JANUARY/FEBRUARY 1994 - VOLUME 15 - NUMBER 1
T H E P H I L I P P I N E S
The Politics of Economic Chaos in the Philippines
by Robert Weissman
MANILA - Philippine President Fidel Ramos fears the future may be slipping away.
The gap between the booming economies of the Asian tigers (Taiwan, South Korea, Hong Kong and Singapore) and the emerging tigers (Malaysia, Thailand), and the Philippines is huge and growing. While the 1991 Philippine per capita gross national product was $730, the per capita GNP in Thailand was $1,570 and S6,330 in South Korea. These countries grew rapidly in the 1980s, but the Philippine economy constricted; the Philippines' average growth ate from 1980 to 1991 was negative 1.2 percent, while Thailand achieved a 5.9 percent annual growth rate and South Korea 8.7 percent. And the disparity shows no sign of narrowing; all of its regional competitors registered significantly higher growth rates in 1993 than the Philippines' estimated rate of approximately 1 percent. Even nearby competitor Indonesia is preparing to pass the Philippines in per capita income.
Signs of the economic chaos besetting the Philippines are apparent to even the most casual observer in Manila.
Poor families, mostly immigrants from the countryside, have established squatter communities throughout the Philippine capital. Virtually every Manila neighborhood is now dotted with shanties; the only exceptions are the most exclusive, guarded enclaves, which stand as a testament to the country's extreme concentration of wealth. In neighborhoods with names like Forbes Park and Bel Air, streets are blocked and guarded, the mansions within accessible only to residents and authorized visitors.
Thousands of Filipinos support themselves by sifting through huge garbage dumps in Manila, pulling scrap metal and other items for recycling or reuse out of people's trash. The scene is repeated in other big Philippine cities, though on a smaller scale. Dump-site residents are among the poorest of the huge numbers of Filipinos living below the poverty line. The government's official statistics show 40 percent of the nation's 66 million citizens living in poverty, but the actual percentage is undoubtedly far higher.
At crowded intersections all over the city, vendors rush to cars and buses caught in Manila's paralyzing traffic, offering to sell cigarettes, gum, candy, newspapers or trinkets. The cigarettes are sold individually, not by the pack, to accommodate the tiny budgets of most Filipinos. Some of the vendors are adults, but many are children, 10 or 11 years old. An estimated two-thirds of Philippine children work.
Taxi drivers explain to foreign passengers that their dream is to improve their English so they can get a job abroad. People throughout the city - even those with steady jobs - echo the sentiment. They have given up hope of succeeding economically in their own country; instead, women aspire to work as foreign domestics, and men hope for shipping or construction jobs with foreign companies.
Ear-shattering noise plagues the streets in office districts of downtown Manila, the result of small, private electricity generators operated by individual stores and office buildings during the city's daily brownouts. For more than a year, the energy shortage on the main island of Luzon has caused daily brownouts lasting 4 to 12 hours. The resulting loss to industrial and commercial output has been immense; the difficulties imposed on individuals in the form of lost wages, wasted time - much of it literally spent in the dark - and discomfort are incalculable.
Despite his worries and the economic and social misery so pervasive in Manila - and equally apparent in the desperately poor countryside - Ramos is optimistic about the future. He expects to go down in history as the man who transformed the Philippines from an economic basket case to an eco nomic powerhouse similar to the Asian tigers.
Ramos's plan for economic rejuvenation, known as the Philippines 2000 program, aims to have the country join the NIC (newly industrializing country) family by the year 2000. Its ambitious outlines are contained in the Philippine Medium-Term Development Plan (MTDP) for the years 1993-1998. Ramos says the MTDP "embodies the vision of a nation empowered, its human resources stretched to optimal capacity, and its industries, products and services of world-class standard."
The MTDP is a comprehensive plan covering all aspects of the Philippine economy. Plan policy goals range from deregulating the financial sector and removing investment restrictions on foreign banks to improving scholastic physical education programs.
