallied 64 cases of civil and
Much was expected on the vital issue of political rights violations against workers,
contractualization after Pres. Dutertes boisterous including 11 cases of extrajudicial killings
promises to end contractualization while aside from victims of threats, harassment and
campaigning and, again, upon assuming office. intimidation, attacks on picket lines and dispersals
The interests of capitalists and employers have, of mass actions, and physical assault.
however, prevailed. The administrations eventual
intervention, Department Order (DO) 174, largely Social inequity
repeated existing weak prohibitions and, in effect,
merely ended up affirming the practice. The The economic growth is also lopsided in the
Department of Labor and Employment (DOLE) interest of a few at the expense of the majority of
claim of 70,000 erstwhile contractuals being poor Filipinos. The conditions of the rich continue
consequently regularized is an exaggeration and, to improve even as wages and family incomes
in any case, only a very small part of the millions have stagnated in real terms, especially with rising
of contractual workers in the country. prices. Millions of Filipinos, meanwhile, continue
to suffer inadequate and unaffordable electricity,
These poor employment conditions are driving water, transport, education, health, and housing.
waves of protest. Thousands of workers have
persisted in their demand for a national minimum While growth has not resulted in improved
wage of Php750 for private firms and Php16,000 employment and wages, it is well-reflected in
monthly salary for government employees as wealth and profits. The net worth of the 15 richest
well for a real end to contractualization. This Filipinos continued to rise by another 8% from
includes thousands of workers from Metro US$56.8 billion in 2015 to US$61.3 billion in 2016.
Manila, Southern Tagalog, CARAGA, and Southern Similarly, the net income of the 265 firms listed
Mindanao trooping to Malacaang and the in the Philippine Stock Exchange (PSE) continued
labor departments offices in the run-up to the to grow by 18% from Php581 billion in 2015 to
presidents state of the nation address (SONA) at Php683 billion in 2016.
the end of July.
Any pockets of gains are welcome, but seem
Neoliberalism and the bias for capitalist profits token when measured against such inequity. The
is also driving violations of workers rights. The sporadic shows of bias for the underdog poor

12 IBON Economic and Political Briefing l 19 July 2017

were a precious few and, most of all, due to
organized campaigns by peoples organizations to
assert their economic rights.
Peasant groups welcomed the Php2 billion
irrigation fee subsidy in the national governments
2017 budget, hailing the long overdue free
irrigation a significant result of farmers decades-
long assertion and demands. The next measure
to watch out for is the institutionalization of free
irrigation through legislation instead of having to
be lobbied for on a yearly basis.
Farmers and fisherfolk meanwhile await the
result of free land distribution recently being
upheld by the administration and the National
Democratic Front of the Philippines (NDFP) as a
key principle of agrarian reform. For now, upon
assertions by peasant groups, the agrarian reform
department has worked to reinstate farmworkers,
secured land, and worked to end the oppressive
aryendo system in Hacienda Luisita and to reclaim
land for farmers from Lapanday Foods Corp. in
Tagum, Davao del Norte. The agrarian reform
department has also pushed to revoke stock
distribution options (SDO) in Negros Occidental
and agribusiness venture agreements (AVAs) in
Davao del Norte.
Peasant groups nationwide continue to press
their demand to break up haciendas nationwide.
At the same time, they have launched cultivation
campaigns (also called bungkalan) in Isabela,
Cagayan Valley, Nueva Ecija, Tarlac, Bulacan,
Cavite, Batangas, Laguna, Panay, Negros,
and Davao del Norte as efforts to improve
agricultural production, improve peasant families
welfare, and subsequently reclaim vast tracts of
land.
Youth and student groups also welcomed the
additional Php8.3 billion in funding for state
universities and colleges (SUCs) to free students
from paying tuition in academic year 2017-2018.
They similarly acknowledged this as the result of
decades of militant campaigning, while warning
of its reverting to a selective scholarship program.
The next measure is likewise a new law that
genuinely institutionalizes free tuition in SUCs
as a matter of state policy. The governments
neoliberal economic managers are, however,
opposing this on flimsy grounds that targeted
support is more effective, efficient and economical
apparently failing to understand what upholding
the right to education entails.
IBON Economic and Political Briefing l 19 July 2017
Government housing programs remain
inadequate. Frustrated urban poor groups rose
up in Pandi, Bulacan to occupy some 5,000
idle housing units. The campaign of thousands
of informal settlers from Bulacan and Manila
to assert their right to housing compelled the
president to give them the units in lieu of the
intended military and police recipients. The
success of the campaign is reported to have
sparked greater political and class awareness
among hitherto unorganized communities.
There were also examples of how foreign capital
and entrenched business and landlord interests
have undue influence on socioeconomic policies.
For instance the two-year ban on land use
conversion demanded by farmers, supported by
the agrarian reform department, and supposedly
already approved by the president remains
thwarted. There was also the administrations
tepid support for a crusading environmentalist
as environment secretary, which was evident
deference to interests of mining corporations.
The past year affirmed the resistance of vested
interests, neoliberal economic managers, and
even of political institutions to challenges from
organized groups. It also affirmed, on the other
hand, the growing movement on a nationwide
scale of workers, farmers, youth, urban poor
groups, indigenous peoples, migrants, women,
and of advocates on various issues.
Economic underdevelopment
It is also important to assess how far the debt-
and hype-driven investments build the real
fundamentals of sustained growth i.e. domestic
agricultural and Filipino industrial production,
especially alongside greater equity. Unfortunately,
the structural changes in the economy so urgently
needed are not taking place.
Large portions of investments have been in
foreign manufacturing or BPOs (especially in
disconnected export enclaves), commercial
and residential real estate, and in transport
infrastructure rather than in local farms and
Filipino industry. These are low value-added
activities with minimal multiplier effect. For
instance, taking just the 2011-2015 period,
only 0.8% of total approved investment was in
agriculture and only 9.9% by local manufacturers
(compared to 23.2% by foreign manufacturers).
13
 Real estate activities meanwhile accounted for
20.3% of total approved investment.
The kind of investments also needs to be
scrutinized further. In the period 2016 to April
2017, for example, it is striking that the largest
investments in durable equipment have been for
road vehicles. (See Table 5) Transport equipment
accounted for nearly half (43.6%) of gross
domestic capital formation, with 41 percentage
points of this consisting of road vehicles. Such
can of course be considered productive capital,
but investments in agricultural or industrial
machineries and equipment are presumably more
indicative of growing production capacity. These,
however, amounted to just 36.6% of investments.
These investment figures are consistent with the
persistent neglect of important domestic sources
of growth. The manufacturing upsurge is
overstated. Filipino industry is stifled and remains
shallow and increasingly foreign-dominated. At
23.2% last year (up slightly in first quarter 2017),
the share of manufacturing in GDP has been
virtually unchanged for the last three years and
still remains lower than the 23.5% share in the
2000s (annual average from 2000 to 2009). (See
Table 6) This is even dominated by foreign firms
minimally connected to the rest of the economy.
Economic policy has to foster higher value-added
manufacturing by Filipino firms.

