Bello Et. Al - State of Fragmentation

State of Fragmentation
The Philippines
in Transition
Walden Bello
Kenneth Cardenas
Jerome Patrick Cruz
Alinaya Fabros
Mary Ann Manahan
Clarissa Militante
Joseph Purugganan
Jenina Joy Chavez
Copyright
Published 2014
by Focus on the Global South and Friedrich Ebert Stiftung
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Overall Editor and Project Coordinator
Jenina Joy Chavez

Copy Editor
Clarissa V. Militante
Additional Research
Carmina Flores-Obanil
Princess Celestino
Editorial Assistant
Mary Joy Manahan

Cover and book design/layout
Amy Tejada
Table of Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Philippines: Failed State, Failed Economy?
Chapter 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Urban Property Development and
the Creative Destruction of Filipino Capitalism
Chapter 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Industrial Decay:
The Hollowing-Out of Manufacturing and Employment
Chapter 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Agrarian Atrophy and the Changing Countryside
Chapter 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
A Labor Exporting State:
The Globalization of the Philippine Migration Model
Chapter 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
A Fragile Frontier:
Environmental Vulnerability and Conflicts over Natural Commons
Chapter 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
Shantytown Nation:
The Urban Underclass and Struggle for Space
Chapter 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
Population Pressure, Poverty, and Development
Chapter 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247
Three decades into People Power,
Whither Philippine Civil Society, Social Movements, Citizens?
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273
Acronym . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287
About the Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291
Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297
introduction
The Philippines:
Failed State, Failed Economy?
For many Filipinos, the last 40 years is a period best forgotten. In the earlier
half of said period, the country was saddled with a dictatorship for 14 years;
then it fell from the status of having the second most developed country in Asia
after Japan to that of sick man of East Asia, plagued by low economic growth
and burgeoning poverty.
During the first three years of the presidency of President Benigno Simeon
Aquino III, the national mood seemed to have changed. At the end of
2012, the Philippines appeared to have fared well in terms of its economic
performance. It registered 7.4 percent growth rate in the last quartersaid
to be the best in Southeast Asia during that timewhile the GDP growth rate
came to an average of 6.6 percent for the whole year. Like the rest of East
Asia, the country was able to avoid the worst effects of the global economic
crisis occasioned by financial implosion that had kept Europe and the US in a
state of stagnation for the fifth year in a row.
Evading the global financial crisis

What saved the Philippines and other countries of East Asia from the first phase
of the global financial crisis was most likely their having experienced the Asian
financial crisis of 1998, when the region was wracked by a chain reaction of
massive inflows of speculative capital, overinvestment, collapse in real estate
prices, capital flight, and speculative attacks on regional currencies. Burned by
the crisis, the Philippine state built up billions in dollar reserves to defend against
5
S t a t e o f Fr a g m e n t a t i o n : T h e P h i l i pp i n e s i n T r a n s i t i o n
future speculative attacks, while Philippine banks became cautious about their
exposure to the complex financial instruments being devised by US banks called
derivatives. True, when the financial crisis brought down the real economies
in the North in 2008 and 2009, the East Asian economies, which have been
greatly dependent on northern export markets, felt the impact. However, by
2010, owing partly to stimulus programs in the Philippines and its neighboring
economies, like China, the worst appeared to be over, and growth resumed,
even as the crisis deepened in Europe and the US.
In 2012, trouble appeared to recur, as Chinas growth slowed down, as
did Koreas, a sign that these East Asian economies were not permanently
immune to the deep stagnation in US, Europe, and Japan. Southeast Asia was
also dependent on these markets, but allegedly owing to a shift to domestic
demand as engine of growth, the OECD predicted that the Philippines and the
rest of the region would continue to register robust growth in the midst of
what was then seen as a prolonged global crisis.1
Fragile growth
Growth statistics were not the only cause for optimism in the Philippines in
the first years of the Aquino administration. The countrys political leadership
was widely seen to be taking the anti-corruption campaign seriously, with
former President Gloria Macapagal-Arroyo under hospital arrest and awaiting
prosecution, and her appointee, former Chief Justice Renato Corona, having
been ousted in 2012. Moreover, Congress passed the extremely contentious
Responsible Parenthood and Reproductive Health Bill, which was seen as
necessary to bring down the countrys high fertility rate that most development
analysts saw as spoiling the best laid development plans.
In explaining the growth statistics, government officials like Finance Secretary
Cesar Purisima stressed how this was a result of the administrations focus
on good governance. Certainly, there was no disputing the fact that new
confidence among both domestic and foreign quarters was triggered by the
administrations anti-corruption campaign, and there was little doubt that
the Aquino government was also serious about containing poverty, as seen
6
i n t ro d u c t i o n
S t a t e o f Fr a g m e n t a t i o n : T h e P h i l i pp i n es i n T r a n s i t i o n
in the inclusion of over three million families in its Conditional Cash Transfer
Program. The Asian Development Bank toasted the CCT as the countrys
most successful anti-poverty program ever, one which was a model for other
countries.2 However, these were factors that could affect the growth rate only
in the medium or long-term.
A central factor in explaining the positive growth rate would be the combination
of accelerated public works spending throughout the country and the higher
inflow of remittances from overseas Filipino workers. In 2012, remittances
were expected to rise by seven percent over the U$20.1 billion that came in
2011.3 Equal to some 10 percent of the countrys gross domestic product,
remittances fuelled the domestic spending that made up for the weakness of
the countrys key export markets in the US, Europe, and Japan.
Annus horribilis
That the Aquino administration, despite its good governance aura, had been
skating on thin ice became evident after the elections of May 2013, which the
ruling coalition handily won. Positive news on conventional growth statistics
and foreign investors assessments continued to mark the next seven months
following the elections. The seven percent plus GDP growth rate and the
administrations reputation for good governance obtained for the Philippines
the prized investment grade status from the key rating agencies, Standard
and Poors, Fitch, and Moodys.
But what should have been a moment of triumph was banished by a series of
reversals. The most serious was an expos, shortly after the May elections,
of how a number of senators and members of Congress had been receiving
massive kickbacks from their pork barrels (or priority development assistance
funds) by channeling funds meant for infrastructure or schools to fake projects
and fake non-governmental organizations. While the president and his key
aides were not implicated in the scandal, they initially defended PDAF. But
when they changed course and called for the abolition of the congressional
pork barrel, this was seen as an opportunistic move to ride the wave of popular
sentiment against pork barrel as a patronage mechanism.
Next happened super typhoon Yolanda, aka Haiyan, in November 2013,

which not only flattened Tacloban City and left a trail of destruction through
the Visayas region but also exposed how ill-prepared the administration was in
efficiently managing disaster relief operations.
Then there was Meralcos Christmas gift to its 5.3 million customers in
Luzona 4.5 pesos per kilowatt hour increase in its rates. The increase was
triggered when eight of its power suppliers went offline on unscheduled outages,
at the same time that the Malampaya natural gas pipeline was shut down for
maintenance, forcing Meralco to obtain power at a much more expensive
price than usual from the Wholesale Electricity Spot Market. As popular anger
built up against Meralcos rate increase and the strong evidence that its power
suppliers had colluded to raise electricity rates at the spot market, the president
remained aloof from the crisis, bringing on charges that hes insensitive to
consumer needs and even of being beholden to the big families that run the
power sector, like the Lopezes.4
Though less dramatic, trends related to the economic prospects of the country
would have equally ominous significance. In the middle of 2013, the National
Statistics Coordination Board released figures that showed that 27.9 percent of
the population lived below the poverty line, a figure that had been practically
unchanged since in the first half of 2009 (28.6 percent) and first semester of
2006 (28.8). These figures are all the more disturbing because globally, the
poverty situation has actually improved since 2005. According to the World
Bank, the proportion of people living in extreme povertyon less than $1.25
a dayfell in every developing region from 2005 to 2008.
While the Aquino administration could pin most of the blame on previous
administrations, it was not possible to escape some blame. Obviously, despite
the CCT coverage of over three million families that constituted the poorest
of the poor, the governments flagship anti-poverty program was making little
headway in reducing poverty.
The CCT was not the only program in trouble. During the briefings on the
2014 budget, the Agrarian Reform secretary was forced to admit that agrarian
reform, one of the leading programs to address poverty and inequality, would
8
not be completed by the end of June 2014. Secretary Gil de los Reyes said that
the backlog in undistributed land stood at almost 700,000 hectares; 450,000
of which were private landssome of the most undistributed lands in the
countrysubject to compulsory acquisition. According to him, it would take
up to the end of June 2016 to complete the distribution process, two years
past the deadline set by law.5
A faltering land reform program paralleled the paucity of initiatives aimed at
altering the structure of the economy to place it on a sustainable developmental
path. Indeed, one could not say that there was a macroeconomic strategy
for development, though one of the key preconditions of a strategy, effective
family planning, might be said to have been put in place by the passage of the
Reproductive Health Bill. The 2010 Medium Term Development Plan talked
about inclusive growth, but that was a mantra imported from the latest World
Bank and United Nations thinking, not a strategy for how to manage and deploy
scarce resources in the most effective manner to achieve development.6More
broadly, one can say that the administration would still have to decisively break
from the old path of neoliberal restructuring and globalization.
No break with the past

Begun with the structural adjustment imposed on the country by the World
Bank and the International Monetary Fund in the 1980s, neoliberal restructuring
reached its apogee during the presidency of Fidel Ramos (1992-1998). Though
it began to run into problems, neoliberal restructuring continued to serve as the
default economic policy during the years spanning the presidencies of Joseph
Estrada (1998-2001) and Gloria Macapagal-Arroyo (2001-2010).
The neoliberal path, followed in varying degrees by the five administrations
prior to the current one, had four key features: prioritization of debt repayment,
export-orientation in both agriculture and industry, and neoliberal reform,
the key thrusts of which were deregulation, privatization of production and
services and trade liberalization, and massive labor export to address local
unemployment and underemployment as well as increase national income
through remittances.
This path did not lead to sustained development. Instead, it resulted in the
emasculation of government as an economic actor; eroded agriculture
and industrial base by uncontrolled importation; and made the Philippines
vulnerable to external economic and political developments. A key indicator
of the failure of this economic path has been the anemic growth rate; this has
averaged four percent over the decade, 2000-2010, much below the seven
to eight percent needed to launch sustained growth, raise per capita incomes,
and roll back poverty. Even more worrisome, the national economy, driven
mainly by globalization, has lost its coherence; industry, agriculture, education,
and employment also lost theirs with one other. The states role as passive
bystander exacerbated this trend, as it has been unable to exercise its planning
function owing to the anti-state bias of neoliberalism.
The state of poverty and inequality was probably a better index than growth
statistics on the health of the economy. The indicators in this area were mixed. In
2012, there were statistical improvements in hunger rate. The proportion of Filipino
families experiencing involuntary hunger fell to 16.3 percent in the fourth quarter of
2012, from 21 percent in the third quarter. The expansion of the CCT program
probably has had the effect of reducing the level of hunger. As for the poverty
rate, with 27.9 families living below poverty line, it remained virtually unchanged in
2012 from the figure six years earlier. The figure was, as one commentary noted,
the highest among emerging Asian economies. As for inequality, it was likely that
the Philippines gini coefficient, the most reliable index of inequality, was still largely
the same as in 2009, when it stood at 44, the highest in Southeast Asia.7
Debt-service economics
One cannot understand the Philippines development predicament without
going back to a momentous decision made in the late `80s, under pressure
from its foreign creditors, to prioritize debt repayment. The so-called model
debtor strategy adopted under the administration of Corazon Aquino, the
current presidents mother, was cast in iron by Executive Order 292, which
provided for the automatic appropriation of the full amount needed to service
the foreign debt. It is worthwhile to note that it is only the Philippines with such
a provision in its legal code.
10
This resulted in investment, which was, along with consumption, the key engine
of growth becoming sorely constrained since government was the biggest
investor in the economy. Government resources instead flowed out of the
country in the form of debt service payments. In the critical period 1986-93,
some eight to ten percent of GDP left the country yearly in the form of debt
service payments, with the total amounting to nearly $30 billion.8 Even with
this massive outflow, the Philippine debt was not reduced and in fact rose
from $21.5 billion in 1986, when Aquino assumed power after the overthrow
of Marcos, to $29 billion in 19939 because of the onerous terms of repaying
debt, such as variable interest rates and the practice of incurring new debt to
pay off the old.
This translated into radical increase in interest payments as percentage of
total government expenditures, from seven percent in 1980 to 28 percent in
1984. Capital expenditures, on the other hand, plunged to 16 percent from
26 percent. Debt servicing, in short, became, alongside wages and salaries,
the number one priority of the national budget, with capital expenditures
being deprived of outlays. The radical stripping away of capital expenditures
represented by these figures would explain the stagnant one percent average
yearly GDP growth in the `80s and the 2.3 percent rate in the first half of the
`90s.10
The savage reduction of government capital expenditures translated into a
steep reduction in the ratio of investment to GDP. From nearly 30 percent in
the early 80s, under the Marcos regime, it dropped to 17 percent in the mid`80s and never really recovered, staying at an average 20-22 percent in the
2000 decade.11 Contrary to neoliberal theorists who saw no need to worry
about the pullback in government investment, the private sector did not step
into the gap.
This trend of continuing outflow of government resources in the form of
payments to creditors and the shrinking of capital expenditures continued in
the first years of the new century. In 2005, according to the World Bank,
29 percent of government expenditures went to interest payments to both
foreign and domestic creditors and 12 percent to capital expenditures.12
This configuration of government spending prompted the University of the
11
Philippines School of Economics to complain that the budget left little room for
infrastructure spending and other development needs13 With government
capital expenditures remaining low, total fixed investment remained anemic
during the reign of Gloria Macapagal-Arroyo, running at only 14 percent of GDP,
which the World Bank noted was substantially lower than during the deep
recession in the first half of the 80s and in most other larger East Countries.14
The pattern was unchanged during the first three years of the Aquino
administration; 20-22 percent of the budget was allocated to debt service.
Infrastructure spending remained constrained, as the administration reviewed
public works contracts the previous regime had entered into to weed out
corrupt agreements.
The Philippine experience was a painful lesson in the economics of debt. It was
also a grim reminder of the fallacy of neoliberal theory. Government spending
does not crowd out private investment. In fact, the opposite has been true: it
crowds in private investment.
The priority placed by government on living up to the terms of foreign debt was
a central factor in the behavior of foreign investment towards the Philippines.
Along with structural adjustment and trade liberalization, the debt economy
contributed to the countrys failure to take off at a time when the massive
transfer of manufacturing facilities to Southeast Asia was taking place, resulting
in a regional boom everywhere, except in the Philippines.
With poverty engulfing close to a third of the population, the Philippines was a
depressed market as far as Japanese investors were concerned, and they were
not about to sink much money into it. Between 1987 and 1991, for instance,
a paltry $797 million in Japanese investment entered the Philippines, while
Thailand received $12 billion.15 When one included Korean and Taiwanese
investment, which usually tracked Japanese investment, the gap would be even
greater. Thailand received $24 billion in investment during the same period, or 15
times the amount invested in the Philippines, which came to $1.6 billion.16 This
difference in the flow of investment from the three countries, Kunio Yoshihara
rightly observed, produced a significant disparity in growth performance of the
two countries [the Philippines and Thailand] during the period.17
12
The country continued to lag behind its dynamic neighbors in foreign investment
inflows well into the recent Aquino period, despite positive commentary in
the foreign press about the presidents anti-corruption reforms. At $1 billion,
foreign direct investment in 2012 was half its level in 2007 and was well below
the $1.5 billion in remitances that flowed in every month.18
Globalization: disintegration and integration