The plan establishes formidable targets. By 1998, it calls for: achieving a growth rate of 10 percent; lowering the number of families in poverty by 10 percent; increasing the national investment rate by one-half; and more than doubling the annual rate of export growth to a level of 27.1 percent.
The soaring rhetoric of the plan offers something for everyone. The MTDP promises free market disciples, for example, that the Philippines will "reduce government intervention in the production, marketing and processing of agricultural inputs and outputs," and "discard traditional trade and industrial policies that dispense protection to domestic industries." At the same time, it assures environmentalists that the government will "play its role as custodian of the environment for future unborn generations and give the attention needed to rehabilitating and preserving the country's environmental stock."
The central prongs of the MTDP, however, are much narrower than the plan's rhetorical aspirations. Attracting foreign investment - in manufacturing, in resource-extractive industries such as mining and logging and in the energy sector - is the key element of plan. New foreign and domestic investment in the manufacturing sector will be directed into 15 Regional Industrial Centers (RICs). Geographically dispersed throughout the country, the RICs will function as expanded export processing zones, offering tax breaks and other government incentives and sound infrastructure support (telephone, roads, ports, etc.). The other, complimentary emphases of the plan are to orient both the manufacturing and agricultural sectors toward exports, and to increase government investment in infrastructure.
While Ramos touts Philippines 2000 as representing a bold, new start for the Philippines, grassroots critics of the plan label it nothing more than failed, free-market, foreign-investment-reliant poli cies presented in new packaging. As Ramos begins to put the program into place, opposition to Philippines 2000 is intensifying among a wide variety of popular sectors.
Throughout the Philippines, land and labor conflicts are emerging in areas newly scheduled for "development" under the MTDP, and are continuing and intensifying in areas where the MTDP proposes building on existing projects and developments. With all social conflict in the Philippines taking place against the backdrop of the government's war against the two decade-long rebel insurgency of the leftist New People's Army (NPA), opposition to Philippines 2000 projects often evokes a violent response from the military.
The Regional Industrial Centers are quickly establishing themselves as a focal point for the battles engendered by the Philippines 2000 program. The Calabarzon RIC, which will build on the economic processing zones, industrial estates and industrial parks established under Marcos and Aquino, is illustrative.
The announcement of plans to create an RIC in Calabarzon - an area combining pieces of five provinces south of Manila - led to rampant land speculation and the expulsion of poor farmers from their land, says Rafael Mariano, former acting chair of the peasant association KMP. Large landowners successfully circumvented the land reform program by converting their lands from agricultural to industrial purposes; the landowners got even richer, and the tenant farmers who had previously worked these lands were evicted.
Labor abuses in the factories established in Calabarzon have been rife, according to Norma Binas, assistant secretary of the KMU labor center's international department. The provincial governments in these areas are stridently anti-union; the governor of Cavite province, Juanito Remulla, has even pledged to enforce a "no union, no strike" policy. (The 'U.S. Department of Commerce, in a Philippines "Investment Climate Summary," notes that Cavite "enjoy[s] a reputation for being actively 'pro-business,' and has reaped the rewards of new investments.") Companies already operating in the Calabarzon economic zones - mostly Japanese, Taiwanese, South Korean, Hong Kong or Singaporean garment and light manufacturers - aggressively deny their employees' right to organize and commonly abuse their workers, particularly women, who are frequently sexually harassed. The KMU reports that employers routinely fire workers engaged in union organizing activity, and carefully question potential employees about their attitudes toward unions in an attempt to screen out any union sympathizers. Armed guards - from the local police, special economic zone police, a special Calabarzon-wide police force or private security forces - stand at the gates of the economic zones, preventing organizers from entering and intimidating the workers within.
The entire Calabarzon region itself has in fact been militarized, according to Reynaldo Quindara, deputy secretary general for internal affairs of the Ecumenical Movement for Justice and Peace. He says that the government has deployed large number of troops both to protect foreign and domestic investments from sabotage by the NPA and to discourage independent civilian activists from challenging Philippines 2000 projects and developments.