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

14 IBON Economic and Political Briefing l 19 July 2017

 Table 6 of GDP so far in first
quarter 2017 from 9.2%
National Accounts of the Philippines by industry group and
by type of expenditure, 2016 and 1st quarter 2016 and 2017 during the same period in
(percentage share of Gross Domestic Product; at constant 2000 2016; it is markedly lower
prices; in %) than the 13.4% share in
the 2000s. Rural poverty
1st 1st
remains widespread
Industry group / Expenditure share 2016 Quarter Quarter
amid persistent land
2016 2017
monopolies, landlessness,
By industry group and low agricultural
1. Agriculture, Hunting, Forestry and Fishing 8.7 9.2 9.1 productivity.
a. Agriculture, Hunting, Forestry 7.2 7.7 7.7
b. Fishing 1.5 1.4 1.4 Growth has mostly
2. Industry Sector 33.9 34.3 34.2 been in the services
sector especially around
a. Mining and Quarrying 1.0 1.2 0.9
wholesale and retail trade
b. Manufacturing 23.2 24.3 24.6 (including malls), real
c. Construction 6.4 5.5 5.6 estate, and BPOs all of
d. Electricity, Gas and Water Supply 3.3 3.2 3.0 which are low value-added
3. Service Sector 57.3 56.5 56.8 activities with minimal
a. Transportation, Storage, and Communication 7.6 7.9 7.7 multiplier effect. The share
of services continued to
b. Trade and Repair of Motor Vehicles, Motorcycles,
inch up to 56.8% of GDP
Personal and Household Goods 16.8 15.4 15.5 in April 2017 from 56.5%
c. Financial Intermediation 7.2 7.6 7.7 during the same period
d. Real Estate, Renting and Business Activities 11.5 11.1 11.1 in 2016 and 53.6% in the
e. Public Administration and Defense: 2000s.
Compulsory Social Security 3.9 3.7 3.7
Domestic manufacturing
f. Other Services 10.4 10.9 11.1
by Filipino firms integrated
By expenditure share in the local economy, as
1. Household Final Consumption Expenditure 69.3 69.8 69.4 opposed to low value-
2. Government Final Consumption Expenditure 10.5 11.0 10.3 added export-oriented
3. Capital Formation 28.0 29.8 30.2 foreign investors, is
a. Fixed Capital 27.7 28.9 30.3 an important driver of
i. Construction 9.9 8.7 9.0
growth and development.
Likewise with modernized
ii. Durable Equipment 15.5 17.8 18.8
agriculture built on an
iii. Breeding Stock and Orchard Development 1.3 1.4 1.4 equitable rural economy.
iv. Intellectual Property Products 1.0 1.0 1.2 Neoliberal economic
4. Exports of Goods and Services 50.3 52.5 59.4 policies are, however,
a. Export of Goods 39.5 39.6 45.5 against the state actively
b. Export of Services 10.9 12.9 13.8
intervening and giving
local producers the
5. Less: Imports of Goods and Non-Factor Services 58.1 62.1 68.5
support and protection
a. Import of Goods 46.5 49.3 56.0 they need to strengthen
b. Import of Services 11.6 12.8 12.5 and develop. There is
Gross Domestic Product 100.0 100.0 100.0 also only lip service to
Source: Philippine Statistics Authority National Accounts of the Philippines the quality of the growth
and job generation. The
The share of agriculture in the economy continues distribution of incomes and assets necessary
to shrink while still taking up the single largest for greater economic democracy is neglected.
share of employment in the country. Despite The impact on natural resource use and carbon
relatively fast growth, its share dropped to 9.1% emissions is likewise ignored.