Debt service economics cannot be said to be solely responsible for the
Philippines failure to launch. The globalization of the Philippine economy
via neoliberal restructuring was perhaps an even bigger factor. To say the
economy was globalized meant it underwent a process of disarticulation and
re-articulation. The traditional sectors of the economyagriculture, industry,
and serviceswere disarticulated from one another or dis-integrated at the
national level and selected dimensions of the economy were rearticulated or
integrated at the global level.
In the succeeding sections, the disarticulation of agriculture, industry, and
services will be examined closely followed by the articulation of the economy
at the global level with the rise to prominence of the electronics sector, the
business processes outsourcing sector, and the labor export economy.
Agricultures decline
The decline of agriculture was one of the most distressing trends in the
economy over the last three decades. Contributing to this were several factors:
decline of government support for agriculture owing to structural adjustment,
liberalization of agricultural trade, a protracted agrarian reform program, and
the impact of climate change.
For a long time, the sector was starved of government support owing to the
draconian structural adjustment forced on the country following the `80s
debt crisis. From 5.5 percent of the total budget during the Marcos regime,
funding dwindled in succeeding administrations, coming to 3.6 percent during
13
the nine-year reign of Gloria Macapagal Arroyo.19 By the end of the Arroyo
administration, the area under irrigation, at 1.3 million out of 4.7 million hectares
of cultivated cropland, was practically the same as that under Marcos a quarter
of a century earlier. Crop yields sagged across the board; the average of 2.8
metric tons of rice per hectare was way below yields in China and Vietnam.20
Good roads are key to agricultural production but by the end of the `90s, only
17 percent of the Philippines road network was paved, compared with 82 per
cent in Thailand and 75 per cent in Malaysia.21
At the same time that structural adjustment was reducing state support for
agriculture, trade liberalization undertaken under the World Trade Organizations
Agreement on Agriculture, which the Philippines signed in 1995, mandated the
elimination of quotas for agricultural commodities, resulting in a massive inflow
of foreign imports. The victims of liberalization included the corn, vegetable,
and poultry sectors. Perhaps the most cogent indicator of the ruinous impact
of trade liberalization was the fact that from being traditionally a net food
exporting country, the Philippines became a net food importing country from
the mid-`90s on.
A third factor hampering agricultural production and productivity was the very
slow pace of agrarian reform. One of the most promising initiatives of the
administration of Corazon Aquino was the Comprehensive Agrarian Reform
Program in 1988. Yet, the progress in land distribution was uneven, with
landlords taking advantage of loopholes in the law to slow down the reform.
The uncertainties, confusion, and conflicts triggered by the protracted process
thwarted production and productivity. Land reform in Taiwan, Korea, and
Japan succeeded in terms of social justice and productivity because the reform
measures had solid backing from government, gave definitive legal ownership
to tenant farmers, had more than adequate financing, and provided effective
support services. CARP had none of these, resulting in only 17 percent of the
1.5 million hectares of private land targeted for reform getting redistributed by
2008, or 20 years after the program had began.
In June 2009, feeling the pressure from agrarian reform advocates, Congress
passed the Comprehensive Agrarian Reform Extension with Reforms Act,
which extended the land reform program to 2014 and provided PhP150
14
billion for land redistribution and support services. Despite CARPER, however,
land redistribution continued with its slow pace, and by the middle of 2013,
some 700,000 hectares of prime agricultural land, as noted earlier, remained
undistributed. This was a task that the administration admitted would not be
completed by the end of June 2014, the deadline for land acquisition and
distribution set by law.22
Providing a counterpoint to this record of underperformance was a Supreme
Court decision mandating the distribution to tenants of Hacienda Luisitas
10,000 hectares belonging to the presidents relatives. Implementation of
the Supreme Court decision, however, has also been slow and fraught with
obstacles posed by the Hacienda Luisita management.
The sluggish pace of agrarian reform implementation has not been simply a
case of bureaucratic inefficiency or due to resistance by landed interests. The
dominant view in governing circles in recent years is that agricultural development
is principally a productivity issue and not a social justice concern, that what
is important is making the investments in physical infrastructure, marketing,
and credit that will unleash the potential of agricultural entrepreneurs.To
agrarian reform advocates, the problem with this perspective is that production
cannot be separated from justice. The main element that would unleash the
productive potential of our millions of farmers is security of tenure over their
land. Moreover, poverty-stricken tenant farmers and rural workers who have
long been chained in feudal relations need assistance from government to be
transformed into vibrant small farmers responding to market incentives.
Farmer entrepreneurs are not created overnight. This is why land reform
advocates lobbied hard for the inclusion of Section 13 of CARPER, which
provided that at least 40 percent of all appropriations for agrarian reform
during the five-year extension period would be set aside and made available for
support services. If there is one thing that can be learned from the experiences
of successful agrarian reform in Taiwan, Korea, and Japan, pro-reform advocates
contended, it is that land redistribution, secure property rights, and production
assistance or subsidies for support services make up the formula for a dynamic
agricultural sector. The absence of one of these factors was what torpedoed
many other land reform efforts in the Philippines and elsewhere.
15
But the problem goes beyond some administration technocrats narrow focus
on productivity. Much development thinking in the country today is centered
on improving the atmosphere for business activities in the city, promoting
the dynamism of the real estate industry, supporting the growth of financial
services, and attracting more investment in Business Process Outsourcing
activities. Development is anchored on servicing the needs of a growing
globalized middle class. In this mindset, agriculture is an afterthought, and food
security is one that can be met with increased imports. In this paradigm, the
over 50 percent of the population that live in the countryside are not regarded
as a dynamic source of development, the main engine of which is seen to lie in
urban economic activities fuelled by foreign investment and OFW remittances.
From this perspective, the bulk of the population that remains in agriculture is
excess baggage constituting a drag on economic takeoff.
But the neglect of agriculture is not simply a development paradigm problem. The
truth of the matter is that the most dynamic sectors of the economic elite appear to
have lost interest in agriculture as source of wealth. As sociologist Kenneth Cardenas
argues later in this volume, Filipino capitalists are going back to land as source of
wealth, but instead of using it as base for a rural, cash-crop-oriented economy, it is
being used for urban development. The highest rate of returns on investment comes
from shopping malls, office buildings, and middle and upper class housing. Yet even
as the most energetic sectors of the upper class have moved into urban real estate
development, seeking to capture demand for housing fueled by the billions of dollars
in OFW remittances, their less enterprising brethren cling on to rural land, less and less
for production and more and more for speculation or security.
Increasingly, it is mainly small producers and rural workers that have an interest
in making a living from farming, and even then, large numbers of them are
abandoning the countryside for what they see as the lack of opportunities
resulting from persisting inequalities and the absence of incentives. Their logic
is compelling: better to take your chances in Saudi Arabia than scratch a living
from land from which you can get evicted any time.
Finally, a key factor negatively affecting agriculture is climate change. This
became especially obvious in 2011-2013, when extreme weather events not
only took thousands of lives but caused tremendous destruction of crops. Some
16
of the countrys worst floods, resulting from non-stop rains in the middle of
2012, destroyed a staggering $57 million worth of crops.23 Then in December
of that year, Typhoon Pablo, aka Bopha, struck a part of the Philippines, the
lower half of Eastern Mindanao that had not been hit by a typhoon in recent
decades, causing $5 billion worth of damage to 101,356 hectares of coconut
plantations and taking a thousand lives.24 Even more ferocious was Typhoon
Yolanda, aka Haiyan, which was estimated to have inflicted some $6 billion
worth of damage to the economy and taken close to 10,000 lives.25
De-industrialization
The combination of trade liberalization, structural adjustment, and absence
of planning proved fatal to Philippine manufacturing. With liberalization under
structural adjustment, the effective rate of protection for manufacturing fell
from 44 to 20 percent.26 And even this was eroded when, in a radical move,
the Ramos administration brought down tariffs across the board to the zero
to five percent range. The list of industrial casualties included paper products,
textiles, ceramics, rubber products, furniture and fixtures, petrochemicals,
beverages, wood, shoes, petroleum oils, clothing accessories, and leather
goods. The textile industry shrank from 200 firms in the late `70s to less than
10 today. 27 The shoe industry centered in Marikina is struggling for its life due
to the surge in Chinese-made shoes from trade liberalization and smuggling.28
Not surprisingly, the contribution of Philippine industry to the Philippines Gross
Domestic Product has declined in the past three decades, from 39 percent in
1980 to 32 per cent in 2009. A major factor was the decrease in the share of
manufacturing in industrial GDP, which fell by more than four percentage points
from its 1980 levels.29 Perhaps the best summation of what transpired came
from a proponent of liberalization who said that Philippine industry was unable
to adjust to a less protected environment, resulting in the curious phenomenon
of de-industrialization at a low level of economic development.30 More
direct was judgment of a former head of the Department of Finance:
Theres an uneven implementation of trade liberalization, which was to our
disadvantage.31 While consumers may have benefited from tariff cuts, it has
killed so many local industries32
17
Privatizing government services

Privatization of key services provided by the government was a key thrust
of the neoliberal restructuring of the Philippines, especially under the Ramos
administration.
Water service delivery. During that period one of the showcases of privatization
was that of the 119-year-old Manila Waterworks and Sewerage System in
1997, which was at that time the biggest water-sector privatization in the
world. Two of the biggest local conglomerates were involved, along with their
foreign partners: the Lopez Group and the Ayala group.
The terms of the deal were that the Maynilad, belonging to the Lopez Group,
would take charge of water provision in the East Zone of Metro Manila while
Manila Water of the Ayala Group would take over the West Zone. The terms
were that, using government-owned infrastructure, the two concessionaires
would operate the system, draw profits from this, and then turn the assets and
management of the system back to the government after 25 years.
By 2000, however, the privatization was in trouble. Maynilad wanted to walk
out of the deal, citing force majeure owing to its borrowing in dollars that
became onerous to service after the peso collapsed during the Asian financial
crisis. However, other critics pointed out that the reason for Maynilads bad
situation was its unrealistic very low bids in order to get the concession, also a
practice of Manila Water.33
The low original bids and other miscalculations led the concessionaires
to petition changes in the original agreement, which were granted by the
government. From the consuming publics point of view, the most damaging
of these concessions was the continual readjustment of prices. Price increases
became a feature of the water privatization experience in Metro Manila. In
five years time, from a pre-privatization amount of 8.78 pesos, prices were
readjusted six times and increased more than 500 percent for Manila Water and
10 times, or more than 100 percent, for Maynilad, making Manila consumers
the victims of some of the highest costs of piped water in the Asian region,
outranking costs in Singapore and other developed countries.34
18
Energy generation. The fiasco that attended the privatization of water delivery
likewise plagued the power sector privatization.
On June 8, 2001, President Gloria Macapagal-Arroyo signed RA 9136, the
Electric Power Industry Reform Act. The measure set the stage for the breakup
of the National Power Corporation and the privatization of all stages of the
power industry, from generation to transmission to distribution. The aim was to
bring down what were then seen as skyrocketing power rates.
Over 12 years later, however, surveys showed that power rates in the Philippines
were either the highest or second highest in Asia and ranked among the highest
in the world. Brownouts lasting several hours a day plagued Mindanao and the
Department of Energy warned of disruptions and shortages in the near future
in Luzon. Privatization did not deliver in terms of lower prices and greater
efficiency in many ventures, including the corporate takeover of Manilas water
supply, but EPIRA turned out to be the most spectacular failure in privatization.
A key aim of EPIRA was to bring about a free market in the power market.
Instead, it resulted in shifting energy generation from the original monopoly
structure to an oligopoly structure. For instance, generating capacity in the
Luzon grid is now highly concentrated among three major groups: San Miguel,
30 percent; Aboitiz, 17 percent; and Lopez, 15 percent.35 It is estimated that
these groups control 52 per cent of energy generating capacity in the whole
country.36 Moreover, the cross-ownership provision of EPIRA allowed for
vertical integration of generation and distribution, resulting in an even more
monopolized structure of energy provision in this country.
EPIRA was supposed to bring about massive investment into electric generation
capacity, yet there was only a 2,223 MW net increase in installed generating
capacity, and this was mostly committed before EPIRA had taken effect.37
Given the fact that the country may need a total additional capacity of 14,400
MW in the next few years, many say this speaks badly of the private sectors
ability to meet the countrys needs under the framework of EPIRA.
After nearly 12 years, EPIRA has not brought about the efficiency in power
distribution and lower electricity rates that its sponsors promised. Like most
19
other neoliberal schemes that had sought to expand the reach of the private
sector and dismantle the state sector in the belief that this would allow the
market to work its magic, it brought about the worst of all possible worlds:
skyrocketing power prices and a powerful oligopoly that didnt care about
gouging the consumer.
The failures of EPIRA have not slowed down the privatization process. In the
biggest single privatization of hydropower generation in the last few years, the
Magat Dam was handed over to a partnership between SN Power of Norway
and the Aboitiz group, a deal that was facilitated by a $100 million loan from
the World Banks International Finance Corporation. SN Power also acquired
control of two other hydropower dams, Binga and Ambuklao.38 In another
controversial development, the Supreme Court, in October 2012, approved
the sale of the 218-megawatt hydroelectric power plant of the Angat Dam
in Bulacan to Korea Water Resources Development Corporation (K-Water), a
company owned and controlled by the Korean government.39
Ten years after the process of privatization began, the Department of Energys
19th Status Report on EPIRA Implementation asserted, The government may
need to involve itself once again in power generation to avoid power shortages
in the future and keep hold of the current momentum being enjoyed as an
investment attractive economy.40 If this assessment of the failure of the private
sector is correct, then the country faces a major problem. Needless to say, getting
government involved again in energy generation is going to be a real challenge
since only some 10 percent of the NPCs former assets remain in its hands.
Globalizing the economy