Generally, Quindara says, the RICs and Philippines 2000 projects are becoming a magnet for mass troop deployments, with many new or ongoing military operations being carried out in close proximity to areas planned to be used for RICs, agrarian export projects connected to the MTDP or development projects tied to the MTDP. Examples include military action in Agusan del Sur in Northern Mindanao, targeted to develop tree and palm oil plantations, and in Western Mindanao, where the government is encouraging resort development and growing vegetables for export. In the Philippines, large-scale deployments like those in Calabarzon, Agusan del Sur and Western Mindanao are often accompanied by widespread harassment of civilians, as well as arbitrary arrests, torture and extrajudicial killings.
MTDP-relatcd violence has also wracked the island of Cebu, the other province which the U.S. Department of Commerce denotes as having a pro-business reputation. At least four peasants were killed on Cebu in the first six months of 1993, apparently because of their efforts to prevent landlords from taking advantage of the opportunities offered by Ramos's Philippines 2000 plan by converting agricultural land into residential and tourist properties. In the case of scenic Cebu, Ramos's commitment to expanding tourism provides a special incentive for such conversion. There is suspicion that two of the murdered peasants were killed by thugs employed by a real estate company, a third by a city councillor associated with a local vigilante group and the fourth by unknown assailants.
Philippines 2000 and indigenous communities
Indigenous peoples' communities are likely to be particularly affected by the large infrastructure projects and major resource-extractive activities proposed in Ramos's economic plan.
The conflict over the Chico Dam, a massive hydroelectric project called off in the mid-1980s, may well be a prototype of the disputes likely to proliferate with the pursuit of the MTDP. The giant hydro project would have dammed the Chico River and displaced thousands of indigenous people in the mountainous five-province Cordillera region in Northern Luzon. Local opposition was intense, and included large demonstrations, civil disobedience (such as lying in front of bulldozers) and a world-famous event at which protesting women bared their chests to shame soldiers in a civilian face-off with the military - as well as armed resistance in collaboration with the NPA. The unprecedented local resistance, combined with international opposition from environmentalists and solidarity organizations, eventually led the World Bank, which had sponsored the project, to call it off. But leaders of the anti-dam struggle were killed during the conflict, and the military committed widespread human rights violations against the mobilized villages.
The Cordillera has remained a hotbed of opposition to the government since the Chico Dam struggle, supporting both civilian and guerrilla resistance movements. Consequently, the region has been a prime target of the military's counterinsurgency program. With new unrest expected as a result of the MTDP, military action against Cordillera civilians is not likely to end any time soon.
The government is now planning a series of 17 so-called mini-dams for the Cordillera region as part of the MTDP. While "mini" connotes the idea oflow-impact and sustainability, Dr. Contancio Claver, executive director of the Community Health Concerns for Kalinga-Apayao, a community health center serving residents of the Cordillera, points out that the rivers which the government has proposed damming are substantial rivers with significant currents. "It is hard to imagine how there can be `mini-dams' in relatively large rivers," he says. Local residents and outside environmentalists alike fear the new dams will still be large, even if they are not as huge as the originally proposed Chico Dam, and will displace hundreds or thousands of local indigenous people.
For the time being, says Claver, "the people are suspicious but have not yet made up their minds to totally oppose" the dam projects. However, if their fears about the size of the dams are realized, massive resistance is almost guaranteed, and the government's response may well be to further militarize the region and intensify its repression of the indigenous population.
The root problem in the Cordillera, says Father Eddie Balicao of the Office for Cordillera Peoples' Concerns, is longstanding "laws which have made the Cordillera a resource base for exploitation without even considering what the Cordillera people think." Development projects undertaken as part of the MTDP are likely to exacerbate this enduring problem.
Pushing past the ecological limits
Despite its rhetorical promises to the contrary, the Philippines 2000 program is likely to further devastate the country's already battered environment. As they have in other initiatives over the last several decades, government and private investment in infrastructure projects and resource-extractive activities are likely to have severe environmental effects. The mini-dams and other energy projects may submerge large land areas and create dangerous local pollution problems; and if the government decides to press ahead with opening the Bataan nuclear power plant, the country will be burdened with an immense environmental and public health hazard. New or expanded mining projects are likely to pollute rivers and thousands of people's water supplies with waste-rock and treatment chemicals; the timber industry is likely to continue overlogging of the country's fast-diminishing forests; foreign and domestic fishing companies are likely to overharvest local fisheries.
