CR/PHILIPPINES

The Republic of the Philippines (Republika ng Pilipinas) has risen to be a country with one of the world's fastest growing GDPs in recent years. Behind this budding developmental success story is a deep history of social diversity, international trade, and finally modernization. The sprawling archipelago of 7,107 islands are home to over 100 million Filipinos and some of the world's greatest biodiversity, which are increasingly leveraged as human and natural capital in a globalized Philippine economy. While issues of corruption and inequality continue to stifle development and markets' efficiency, an active civil society and the relative success of populist leaders may produce more equitable growth and democratic governance.

Capital: Manila
Largest city: Manila (11.86 million)
Surface area: 300.000 km2 
Land area: 298,170 km2
Population: 107,668,231 million
Population under 14 years: 33.7%  
Currency: Philippine Peso (₱)
Real GDP growth rate:  3.6% (2011)  6.8% (2012)  6.8% (2013)
GDP per capita: $4,700 (2014 est.)
Human Development Index (HDI): 0.660 (117 of 187)[3]
[1] World Bank. (2014b). [2] Ibid. [3] UNDP. (2014).
Country Reports News: 
Archives
January 07, 2016
News /
Posted by NCID

On the 9th of May, 2016, the Philippines heads to the polls to vote for a new government. The Filipino people are poised to choose a new president and vice president. This elections also coincides with the elections as well for a new slate of senators, congressmen, and local government officials. Amid much color and festivity, 130 individuals have stepped and submitted their certificates of candidacy for the position of president, 19 for vice president, and 172 for senator. The Philippine Commission on Elections is set to deliver a quicker more efficient and accurate poll by utilizing automated optical mark recognition machines to count the results of the ballot. This is the second time the election body is utilizing the automated system and is promised to be a key solution to providing a clean and well-organized election to a population which has otherwise been subjected with poverty, corruption, crime, and insurgencies.

Constitutionally, the Philippine Executive is given one term of 6 years and is not allowed to run for reelection. Under the present administration, the country has achieved steady growth and has received sovereign credit rating upgrades over the last 6 years. The country is continuing its participation in South East Asian regional integration and security cooperation with the United States, Japan, and Australia. It will be up to the Republic’s next president-elect to continue these positive trends.

The May 2016 elections will be crucial for the Republic to continue and build on what the country and moreover the economy has achieved in the recent years. The country’s economy has grown positively at a stable rate since 2010 with more jobs being added to the market as well as local and foreign business seeing higher returns on their investment. The Philippines has also being slowly improving and upgrading its military defense capabilities with the onset of growing tensions in the disputed islands and atolls of the South China Sea. Slowly as well the culture of corruption and the onset of change for the better has been increasingly popularized in pop culture among the minds of the youth. This is very relevant for changing social ideals as the median population age of the country is just 23 years of age.

This signals a very important campaign strategy for the May 2016 elections in the country. By law, the legal age and consequently the voting age as well is 18 years old. The outcome of the 2016 election campaign will be highly determined by the swing of the youth vote. The fact is the Philippines has a very young population. General sentiments among the youth over issues on governance, society, and economics have seen a shift as compared to a couple of generations ago. The power of information most especially the internet, cheap travel, and easy access to communication have seen the youth of the Philippines today being highly opinionated and much more critical than the electorate of the past. 

At this key stage, several major contenders have emerged: Jejomar Binay (current vice president of the republic), Rodrigo Duterte (current mayor of Davao City), Grace Poe (current senator of the Republic), Mar Roxas (former senator and cabinet secretary), Miriam Defensor Santiago (acting senator of the republic). 

The NCID has compiled information from the top 5 leading candidates for the presidency through popular survey in light of the 2016 Philippine Presidential Elections

Please click here to view full image.

 

Main image by jsigharas from Flickr

 

 

Archives
February 08, 2016
News /
Posted by NCID

The Philippines has been beefing up its military significantly amid tensions with China in the South China Sea. President Benigno Aquino Jr. has just announced that PHP25Bn (USD522Mn) will be earmarked for the 2016 Philippine defense budget. This marks a single year record investment on military modernization and the national defense budget. Budget Secretary of the Philippines, Florencio Abad, has openly declared “we need to protect what is clearly within our territorial jurisdiction” emphasizing the gravity of the country’s maritime row with China in the South China Sea. This move also comes along with the country stepping joint military exercises with its allies the United States, Japan, and Australia. The region is increasingly said to be the world’s next flashpoint.