As noted earlier, globalization is a process that disarticulates the national
economy and reintegrates parts of it at the global level in accordance with the
dynamics of global capital. Matching the disarticulation of its agriculture and
industry, the Philippines assumed three key roles in the global division of labor:
as an assembler of electronic chips for export; a site for the transfer of Business
Processing Activities from the developed countries; and as an exporter of
skilled, semi-skilled, and unskilled labor.
20
The emergence of the Philippines as a major electronic chip exporter had

its origins in the Marcos period, when the World Bank promoted an exportoriented development strategy that relied on having the transnational
corporations to situate the labor-intensive assembly activities in Philippine
export processing zones where they could access cheap labor. Since 1997,
electronics has consistently accounted for more than half of all commodity
exports, amounting to $31 billion in 2010. In that same period, electronics
and semi-conductor exports, however, remained essentially flat for over a
decade, even as the Philippines became the worst hit among Asian producers
by the global financial crisis that began in 2008, owing to a major downturn
in demand in major developed country markets. Analysts said, however,
that the stagnant state of the industry was not due simply to cyclical trends
but to structural weaknesses, meaning low investment and innovation.41
Since the electronic and semi-conductor industry was dominated by foreign
corporations, this meant that the Philippines was losing its advantage as a
location for cheap-labor assembly operations.
A much-ballyhooed new trend was the location to the Philippines of call
centers and other business process outsourcing operations of US-based
transnational corporations. According to one report, The Philippines share
in global Off-shoring and Outsourcing grew to 15 percent in 2008, the third
largest around the world. In the same year, the industry contributed 3.6
percent to the countrys GDP and 12.36 percent to exports, in particular, to
the export of services.42 However, those employed in the sector came to
only 12,000, contributing only 0.74 of total employment in 2006. While it
was widely reported that the Philippines had outstripped India as a BPO hub,
other reports put it at a more modest place.43
Moreover, the BPO sector, like the export electronics industry, was dominated
by low-value-added activities, notably call centers. The participation by
domestic business was generally limited to developing and renting out space
to TNCs, with foreign equity representing 92 percent of total equity in 2009.44
21
Labor export
For all intents and purposes, the most dynamic sector of the economy was
labor export. While government authorities were loath to acknowledge this,
and there was only perfunctory acknowledgment of its role in the economy in
the medium-term development plans, the reality was that it was labor export,
with the billions of dollars it was bringing in to support the consumption of
families of overseas workers, that was keeping the economy afloat.
This country is now one of the great labor exporters of the world. Some 11
percent of its total population and 22 percent its working age population are
now migrant workers in other countries.45 With remittances totaling some $20
billion a year, the Philippines ranks fourth as recipient of remittances, after
China, India, and Mexico.46
The countrys role as labor exporter cannot be divorced from the dynamics
of neoliberal capitalism. The labor export program began in the mid-`70s as
a temporary program under the Marcos dictatorship, with a relatively small
number of workers involvedsome 50,000. The program eventually ballooned
to encompass some nine million workers as a result of the devastation of
the economy and jobs by the structural adjustment policies imposed by the
World Bank and the International Monetary Fund beginning in 1980, trade
liberalization under the World Trade Organization, and the prioritization of
debt repayment by the post-Marcos governments in national economic policy
since 1986.
Structural adjustment resulted in de-industrialization and the loss of so
many manufacturing jobs; trade liberalization pushed so many peasants
out of agriculture, a great number directly to overseas employment; and
prioritization of debt repayments, 20 to 40 percent of the annual budget,
robbed government of resources for capital expenditures that could have
acted as an engine of economic growth. In the role that structural adjustment
and trade liberalization played in creating pressures for labor migration, the
experience of the Philippines paralleled that of Mexico, another key laborexporting country.47
22
The dynamics of the labor export phenomenon, however, cannot be

understood solely in terms of the impact of neoliberal structural adjustment. It is
intimately related to the accelerated process of globalization, or the integration
of production and markets, since the `80s.
The freer flow of commodities and capital has been one of the features of
the contemporary process of globalization. Unlike in the earlier phase of
globalization in the 19th century, however, the freer flow of commodities and
capital has not been accompanied by a freer movement of labor globally in the
current phase of globalization. After all, the centers of the global economy
both the old sites of accumulation like Europe and the United States and the
dynamic new sites like the Gulf Stateshave imposed ever-tighter restrictions
on migration from the poorer countries. Yet the demand for cheap labor in the
richer parts of the world continues to grow, even as more and more people in
developing countries seek to escape conditions of economic stagnation and
poverty, often the result of the same dynamics of a system of global capitalism
that have created prosperity in the developed world.
The number of migrants worldwide grew from 36 million in 1991 to around
191 million in 2005.48 The aggregate numbers do not, however, begin to
tell the critical role that migrant labor plays in the prosperous economies. For
instance, the booming economies in the Persian Gulf and Saudi peninsula are
relatively lightly populated in terms of their local Arab population, but they
host a substantial number of foreign migrant workers, many of whom come
from South Asia and Southeast Asia. Indeed, foreign migrant workers are a
disproportionate part of the populations of the Persian Gulf statesranging
from 25 percent in Saudi Arabia to 66 percent in Kuwait, to over 90 percent in
the United Arab Emirates and Qatar.49
This gap between increasing demand and restricted supply has created an
explosive situation, one that has been filled by a global system of trafficking in
human beings that can in many respects be compared to the slave trade of the
16th century.
Labor export is big business, having spawned a host of parasitic institutions that
now have a vested interest in maintaining and expanding it. The transnational
23
labor export network includes labor recruiters, government agencies and

officials, labor smugglers, and big corporate service providers like the US
multinational service provider Aramark. What is actually happening is the
expansion of a system of labor trafficking that is just as big and as profitable
as sex trafficking and the drug trade. The spread of free wage labor has
often been associated with the expansion of capitalism. But what is currently
occurring is the expansion and institutionalization of a system of unfree labor
under contemporary neoliberal capitalism, a process not unlike the expansion
of slave and repressed labor in the early phase of global capitalist expansion in
the 16thcentury that was pointed out in the work of sociologists like Immanuel
Wallerstein.50
This expansive system that creates, maintains, and expands unfree labor is best
illustrated in the case of the Middle East, now the main destination of OFWs.
As Atiya Ahmad writes, With the booming of the Gulf states petrodollardriven economies from the early 1970s onwards, a vast and consolidated
assemblage of government policies, social and political institutions, and public
discourse developed to manage and police the regions foreign resident
population. Anchored by the kefala or sponsorship and guarantorship
system, this assemblage both constructs and disciplines foreign residents into
temporary labor migrants.51 This elite-promoted construction of migrant
identity promotes internalization of the migrants role as social subordinates
and at the same time emasculation of their status as political agents. They are
expected to remain and so far have largely behaved as non-participants in the
politics of their so-called host societies, even if these societies are swept by the
winds of political change.
In 2009, some 64 per cent of the more than one million Filipino workers that
went abroad went to the Middle East.52 Most of these workers were women
and the biggest occupational category was household service workers or
maids.53
In its effort to curb this free market in virtual slavery or to prevent workers from
going into countries where their physical security would be in great danger
like Afghanistan or Iraq, the Philippine government requires governmentissued permits for workers to be able to leave or in other cases it has imposed
24
deployment bans to some countries. However, labor recruiters, who are often
in cahoots not only with Middle East employers but also with the US Defense
Department and US private contractors, have found ways of getting around
these regulations.
Clandestine networks that smuggle workers from the Southern Philippines to
destinations in the Middle East have been organized. Based on interviews with
these workers, this is the clandestine route of such networks: people told of
being smuggled out in the Southern Philippine city of Zamboanga by small
boat to the Malaysian state of Sabah. From there, they were transported in
the hold of a bigger boat going to Singapore, where they were then offloaded
and brought by land transport to a site near Kuala Lumpur. In Kuala Lumpur
they were forced to work for their subsistence for six weeks. It was only after
two months that they were finally transported by plane from Kuala Lumpur to
Dubai, then to Damascus, where they found themselves in the midst of a civil
war!54
With such illegal transnational human smuggling networks in operation, it is not
surprising that of the 9,000 domestic workers in Syria, the Embassy estimated
that 90 percent were there illegally; that they had no valid exit papers from the
Philippines.55 Among other things, this has made locating them and contacting
them very difficult after Manila had issued orders to the Embassy in January
2014 to evacuate all Filipino workers in Syria.
The situation is similar in Afghanistan and Iraq. For much the same reason, there
is no accurate figure of how many Filipinos have been illegally recruited to be
service workers in the US bases by the Pentagon and US military contractors,
but 10,000 is probably a conservative number. In the case of Afghanistan, the
collusion between illegal labor traffickers, the US government, and US private
contractors poses a gargantuan challenge to the weak Philippine state.
The predominance of women among the workers being trafficked to the
Middle East has created a situation rife with sexual abuse, and a system whereby
labor trafficking and sexual trafficking are increasingly intersecting. Here is an
excerpt from a report of the House Committee on Overseas Workers following
the visit of some members to Saudi Arabia in January 2011:
25
Rape is the ever-present specter that haunts Filipino domestic workers

in Saudi Arabia. Rape and sexual abuse is more frequent than the
raw Embassy statistics reveal, probably coming to 15 to 20 per cent of
cases reported for domestics in distress. If one takes these indicators
as roughly representative of unreported cases of abuse of domestic
workers throughout the kingdom, then one cannot but come to the
conclusion that rape and sexual abuse is common.56
One can go further and say that there is a strong element of sex trafficking
in the trafficking of Filipino women in the Middle East given the expectation,
especially in many Gulf households, that providing sex to the master of the
household is seen as part of the domestic workers tasks.
In sum, the creation of the labor-export economy in countries like the Philippines
stemmed greatly from the impact of structural adjustment, trade liberalization,
and the prioritization of debt repayment, policies that led to de-industrialization,
the erosion of local agriculture, and the gutting of state investment, disabling it as
an engine of growth. Moreover, the dynamics of neoliberal capitalism have led
to the creation of a global system of labor trafficking, reinforcing the insight of
Immanuel Wallerstein that the development of capitalist relations of production
does not, in many cases, displace but reinforce or promote the spread of
unfree labor. This includes not only new centers of capital accumulation like
the Middle East but also old centers like the United States.
Local capital adjusts to globalization

Pressures for agrarian reform and the liberalization of the economy pushed
by global capital and local technocrats led to transformations in the bases of
wealth and capital accumulation of the propertied classes in the country.
The displacement and destabilization of landed wealth already began in the
Marcos period with the expiry of the Laurel-Langley Agreement in 1974, which
ended the privileged access of Philippine sugar into the United States. Sugar
had been the basis of the wealth of the so-called sugar barons, the dominant
faction of the Philippine landed class, to which the current presidents relatives
26
belong. Agrarian reform and trade liberalization pushed by the World Trade
Organization intensified the insecurity of landed wealth in the `80s and `90s.
The Philippines, as noted earlier, was transformed from a net food exporting
country to a net food importing country since the mid-`90s, with agricultural
exports dwindling to less than one percent of its total exports. In comparative
terms, the value of Philippine agricultural exports from 1974 to 2010 grew by
16 percent, while that of Indonesia, Malaysia, and Thailand grew by 744, 184,
and 2,652 percent respectively.57
The virtual destruction of key segments of Manilas import-substituting
manufacturing sector, which was built up in the `40s to the `70s, by import
liberalization paralleled the negative trends in agriculture. Car assemblers like
Delta Motors Yutivo Motors disappeared, as did the textile and garments
industry that had been the bulwark of the Chinese-Filipino capitalist class, along
with some 100,000 jobs.58When they did not disappear owing to liberalization,
they sold out to foreign capital, like the local cement industry, which passed to
the hands of the multinationals Pemex, Holcim, and LaFarge.
In the 90s, analysts were already speaking about the disappearance of the
Philippine bourgeoisie. In fact, in the words of Kenneth Cardenas, Philippine was
simply undergoing creative destruction in Schumpeterian fashion. Much wealth
was rechanneled away from traditional agricultural and manufacturing enterprises
to snapping public utilities that were being privatized like the Metro Manila water
supply system and the National Power Corporation and to urban real estate.
Privatization provided the opportunity for the Lopez and Zobel groups to move
into water provision in the Metro-Manila area and led to the transformation of
the power industry from a government monopoly to one where 52 per cent
of energy generation was controlled by San Miguel, the Aboitiz group, and the
Lopez group.
Urban real estate, however, became the investment area of choice. Central
to this development were three drivers of demand: remittances from OFWs,
which fuelled home construction and condominium sales; office space leasing
by the Business Processes Outsourcing industry; and retail space rentals in malls,
driven by spending by OFWs and the new globalized middle classes.
27
Among the 20 richest Filipinos in 2012, 13 have significant holdings in diverse

forms of real estate investment. While the Zobel Group (Ayala) has remained
probably the most prominent real estate developer, it is joined by the Gotianuns
(Filinvest), the Villars (Vista Land and Lifescapes), and the Antonios (Century
Properties), as well as the formidable Chinese-Filipino taipans that have had
few investments in property until fairly recently. These included Henry Sys SM
Development Corporation, Andrew Tans Megaworld Corporation, and John
Gokongweis JG Summit.
The story of Filipino capital in the last 30 years has been their move from unprotected agriculture and manufacturing to areas of the economy that continued
to be reserved for Filipinos, such as real estate, telecommunications, water,
energy, and mining. Local elites did not crumble in the face of globalization;
they adjusted to it by relocating the sources of accumulation even as they were
broadly subordinated to the dynamics of transnational global capital.
The Philippine state: still an anti-developmental state?