IBON Economic and Political Briefing l 19 July 2017 15

 This results in the current shallow domestic
economy with decreasing productive capacity,
and correspondingly weak job generation and low
incomes. This in turn represses domestic demand
and investment.
Build? Build? Build?
The government needs to sustain the
economic growth to maintain any sort of
economic credentials, especially given the
poor socioeconomic conditions of the majority
of Filipinos. But it is keenly aware that
subdued domestic demand from poverty amid
underdeveloped agriculture and industry is not
enough. It has become anxious to keep growth
high and is resorting to a grand infrastructure
offensive to achieve this. The Public Investment
Program (PIP) 2017-2022 reportedly has a total
funding requirement of Php8.4 trillion or US$168
billion. Two-thirds (66%) of this is targeted to
come from government domestic financing, 15%
from official development assistance (ODA), and
18% from public-private partnerships (PPP).
But its fiscal room to maneuver is tight. The gap
between government revenues and expenditure
has been growing since 2014, leading to a growing
national government deficit. (See Chart 7) The
Chart 7
Selected fiscal indicators, 2007-2016 (in % of GDP)
20
16.7
15 16.5
10
GDP ratio (%)
(0.2)
-
2007 2008 2009 2010
(5)
Source: Bureau of the Treasury
16 IBON Economic and Political Briefing l 19 July 2017
deficit has quadrupled from 0.6% of GDP in 2014
to 2.4% in 2016, especially with the marked
decline in revenue effort in 2016.
Although the ratio of national government (NG)
debt to GDP still remains low, the stagnant tax
effort combined with the pressure to spend to
boost growth will be considerable pressure on the
government debt burden. Nominal NG debt is, for
now estimated to reach Php6.47 trillion in 2017
and Php7.05 trillion in 2018.
The administrations Build! Build! Build!
infrastructure program is the highlighted bedrock
strategy of Dutertenomics. It will only be a short-
term stimulus to economic growth. The surge
of spending in construction and related sectors
will temporarily increase economic activity,
create short-term jobs, and stir up business
and consumer confidence for a little while. But
this would only be for a few years because the
transport and other infrastructure proposed does
not develop domestic agriculture and Filipino
industry on a nationwide scale. It is a short-
sighted effort that will not result in broad-based
economic growth, social progress, and national
development.
The argument that the economy is constrained
by poor infrastructure and that a massive
17.6
Expenditure effort
Revenue effort
15.2
2011 2012 2013 2014 2015 2016
(2.4)
GDP ratio
Year
infrastructure drive will spur growth and
development looks appealing, but is actually
simplistic. Infrastructure is necessary, but
insufficient. The Marcos dictatorship (mid-1970s),
Cory Aquino (1987-1990) and, more recently,
the previous Aquino administration (started
in the last years of Gloria Macapagal-Arroyo
[2008/2010] and continued throughout his term
until 2016) were all biased towards a similar
infrastructure-heavy approach. Yet the economy
remains underdeveloped; agriculture and industry
backward; and the majority still poor.
Infrastructure in its generic sense is indeed
important for development. In practice, however,
the context of and kinds of infrastructure built
matters for its eventual contribution to national
development. If it is elitist and exclusionary
infrastructure, as neoliberal measures all tend to
be, it will not develop the national economy and
may even leave greater problems in its aftermath.
The Build! Build! Build! infrastructure program
covers big-ticket infrastructure: mass transit,
roads and bridges, railways, airports, seaports,
flood control, communication and information,
and so-called new cities. The government has
75 flagship projects, of which 53 have identified
budgets cumulatively worth Php 1.6 trillion.
Planned spending is overwhelmingly concentrated
in NCR, CL, and ST, which account for 63.5% of the
total value of these 53 projects, with at most 20%
for the Visayas, and just 13.3% for Mindanao. (See
Table 7) The 14 projects in NCR alone account
for a huge 44.4% of the identified value not
yet counting another 13 still without specified
budgets.
Such infrastructure program strengthens
prevailing enterprises engaged in neocolonial
trade especially in NCR, CL, and ST. The
infrastructure projects support economies of
scale in production and selling, facilitate the
export of the countrys mineral and agricultural
raw materials, and also boost tourism. The
main beneficiaries would be existing big foreign
and domestic corporations in low value-added
manufacturing for export, natural resource
extraction, and services including selling of
imported products.
The planned infrastructure build-up does little
to make the countrys at least six million farms
nationwide more productive. Irrigation, post-
IBON Economic and Political Briefing l 19 July 2017
harvest facilities and farm-to-market roads in
rural communities across the country would
be more beneficial for the vast rural poor. This
should be accompanied, if not preceded, by real
agrarian reform so that farmers nationwide would
gain from market opportunities created. On the
contrary, the social and economic impact on
poor communities displaced by the planned large
infrastructure projects is not being taken into
consideration.
The Build! Build! Build! program is also
indifferent to supporting the development of
Filipino firms manufacturing goods with native
science and technology. A larger national
industrialization program with infrastructure as
just one of many components consciously and
methodically identified to be supportive of the
development of large, medium and small Filipino
firms would be more productive. These are the
essential foundation of domestic-driven economic
growth and job generation that is sustainable over
the long-term.
Social development would also demand
prioritization of dispersed social infrastructure
over centralized big ticket projects. The country
has considerable gaps in safe water supply (with
for instance, 3.3 million families without access)
and sanitary toilets, rural electrification, schools,
and hospitals. Infrastructure has to be appropriate
meaning spread across the country and in
the kinds of infrastructure most needed by the
poorest, not a few big-ticket projects mainly in
urban areas and especially in NCR, CL, and ST.
The true financial cost of the infrastructure,
whether under the public-private partnership
(PPP) scheme or its hybrid variant, also has to
be put under scrutiny. Project financing is one
aspect coming from government funds, ODA
(bilateral and multilateral), private capital and
the eventual rates or fees charged to the public
are another relevant aspect.
The actual benefits would greatly depend on the
actual terms of the loans and aid (e.g. flexible
interest rates that are low now but possibly
burdensome in future); conditionalities related
to contractors and sourcing of equipment and
even labor (not necessarily building the best and
most appropriate infrastructure at the best price);
possible corruption; and others. This is aside from
government subsidies of private profit through
17
Table 7
75 Infrastructure flagship projects under the Duterte administration
Value of projects
Projects Projects by sector
with budget
Region/s Amount Roads
% of With Budget Mass Flood New
(in Php and Railways Airports Seaports Water Power
total budget TBD transit control cities
billion) bridges
Region I 18.4 1.2 2 2
CAR; Region II 2.7 0.2 1 1
Region II 4.0 0.3 1 1
Region II;
4.0 0.3 1 1
Region III
Region III 117.6 7.4 3 3 1 1 1 3
NCR; Region III 211.5 13.4 1 2 1 2
NCR 342.8 21.7 11 11 3 16 2 1
NCR, Region IV 144.9 9.2 2 1 1
Region IV-A;
151.0 9.6 1 1 1 1
Region V
Region IV-A;
30.9 2.0 1 1
Region IV-B
Region V 29.0 1.8 3 3
Region V; NIR 27.2 1.7 1 1
Region V;
57.6 3.7 1 1
Region VIII
Region VI 49.7 3.1 2 1 1
NIR 20.3 1.3 1 1
Region VII 74.5 4.7 4 1 1 1 1
Region VII; NIR 14.4 0.9 1 1
Region VII;
72.1 4.6 1 1
Region VIII
Region VIII;
47.4 3.0 1 1
Region XIII
Region IX 6.2 0.4 2 1 1
Region X 27.7 1.8 5 2 1 2 4
Region XI 102.9 6.5 4 1 1 1 1
Region XII 13.7 0.9 1 1
Region XII;
5.4 0.3 1 1
ARMM
Multi-region (I,
3.4 0.2 1 1
IV-A, V, VI, IX)
Region XI;
1 1
Region XIII
Multi-region (X,
1 1
XI, XII, XIII)
Multi-region
(IX, X, XI, XII, 1 1
XIII)
Total 1,579.2
100

5 22 3 32 9 6 4 3 11 4 3
ARMM - Autonomous Region in Muslim Mindanao NCR - National Capital Region TBD - to be determined
CAR - Cordillera Administrative Region NIR - Negros Island Region
Source: National Economic Development Authority