The country has long neglected the up-keep and maintenance of its armed forces and has now become a paramount concern for Manila. The President, along with the congress and senate, has approved the new AFP Modernization Act (Armed Forces of the Philippines) which sets the country on track for a 15-year effort of military modernization and upgrade. As part of the AFP Modernization Act, the Philippine government is expected to spend between PHP75Bn to PHP85Bn (USD1.65Bn to USD1.88Bn) by 2017 as part of the first 5 years of the 15 year armed forces modernization plan. (Gady, 2015)

Among the big tickets expected to be acquired by the Philippines in 2016 are two navy frigates (PHP18Bn), six close air support aircraft (PHP864.32Mn), night fighting systems (PHP1.12Bn), two C-130 cargo aircraft (PHP1.6Bn), two naval helicopters (PHP5.4Bn), and lead-in fighter trainer jets ammunition (PHP4.47Bn).

Other smaller ticket items up for acquisition are air surveillance radars (PHP2.68Bn), marine forces imagery and targeting drone support system (PHP684Mn), eight amphibious support vehicles (PHP2.5Bn), and air force full motion flight simulators (PHP246Mn). (Romero, 2016)

However big and expansive these numbers may sound it is still just a drop in the bucket as compared to neighboring China. There exists a massive power asymmetry between China and its smaller neighbors of South East Asia. In terms of per capita defense spending, the Philippines still ranks among the lowest spenders in the 10-block ASEAN region (Association of South East Asian Nations). “It is still a long way to go. We are just starting to enhance our capability. We still have a lot of things to do” said Philippine Air Force Chief Lieutenant General Jeffrey Delgado in August of 2015. Evidently China has a much greater military budget and capability. Only the United States has the capability to provide a significant military presence and wherewithal to stabilize the balance of power in the region.

Former colonizer and longtime friend, the United States has been helping the country beef up its military capabilities and to acquire more military hardware. This also comes as US President Barack Obama’s shift in foreign policy to the “Pivot to Asia”. Since 2002, the United States has already provided the Philippines with over USD500Mn in military aid and assistance as well as various types of military equipment. (Mogato, 2015) The US Ambassador to the Philippines has announced that the country can expect to receive in donation a total of 114 M113A2 armored personnel carriers from the US military by January 2016. (Agence France-Presse, 2015) This comes as a part of a new defense package under the EDCA (Enhanced Defense Cooperation Agreement) which is also been recently approved and ratified by the Philippine Congress and Senate and pushed by the President. US President Barack Obama has also promised that a big part of the USD140Mn in foreign military funding in the region will go to the Philippines. (Lee-Brago, 2015)

All these military upgrades and build up have come from a string of disputed islands and atolls in the South China Sea called the South China Sea Islands which include the Spratly’s, the Paracel Islands, Scarborough Shoal, and Senkaku Islands. The Paracel Islands are disputed by both China and Vietnam only and the Philippines has no interest on them because it is too far from the country’s EEZ (Exclusive Economic Zone). The Senkaku Islands are disputed by Japan, Taiwan, and China. The Scarborough Shoal which lies 118 nautical miles from the Philippine mainland is disputed by both China and the Philippines.

The Spratly group of islands is the most highly sought after and contested by 6 nations. The group of islands is the largest group among the four which makes up of more than 750 reefs, islets, atolls, cays, and islands that make up a total of only 4sq. kms. of land area spread out over 425,000sq. kms. of the South China Sea. The islands have no natural inhabitants but prove to be very rich fishing ground and is widely believed that they contain rich reserves of oil and natural gas. For these resources, 6 countries, China, Taiwan, the Philippines, Vietnam, Malaysia, and Japan all lay claims on in partiality or entirety of the region.

Figure 1 Asian Military Personnel by Center for Strategic International Studies (2016)

To see picture un full size click here

The Spratly Islands are located in a highly strategic, high traffic sea lane. These islands are right in the middle of one of the busiest and strategic shipping lanes of the world. Over USD5Tn in international trade pass through the South China Sea every year. It is one of the most important sea lane arteries of the world serving as a key transit route point for the bulk of energy imports of major Asian economies such as Japan, South Korea, and China. The South China Sea is also vital to the global food supply in which 10% of the world fishery products come from it.