In the search for the causes of underdevelopment in the Philippines, much
analysis has focused on the nature and structure of the Philippine state. One of
the most influential of these approaches has been that of Paul Hutchcroft, who
called the post-World War II Philippine state a patrimonial oligarchy, where
a powerful economic elite extracted resources from and manipulated a weak
and disorganized state bureaucracy, a configuration of power that was inherited
from the American colonial period.59 Superficially, the Marcos dictatorship
(1972-86) might have seemed to be a strong state, but actually it was a system
that facilitated the capture of the state by newand more centralized
regime interests.60 What financial resources were generated by the economic
system were siphoned via state mechanisms to the Marcos family, relatives, and
cronies instead of being recycled into productive investment in a market-driven
economy. The overthrow of Marcos in 1986 may have changed the form of the
statefrom a dictatorship to an elite democracybut the relationship between
the state bureaucracy and the economic elite has remained the same, that is, the
state serves as a pliant instrument for wealth extraction by the upper classes,
though in contrast to the Marcos period, class power is now less concentrated.
28
The implications of such a regime for development was spelled out by Robin
Broad: That state finds itself without relative autonomy to pursue policies that
do not reflect the short-term interests of the exploiters; parts of the state are
not just politicized but are captured. Such a state is not what has been called
a strong state or a developmental statethat is, one able to formulate and
implement policies independently of powerful groups.61
What Hutchcroft failed to see but Broad did take into account was that this
weak state was manipulated as well by powerful external forces, meaning
the US, International Monetary Fund, and World Bank. Indeed, the local
elite and international actors have often worked in tandem, though perhaps
not consciously, to create a weak, anti-developmental state. This was
particularly the case in the `80s, when the local elites successfully emasculated
state-led land reform, a key element in the economic take-off of Korea and
Taiwan, while the IMF and World Bank significantly altered the countrys trade
structure via structural adjustment and the imposition of debt servicing as the
national economic priority.
But were there trends that were loosening the elites grip on the state? Some
analysts purported to see a transition from elite democracy to a contested
democracy, where development could be pursued more autonomously by
the state. To these analysts, one of the most significant steps in the latter
direction was the Party-List Law, which provided for filling 20 percent of the
seats in Congress with the nationwide election of representatives representing
marginalized groups. From the time it came into effect in 1998, the party
list law allowed the election of candidates that were not tied to traditional
local elites, who then began to sponsorand passmeasures that did not
serve elite interests but were pro-people and pro-development. Indeed, the
number of laws that were spearheaded by progressive party-list organizations
was impressive. These included the Cheaper Medicines Act, Anti-Death
Penalty Act, Renewable Energy Act, Magna Carta on Women, Anti-Torture
Act, Comprehensive Agrarian Reform Extension Act, Right to Self-Organize
Law, National Land Use Act, Overseas Absentee Voting Act, Balanced Housing
Act, and the Responsible Parenthood and Reproductive Health Act.
29
That such pieces of progressive legislation could be passed stemmed from a

more fluid political landscape, where elite power continued to be hegemonic
but non-elite forces were actively, and in some cases successfully, disputing
elite hegemony. Yet the failures of the reform groups in both civil society and
in government have shown the limits of their ability to challenge the system.
They failed to repeal the automatic appropriations of government funds to pay
off the debt. They were not able to stop the privatization of water provision
or energy generation. They failed to formulate a non-neoliberal developmental
strategy centered on an activist state. They were not successful in halting
contractualization of the labor force. Moreover, what had served as the entry
point for progressive forces into legislative arena, the party list system, has
gradually been distorted by traditional elites as another way of entering the
House of Representatives, in addition to the route of district representation.
In short, the achievements of non-elite political and social forces in terms of
creating contested spaces in the political system could not be denied, but
whether these added up to creating a momentum for the emergence of a
developmental state remained to be seen.
Conclusion
In the first years of the second decade of this century, the economic prospects
of the Philippines appeared to be improving, with many in the business press
toasting it as one of Asias most promising economies. But while important
reforms targeting corruption and poverty were in progress, there were no
visible initiatives that represented a break with the failed neoliberal legacy.
One of the most damaging of these neoliberal policies was the prioritization of
debt repayment, which led to massive curtailment in state capital expenditures.
The sharp reduction in state investment was not made up by the private sector,
contributing greatly to the stagnation of the economy in the `80s and its low
rate of growth in the last two decades.
Debt service economics, however, was not the only cause of stagnation. The
globalization of the Philippine economy via neoliberal restructuring was a
30
central factor. Globalization of the Philippine economy had two aspects. On

the one hand, it involved the disarticulation or disintegration of the national
economy, leading to a crisis in agriculture, industry, and services. On the other
hand, it articulated or integrated key dimensions of the economy at the global
level. So even as the traditional mainstays of the national economy suffered and
stagnated, new sectors emerged, though their dynamism could not hide their
intrinsic fragility. These sectors were electronics, business process outsourcing,
and labor export. Though remittances, by 2011, surpassed $20 billion, labor
export could not substitute for an economy producing jobs for its labor force
rather than forcing them to migrate for lack of opportunities.
Even as the Philippine lower classes adapted to becoming a labor force for
the world, the Philippine economic elites transformed their sources of capital
accumulation. From the traditional sectors like agriculture and manufacturing,
the elite channeled its investments into urban real estate, a sector that was made
very profitable by demand stemming from foreign investment, but especially
by demand for housing fuelled by the massive remittances to the families
of migrant workers. While being broadly subordinated to the dynamics of
transnational capital, local capital did not capitulate but adapted to globalization
largely via creative destruction, to use Schumpeters terms, that is by shifting
the sources of wealth extraction from manufacturing and agriculture to urban
real estate.
A key problem in Philippine development has been the state, which has
traditionally not functioned as a development agent but as a mechanism used
by the economic elite to almost exclusively extract wealth from society. Over
the last few decades, however, sectors of civil society have been empowered,
and this has translated into some influence over the political process and
political institutions such as Congress. While progressive legislation has been
produced and contested political spaces have emerged, the upper classes
remain hegemonic and the Philippine state still has to make the transition to
becoming a developmental state.
31
Notes
OECD: Southeast Asian Economic Outlook to Return to Pre-crisis levels, Guardian, Nov. 18, 2012, http://
www.guardian.co.uk/global-development/datablog/2012/nov/18/oecd-south-east-asia-economic-outlook
2 CCTs Continuing Success, Philippine Daily Inquirer, Oct 8, 2012, http://opinion.inquirer.net/38362/cctscontinuing-success
3 Informal OFW remittances P242 billion higher, Business Mirror, Nov 14, 2012.
4 See among others, Walden Bello, Missing in Action: President Aquino and the Meralco Rate Hike Scandal,
Philippine Daily Inquirer, Dec 21, 2013, http://opinion.inquirer.net/67785/missing-in-action-presidentaquino-and-the-meralco-rate-hike-scandal
5 See Walden Bello, Waterloo for Agrarian Reform, Philippine Daily Inquirer, Sept 16, 2013, http://opinion.
inquirer.net/61273/waterloo-for-agrarian-reform
6 National Economic Development Authority, Philippine Development Plan, 2011-16 (Pasig: NEDA, 2011).
7 Abigail Ho, Philippines leads in income inequality in Asean, says study, Philippine Daily Inquirer, April 11,
2012, http://business.inquirer.net/8377/philippines-leads-in-income-inequality-in-asean-says-study
8 World Bank, World Bank Debt Tables, Vol 2 (Washington, DC: World Bank, 1994), p. 378.
9 Ibid., p. 379.
10 World Bank, World Development Indicators 1998 (Washington, DC: World Bank, 1997), p. 131.
11 Jesus Felipe and Rana Hasan, Unemployment, Labor Laws, and Economic Policies in the Philippines, in
Jesus Felipe and Rana Hasan, eds., Labor Markets in Asia: Issues and Perspectives (Houndmills, Basingstoke,
Hampshire: Palgrave Macmillan, 2006), p. 446.
12 Calculated from figures provided in World Bank, Accelerating Inclusive Growth and Deepening Fiscal
Stability (Manila: World Bank, March 2008).
13 Emmanuel de Dios et al., The Deepening Crisis: the Real Score on Deficits and the Public Debt, Faculty of
Economics, University of the Philippines, August 2004.
14 World Bank, ibid., p. 27.
15 Kunio Yoshihara, The Nation and Economic Growth (Kuala Lumpur: Malaysia, Oxford University Press,
1994, p. 49.
16 Ibid.
17 Ibid.
18 The booming Philippines missing link: foreign investors, Reuters, Dec 19, 2012.
19 Government data provided by Riza Bernabe, personal communication, May 5, 2008.
20 Rovik Obanil, Rice Safety Nets Act: More of a Burden than a Shield, Farm News and Views (1st Quarter
2002), p. 10.
21 Walden Bello, Food Wars (London: Verso, 2009), p. 60.
22 See Walden Bello, Waterloo for Agrarian Reform, Philippine Daily Inquirer, Sept 16, 2013, http://opinion.
inquirer.net/61273/waterloo-for-agrarian-reform
23 Kara Santos, Philippines Floods Prompt Climate Action, Interpress Service, Aug 27, 2012
24 PCA Eyes Coco Levy Fund for Pablo Farm Rehab, Philippine Star, Jan 4, 2013, p. A-21.
25 $6 billion economic impact from Typhoon Haiyan tops November CAT report, The Broke, Dec 5, 2013,
http://www.citopbroker.com/news/6-billion-economic-impact-from-typhoon-haiyan-tops-november-catreport-6093
26 Walden Bello et al, The Anti-Developmental State: The Political Economy of Permanent Crisis in the
Philippines (Manila: Anvil, 2009), p. 25.
27 Fair Trade Alliance, Stop De-industrialization: Recalibrate Philippine Tariffs Now (Manila: Fair Trade Alliance,
2003), p. 16.
28 Philippines Gets Stomped, Multinational Monitor, Jan-Feb 2006, Vol 27, No 1, http://www.
multinationalmonitor.org/mm2006/012006/front.html
29 O. Nusui, Taking the Right Road to Inclusive Growth: Industrial Upgrading and Diversification in the
Philippoines (Mandaluyong: Asian Development Bank, 2012.
32
30 A. Balisacan and H. Hill, eds., The Philippine Economy: Development, Policies, and Challenges (Quezon City:
Ateneo de Manila University Press, 2003)
31 Isidro Camacho, quoted in Eric Boras, Government Loses $120 billion to Tariff Cuts, Business World, Oct
20, 2003.
32 Ibid.
33 Orville Solon and Steven John Pamintuan, Opportunities and Risks in the Privatization-Regulation of
MWSS, Philippine Review of Economics, Vol 38, No 1, cited in Jude Esguerra, A Critical Assessment of the
Manila Water Concession, undated.
34 Mary Ann Manahan, Water Privatization Project Crumbles: the Philippine Experience, Focus on the Global
South, Nov 2004, p. 5.
35 EPIRA at 10: Revving up Reforms in the Philippine Power Sector, CPRD Forum, 2012, p. 6.
36 Ibid.
37 Ibid.
38 Peoples Response to Water Privatization and Resource Grabbing: Strategies to Reclaim Water and
Commons, Quezon City, Aug 1, 2012.
39 SC allows sale of Angat Dam power plant to Korean firm, GMA News, October 24, 2012.
40 Department of Energy, 19th EPIRA Implementation Report: Period Covering April 2011 to October 2011,
Manila, 2012, p. 36.
41 Resurgent PH electronics industry seen in 2-3 years, http:// http://www.abs-cbnnews.com/
business/02/27/12/resurgent-ph-electronics-industry-seen-2-3-years
42 IT-BPO Industry Profile, Prospects, Challenges, and Issues for Growth and Employment, Angelo King
Institute Policy Brief, De La Salle Universiry, Vol 4, No 2, 2012.
43 See BPO vows to expand Phl labor base as Canada leaves Top 10 list, Business Mirror, Dec. 5, 2012,
http://businessmirror.com.ph/index.php/business/companies/4659-bpo-vows-to-expand-phl-labor-baseas-canada-leaves-top-10-list
44 http://www.bsp.gov.ph/statistics/keystat/ict/itbpo_3.2.htm
45 http://en.wikipedia.org/wiki/Philippine_Labor_Migration_Policy
46 http://en.wikipedia.org/wiki/Overseas_Filipino
47 See Walden Bello, The Food Wars (London: Verso, 2009), pp. 39-67.
48 Guy Arnold, Migration (London: Pluto Press, 2012), p. 4.
49 Atiya Ahmad, Beyond Labor: Foreign Residents in the Gulf States, in Migrant Labor in the Gulf,: Summary
Report (Washington, DC: Center for Strategic and International Studies, 2011), p.3.
50 Immanuel Wallerstein, The Modern World System (New York: Academic Press, New York, 1974).
51 Ibid., p. 3
52 http://en.wikipedia.org/wiki/Philippine_Labor_Migration_Policy
53 http://en.wikipedia.org/wiki/Overseas_Filipino
54 Interviews with Filipino workers in shelter, Philippine Embassy, Damascus, March 18, 2012
55 Estimate of Sec of Foreign Affairs Albert del Rosario, cited in Pinoy workers repatriated from Syria grateful
to be back in PHL, GMA News, September 12, 2012, http://www.gmanetwork.com/news/story/273646/
pinoyabroad/news/pinoy-workers-repatriated-from-syria-grateful-to-be-back-in-phl.
56 The Dark Kingdom? The Condition of Overseas Filipino Workers in Saudi Arabia: Final Report of the
Investigating Mission of the Committee on Overseas Workers Affairs (COWA) to Saudi Arabia, January 9
13, 2011, House of Representatives of the Philippines, Feb 9, 2011.
57 Data sourced from The World Bank. (2012). World development indicators and Global development
finance. World DataBank. retrieved 20 February 2013, from http://databank.worldbank.org/ddp/home.do
58 Walden Bello, David Kinley, and Elaine Elinson, Development Debacle: the World Bank in the Philippines (San
Francisco: Institute for Food and Development Policy, 1982), p. 170.
59 Paul Hutchcroft, Booty Capitalism: The Politics of Banking in the Philippines (New York: Cornell University
Press, 1998).
60 Ibid., p. 111.
61 Robin Broad, The Political Economy of Natural Resources: Case Studies of the Indonesian and Philippine
Forest Sectors, The Journal of the Developing Areas, Vol 29 (April), pp. 330331.
33
C h apter
Urban Property Development