18 IBON Economic and Political Briefing l 19 July 2017

regulatory risk guarantees, take-or-pay provisions,
pass through costs, and similar schemes.
The Php8.4 trillion (US$168 billion) funding
requirements of the PDP 2017-2022 are huge,
and it appears that the administration is looking
to finance a large portion of these with foreign
assistance. Among the nearly 20 countries that
the president has visited in his first year in office
are China and Japan, which it seems are also
intended to be major financiers. This raises the
question of what leverage will result over the
Philippines from getting such large financing from
only a few sources. The amounts being reported
are not always consistent, and the commitments
are nonetheless still uncertain.
China has been reported to be willing to provide
anywhere from US$24 billion to over US$50
billion in ready and cheap financing from ODA
and commercial tied loans. This seems to be
mainly from the China Development Bank and
the Export-Import Bank of China. This does not
yet include possible financing from the China-
dominated Asian Infrastructure Investment Bank
(AIIB). The Philippines is also an active member
of the AIIB and is pitching to be part of Chinas
One Belt, One Road infrastructure offensive
particularly its maritime Silk Road component.
These are distinct from the US$15 billion in
investment pledges mostly made between private
Philippine and Chinese companies.
Japan has long been the single-biggest country
source of ODA. This appears likely to continue
with the Japan International Cooperation Agency
(JICA) considering the financing of Php457 billion
worth of primarily railway projects Php230
billion Manila Metro Line 9 (Mega Manila Subway
Project - Phase 1) and Php212 billion PNR North 2
(Malolos-Clark Airport-Clark Green City Rail) but
also a few water projects. There is also reportedly
US$17.2 billion in investment pledges for mass
transport, roads, water, and power projects.
Economic relations with Russia, meanwhile,
are still developing. The presidents high-profile
trip to Russia resulted in new agreements on
defense and economic cooperation, but, so far,
few financial or economic commitments. It is not
clear what the Russian commitment to purchase
US$2.5 billion in fruits and vegetables means in
practice. Likewise with business-to-business deals
worth US$875 million reported to be in progress.
IBON Economic and Political Briefing l 19 July 2017
Ills of neoliberalism
Dutertenomics and its outmoded neoliberalism
will only deliver the same exclusionary growth
that past administrations have delivered.
Policymaking since the 1980s has been about
steadily removing barriers to profit-making
alongside creating conducive business conditions
even at the expense of the peoples immediate
welfare and of long-term national development.
Neoliberal globalization wrongly equates profits
with development. This resulted in market-fixated
macroeconomic and foreign trade and investment
policies that do not develop the national economy
and only make it more difficult for millions of poor
Filipinos to scrape a decent living.
Dutertenomics does not change that flawed
economics. Quite the opposite, it is preoccupied
with looking for what else can be done to
make the economy more profitable for foreign
capital and domestic big business. Decades of
globalization have already drastically altered the
Philippine economic policy landscape and led to
further underdevelopment. The administration
is just building on these policies and has lined up
the next wave of pro-business and anti-people
neoliberal measures.
The Duterte administrations neoliberal agenda is
central to getting the strategic support of foreign
and domestic big business, on top of the smaller
Mindanao-based landlords and Filipino-Chinese
capitalists he relied on during the elections. The
administrations 0+10-point Economic Program
and PDP 2017-2022 is a conventional package of
policies to increase the profits of foreign investors
and protect the wealth of Filipino oligarchs. Pres.
Duterte himself is in favor of relaxing the 60-40
Filipino-foreign ownership rule in the Constitution
and of up to 100% foreign ownership even of
utilities.
The PDP 2017-2022 will fail to develop the
Philippines as declared by the government. This
is because it does not offer anything new. (See
IBONs PDP 2017-2022: Unchanged Market
Fundamentalism [Jun 06, 2017]) It is still afraid
to reform inequities in assets, wealth, income,
and opportunities. It still equates development
with growing businesses and profits even if only
for just a few. It is still fixated on attracting foreign
investors over making domestic capital flourish. It
still refuses to acknowledge that the government
19
 has a responsibility to more systematically
intervene in the economy.
The administration has already started on far-
reaching measures with economy-wide impact.
Its proposed Comprehensive Tax Reform Program
(CTRP), which cuts taxes on the propertied rich
while increasing taxes on the dispossessed poor
majority, is the single most comprehensive
neoliberal overhaul of the tax system in the
countrys history. The administration is also
seeking more expansive liberalization through the
Regional Comprehensive Economic Partnership
(RCEP) free trade deal and complete investment
liberalization through changes in the Philippine
Constitution.
Other more specific initiatives include: further
agricultural liberalization with the removal
of quantitative restrictions on rice imports
in line with World Trade Organization (WTO)
commitments; further investment liberalization
by allowing foreign capital in domestic utilities;
further deregulation in taking away the
governments pre-approval authority in the
setting of suggested retail prices (SRP) on basic
goods and commodities and in pushing the
two-tier wage system for workers; and further
privatization through its infrastructure offensive
and the way social services are provided.
The Duterte administrations economic policies
substitute the ease of doing business for ensuring
basic needs, upholding social and economic rights,
and achieving real national development. They
steer the economy toward ever greater foreign
capitalist and oligarchic control of economic life at
the expense of the peoples welfare and national
development.
Foreign capital will continue its control over
Philippine-located manufacturing directly and
through local adjuncts subordinated in global
value chains. Filipino oligarchs will remain
entrenched in natural resource extraction
(e.g. mining, agricultural exports) as well as in
utilities (e.g. telecommunications, power, water,
transport), social services (e.g. schools, health),
retail trade, real estate, construction, and finance.
Investment liberalization will let foreign capital
make even deeper inroads in partnership with
domestic capital. All these will result in growing
inequality and worsening material insecurity.
20 IBON Economic and Political Briefing l 19 July 2017
The country is hyped as a leading emerging
market because of the profitable opportunities
for foreign capital resulting from the aggressive
neoliberalism of the government in the
previous and current administrations. Foreign