Among all claimants to the South China Sea Islands, China has so far been the most aggressive. Gaining ground pretty fast, China has artificially reclaimed 20 times more land than all other claimant countries combined in the last 40 years. (Heydarian, 2015) China hopes that these developments will greatly increase her claim over the disputed islands. The Chinese hope that their land reclamation activities will help them push their case with the UNCLOS (United Nations Convention on the Law of the Sea). The Philippines has as well resorted to the arbitration hearings in The Hague formed under the aegis of the UNCLOS to require compulsory arbitration between China and the Philippines for maritime disputes.

The Philippines and the United States along with their allies and partners in the region are playing tag team to balance out regional power. Evidently, the Chinese is the strongest regional player and they aren’t too pleased that the Americans have stepped into their front door step. The Philippines alone does not have the military capability to exert and project its sovereign right over its territory, far less to prove to be of any significant balance shifter. The country’s efforts in its military modernization are commendable. However this is not enough to be of any significant weight in facing the Chinese alone. 

 

References

Agence France-Presse. (2015, December 10). Retrieved from Defense News : http://www.defensenews.com/story/defense/2015/12/10/us-gives-military-vehicles-philippines/77101724/

Gady, F.-S. (2015, August 21). Retrieved from The Diplomat: http://thediplomat.com/2015/08/philippines-push-for-military-modernization-in-new-budget-proposal/

Heydarian, R. J. (2015, October 29). Retrieved from Rappler Philippines: http://www.rappler.com/thought-leaders/110843-america-china-west-philippine-sea

Lee-Brago, P. (2015, November 26). Retrieved from The Philippine Star: http://www.philstar.com/headlines/2015/11/26/1526041/us-pushes-edca-hikes-military-aid

Mogato, M. (2015, November 25). Retrieved from Reuters: http://www.reuters.com/article/us-southchinasea-china-philippines-usa-idUSKBN0TE0WO20151125

Romero, A. (2016, January 4). Retrieved from The Philippine Star: http://www.philstar.com/headlines/2016/01/04/1539163/big-ticket-items-afp-modernization-await-implementation

Main Picture taken from Hukbong Katihan ng Pilipinas facebook Community 

 

Archives
March 11, 2016
News /
Posted by NCID

102 million people call an archipelago of 7,107 islands home. The Philippines tucked away in South East Asia is the 12th largest country in the world by population. In a 1903 census conducted by the then American colonial administration, found that the former Spanish (later American) colony was home to 8 million people spread throughout the archipelago. In a 2015 study by the National Economic Development Authority, the now independent Republic was found to be home to 105 million people. This represents a 1170% population jump in the last 113 years.

The Philippines, one of the world’s fastest growing economies in South East Asia has 24% of its population residing its capital Manila, Metropolitan Manila or Greater Manila – to locals. This represents over 24 million people crammed into a highly urbanized area of 1,580 km2 which is only about 0.5% of the country’s total land area. Manila is ranked the fourth largest urban area of the world. (Demographia World Urban Areas, 2016) Ranked just above Seoul, South Korea and below New Delhi, India. The top spot is taken by Tokyo, Japan with a population of 31.7 million people and a density of 4,400 km2. Manila has a population density of 15,000 people per km2. Measuring that density up to other world cities such as Hong Kong (26,400 km2), New York (1,800 km2), Shanghai (6,100 km2) Mexico City (9,700 km2), Madrid (4,700 km2), and London (5,900 km2).

Huge traffic jams, long queues on the metro, dilapidated buses, red lights, and road “carmageddon” have all become a way of life in Manila. Unsafe and unreliable public transport have all become one with city of Manila. The roads are littered with all sorts and forms of transportation on wheels. Manila’s roads are most famous for the “jeepney”. Rather a stretched World War II US Army Jeep which can carry about 12 passengers – or more, as is notoriously known in the Philippines. These “jeepneys” ply Manila’s back roads and main thoroughfares getting people from one point to another usually in a melody of chaos and disorder stopping as they or their passengers please. A normal commute would usually merit a “jeepney ride”. Manila’s streets are crammed with 50,000 of these World War II vintage vehicles still moving since 1945.