and the Creative Destruction
of Filipino Capitalism
The first decade of the millennium was incredibly good for Filipino capitalism.
Consider these: in the 10-year period, from 2000-2010, the combined profit
of the 30 companies comprising the Philippine Stock Exchange composite
index grew 635 percent in real terms, from PhP26.1 billion to 304.23 billion. In
2006, when Forbes began publishing an annual list of the richest Filipinos, the
combined net worth of the 40 wealthiest Filipinos was US$16 billion. By 2010,
their fortunes were collectively worth US$22.8 billion, showing 32.3 percent
increase in real terms on the 2006 figures. In comparison, the Philippines gross
domestic product grew by only 59 percent during the same decade; GDP per
capita increased by a mere 13 percent.1
Several of these Forbes-listed conglomerates continue to embark on ambitious
international expansion plans instead of depending exclusively on Philippine
market. Henry Sys SM Prime is presently planning to open five more malls
in China within the next three years;2 the Gokongweis Universal Robina
is eyeing a factory in Myanmar, which will follow successful investments in
manufacturing in Thailand, Vietnam, Malaysia, Indonesia, and China;3 and San
Miguel Corporation, as part of its plan to bring total sales to PhP1 trillion by
2013, is planning to put up plants in Myanmar, Cambodia, and Laos.4
These outcomes had not been expected. The first decade of the millennium
was very turbulent for business, having begun with Philippine capitalism in
serious crisis, as the economy reeled from the Asian financial crisis of 1997-98.
The initial contraction, at half percent, was mild compared to the severe drops
35
S t a t e o f Fr a g m e n t a t i o n : T h e P h i l i p p i n e s i n T r a n s i t i o n
seen in the rest of middle-income Southeast Asia. But an anemic recovery,

coupled with a hollowed-out neoliberal state unwilling and unable to either
stem the outward flow of portfolio investments or to spend its way out of the
crisis, prolonged the economys stay in the doldrums, culminating in a fiscal
crisis in 2005.
For much of that decade, political crisis also gripped the country. The
impeachment trial of Joseph Estrada, the subsequent revolt of middle-class
Manila, and the installation of Gloria Macapagal-Arroyo in the presidency in
2001 proved to be harbingers of more political precariousness. As the decade
wore on, Arroyos questionable mandate further lost legitimacy; rigged
elections, massive protest actions, and the re-emergence of adventurism and
impunity in the military eventually became the landmarks of her presidency.
If at home there was political instability, outside, the closing years of the decade
witnessed global capitalism erupt in a systemic crisis that until now it has not
emerged from.
Demise of industries and traditional bases of accumulation

Looking at how in the past three decades the established modes of building
fortunes in this country have been steadily eroded, the success of Filipino
capitalists becomes even more surprising. Cash crop export, the economic
bulwark of the landed cacique class, has been in terminal decline for almost
four decades now. Until the early `70s, the Philippines was by any measure an
agrarian rural economy. During that decade, agriculture accounted for between
27 and 31 percent of GDP, while coconut, sugar, fruit, and tobacco exports
accounted for an average of 43 percent of total agricultural exports.5 But
beginning with the expiry of the Laurel-Langley Act in 1974, which ended
the privileged access of sugar producers to the US market, a range of factors
made export-oriented agriculture an increasingly untenable capitalist modus
operandi. The world market for sugar entered a prolonged period of depressed
prices, which saw prices plummet from US$0.67 a pound in 1974 to US$0.10
in the mid-`80s. Similarly, coconut products traded at an average of 44 percent
of 1974 prices from 1975 to 1985.6 Sugar and coconut monopolies created
36
Chapter 1
during the Marcos regime, partly as responses to this crisis, were mismanaged
by his cronies and ended up hastening their collapse.7
From 1987 to the present, the successes and failures of agrarian reform
have become another important factor in the development of Philippine
capitalism. On one hand, agrarian reform has caused the breaking up and
redistribution to the tillers of several large estates; on the other, it has
precipitated the reclassification of land into non-agricultural uses to thwart
redistribution.8 More recently, the crisis in export agriculture has deepened
with the entry of imported produce under a liberalized trade regime, as a result
of the commitments entered into by the Philippines under the World Trade
Organization and in bilateral and regional free trade agreements. Liberalization
has rendered Philippine agriculture susceptible to competition from cheaper,
often subsidized, agricultural imports.9 In comparative perspective, the value
of Philippine agricultural exports from 1974 to 2010 grew by 16 percent,
while that of Indonesia, Malaysia, and Thailands grew by 744, 184, and 2,652
percent, respectively.10 The Philippines, presently running an agricultural trade
deficit with 11 of its 16 free trade partners,11 has been a net agricultural
importer since the mid-`90s,12 and its agricultural exports have dwindled to less
than one percent of its total exports.13
Domestic manufacturing was equally devastated in the last three decades,
from the `80s to the closing of the recent decade. The tariff- and-quota-based
protection schemes erected to develop a domestic industrial capability, upon
which the Taipan class had built its wealth, were effectively dismantled by three
decades worth of neo-liberalization. Older accounts of Filipino capitalism, such
as Kunio Yoshiharas catalogue of Southeast Asian capitalists in the `80s and
Temario Riveras on the landlords-cum-import substitution industrialists, reveal
the extent of devastation of domestic manufacturing capital. The majority of
the families, companies, and industries which defined ersatz capitalism in the
Philippines in the early `80s have now been consigned to the dustbin of history.14
In the automotive industry, the niche for domestic assemblers created by
import substitution policies no longer exists. Companies such as Delta Motors
and Yutivo Hardware, which respectively assembled Toyota and General
Motors products for the local market, were among the first casualties of the
Urban Property Development and the Creative Destruction of Filipino Capitalism
37
political and economic crises during the closing years of the Marcos regime.15
The textiles industry, which had built the wealth of a number of ChineseFilipino capitalists and had once been considered a cornerstone of Philippine
industrialization, collapsed due to structural adjustment and competition from
textiles smuggled out of export processing zones.16 By the World Banks own
estimates, 100,000 workers were laid off in the garments and textile industries
alone as a direct consequence of structural adjustment, which was equivalent
to five percent of total industrial employment in the early `80s.17
At the height of the Asian financial crisis, the entire cement industry was taken
over and remade into subsidiaries of large transnational companies like Holcim,
Cemex, and Lafarge.18 With domestic content laws and tariff barriers either
reduced or removed, factories multinational companies built for the Philippine
market ceased to have reason to exist, and production for the Philippine market
has since been relocated elsewhere to factories in ASEAN and China. The most
recent example of this trend was Goodyear, which closed its Las Pias factory
in 2009 after 53 years of operating in the country.19
The entry of foreign competitors in the once-protected domestic market also
proved ruinous for entire industries, such as the shoe and domestic appliance
industries. Year 1980 imports per capita rose by 134 percent in 2010, while
GDP per capita merely rose by 26 percent. State-owned enterprises set up
as nuclei for Philippine industrialization were privatized without even fulfilling
their original mandate. National Steel Corporation was snapped up in 2004
by Pramod Mittal, the younger brother of Lakshmi Mittal of the ArcelorMittal
Group, which has since folded up.20 Petron changed hands several times,
with majority ownership passing from PNOC, to Saudi Aramco, then to the
Ashmore Group, before being acquired by San Miguel Corporation at the end
of 2008. These factors, combined with the failure of the country to attract
Japanese capital in the wake of the Plaza accord,21 caused the Philippines to
de-industrialize in relative terms just as its neighbors embarked on rapid and
thorough export-oriented industrial development.
At the beginning of the `70s, the Philippines had the most industrialized
economy among the middle-income ASEAN countries Indonesia, Malaysia,
Philippines and Thailand. At its peak in 1983, industry contributed 39 percent
38
Chapter 1
of GDP and employed 14 percent of the Filipino workforce. By 2010, the

Philippines had the lowest level of industrialization among these four countries,
contributing only 30 percent of total GDP, while its share in total employment
barely moved; presently, its share is at a little less than 15 percent. What little
growth in manufacturing that took place from the `90s to 2000s was in foreign
investment-fueled, export-oriented industries located in export processing
zones, in which Philippine capitalists have had a rather limited involvement.22
With the demise of industries and decline in agricultural production, it is now
structurally impossible to amass incredible wealth on either the backs of
peasant labor or from a protected domestic market. This situation stands in
stark contrast to the `50s and `60s, when the wealthiest Filipinos were almost
invariably sugar barons and when the upper echelons of Philippine politics were
drawn from their ranks.23 This is also markedly different from the `70s and
early `80s, when an ersatz industrial capitalist class propped up by the Marcos
regime dominated the economy.24 Today, none of the wealthiest Filipinos have
significant holdings in cash crops, and although a number of prominent political
figures descend from haciendero families, cash crop agriculture is no longer
the dominant economic interest of members of Congress. With some notable
exceptions, the crony capitalists tasked with running the national industries
in the Marcos era were generally unable to leverage the considerable wealth
they had amassed to ensure dominance in the economy. More crucially,
almost none of the capitalists from neither the landowning cacique class nor
the Taipan class have mobilized their wealth to transition into export-oriented
manufacturing, a key component of the capitalist transformations in the highgrowth economies of East and Southeast Asia.
It would have been easy to proclaim the death of oligarchic capitalism at the
turn of the 21st century, with the Asian financial crisis and the IMF rescue
packages in its aftermath dealing the final blow on domestic capitalist classes
in Southeast Asia. As far as the Philippine capitalists are concerned, the home
markets have been pried open by their transnational counterparts.25 But there
would be no death certificate yet for the Philippines and its capitalists. Domestic
capitalist class power instead would reinvent itself and experience resurgence
amidst erosion of traditional bases of accumulation and condition of permanent
crisis; despite, too, of failure to shift to export-oriented manufacturing.
39
Philippine capitalists flourish under new rules