investment can play an important role in domestic
development, but the investment environment
created by the Philippine government is too liberal
or too open. It puts the country into a harmful
race-to-the-bottom with other countries to attract
foreign investors.
The government has to regulate foreign
investment. This includes regulating TNC
entry, establishment and their right to operate
through equity and ownership restrictions,
joint ventures, requiring local content and
domestic reinvestment, requiring technology
transfer, and other performance requirements
as deemed necessary. Foreign TNCs and their
domestic partners may complain, but these are
all vital policy tools historically-proven to create
meaningful linkages and benefits for the domestic
economy.
Structural changes are needed for broad-based
development. Economic policies need to confront
gross inequities with forceful asset, income
and wealth redistribution. This is necessary to
genuinely and immediately expand opportunities
for millions of Filipinos. There should also be
much greater support for developing agriculture
and rural economies made more equitable by real
agrarian reform. Filipino ownership and control
of domestic manufacturing has to be increased,
and the countrys mineral and agricultural raw
materials should be used mainly by Filipino firms.
Neoliberal tax reform
The anti-poor pro-rich CTRP deserves special
attention. The proposed tax reform program
reduces taxes on wealthy families, domestic big
business, and foreign investors and offsets this
with higher consumption taxes on the countrys
poor majority. The first part of the Duterte
administrations CTRP was passed by the House
of Representatives (HOR) as House Bill No. 5636
or the Tax Reform for Acceleration and Inclusion
Act (TRAIN). The main opposition to the grossly
inequitable law from the progressive Makabayan
bloc was routed by 246 lawmakers from the
presidents supermajority voting in favor. The
measure is up for deliberations at the Senate.
The finance department has an aggressive but
misleading campaign on this where it understates
the tax impact on the poor, misrepresents
temporary welfare measures, and exaggerates the
benefits for the people of what the higher taxes
finance. They also distort progressive taxation
into a notion that is insensitive to how the
impact of income losses from taxation are very
different for poor households on the margins of
existence compared to rich households that have
larger incomes, much more assets, and greater
opportunities.
Analysis of the CTRP are available elsewhere.
(See IBONs Buwis(et)! DOFs Top 5 Tax Reform
Lies [Jun 20, 2017] and Tax Ganern! DOFs Tax
Reforms Tax the Poor and Relieve the Rich [Sep
2, 2016].) What can be highlighted now is how
the Duterte administrations tax reform program
follows the neoliberal trajectory of tax changes
since the 1980s of reducing direct taxes (especially
income taxes) on the rich and offsetting this with
higher consumption taxes on the poor. Part of
the backdrop of these tax changes is reduction
in trade-related revenues following the steady
cuts or removal of tariffs, export taxes, and
other trade-related measures in line with trade
liberalization since the 1980s.
Direct taxes on personal and corporate income
are the most progressive taxes possible, with
NEOLIBERAL, POPULIST, AUTHORITARIAN
The Duterte administration is upholding
neoliberalism through a combination of populism
and growing authoritarianism. Pres. Duterte
is at the center as the stereotypical strong
leader cultivating a devoted cross-class base
of supporters and securing the backing of the
military and police. Politicians are either co-
opted or intimidated. The corps of neoliberal
technocrats managing the economy is critical.
They have the all-important role of ensuring that
state resources and powers are used to create
profitable opportunities for private capitalists in
the framework of a liberalized market economy.
This secures the support of foreign monopoly
capital and the domestic ruling classes.
This is not Marcos-type authoritarian rule
with prominent crony-driven state enterprises
IBON Economic and Political Briefing l 19 July 2017
taxes paid correlated with income or the ability to
pay. Personal income taxes were lowered by the
Cory Aquino administration (with the maximum
of 60% lowered to 35%), which also increased
exemptions, and additional exemptions were
introduced by the Ramos administration. The
CTRP correctly exempts low income earners but
also actually reduces the income tax paid by most
high income earners.
The corporate income tax was set at 35% by the
Cory Aquino administration, reduced to 32% by
the Ramos administration, and reduced to 30%
by the Arroyo administration (after a short period
of being increased to 35%). The CTRP seeks to
lower corporate income taxes further even if
effective tax rates paid by the countrys largest
corporations, for instance, are already as low as in
the 12-19% range.
Indirect taxes on consumption, on the other hand,
are regressive taxes, with taxes paid indifferent
to the taxpayers ability to pay. The value-added
tax (VAT) was introduced by the Cory Aquino
administration (10%), its coverage expanded by
the Ramos administration, and increased to 12%
by the Arroyo administration aside from also
being imposed on oil and electricity. The CTRP
seeks to expand VATs coverage further.
and protectionism. In the globalization era,
this is authoritarian rule with neoliberal free
market-oriented economic policies and greater
integration with advanced capitalist powers.
Democracy remains limited in the Philippines
even after the Marcos dictatorship. The forms
and procedures of democracy were promoted
such as free elections, free press, civil society, and
others. Yet despite these, much of governance
still favors the elite, government in many ways
remains unaccountable, and severe economic
inequalities keep being reproduced in the political
sphere with all of these only worsening during
the era of globalization.
Looked at this way, the current populist
administration seems the logical result of decades
21
 of neoliberalism, and, in a way, so too the
emerging authoritarianism to push the neoliberal
agenda further. The ruling classes are fine with
authoritarianism as long as their businesses
remain profitable and their riches remain intact.
It may even be deemed necessary to provide the
stability and opportunities needed to maintain
business confidence and economic growth.
There is the danger that authoritarianism may
be used to further insulate profit-making,
market-oriented policymaking, and the market
economy from democratic politics. At its worst,
the states repressive and propaganda apparatus
may be wielded against peoples resistance to
neoliberalism, to defend vested interests, and to
perpetuate the inequitable status quo.
False promises
Presidential discretion has a disproportionate
influence in the president-centric political system
of the Philippines. This context of relatively weak
political institutions is among the reasons that
the unconventional Pres. Duterte could give the
impression that some kind of pro-poor and anti-
elite change could emanate from him.
The impulses against overbearing US intervention,