Congestion, unruliness, and chaos have been the “lords” of EDSA – Manila’s main thoroughfare. EDSA alone is plied by 266 different bus companies and 1,122 other bus companies ply the rest of the city’s thoroughfares. Some people would ask how about the metro? This is where things get a little more complicated. Manila does have a metro. But just with 3 metro lines with queues that could reach over a kilometer long. The city is just too congested with inadequate infrastructure.

It has turned the rule of the game from avoiding traffic to living with traffic. In 2014, if you were to hop into your car and drive 12kms from Quezon City (residential district) to Makati (financial center) it would take about an hour’s drive. Today, in 2016, it can easily take between 1.5 to 2 hours for the same commute. (Punongbayan, JC; Mandrilla, K.; Rappler , 2015) Some people are bound to 5 hour daily commutes just to get to work in the city’s main financial center. What is happening to the city?

This is all mixed into what Manila physically is. The city, from the sky, literally has an hour glass shape and the capital’s main central and financial districts scattered right smack in the middle of the narrowest point. Bounded by Manila Bay in the East and the Sierra Madre mountains and Laguna de Bay on the West. In the sense of its urbanity, Manila lacks roads. And lots of it. A quick look back in time and it makes it a little easier to understand Manila. The city is essentially somewhere between a cross breed of the old of Spanish philosophy of small narrow roads and a dash of the United States with big highways and open spaces. This is well noted as you go along the different zones of the metropolis. What’s worse is that during the Second World War, Manila along with Warsaw were the two most devastated cities. All the infrastructure and improvements built up by the Spaniards and Americans were then sent to ruins. The devastation of the war brought the worst to the metropolis. Years of bad governance and lack of foresight brought the city to an infrastructure black hole. The city failed to build an extensive road network after war. It lacks high volume mass transit. The American dream and car culture has strained the metropolis’ network of roads which hasn’t changed much since the colonial times.

However, despite the lack of infrastructure the boom the Philippine economy has seen the country growing at an accelerated growth above 6% since 2010. Far greater than the less than 4% growth the previous two decades triggering a mass internal migration into the nation’s capital of Manila where about a third of the country’s GDP is concentrated.

The growing middle class dream is to own wheels. According to the Philippine Land Transportation Office the number of cars on Manila’s roads has increased from 1.7 million in 2008 to 2.1 million in 2015. An increase of 26% in 7 years. The government estimates that there are about 300,000 vehicles that ply the 24km EDSA on a daily basis. That makes at least 12,500 cars per kilometer. There are just too many vehicles and not enough roads.

According to data compiled by Bloomberg, Manila is receiving on a daily basis 1,700 people who are essentially moving to the Philippine capital. (Yap, K.L.; Bloomberg, 2014) At this pace of growth, Manila is expected to rise to a population of 30 million by 2025 according to Belleville, Illinois based Demographia. This is also part of a regional mass urban migration where the Asian Development Bank expects that at least 1 billion people will be moving into urbanized areas by the year 2030.

This mass internal migration into the city as well as government and public neglect of Manila’s thoroughfares has effected the productivity of the capital and lead to huge significant economic losses. A study by the National Center for Transportation studies of the University of the Philippines – Diliman, as announced by Economic Planning Secretary Arsenio Balasican, found that traffic in Manila alone costs the country’s economy PHP1.1 trillion (USD23.4 billion) per year. That is equivalent to a daily loss in the economy of PHP3 billion (USD64 million). (Philippine Star, 2015) It is no laughing matter.

Recently, the Japanese government has granted a USD2 billion Official Development Assistance (ODA) loan from the Japan International Cooperation Agency (JICA) to the Philippine government to fund the construction, operations, and maintenance of a 38km commuter railway which takes passengers from the outlying provinces north of Manila to the Central Train Station of Tutuban. (Lopez, T.; Manila Standard, 2016) It is expected to be completed by 2020. This along with other projects such as rehabilitation and construction of 323kms of railway running through the metropolis from North to South and East to West, 539kms of expressways, 499kms of national roads, a new international airport, and a PHP514 billion subway network for Manila. The estimated cost of all these projects amount to PHP2.1 trillion. But with the country estimated to be already loosing PHP1.1 trillion annually, the planned infrastructure investment is worthwhile.