However, the most significant ecological damage may stem from the increasing inequity of the country's land distribution scheme. The Ramos administration is exhibiting virtually no political will to push through a land reform program. (The KMP's Mariano says that "while the Aquino administration made many empty promises, the Ramos government just sides with the big landlords. ") Many landowners are eagerly converting their land to non-agricultural uses or export crop production in order to take advantage of the opportunities posed by the MTDP, and increasing numbers of poor farmers are becoming landless [see "Land Scam: Agrarian `Reform,' Ramos Style"]. These displaced rural people have few options but to encroach on forests and other marginal public lands.
Recent Philippine history demonstrates how harmful the ecological consequences of rural displacement can be. Rural uprootedness and increasing landlessness were the proximate causes of the worst environmental effects of the structural adjustment program implemented in the 1980s at the behest of the World Bank and International Monetary Fund, according to a recent World Resources Institute study. As unemployment rose, the study found, "only the marginal resources in the public domain - forest lands, mangroves and fisheries - remained available to a rapidly growing pool of landless workers." Many unemployed and landless people in the countryside migrated, not on the traditional path to Manila, but from lowland to upland rural and coastal areas - from the lowlands of Central Luzon to the mountain provinces of the Cordillera and from the lowlands of the central Philippine islands to the uplands of the southern island of Mindanao. As these workers "migrated to the open access resources of the uplands and coastal areas, deforestation, soil erosion, the destruction of coastal habitats and the depiction of fisheries increased," the World Resources Institute report concluded.
A blurry vision
Perhaps the worst indictment of the Philippines 2000 program is that despite its social and environmental costs, it is not likely to deliver the benefits which it is designed to produce. Critics denounce the program as unrealistic and based on a misreading of the success of the East Asian tigers, and they say it fails to grapple seriously with the central Philippine political and economic problem - the highly stratified distribution of land.
The first problem identified by critics is that the MTDP aims too high and stretches too far. They say that it really is no more than an arbitrary and exhortory political wish list. One financial analyst comments that the MTDP "is more of a declaration of intent than a plan as such," A plan, he says, would imply the imposition of a concrete schedule, detailed policies to achieve specified goals and a means to finance agreed-upon programs.
Many elements of the MTDP reflect the personal interests of Ramos and the imperatives of Philippine politics rather than sound economic planning, confirms Maria Rina Rosales, a senior economic development specialist with the Philippine National Economic Development Agency (NEDA) . For example, says Rosales, NEDA economists recognized the goal of achieving a 10 percent growth rate by 1998 as being wholly unrealistic - hut it was included in the MTDP because Ramos insisted on setting a target of double digit growth. The country has already failed to meet the 1993 goal of a4.5 percent growth rate, indicating that there is little chance of achieving the MTDP's overall goal of a five-year 7.5 percent growth rate. Similarly, Rosales says, NEDA economists acknowledge that the goal of establishing a RIC in each region of the country is unrealistic, but it was included to avoid criticisms from excepted regions.
More generally, there is virtually no chance of the government achieving its goal of turning the Philippines into a NIC by 2000. As Filomeno Sta. Ana, secretary general of the Manila-based Freedom From Debt Coalition, notes, "The NIC goal of the Ramos administration has no long-term vision." He explains, "fulfilling the vision of NIC is not an overnight affair. A giant leap towards industrialization begins with many small steps. ... And the whole process spans decades, involving a complex but coherent and comprehensive set of measures for reform and transformation."