for the resumption of peace talks with the NDFP,
and to offer Cabinet positions to members
the Communist Party of the Philippines (CPP)
were, for instance, projected as changes for
the better. They were certainly in stark contrast
to the positions taken by the previous Aquino
administration, which was rabidly pro-US and
extremely anti-Left.
However, by the start of 2017 and especially by
the middle of the year, it became clear that these
were calculated moves with more pragmatic
motives. The opposition to these measures is
considerable, so the extent to which real reform
efforts would have produced meaningful results
was always going to be uncertain. In any case, there
was no genuine presidential will to press these
initiatives to their logical conclusions, so the
results have at best been exceptionally sparing.
Pretended independent foreign policy
The verbal tirades against US interventions in the
country and global abuses were meaningful in
coming from the head of the neocolonial state.
22 IBON Economic and Political Briefing l 19 July 2017
Regardless of the messenger, the message was
amplified and spread far and wide. This also
underscored the relative weakening of the US
amid growing global multipolarity. Of course, how
far the governments neocolonial practice has
been modified is another matter.
The long-standing US dominance of Philippine
geopolitical and economic policy has been shaken,
but remains basically intact. Bellicose anti-US
rhetoric at the start has settled into a more
conventional hedging strategy by the Philippines
between geopolitical peer competitors US and
China, and to some extent, Russia. Pres. Dutertes
foreign policy has been turning out not so much
an assertion of independence and sovereignty,
but rather as strategem to exploit the relative
weakening of the US amid growing multipolarity
in global geopolitics.
One factor is certainly how the US has counter-
maneuvered to ensure that the Philippines
remains in its orbit. The levers of US influence in
the country remain far-reaching and, aside from
the Armed Forces of the Philippines (AFP), include
politicians and technocrats, big business interests,
mass media, the diplomatic community, and many
others. The presidents one-dimensional anti-US
stance has all too easily folded into standard US
priorities: anti-terrorism, counter-insurgency, US
troops and military facilities, and affirmation of
the defense agreements, namely Visiting Forces
Agreement (VFA), Mutual Logistics Support
Agreement (MLSA), and Enhanced Defense
Cooperation Agreement (EDCA). Nationalist
protests against the US military presence
continued in Manila as well as in Mindanao.
The US government reduced its programmed
assistance to the Philippines in line with
developments in US-Philippines relations.
Economic, military, and security aid was reduced
to US$70.3 million for 2018, which is less than
half the US$188.0 million for 2017 and the lowest
since 2001. (See Table 8) This is not likely to be a
long-term thing though. Although Pres. Duterte
has said that he is willing to reject aid to assert
the countrys independence, the administration
was quick to accept US assistance upon the
Marawi crisis. It also by no means certain that
China and Russia will be providing enough
support, and especially the kind of support that
the AFP demands.
 US aircraft carrier strike groups continue their
Table 8 sea and air patrols there. This undermines the
Selected US assistance programs to the legitimate demand for demilitarization of the
Philippines by funding account, contested waters, reefs and islands to defuse
Fiscal Year 2016-2018 (in US$ million) tension and create space for a more negotiated
Funding Account FY 2016 FY 2017 p FY 2018 p diplomatic resolution according to accepted
international standards.
Economic aid 94.1 133.4 57.0
Global Health 32.0 31.0 11.0 Upstart imperialist Chinas efforts during the
Programs Arroyo administration to gain a foothold were
Development 62.1 102.4 - interrupted by the Aquino administration. Chinas
Assistance actual base for further advance still remains
Economic Support - - 46.0 small, especially compared to long-standing and
Development Fund wide-ranging US dominance. But the Duterte
Military, security aid 64.5 54.6 13.3
administration creates prospects for pockets
of progress for China and perhaps even for
Foreign Military 50.0 40.0 - breakthroughs on the economic and diplomatic
Financing Program fronts. The administration has not been taking any
International 1.9 2.0 2.0 overt and active position against Chinese military
Military Education construction and build-up in the WPS/SCS.
and Training
International 9.0 9.0 5.3 Yet another is that the all-important nationalist
Narcotics contours of independent foreign policy amid
Control and Law evolving global realities were not defined in even
Enforcement the vaguest terms and indeed still have not been.
Non-Proliferation, 3.6 3.6 6.1 For now, the supposed shifts towards China and
Anti-Terrorism and Russia have parlayed into promises of greater
Demining Related economic and even military aid.
Total 158.6 188.0 70.3
Peace, all talk
p
- preliminary; data are as requested by US Department of
State respective of the fiscal years The Duterte administrations openness to
Source: US Department of State Foreign Assistance Budget resuming peace talks with the NDFP and
continuing talks with the Moro Islamic Liberation
The US, nonetheless, remains the single-biggest Front (MILF) are potentially significant starting
foreign influence on Philippine economic policy- points in their respective peace processes. But a
making even if one aid package, under the year after, there is still little sign of real political
Millennium Challenge Corporation (MCC), was will to reach meaningful commitments to address
interrupted. The Partnership for Growth (PFG) long-standing concerns. This difficult process has
initiative started under the Aquino administration always been vulnerable to militarists narrowly
in 2011 continues. This includes USAID economic seeking a mere end to hostilities and dismissive of
policy intervention projects cumulatively worth legitimate historical grievances.
some US$50 million (Php2.4 billion): Trade-
Related Assistance for Development (TRADE), The resumption of peace talks with the NDFP
Facilitating Public Investment (FPI), Investment revived a process that the Aquino administration
Enabling Environment (INVEST), and Advancing was uninterested in and let stagnate. The talks
Philippine Competitiveness (COMPETE) Project. started in August 2016 with high hopes and
palpable reservoirs of goodwill on both sides.
The Philippine Navy has meanwhile resumed joint These moderated and diminished with every
patrols with the US Navy in the Sulu and Celebes succeeding round upon various intervening
seas. Soon after coming into office, Pres. Duterte circumstances. Still, the negotiations on social,
cancelled similar joint patrols with the US in the economic, political and constitutional reforms
contested West Philippine Sea/South China Sea have proceeded the furthest and arguably
(WPS/SCS), which started in early 2016. However, the fastest they ever have since the Ramos
administration.