Manila’s traffic is no longer just a great inconvenience. For a country with about 25% of the population falling below the poverty line and many more close to it, the problem is a huge economic burden that cannot be allowed to slip unnoticed. As the country struggles to pull itself out of poverty and close the gap between the rich and the poor, traffic is no longer just a normal daily concern as is with other highly urbanized zones in the world. Traffic is and has become a source of poverty. Fixing the traffic problem is an investment that will bring great savings to the economy. The country just cannot afford to be losing PHP3 billion (USD64 million) everyday as the traffic situation continues to deteriorate.

 

References

Demographia World Urban Areas. (2016, March 3). 11th Annual Edition - 2015. Retrieved from http://demographia.com/db-worldua.pdf

Lopez, T.; Manila Standard. (2016, January 20). The emperor and Manila traffic. Manila, Philippines.

Philippine Star. (2015, September 16). Metro Manila traffic costing Philippines PHP3 billion a day. Manila, Philippines.

Punongbayan, JC; Mandrilla, K.; Rappler . (2015, August 15). Carmageddon: why are there so many cars in Metro Manila. Manila, Philippines.

The Economist. (2016, February 27). Traffic in the Philippines' Capital: Slowly does it. Manila, Philippines.

Yap, K.L.; Bloomberg. (2014, April 10). Epic gridlock reigns over Manila's 23 million residents. Manila, Philippines.

 

Picture by Roberto Verzo in Flickr

Archives
April 12, 2016
News /
Posted by NCID

The Philippine financial system was rocked by the country’s largest electronic heist in its history. USD81Mn was hacked, stolen, and laundered from the US dollar account of Bangladesh Bank (Central Bank of Bangladesh) at the US Federal Reserve of New York and remitted to the RCBC (Rizal Commercial Banking Corporation), one of the Philippine’s largest banks. The whole fiasco turned into a firestorm forcing the resignation of Bangladesh Central Bank governor Atiur Rahman to resign from the top post and prompting the Philippine upper chamber, the senate, to start proceedings for a formal investigation into the matter.

A country marked by many social ironies, the integrity of the Philippine financial system has been placed on the line yet again, but this time in front of a much wider audience. Contrasted by yet more irony, the Philippine government has been promoting the casino and gaming industry in the country in a bid to take a piece of the pie from otherwise burgeoning and highly profitable business.

Flying into the Ninoy Aquino International Airport, Manila’s main hub, a burgeoning of buildings and brightly lit with a frenzy of colorful lights by its side seemingly greeting the rich Chinese high rollers flying into the city on their way to the casino strip. Wealth from mainland China and the Chinese Triads have been flowing to casino centers such as Macao. Making Macao one of the largest gambling centers in the world. (Cohen, 2016) Manila is not one to miss out. As the country has seen a growing increase in interest in casino and gaming investments over the last couple of years. The Philippines aims to reach revenues of USD10Bn per year by the end of the decade from gambling revenues alone. (Moss & O'Keefe, 2015) The Solaire, the first luxury casino and gaming facility, turned profitable after just a year of operations. Philippine casinos also present a much lower rate in gaming income taxes. Manila offers about a 15% tax rate versus Macao’s 40% attracting a lot more Chinese high rollers. (Cohen, 2016) Patterned after Macao’s success, the country has also been receiving an increasing number of gamer tourists through “junket operators”. These junkets have been rerouting their customers to Manila from Macao due to lower taxes. Junket operators function in a network of middlemen who recruit wealthy Chinese gamblers in the mainland and lend them money for them to go on even higher rolls in Macao casinos. The junket operator then handles debt collection and makes his profits from commissions. (Moss & O'Keefe, 2015) This was where the dirty money trail ended.

The Philippines’ AMLC (Anti Money Laundering Council) picked up the suspicious transaction from behind the frosted glass of an RCBC bank branch in Makati, Manila’s main financial center which eventually led to a Filipino remittance company ending up with several casinos. In the casinos, it was dispersed to various accounts of junket operators. However, this is just the general story. Marred in a flurry of “he said/she said” blaming. The Philippine Senate still has to conclude its investigation.

This case is highly controversial and a very important matter for the Filipino people. Not only because it involves millions of US Dollars of another sovereign state but because it touches on the integrity of the country’s financial and remittance system.