Filipino capitalists are now at the cusp of joining the transnational capitalist class.
This is how it happened.
Andrew Mellons observation in 1929 becomes a refrain in the present global
economic crisis: that during crises, assets return to their rightful owners. But this
opens up questions: what is the crisis; who and what are the rightful owners;
what are the processes through which assets have returned to them?
From the early `80s to the present, three sets of processes have defined the
structure of Philippine economy; its position across global circuits of labor,
commodities, and capital; and the opportunities for accumulation available to
its capitalist classes. First, there is neoliberalization. The Philippines is one of
the countries where neoliberalism has seen an unqualified ideological triumph.
It was among the first countries in the world to participate in the structural
adjustment program in 1980, and has since been the recipient of a total of nine
structural adjustment loans from the World Bank while also being a participant
in three IMF programs.26 The momentum of neoliberal reform has been
sustained from within by state economic planning agencies, the academe, and
private-sector think tanks.27 The Philippines has consistently gone beyond the
prescriptions of the Washington Consensus by: unilaterally adopting the lowest
average tariff rates in the world; innovating on the privatization of economic
zones; embarking on some of the biggest privatizations in the world.
Far from being a completely ideological project, however, neoliberalization in the
Philippines has been implemented in a specific, locally-contingent, and highlyuneven manner. The resultant contours have been crucial to the recent successes
of domestic capitalists, especially under the Philippine privatization program.
Beyond the crown jewel corporations, such as Philippine Airlines, Petron, National
Steel, and National Power Corporation (Napocor), public land and infrastructure
have been the most consistent targets for privatization of successive post-EDSA
governments. In Metro Manila, military lands, such as Fort Bonifacio and Camp
BagoBantay, national government centers in Quezon City, and reclaimed lands
40
Chapter 1
on Manila Bay have been privatized. In recent years, these projects have, in fact,
defined urban development. Through the Bases Conversion and Development
Authority alone, a total of 267 hectares of the city have been privatized in this
manner, creating for government some PhP46.697 billion revenues.28
Two particular features of the privatization program deserve closer scrutiny.
Privatization projects have been pursued through auctions of large tracts of land,
though this is not the only means through which privatization can be accomplished.
The privatization of Singapore Airlines, for instance, was accomplished through
a public offering, allowing the Singaporean middle class to participate in the
privatization process.29 The land assets of a national government can also be
privatized as smaller lots, or allocated for socialized housing. In the Philippines
case, however, the lots have been huge, and the stakes high. With mandate to sell
the land at as high a price as possible, the BCDA sold these lots to the highest bids,
precluding the use of these lands for anything but the highest ends of the market.
The initial bloc of Fort Bonifacio privatized in 1995 was 150 hectares; the
winning bid was a hefty US$1.6 billion. In 2013, the highest bid for the
74-hectare FTI Complex in Taguig, the latest public land to be privatized, was
PhP24.3 billion.30 To put this figure in perspective: under the Urban Housing
and Development Act, the mandated maximum size for socialized house-andlot units, which have a price ceiling of PhP400,000 per unit, is 18 square meters.
At the prices paid by the winning bidders, an unimproved 18 square-meter plot
in Fort Bonifacio would have cost PhP676,962; the same size of land in the FTI
complex, PhP591,081. No wonder then that privatized Fort Bonifacio is now a
master-planned, high-end district whose recent locators include the embassies
of Singapore and the United Kingdom, the new headquarters of the Philippine
Stock Exchange, and the local offices of several multinational corporations.
The other feature is that privatization took place with the national patrimony
provisions of the 1987 Constitution firmly in place, limiting foreign ownership
of private land to 40 percent of total equity. This provision has often been
understood as resistance to neocolonial appropriation of the countrys natural
resources. Filipino resources should benefit Filipinos, or so it has been thought.
But given the highest-bidder, the winner-take-all system in place for privatizing
lands and the constitutional restrictions on land ownership effectively have
41
enforced an oligopoly for Filipinos who could effectively mobilize capital, either
their own, or that of foreign partners. (See Table 1)
Trade liberalization and deregulation in the country have exhibited the same
unevenness. On one hand, trade liberalization has been remarkably brutal
to agriculture and industry, as described above. On the other, several key
sectors have been protected from complete foreign ownership in varying
degrees, guaranteeing a place in the economy for domestic capital. As with
private lands, foreign equity in mining companies and public utilitiesincluding
telecommunicationsis limited to 40 percent of total equity. For banks, it is 60
percent. Retail trade has also been liberalized, but in a halting and piecemeal
manner. High-capitalization stores have been established using foreign equity,
but they have to rent space in malls, which are not foreign-owned. The extent
to which Philippine administrations would bend neoliberal doctrine backwards
to favor allies is best demonstrated in the airline industry. In 1998, then President
Joseph Estrada rolled back an earlier open skies policy to shield from foreign
competition Philippine Airlines, then majority-owned by his friend Lucio Tan.31
In other sectors, the Philippines innovated on new forms of liberalization,
beginning in the mid-`90s, which have again opened opportunities for Filipino
capitalists. In 1995, it was the first in the world to transfer to the private sector
the development and administration of export-processing zones, which had
been the exclusive domain of states.32 In 2000, it allowed single floors of
buildings to be declared as information and communications technology special
economic zones, paving the way for the rise of the multi-billion dollar business
process outsourcing industry. These innovations made the export processing
zone program of the Philippines one of the most successful globally. Thus,
from 2005 to the 2010, the Philippine Economic Zone Authority recorded IT
investments worth US$10 billion.33 The national patrimony provisions of the
constitution, however, have assured that the few Filipinos who could mobilize
the requisite capital could have at least a 60 percent stake in the development
and operation of these zones.
The second set of processes is economic globalization, Philippines style. Here,
uneven neoliberalization has had a key role. In this second process, the country
has undertaken specialization to fill three niches in the global economy. First
42
Chapter 1
niche is electronics manufacturing, primarily in the low value-added, laborintensive processes of testing and sub-assembly manufacturing. Since 1997,
electronics have consistently accounted for more than half of all commodity
exports of the Philippines; the value of electronics exports have grown from
US$22.17 billion in 2000 to US$31 billion in 2010.34 This growth, however,
has taken place almost entirely within export processing zones, and with some
exceptions such as the Ayalas Integrated Microelectronics Inc., this industry
has seen very little participation by domestic capitalists35 other than the
development and administration of the zones themselves.
Second niche is services outsourcing industry, virtually nonexistent in 2000,
but by 2010 was raking in US$9.5 billion in exports earnings and employing a
little more than half a million Filipinos.36 From 2004 to 2010, revenue growth
in the sector averaged 54 percent annually; the Philippines is now one of the
biggest services outsourcing destinations in the world. But similar to the export
electronics industry, outsourcing has been dominated by low value-added
activities, particularly call centers. Domestic capitalist involvement has been
limited to the development and rental of office spaces for the locators; foreign
equity represented 92 percent of total equity for the entire industry in 2009.37
Third niche is labor exportation. Weak generation of domestic employment in
this neoliberal era has underpinned a massive labor exodus, with labor export
and remittances now comprising huge share in the countrys economic activity.
In 2010, 1.9 million Filipinos out of a labor force of 37.1 million were deployed
overseas on temporary contracts.38 In the same year, remittances totaled
US$18.76 billion, the fourth largest remittance inflow in the world after India,
China, and Mexico. This exodus has come at an immense social and human
cost, though invaluable in keeping the Philippine economy afloat during the
present global financial crisis. Domestic consumption in the services sector,
not export growth nor investment, has been behind the Philippines recent
above-average economic performance.39
The third of the processes is capitalist development characterized by sectoral
and geographic unevenness. This has created spectacular profits for Filipino
capitalists but has failed to substantively improve the well-being of the majority
of the Filipinos. Against a stagnating agriculture sector and weak transitioning to
43
export-oriented industrialization, the services sector dominated the Philippine

economy in the last three decades. At the close of this period, in 2010, the
services sector accounted for 55 percent of the countrys GDP and a little
more than half of total employment. Among the sectors which were able to
outpace the growth of the economy from 2000 to 2010, only bananas and
fisheries were agricultural; the only industrial subsector was mining.40 Similar
to the experience of post-industrial societies of the global North, the growth
in services in the recent decade created a bifurcation in opportunity: on one
hand, remittance and outsourcing work produced narrow culturally- and
economically-globalized middle classes; on the other, a large and still growing
insecure labor force worked in low-wage, flexible services jobs that sustained
the economy. Remittances further exacerbated this situation. The early phase
of labor export saw remittances being used to sustain agricultural livelihoods,
though OFW expenditures have since shifted from education, consumption,
and investment into real estate.41
Geographically, the transformation of the economy has favored Manila and its
surrounding regions. The sectors that have become the Philippines niche are
overwhelmingly urban. In 2011, the National Capital Region, Central Luzon,
and Calabarzon (Calamba, Laguna, Batangas, Quezon) deployed 43.3 per
cent of the countrys overseas workforce;42 the 2007 Family Income and
Expenditures Survey meanwhile showed that 93.9 per cent of remittancereceiving families from these regions had incomes of PhP100,000 or higher.43
These developments should not come as a surprise, given the very high
upfront costs involved in deploying overseas for work; it would be the betteroff families in better-off regions, and not the poorest of the poor, who would
have more access to overseas employment. The employment generated by
export-oriented manufacturing has been concentrated in peri- and ex-urban
greenfield sites in Cavite and Laguna, which are assured of steady power and
water supply, access to the airport in Manila, and a compliant labor force
policed by local government.44 The BPO boom also used to be concentrated
in the business districts of Metro Manila; before the enactment of a provision,
which allowed single floors of office spaces to be declared as special economic
zones, Manila had zero economic zones. By the end of the decade in 2010,
there were 82.
44
Chapter 1
Jobs and opportunities have been concentrated in the cities, even as the viability
of rural agrarian livelihoods has increasingly been rendered tenuous. Pre-existing
push and pull factors have aggravated rural-urban migration, creating a level of
urbanization in the Philippines anomalously high for its level of development.
Among the 56 countries classified by the World Bank in 2009 as lowermiddle income, the Philippines had the fifth highest level of urbanization; its
urban population was larger than the rest of the top 10 combined45. Manila,
historically the primary city in the Philippine urban system, has been the main
destination of this rural-urban exodus. The previous trend that saw economic
decentralization from the core of Manila to its surrounding regions was reversed
in this last decade. The share of Metro Manila in the Philippine economy in this
period was consistently above 50 percent of GDP.
Back to the land

The Philippines brand of neoliberalization, the unique vectors through which
its economy globalized, and its uneven sectoral and geographic development,
have all converged in urban real estate.
Mirroring the economys state, real estate development would also begin the
decade in crisis: the sector shrank during the period 2000 to 2002, hitting a
24.7 percent year-on-year contraction in the first quarter of 2001. But the
decline would be turned around in 2003, beginning with sustained growth
in residential lot sales, and office and retail space rental and leasing. From the
second quarter of 2004 until the fourth quarter of 2008, this sector would
record double-digit streak, broken only twice by high single-digit growth rates.
In the third quarter of 2006, the sector would grow at a record pace of 26.2
percent year-on-year, breaking its third quarter record of 1982. This record
would be exceeded yet again by the 27.7 percent growth in the second
quarter of 2010. At the end of its bust period in 2002, the gross value added
of real estate development would stand at approximately PhP8.8 billion. In
2010, it would be PhP22.1 billion.46 If considered as a separate subsector, real
estate would be the second-fastest growing sector of the economy in the last
decade, outpaced only by mining.
45
Fuelling this spectacular growth were remittances from overseas Filipinos,

specifically invested in home construction and condominium purchases;
followed by office space leasing by the BPO industry; and retail space rentals
in malls, driven by consumer demand from the newly globalized middle class.
In a press release for the record-breaking third quarter of 2006, the National
Statistical Coordination Board noted: brisk sales in residential projects from
OFWs, the strong demand for business office spaces from the BPO industry
and higher income from rental and leasing operations from newly opened
supermalls propelled the growth of real estate.47
By the industrys own reckoning, 30 percent of all remittances sent by overseas
Filipinos have been spent on real property.48 Going by this estimate, some
US$5.6 billion of OFW remittances was spent on real estate in 2010 alone49.
In the same year, Vista Land estimated that 60 percent of their sales were
from overseas Filipinos;50 Robinsons Lands, 40 percent;51 and Ayala Lands,
20 percent.52 Much of this investment was poured into Metro Manila and its
suburbanizing periphery. In 2000, there were a little over two million occupied
housing units in the NCR; 10 years after, permits for the construction of 377,471
new units were issued for the region53. From 2002 to 2010, some 21 million
square meters worth of new residential spacean area equivalent to the land
area of Marikinawas constructed in the NCR, accounting for 27 percent
of total residential construction in the country. If residential construction in
the adjoining provinces of Bulacan, Cavite, Laguna, and Rizal were included,
the total would run up to 37.7 million square meters or 48 percent of new
residential construction nationwide54.
Commercial construction has been undergoing a similar boom. At the beginning
of the millennium, office space supply in the NCR stood at around 3.6 million
square meters. By the end of its first decade, supply increased by more than
50 percent, or to a little less than 5.5 million square meters.55 Demand from
the BPO industry, to the tune of 300,000 square meters per year during that
period, resuscitated office rentals coming from a near-crash situation during
the Asian financial crisis.56 Upward trend in demand for office space continues
and is expected to outstrip supply by 2015.57 Past trends showed 18 percent
vacancy rates at its peak in 2001, decreasing to below two percent in 2012.
46
Chapter 1
Non-residential construction from 2002 to 2010 reached 20.2 million square

meters in the NCR and 27.6 million square meters in its extended metropolitan
region, accounting for 37 and 50 percent of total construction in the country,
respectively58.
Malls have dominated the retail landscape. In 2000, there were approximately
three million square meters of retail space in malls, but by the end of the decade,
space use expanded by 60 percent, reaching five million square meters.59 SM
Prime accounted for more than half of this space, using up 2.7 million square
meters, followed by Ayala Land, at approximately 808,000 square meters, and
Robinsons Land, 723,000 square meters. Together, these three operators
accounted for almost 85 percent of the total mall retail area in Metro Manila
and almost all of the new leasable areas constructed over that decade. In
2000, these three companies raked in a total of PhP8.1 billion in retail space
rental income, which would more than triple, reaching PhP30.3 billion, in 2010.
(See Table 2)
Even as it integrated urban real estate into circuits of global capital, neoliberalization
also freed urban land supply through privatization of state lands. Military bases
were converted; former national government centers, such as the North and
East triangles in Quezon City, were sold and privatized as well as reclaimed land,
as in the case of Pasay. The state defaulted on urban development and planning
to give way to the logic of the market: North Triangle, which was planned to
house government offices, is now being touted as Quezon Citys new central
business district; former First Lady Imelda Marcos city from the sea in Pasay,
the site of embassies, cultural spaces, and international expositions now hosts
SMs Mall of Asia and several big-ticket gambling and leisure developments.60
It can be said that free market liberated the city from the Marcoses New
Society, yet in an ironic turn, it also broke down the fetters of the old economy
that had predominantly benefited the landed elite. In a deliberate effort to
avoid agrarian reform, the landowning class saw an escape in the conversion
of their lands from agricultural to commercial purposes through reclassification.
In Cavite alone, some 4,337.5 hectares were used for redevelopment in this
manner from 1988 to 2001.61 However, the converted or reclassified lands
around Manilas peripheries did not create the expected demand for industrial
47
parks and economic zones. In 2009, a total of 1,095.5 hectares in 12 economic

zones in Cavite held the dubious status of developments in progress which
were not fully occupied by locators though some of these zones had been
incorporated as economic zones as long ago as 1996.62
In core areas of the metropolis, idled factories of the old import-substitution
industries were demolished to create brown-field sites for redevelopment. The
redevelopment of industrial land in Libis into Eastwood City, which was the
first information technology special economic zone in the country, is perhaps
emblematic of the broader transformation of the economy.63 The model
has since been applied to the redevelopment of the former Nestle factory in
Muntinlupa, Plastic City in Valenzuela, and a belt of warehouses, silos, and
factories on the north bank of the Pasig River from EDSA all the way to C-5.
Urban property development restores capitalist class power