IBON Economic and Political Briefing l 19 July 2017 23

 These talks are potentially a chance for bold
changes to upend the established inequitable
order, yet their prospects have steadily diminished
after the high point at their resumption last
year. The release of 19 NDFP consultants and
another 10 political prisoners were small shows
of goodwill, and even very belated in the case
of the latter. In retrospect, and especially after
the Duterte government used over 400 political
detainees as bargaining chips, the releases are
evidently calculated. This violated standing peace
agreements including the Joint Agreement on
Safety and Immunity Guarantees (JASIG) and the
landmark Comprehensive Agreement on Respect
for Human Rights and International Humanitarian
Law (CARHRIHL).
As the talks progressed, the persistent position
of the Duterte administration was to achieve an
immediate ceasefire and prolong this as a military
tactic to weaken the defense of the New Peoples
Army (NPA) of their base areas and presence in
guerrilla zones, open up communities to combat
and psy-war operations, and undermine the
fighting will and capacity of the NPA and the
people. The peace talks for the administration
increasingly seemed about working around the
NDFPs insistence on following prior agreements
to first conclude talks on social, economic,
constitutional and political reforms before taking
up a longer cessation in hostilities.
The prospects for the talks remain uncertain. On
one hand, the NDFP appears open and flexible
enough to see some openings and potentials
such as for instance seeking to reach meaningful
social, economic and political reforms with the
Duterte administration. They are supported by
various multisectoral and church-based groups
campaigning to ensure that peace talks continue
and take up substantive reforms. On the other
hand, the Duterte administrations position is
circumscribed by the AFPs aim of an immediate
indefinite ceasefire and by protecting the
economic and political interests of entrenched
interests. Yet, for now, both sides appear to have a
common interest in the talks proceeding.
The peace process with Moro groups in Mindanao
remains tentative and possibly even tenuous
post-Marawi crisis. Among Pres. Dutertes bold
promises at the start of his term was that he
would unite the various Moro groups behind a
new Bangsamoro Basic Law (BBL). The president
last year formed the 21-member Bangsamoro
24 IBON Economic and Political Briefing l 19 July 2017
Transition Commission (BTC) to draft the new
BBL. He also received Chairman Nur Misuari of
the Moro National Liberation Front (MNLF) in
Malacaang, who is still facing charges and was
erstwhile incognito.
The MILF has to contend with diminished public
support for a deal after the Mamasapano incident
and, at the same time, with how new Jihadist
groups are attracting even more recruits from
its ranks. The situation is also complicated by
the expected proposal from a separate track of
negotiations with Misuari of the MNLF with whom
a peace deal was already signed in 1996.
As it is, the BTC recently submitted the draft BBL
to the president before the opening of Congress.
This is intended to be the enabling law of the
Comprehensive Agreement on the Bangsamoro
(CAB) signed by the government and MILF in
2014. The previous BBL was opposed and shelved
for being unconstitutional despite already being
a moderated demand by the MILF for autonomy.
Progressive Moro groups, however, also opposed
how the new Bangsamoro entity in effect
opened up the natural resources of the region
to exploitation by foreign investors and local big
capitalists.
It is difficult to say what the response of
Congress and the reaction of the public to
the new Bangsamoro political entity replacing
the Autonomous Region in Muslim Mindanao
(ARMM) will be. On the ground, the reaction of
armed Moro groups also needs to be watched
keenly. This will to some degree also be a
barometer of response and reaction to the social,
economic, political, and constitutional agreements
to be reached with the NDFP. The president,
meanwhile, is sending signals that other Moro
groups who do not come on board with his
administrations peace processes will be dealt
with forcefully.
Still traditional politics
The unsolicited and publicly-announced offer of
Cabinet positions to CPP members was a surprise
to many. The offer was also to government
positions high enough to stir talk at the time of
an alliance government of some sort although it
was declined and the positions went to prominent
Leftist activists nominated in their stead. The
Cabinet ended up a patchwork of vastly different
ideologies and the positions taken had their own
limitations in terms of the radical change the
country needs.
Still, a year of commendable work showed that
Leftists can indeed govern at the highest levels
of the state. Sustained pressure from the mass
movement and working with allies in government
have also delivered some reforms within the
scope allowed by the status quo. As the effects of
anti-poor policies unfold, they will only become
more important for the administration as the last
threads of progressive and pro-poor posturing.
Outside of this, however, the government remains
steeped in traditional politics of patronage,
pork barrel, narrow self-interest, intimidation,
and systematically elitist governance. Political
practice in the Executive, Senate, House of
Representatives, and local government remains
largely the same. There is still abundance of
political parties without real political programs
and of politicians with elastic loyalties, such as
in the coalition Pres. Duterte cobbled together.
Traditional political families still largely dominate
local politics through well-established patronage-
clientilist relations.
The undue influence of foreign capital and
entrenched business and landlord interests on
socioeconomic policies is also an intrinsic part
of the countrys traditional elite-oriented and
undemocratic politics.
The president also speaks loudly against
corruption. He fired two of his long-time political
allies Ismael Sueno as local government
secretary and Peter Lavia from the National
Irrigation Administration (NIA) amid corruption
allegations, although it is possible that factional
struggles also factored in.
The anti-corruption posturing is, however, most
of all undermined by the political alliances with
the Marcoses, heirs to world-class dictatorship
and corruption, and former president Gloria
Macapagal-Arroyo, whose presidency was
wracked by high-level corruption reaching up to
her office. As it is, many Cabinet positions have
gone to known Arroyo personalities including in
the administrations critical economic team.
The Duterte administrations political
consolidation is well underway. The economic
managers are using neoliberal economic policies
and the promise of greater profits to get the
IBON Economic and Political Briefing l 19 July 2017
support of foreign capital and domestic big
business. The Cabinet Secretary is using the
governments anti-poverty and social programs
to try and build a patronage-driven network
of grassroots support along the lines of a mass
movement of sorts. The defense secretary, armed
forces chief and the military ensure that the US
geopolitical and economic interests in the country
and the region are protected. The president
himself has built a supermajority in Congress
aside from putting opposition politicians in check.
Populist fervor has in effect been used to further
buttress an unchanged reactionary system rather
than as fuel for real democracy in the country.
Still militarist and now authoritarian
The most alarming political trend is, however, the
dangerous authoritarian and militarist mindset
that is steadily being revealed. The states legal
monopoly on force has already been heavy-
handedly used in an ill-conceived war on drugs
and against terrorism in Mindanao. Police and
vigilantes are estimated to have killed up to
9,000-10,000 suspected small-time drug users and
dealers. The administrations narrative has gone
from exaggerating drug-induced lawlessness to
exaggerating the reach of Islamic extremism and
the risk of losing control not just of streets, but of
parts of territories.
The Marawi incident gave the administration the
pretext to declare martial law, test the reaction of
the public, and condition the public to its use and
benefits. The administration has affirmed that the
public can be made to accept martial law if they
are made to believe that there is uncontrolled
lawlessness and chaos. The excessive use of
military force against the Maute group and the
sweeping attack against the Bangsamoro will only
inflame and agitate armed Moro.
Martial rule threatens to be justified on a
nationwide scale against perceived enemies of the
state. This could be implemented outright if the
administration estimates that it has manufactured
sufficient grounds. But even if not declared, it is
already certain that the Duterte administration
will gradually expand and use its authoritarian
powers.
Pres. Duterte is in any case likely emboldened
by the administrations and the AFPs deft
manipulation of information and public opinion
around the Marawi incident and by the Supreme
25
 Court decision legitimizing the declaration of
martial law in Mindanao. Progressive groups have
nonetheless still been able to launch campaigns
and protest actions against the declaration and for
an end to military abuses in Marawi and the rest
of Mindanao.
The most immediate motivation for
authoritarianism is likely to be able to more
aggressively put down opposition to advance
its neoliberal economic agenda higher taxes
opposed by the poor, wage and union repression
opposed by workers, land conversion and
reconcentration being opposed by farmers,
debt-driven short-term stimulus opposed by the
public bearing the burden of repayment, big-ticket
infrastructure projects opposed by communities
to be displaced or by oligarchs bypassed and left
out, charter change opposed by nationalists out to
preserve economic sovereignty, and others. There
is also the presidents still unformed federalist
project.
There are already many signs of the
administrations authoritarian character
and actively projected by Pres. Duterte. The
presidents reputed links to death squads, while
he was still Davao City mayor was an early, but
small sign. Upon taking office, however, Pres.
Duterte has repeatedly flaunted his penchant
for using force starting with his banner war on
drugs. He has been vocal about his disdain for
human rights especially civil liberties and political
rights. He has spoken recklessly of shutting down
Congress and ignoring the Supreme Court if they
go against him.
He repeatedly and publicly gives signals to
the military and police that they can act with
impunity putting this into visible practice with
the reinstatement of the 19 police officers who
killed mayor Rolando Espinosa last year. More
subtly, Pres. Duterte has appointed at least 59
retired military generals, police directors, admirals
and colonels to his Cabinet and other agencies,
including government-owned corporations. This
helps him build loyalties and networks among the
military as well as potentially facilitates stronger
control of the civilian bureaucracy if such need
arises.
Further potential conditions for authoritarianism
are the supermajority in both houses of Congress
and the intimidation of the traditional political
26 IBON Economic and Political Briefing l 19 July 2017
opposition. The administration also demonstrated
its capacity to publicly shame, arrest and detain
critics on flimsy charges. The example of Sen. Leila
de Lima showed early on that the president would
not hesitate to politically attack even national
level elected officials.
The Supreme Court has on two occasions now
supported rather than challenged the president
the first being on the burial of the dictator
Ferdinand Marcos in the Libingan ng mga
Bayani and the second being the support for his
declaration of martial law across the whole of
Mindanao. Eleven of 15 justices ruled to dismiss
the challenges to the presidents declaration
for 60 days beginning on May 23. The AFP is
seeking an extension of martial law in Mindanao
that Congress is discussing. The Speaker of the
House of Representatives has even floated the
idea of extending martial law until the end of the
presidents term in office.
Human rights violations and militarization
are long-standing features in the Philippines,
especially, but not only in the countryside. The
independent human rights group Karapatan has
monitored 68 extrajudicial killings and 4 enforced
disappearances since the start of the Duterte
administration, from July 2016 to June 2017. (See
Table 9) The most number of rights violations
were the 416,005 victims of forced evacuation,
followed by 357,569 victims of indiscriminate
firing, 42,894 victims of threat, harassment and
intimidation, and 26,666 victims of violations
of the use of schools and other public places
for military purposes. Karapatans human rights
statistics reveal that the Duterte administrations
first year was generally worse compared with the
first year of the previous Aquino administration.
This does not yet include another wave of
evacuations by Lumad communities of Lianga,
Surigao del Sur in July just weeks before the
president delivers his state-of-the-nation address
(SONA). These are organized communities fighting
against land-grabbing, militarization, and plunder
of their mineral resources who only recently
returned and started rebuilding their schools.
Renewed military operations including the use of
aerial assets have driven 442 families with some
2,046 people back to evacuation centers. There
are also reports of the military blocking donations
of food and medicines.
Karapatan also reports 416 political prisoners of under the Duterte administration. Pres. Duterte
the government as of June 2017, including 121 had earlier promised a general amnesty for all 400
sickly, 35 elderly, 36 women, and seven (7) NDFP plus political prisoners.
peace consultants. Out of these, 57 were arrested