The Philippine economy is heavily reliant on its OFWs that remit over USD26.92Bn a year. (GMA News Online, 2015) To be concise over 6,000 people daily (Migrant International, 2015) leave the country seeking better work and life opportunities overseas. It is estimated that a little over 10% or about 10 million Filipinos live and work overseas sending back home to their families. (Commission on Filipinos Overseas, 2013) Most of which live in North America, the Middle East, Oceania, and Europe. This social phenomenon which started in the second half of the 20th century has become a fundamental part of the Philippine economy.

In 2013, the Philippine congress amended the AMLA (Anti Money Laundering Act) but these amendments were only the bare minimum to satisfy the FATF (Financial Action Task Force), an international watchdog, to not put the country on its blacklist. (the Economist, 2016) Such a restriction would have severely restricted the billions of US Dollars flowing into the country each year. Moreover this would have made it very difficult for millions of OFWs to send money back home to their families. This would later have catastrophic effects on the Philippine economy which is highly consumer based driven.

The main problem is the Philippines’ AMLA is just too lax and way too politically convenient. The existing Philippine “bank secrecy law” as well is one of the strictest in the world.  It is a fact that existing Philippine laws against money laundering are amongst the weakest in the world. (Lopez & Batino, 2016) This comes also as a result of martial law years under the former dictator Ferdinand Marcos who had grand plans of attracting a lot foreign money by converting the country into a fiscal paradise.

A long history of corruption has led to a long term social sickness that has been plaguing the country as well as “plausible deniability”.  This along with a very weak justice system has been a staunch problem in the Philippines. It is not uncommon in public hearings to see a lot of denying, withholding of information, as well as inconsistent stories surfacing.

The whole process at the Philippine Senate has turned into the “nation’s biggest and most successful laundromat”. (Pamintuan, 2016) Just as has been in the past, the country’s public hearings pretty much turn into some sort of melodramatic soap opera. The junket operators and money launders have always been around. This time they have just gone too far.

This is a great chance for the Philippines to show to the world how serious it is in fighting crime and cleaning up and strengthening the integrity of its financial system. Just like many things that has come and gone through Philippine history it’s a wait and see situation how the country handles this political and financial firestorm.

 

 

Bibliografía

Cohen, M. (4 de February de 2016). Forbes Magazine . Obtenido de Macau Casino Revenue Falls Again In January; Will The House Stay At 20?: http://www.forbes.com/sites/muhammadcohen/2016/02/04/macau-casino-revenue-falls-again-in-january-will-the-house-stay-at-20/#29863dc04620

Commission on Filipinos Overseas. (1 de December de 2013). Stock Estimate of Filipinos Overseas. Manila, Philippines. Obtenido de http://www.cfo.gov.ph/images/stories/pdf/StockEstimate2013.pdf

GMA News Online. (9 de June de 2015). Infographic: where USD26.92B of OFW remittances come from. Obtenido de GMA News: http://www.gmanetwork.com/news/story/500918/money/infographic-where-26-92b-of-ofw-remittances-come-from

Lopez, D., & Batino, C. (2 de March de 2016). Philippine gaming regulator probes alleged money-laundering. Obtenido de Bloomberg: http://www.bloomberg.com/news/articles/2016-03-02/philippine-gaming-regulator-probes-money-laundering-allegations

Migrant International. (29 de July de 2015). Number of OFWs leaving daily rose from 2,500 in 2009 to 6,092 in 2015. Obtenido de Migrant International: http://migranteinternational.org/2015/07/29/sona2015-number-of-ofws-leaving-daily-rose-from-2500-in-2009-to-6092-in-2015/

Moss, T., & O'Keefe, K. (2 de February de 2015). The Wall Street Journal. Obtenido de Manila doubles down on gambling: http://www.wsj.com/articles/manila-nears-goal-of-becoming-gambling-hub-with-new-city-of-dreams-1422879949

Pamintuan, A. (18 de March de 2016). Black Hole. Obtenido de The Philippine Star: http://www.philstar.com/opinion/2016/03/18/1564172/black-hole

the Economist. (26 de March de 2016). Walls of silence. Obtenido de The Economist: http://www.economist.com/news/asia/21695555-bank-thieves-pick-just-place-washing-their-money-walls-silence


Picture by Ree Dexter Flicker user.