That was how the new economy came about. Simply told, overseas Filipinos
and foreign investors poured in billions of dollars as investments in lands newly
liberated from the state, agriculture, and domestic manufacturing, and were
redeveloped into residential enclaves, condominiums, office space, and malls.
If their monies were the drivers, who then rode on the growth of this new
economy?
As in any other economy, power in the brave new Philippines is found in the
opportunities available for capitalist accumulation. Just like ownership of land
under hacienda agriculture or dictatorial largesse under import-substitution
industrialization, control over these opportunities means control over the
creation of wealth. Over the past two decades, an array of crony capitalists,
manufacturing-oriented Taipans, and landed elites have converged on urban
real estate as a central component of their strategies to diversify from their
traditional sources of wealth. They have amassed wealth from haciendas and/
or factories of the now dead industries which received new life from real estate
development. The new economy has created possibilities for such wealth
accumulation through the torrent of foreign investment and remittances that it
has unleashed whether by accident or design.
48
Chapter 1
The 10 richest Filipinos in 2012 all had interests in real estate; 15 of the top 20
have significant holdings in real estate. (See Table 3) Most of the real estate
companies owned by these people and their families have been fairly new to
the game, and among this group, only Gotianun (Filinvest), Villar (Vista Land and
Lifescapes), and Antonio (Century Properties) have built their fortunes on real
estate. The rest of the group is composed mainly of Chinese-Filipino Taipans
who earlier built their wealth from manufacturing or retail, with almost zero
investments in property development up until recently. The newest member of
this group is Jollibees Tony Tan Caktiong, who in 2012 set up Double Dragon
Properties with owner of restaurant chain, Mang Inasals Edgar Sia II. Before
this move, the international expansion of Tan Caktiongs fast food empire was
becoming increasingly exceptional in a group composed of Taipans that had
taken only the route of domestic intensification and diversification.
Despite being new entrants to the industry, these real estate companies now
have a dominant position in the market, especially in the vertical development
subsector. Henry Sys SM Development Corporation is perhaps the best
example of this trend: with a market share of 23.8 percent, SMDC is now
the largest condominium developer in the country, having sold some 28,650
units since its first construction in 2003.64 SMDC is also the fastest-growing
arm of the Sys business empire; in 2006, housing and tourism development
only accounted for one percent of the revenues of Henry Sys holding firm,
SM Investments Corporation. By 2011, this grew to 11 percent, and would
astoundingly account for a full third of SMICs profits. In contrast, retailSys
traditional bread and butterbrought in 76.6 percent of SMICs total revenues,
but only accounted for 9.5 percent of total profits.65
The same story of rapid growth and incredible profitability would repeat
itself. Andrew Tans Megaworld Corporation, which comes in at second
place, completed its first project in 1994, but now holds 13.1 percent of the
market and accounts for more than half of profits of Tans Alliance Global
conglomerate. Lucio Tans Eton Properties had completed its first real estate
project in 2007, generated PhP4.45 billion in revenues in 2010, and now
holds 5.2 percent of the market. These giants have also grown much faster
than the already-impressive pace of the real estate sector as a whole. SM
Developments revenues grew by 47,400 percent from 2003 to 2011, while
49
Megaworlds grew by nearly 45,000 percent from 2004 to 2011. By 2010,

property development was firmly established in the portfolios of the countrys
largest conglomerates. (See Figure 1)
The newfound dominance of big capital in real estate development may be
seen as proof of the axiom that capital seeks its own level; that it will seek
out the most profitable opportunities. Yet the opportunities available in real
estate development have not been available to just anyone; the specific
contours of neoliberalism have denied the participation of foreign firms, even
as it has created the conditions for these companies spectacular growth. It
wasnt merely generic capital which was able to exploit these conditions, but a
specific fraction of it. Henry Sys dominance in real estate development and in
banking owed as much to the protection afforded to him by foreign investment
negative lists as to his ability to mobilize the requisite capital.
A piece of the puzzle lies in the politics of neoliberalism.
Neoliberalism in the Philippines

David Harveys distinction between neoliberalism as an ideological creed and
neoliberalism as a project for restoring class power is useful in understanding
how it has ushered in a period of super profits for Filipino capitalists. As
ideological creed, neoliberalism best advances the well-being of individuals and
of society liberating individual entrepreneurial freedomswithin an institutional
framework characterized by strong private property rights, free markets, and
free trade.66 This view is along the same line of ideas worked out by Friedrich
von Hayek, Milton Friedman, and the so-called Austrian school of economics,
which have since achieved hegemonic status in the academe, think tanks, and
popular media.
Neoliberalism in practice, however, deviates from this ideal. In practice, neoliberal
reforms are not just about reducing perceived inefficient distortive effects of state
involvement in the economy, it is more about relying on the states monopoly of
force to suppress dissent and organization against neoliberalism, as well as about
supporting the states unique ability to create markets where there used to be
50
Chapter 1
none. Notwithstanding the Thatcherist There Is No Alternative mantra, three

decades of neoliberalism has yet to engineer a global convergence on a single
model of economic organization; what it has produced is a bewildering variety
of place-specific neoliberalisms. In China, for instance, neoliberalism has worked
well with strong state role in the creation of a new capitalist manufacturing class;
across the Yellow Sea, it has dismantled the cozy relationship between the state
and the chaebol in South Korea.67
What has remained consistent in all variants of neoliberalism across countries
is that they have all created conditions for the re-concentration of class power
diluted under Keynesian-welfare, developmental, and other political-economic
projects enacted after World War II. In all these, though in varying degrees, the
state has tempered capitalisms excesses.68 This view of neoliberalism explains
the discrepancies between its theory and practicea scriptural reading of the
Austrian school would have forbidden Chinas use of state power to enforce
technology transfers from foreign investors to its domestic industries. It also
wouldnt have allowed Carlos Slim, presently the worlds richest man, to amass his
fortune by monopolizing Mexicos telecommunications market. If neoliberalism
were understood as an excuse for the concentration of class power, and not as
a coherent creed, these apparent sins would suddenly make complete sense.
Under these conditions, diversification to real estate development in the
Philippines cases has emerged as an excellent strategy. As discussed, urban
property development is neatly at the center of the new economy. Not only is it
a shelter from the neoliberal storm, it is also well-positioned to salvage valuable
flotsam. It is a sector protected from foreign competition and one that stands
to gain most from the stagnation of agriculture through the development of
greenfield sites for EPZs and suburban developments, and from the decline
of the import-substitution industries by redeveloping brownfield sites into
IT parks, malls, and residential towers. The technical barriers to entry are
minimal, especially if competencies in construction, sales and marketing, and
banking have previously been developed. The only major barrier is access to
large amounts of capital, which has even worked to the advantage of Filipino
capitalists, as it has insulated their companies operations from broader-based
competition.
51
The unevenness has benefited several sectors and industries which have ended
up being the exclusive domain of Filipino capitalists. The same has enabled a
resurgence of their class power. This is neither the ideal end result of neoliberal
orthodoxy, if the Philippines were to be pitted against the rest of middleincome Southeast Asia, where foreign companies maintained a higher profile
in the services sector. Britains Tesco has a dominant position in Bangkoks retail
landscape; the biggest low-cost carriers in Malaysia, Singapore, and Thailand
are subsidiaries of Malaysias AirAsia. In these same sectors in the Philippines,
the protection neoliberalization afforded has created unintentional national
championsSM, which began expanding internationally in 2001, and Cebu
Pacific, which is presently the third-largest low-cost carrier in Asia.
Understood in this light, the specific contours of Philippine neoliberalization,
as well as their outcomes, have not been accidental. Neither have their
consequences been unalterable, intrinsic qualities of globalization. Instead,
they have reflected the exercise of power to effect specific outcomes, both
through structural adjustment programs that international financial institutions
implemented and the ideological support of Filipino technocrats, the political
elites, and domestic capitalists.
Nowhere is the fusion of business and politics in urban land more apparent than
in Philippine Congress. Its members, the landed and political cacique classes,
who were eager to avoid agrarian reform, have also cashed in on the demand
for suburban house-and-lot developments, industrial zones, cemeteries, and
resorts by converting their landholdings and, in many instances, by participating
in the development business as well. Research by Sheila Coronel and the
Philippine Center for Investigative Journalism showed that from 1992 to 2004
the proportion of congressmen and women with agricultural land dwindled
from 58 to 39 percent. The proportion which held interests in real estate
remained steady, from 53 to 49 percent. In the 9th Congress, agricultural land
was the dominant business interest in the lower house, as it had been historically;
by the 11th Congress, real estate development replaced it at the top spot. 69
As in pre-Marcos Congresses, the hacenderos continue to be a potent lobby
that shows no qualms about using political power to protect their interests.
Thanks to decentralization of key decision-making processes, they are able
52
Chapter 1
to exploit the unclear boundaries between patrimonial and public powers at

the local level to help the process of land conversion along. 70 In Congress,
they have voted to increase the funds granted to the National Home Mortgage
Finance Corporation through the Comprehensive and Integrated Shelter
Financing Act.71 Beginning with Juanito Remullas lobbying with Marcos, who
was his fraternity brother, to locate an export processing zone in Cavite,72
particularly influential politicians have since been able to leverage their power
for the declaration of special economic zones in their fiefdoms, and for the
prioritization and realignment of national infrastructure projects which serve
these zones. To varying extents, influence in Malacaang and with other
lawmakers certainly helped the declaration of pet-project economic zones in
Zamboanga, Cagayan, and Aurora, and the realignment of expressway projects
in southern Manila and Central Luzon.
Senator Manuel Villar perhaps presents the prototype of the 21st-century
panginoong may-lupa: a real estate developer who was able to build on his
business to diversify into politics, and then eventually exploited synergies
between the two. Villar was implicated in a number of allegations of landgrabbing in Bulacan and Cavite and the use of pork barrel funds on roads serving
developments put up by his company, Vista Land and Lifescapes, and had been
the subject of a Senate ethics investigation on his involvement in the realignment
of the C-5 extension expressway project to benefit VLL developments.73 In the
16 years between winning his first election in 1992 and his 2008 presidential
bid, Villars net worth grew 13 times its original size.74
The creative destruction of Filipino capitalists