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

CLASS TRUMPS POPULISM

The political logic of the presidents populism cuts
across classes, but in the end, as the past year has
shown, it is still the unfolding of class forces that
determined which of the multitude of promises he
made would be fulfilled. The imperialist agenda
of global powers still defines Philippine foreign
policy and shapes its economy. Foreign capital and
oligarchic elites still dominate the inequitable and
backward national economy. The political power
of the ruling classes is still intact, while that of the
people continues to be repressed.
These are signs that Pres. Dutertes populism
is serving as a smokescreen for unchanged
neoliberalism and unreformed political practice
drifting towards authoritarianism. There is already
little left of its anti-elite and pro-poor flavor.

IBON Economic and Political Briefing l 19 July 2017 27

 The Duterte administration rose to power on a
populist electoral upsurge for change. But it has
shown its inability to meaningfully break from the
past. Unmet promises especially in the economy
have led to worsening unemployment, eroding
conditions of farmers, workers and other poor
Filipinos, and failing social services and public
utilities. The administration projects an image
of strength and stability and bolsters this with
its authoritarian subtext. Yet public frustration
and anger can only mount as social fragility and
economic vulnerability worsens.
The mainstream Left is the most sustained and
determined countervailing force to neoliberalism
28 IBON Economic and Political Briefing l 19 July 2017
as well as to authoritarianism and militarism in
the country. It has long been at the forefront of
grassroots organizing against policies that deepen
Philippine underdevelopment while creating
prosperity for a few, even as many other anti-
globalization groups have dissipated or been
co-opted.
These make it the political force best positioned
to lead the movement for positive change that
confronts elite domination and exploitation in all
its forms. The growing social upheaval only makes
its critique of the current system and proposed
alternative even more compelling for the poorest
millions of Filipinos.
Annex
Armed confrontations between the NPA and government forces, 2010-2017 January-June
Number Dead a Wounded a Captured
Date of AFP/PNP/ AFP/PNP/ AFP/PNP/
NPA Civilian b NPA Civilian b NPA Civilian b
Incidents CAFGU CAFGU CAFGU
2010 295 95 381 25 15 369 23 47 14 84
2011 347 108 373 14 61 332 21 40 12 25
2012 323 143 324 20 49 309 59 49 1 57
2013 372 81 441 11 26 407 35 66 35 29
2014 317 103 336 15 11 381 16 36 10 49
2015 318 41 233 25 17 321 14 25 11 80
2016 168 33 180 4 3 144 8 16 17 -
2016 Jan- 153 23 170 4 3 127 8 16 12 -
Jun
2016 Jul- 15 10 10 - - 17 - - 5 -
Dec c
2017 Jan- 173 43 146 10 1 147 9 10 7 9
Jun d

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

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