A second major criticism is that the MTDP's emphasis on recycled policies of export-oriented industrialization and foreign investment is not likely to help the economy escape from the rut in which it lies. In 1979, Ferdinand Marcos said, "Industrialization for exports-this is what we in government ... proclaim and I think by and large we accept this as the fundamental thrust of our national economy today. There is a natural and necessary correlation between our new industrialization program and our export expansion program which stands at the forefront of our national economic goals today. Marcos' words could have been spoken by Ramos in 1993. There is very little substantive difference between Marcos' export processing zones and Ramos's regional industrial centers, except perhaps that Ramos is promising companies bigger tax breaks and subsidies. What failed under Marcos is not likely to succeed under Ramos.
A third criticism voiced by economists like Sta. Ana is that Ramos is making a crucial error in his attempt to mimic the success of the Asian tigers. In the early stages of industrialization, the tigers did not open their economies to foreign investment and trade and pursue an export-oriented strategy, Sta. Ana notes. Instead, they devoted attention to building up their internal markets; they protected domestic producers; and they limited foreign investment.
A fourth point of contention is the bankruptcy of the notion of "competitiveness" which underlies Ramos's foreign-investment-dependent, export-oriented strategy. As an Asian country with a poorly developed infrastructure and little history of domestically controlled high-tech production, the Philippines has little to offer foreign investors besides low wages, a point conceded by NEDA economist Rosales. But the Philippines is not especially well positioned to compete on the basis of low wages; the country's four-dollar-a-day minimum wage rate is not low enough to compete with Vietnam, China or Indonesia, countries where wages range as low as a dollar a day or less.
"Can we compete with China in the export market?" asks Sta. Ana. "Their labor is much cheaper than ours. The distorted logic, of course, is for us to cheapen our labor further. And that is not the way."
A final - and probably the most important - criticism of the MTDP is that it fails to deal seriously with the country's overriding political and economic problem: land reform. In 1988, according to Department of Agrarian Reform statistics reported by researcher James Putzel, 3,235 land owners (about .2 percent of a total of more than L 5 million), owned almost one-quarter of the agricultural land in the Philippines, and land ownership is becoming increasingly concentrated.
"Unless the problem of landlessness is addressed first, a `NIC-hood' development strategy could not only fail but lead to economic disaster," says the KMP's Mariano, noting the dangers of pushing more farmers off the land without providing any jobs for them to fill.
The refusal to confront the powerful agrarian elite and force through a genuine land reform may be sufficient to doom Ramos's Philippines 2000 program to failure, even on its own terms. The achievement of a relatively egalitarian land distribution regime has been a prerequisite to the successes of the Asian tigers. "Study of the industrial transformation of previously agrarian economies - from Japan to the NICs - shows that agrarian reform plays a key role in breaking down the social base, releasing the energies of the peasantry and opening up the possibility for transformation from a feudal to industrial economy," says Satur Ocampo, spokesperson for the National Democratic Front, the political wing of the rebel New People's Army.
Ocampo and others emphasize that land reforms in the Asian tigers helped jumpstart the domestic market by creating a significant market of rural consumers for both agricultural inputs and some consumer goods; reduced the pressure on the rural poor to migrate to the cities by giving them a base to support themselves; and helped equalize labor market conditions in the manufacturing sector by strengthening the bargaining position of workers for whom the option of returning to the countryside became more viable.
For the last few decades, "Development for whom?" has been the virtual mantra of Filipino activists as they confront one development scheme after another. At first hearing, their question sounds like a demand that the costs and benefits of development be widely and fairly distributed. It is that, but it is a more profound challenge as well.
Sustainable development activists - whether they come out of the labor, environmental, indigenous rights or underground movement - are challenging conventional top-down, foreign-dependent economic development models as inherently unable to improve the well-being of most Filipinos. In the context of recent Philippine experience, "Development for whom?" is an incisive critique of development programs that promise to benefit the elite while hurting the majority and, on balance, worsening the country's economic, environmental and social conditions.
Relentless in their efforts, these activists continue to pose their troubling question, now about Ramos's Philippines 2000 program - and their answer remains disturbing. As Ocampo succinctly says, the Philippines 2000 program is another in a long line of government programs that "fail to consider a lot of factors. It is always the people who are left suffering the consequences of neglect and skewed priorities. "M