Not all of the established real estate companies have benefited from this
boomand it is crucial to ask why. Among the old guard, Ayala Land, Vista
Land and Lifescapes, and to a certain extent Filinvest, have fared much better
than companies such as Fil-Estate, Sta. Lucia, and New San Jose Builders.
Historically, real estate has proven itself as the most resilient moneymaking
machine in the country. Owing to the high and relatively secure returns, urban
land speculation has long been a favored accumulation strategy of both the
53
elites and middle classes.75 Between 1975 and 1991, urban land appreciated
at a rate of 2.5 to 3.65 times faster than the GDP growth rate;76 in 1991, a few
elite families owned 44 percent of all urban land in Metro Manila.77 Almost
all fractions of domestic capital have, to varying extents, been investments in
land speculation.78 Yet there is qualitative difference between family-owned
estates held as idle speculative assets and land for property development,
as demonstrated in the rivalry between SM and Ayala conglomerates over
land owned by the Ortigas clan. Whichever conglomerate ends up acquiring
the land, the true winner will be diversified capital, and the loser, landed,
speculative capital. That the large landowning families of Metro Manila, such
as the Ortigases, the Aranetas, and the Tuasons, are no longer major players in
property development indicates how the property development industry is not
about the scale of capital involved, but is a qualitatively different game.
The story of Ayala Land might provide some insight into how the game has
changed. Among the major capitalist clans of the Philippines, the Ayalas were
the first to discover that skyscrapers were much more valuable than cash crops
such as sugar. The family initially had built its wealth on an industry allied to cash
cropsliquor distillationand then forayed into insurance during the American
colonial period. After World War II, they began developing its landholdings in
Hacienda Makati in earnest; beginning with the development of Forbes Park
in 1948, they set about on a long-term development project which would
eventually lead to the development of the Makati Central Business District. By the
`60s the Ayalas would be the countrys largest real estate developer.79 For the
rest of the century, property development would remain the core business of the
family, even as they would diversify into businesses such as banking, automotive
sales, food processing, electronics manufacturing, and most recently, business
process outsourcing. The last decade also saw Ayala Land expanded from their
high-income mainstay business to middle- and even low-income housing; the
company launched a record number of units in 2010 and 2011.
This story illuminates two processes defining how Filipino capitalism and urban
property development have been changing. With some variations, the trajectory
other capitalists have taken in recent years mirrors that taken by the Ayalas.
Up to the mid-`90s, the core businesses of John Gokongwei, Jr., Andrew Tan,
and Lucio Tan were manufacturing industries closely allied to cash crops, such
54
Chapter 1
as sugar refining, food processing, liquor distillation, and cigarettes. Lucio Tan
had begun in tobacco and with substantial help from former President Marcos
acquired La Tondea in the late `80s; he aggressively diversified into services in
the `90s. The situation of the Gokongweis JG Summit is particularly illuminating
as, over the past decade, Robinsons Land was consistently the only profitable
arm of the conglomerate; JG Summit closed its textiles operation in 2006.80
Incidentally, the only conglomerates described by Yoshihara in his 1988 study
which thrive today are those involved in liquor and food processing, such as La
Tondea, San Miguel, and Universal Robina, or those which have operations in
the services industry, particularly retail and banking; without exception, all of
these conglomerates have diversified into real estate.
At the same time, the diversification of Ayala Land into multiple market
segments demonstrates a shift in the urban property sector itself. To take
advantage of the property boom, it is no longer sufficient to merely have a
large land property, or to have a history in real estate development; what has
become the overriding qualification is the ability to mobilize large amounts
of capital to meet the globalized sources of demand for different products
condominiums, IT offices, and export processing zonesversus those offered
by traditional developers. The cash-flush conglomerates of the Taipans have
had this ability; the previously-dominant developers did not.
Neil Brenner and Nik Theodore have argued that neoliberal reform must be
understood as the outcome of a dialectical process of the neoliberal project
with legacies of inherited institutional frameworks, policy regimes, regulatory
practices, and political struggles.81 They never arrived at an ideologicallypure form of neoliberal practice, but rather at path-dependent and locallyspecific reconfiguration of interests and institutions, a creative destruction
that involves the (partial) destruction of extant institutional arrangements
and political compromises through market-oriented reform initiatives; and the
(tendential) creation of a new infrastructure for market-oriented economic
growth, commoditization, and the rule of capital.
This process is revealed in whats common and different in the old and the
new economy. Common in the two is the use of land as source of wealth; the
difference is that land is no longer base for rural, cash crop-oriented economy,
55
but is being used for urban development. Urban development is itself being
reconfiguredwhile it remains a lucrative investment, profits from it are now
realized through its active circulation as capital, as opposed to speculation in
idle assets. What is most critical in understanding Filipino capitalism in the 21st
century is not that a number of prominent names and families have retained
their wealth and dominance over the Philippine economy, but that while they
may be the same people who come from the same families, they now belong
to an altogether different fraction of capital. These changes demonstrate a
need to shift the discussion from who are the Filipino capitaliststheir racial
backgrounds, how they lead their lives, who their kids marry, and all such other
lifestyle section prattleto what kind are they. From some angles, they may
resemble their comprador forebears, in that they accrue profits from globalized
(ne foreign) sources of demand, and can become immensely wealthy without
improving the lives of the rest of Filipinos. But in contrast to the compradors,
21st century Filipino capitalists, getting fuel from remittances and foreign
investments, have been accumulating wealth that has been transforming them
into a transnational class.
The question now is if this mode of capitalist growth can translate into broaderbased gains, as seen in the rest of East Asia. This leads to one final aspect of
the Filipino capitalists creative destruction. In a manner similar to the keiretsu
of Japan and the chaebol of South Korea, a national species of transnational
conglomerates is being formed in the Philippines. However, in contrast to their
East Asian counterparts, Filipino capitalists are becoming transnational without
becoming substantively industrial; without neither a commitment to help
the state in its developmental project nor a Fordist incentive to create strong
domestic market and a partnership with labor. If they can profit now without
having to ensure the improvement of the lives of Filipinos, there is no reason to
believe that they will in the future.
56
Chapter 1
Table 1.
Major land privatizations and public-private partnerships
in Metro Manila, 1995 to present
Location
Year
privatized
Size
(ha.)
Winning bidder
Winning bid
Camp Bago
Bantay82
2004
Bellevue (SM
Investments Corp.)
PhP695 million
Vetronix83
2004
6.68
Megaworld
PhP286 million
Expanded Delta
Lot, Bonifacio
Global City84
2008
1.2
Net Group of
Carlos Rufino and
Jacques Dupasquier
PhP2.032 billion
FTI Complex85
2012
74
Ayala Land
PhP24.33 billion
Metro Pacific
PhP39 billion for a 55% stake in

a joint venture with the Bases
Conversion and Development
Authority. Eventually sold to
Ayala Land and the Camposes
Evergreen in 2003 for US$90
million.
Megaworld
PhP624 million advanced for

replication of Philippine Air Force
facilities. PhP503.9 million in
revenues remitted to BCDA from
2003 to 2009.
Outright sales
Joint ventures
Fort Bonifacio/
Bonifacio Global
City86
Villamor/
Newport City87
1995
2003
150
25
McKinley Hill
2003
50
Megaworld
PhP942 million advanced;

guaranteed minimum revenue
share for the BCDA of PhP1.772
billion yearly for 15 years.
North
Bonifacio89
2009
8.38
Megaworld
PhP3.151 billion; PhP15.6 billion in

investments by Megaworld
88
North Triangle/
QC Central
Business
District/Vertis
North90
JUSMAG, Fort
Bonifacio91
2009
2010
29.1
34.5
Ayala Land
Megaworld
NHA contributed the property,

valued at PhP6 billion, and
expects a return of PhP12 billion
in the lifetime of the project.
PhP1.5 billion; guaranteed revenue
share of PhP873.4 million yearly
for 23 years; PhP700 million for
replication of affected military
housing.
57
Table 2.
Leasable retail floor area and revenues for retail rental
for the three major mall operators, 2000 and 2010
Estimated retail gross floor area
in NCR (square meters)
Revenues from retail rental

(thousand pesos)
2000
2010
2000
Ayala Land
637,435
808,314
2,000,000
4,600,000
Robinsons Land93
393,000
723,000
1,280,000
5,739,180
SM Prime94
1,589,556
2,758,064
4,854,510
19,992,949
Total
2,619,991
4,289,378
8,134,510
30,332,129
92
2010
Table 3.
Property development interests of the richest Filipinos
Rank, Associated real estate
201295 companies96
Began
operations
Henry Sy and family
SM Development Corp.97
SM Prime Holdings
Belle Corp.
200398
1985
1989
Lucio Tan and family
Eton Properties Philippines, Inc.
200799
Enrique Razon, Jr.
Bloomberry Resorts and Hotels, Inc.
2012
John Gokongwei, Jr. and family
Robinsons Land Corp.
1980
David Consunji and family
DMCI Homes
1999
Andrew Tan
Megaworld Corporation
Empire East Land Inc.
Global-Estate Resorts, Inc.100
1989
1948
2011
Jaime Zobel de Ayala and family
Ayala Land, Inc.
George Ty and family
Federal Land, Inc.
Roberto Ongpin
Alphaland Corp.
2007
Eduardo Cojuangco
10
San Miguel Properties102
1990
Tony Tan Caktiong and family
12
DoubleDragon Properties Corp.103
2012
Jon Ramon Aboitiz and family
16
AboitizLand, Inc.
1993
101
Andrea Gotianun and family
17
Filinvest Land, inc.
Manuel Villar
18
Vista Land and Lifescapes, inc.
1972
1967
1975104
Beatrice Campos and family
19
Greenfield Development Corp.
1961
Mariano Tan, Jr.
22
Greenfield Development Corp.
1961
Enrique Aboitiz and family
23
AboitizLand, Inc.
1993
Eric Recto
24
Alphaland Corp.
2007
Jose Antonio
25
Century Properties Group, Inc.
1986
58
Chapter 1
Figure 1.
The rapid growth of property development
as an accumulation strategy. Share of property development
in selected conglomerates net incomes from 2000-2011105
SM Investments Corporation
Ayala Corporation
59
Alliance Global, Inc.
JG Summit Holdings, Inc.
DMCI Holdings, Inc.
60
Chapter 1
Notes
1
Data on the richest Filipinos derived from Doebele, J., Vorasarun, C., Ramakrishnan, J., & Nam, S. (2006,
December 25). Philippines 40 richest. Forbes. Retrieved 3 May 2013, from http://www.forbes.com/
global/2006/1225/039.html; & Nam, S. (2010, July 7). Special report: the Philippines wealthiest. Forbes.
Retrieved 3 May 2013, from http://www.forbes.com/lists/2010/86/philippines-10_The-Philippines-40Richest_Networth.html. Data on the Philippine economy derived from The World Bank (2012). World
development indicators and Global development finance. World DataBank. Retrieved 20 February 2013, from
http://databank.worldbank.org/ddp/home.do
2 Sayson, I.C. (2012, August 2). Billionaire Sy plans $1.5 Billion mall expansion: Southeast Asia. Bloomberg.
Retrieved 19 February 2013 from, http://www.bloomberg.com/news/2012-08-01/billionaire-sy-plans-1-5billion-mall-expansion-southeast-asia.html
3 Dumlao, D.C. (2012, April 19). URC to open biofuel plant in PH, factory in Myanmar. Philippine Daily Inquirer.
Retrieved 19 February 2013 from, http://business.inquirer.net/54581/urc-to-open-biofuel-plant-in-ph-factoryin-Myanmar
4 De la Fuente, F.G. (2012, May 29). Beverage bigwigs keen to set up more factories. Business World. Retrieved
19 February 2013 from, http://www.bworldonline.com/con10t.php?section=Corporate&title=Beveragebigwigs-keen-to-set-up-more-factories-&id=52563
5 GDP data drawn from The World Bank. (2012). World development indicators. World DataBank. Exports data
drawn from the National Statistics Office (1997-2010). Philippine Statistical Yearbook.
6 Data sourced from The World Bank. (2012). Global economic monitor. World DataBank. Retrieved 20
February 2013, from http://databank.worldbank.org/ddp/home.do
7 Larkin, J.A. (1993). Sugar and the origins of modern Philippine society. Berkeley: University of California Press.
8 Borras, S. (2001). State-society relations in land reform implementation in the Philippines. Development and
Change, 32, 545-575; Kelly, P. (2003). Urbanization and the politics of land in the Manila region. The Annals
of the American Academy of Political and Social Science, 170-187.
9 Bernabe, R. (2007). Potential impact on Philippine agriculture: bilateral and regional free trade agreements. Rural
Development Review, 1(2).
10 Data sourced from The World Bank. (2012). World development indicators and Global development finance.
World DataBank. Retrieved 20 February 2013, from http://databank.worldbank.org/ddp/home.do
11 Bernabe, R. (2007). Potential impact on Philippine agriculture: bilateral and regional free trade agreements. Rural
Development Review, 1(2).
12 Borras, S. (2001). State-society relations in land reform implementation in the Philippines. Development and
Change, 32, 545-575.
13 Data drawn from National Statistics Office (1977-2010).
14 For an account of the dominant players in Philippine Ersatz capitalism in the early 1980s, see appendices
in Yoshihara, K. (1988). The rise of Ersatz capitalism in South-East Asia. Quezon City: Ateneo de Manila
University Press.
15 GM withdrew from the Philippine market in 1985, while Delta Motors closed in 1982; see Yoshihara, K. (1988).
The rise of Ersatz capitalism in South-East Asia. Quezon City: Ateneo de Manila University Press, 162; 191.
16 Ofreneo, R. (2006). Development choices for Philippine textiles and garments in the post-MFA era. Journal of
Contemporary Asia, 39(4), 543-561.
17 Bello, W., Kinley, D., & Elinson, E. (1982). Development debacle: the World Bank in the Philippines. San
Francisco: Institute for Food and Development Policy and the Philippine Solidarity Network, 170.
18 Bello, W., Malig, M.M., Docena, H. & De Guzman, M. (2004). The anti-development state: the political
economy of permanent crisis in the Philippines. Quezon City: University of the Philippines Press, 115.
19 Goodyear Corporate Website. (n.d.). Goodyear to close Philippines tire plant. Good Year News Releases.
Retrieved 18 February 2013 from, http://www.goodyear.com/cfmx/web/corporate/media/news/story.
cfm?a_id=20
20 Cahiles-Magkilat, B. (2011, November 17). GSPI promises $1-billion new capital but BoI is wary. Manila
Bulletin. Retrieved 18 February 2013, from http://mb.com.ph/node/341724/g; Rimando, L. (2012, May 18).
61
Philippine loses arbitration case vs Indian-run steel firm. Rappler. Retrieved 18 February 2013, from http://
www.rappler.com/business/5579-philippines-loses-arbitration-case-vs-indian-run-steel-firm
economy of permanent crisis in the Philippines. Quezon City: University of the Philippines Press, 19-20.
22 Kelly, P.F. (2000). Landscapes of globalization: human geographies of economic change in the Philippines.
London: Routledge, 54; McKay, S.C. (2006). Satanic mills or silicon islands? the politics of high-tech production
in the Philippines. Ithaca: Cornell University Press, 48-50.
23 Rivera, T. (1994). Landlords and capitalists: class, family, and state in Philippine manufacturing. Quezon City:
University of the Philippines Press, 50-53.
24 Yoshihara, K. (1988). The rise of Ersatz capitalism in South-East Asia. Quezon City: Ateneo de Manila
University Press.
25 Robinson, R., Beeson, M., Jayasuriya, K., and Kim, H., eds. (2000). Politics and markets in the wake of the Asian
crisis. London: Routledge: 172-261.
26 Bello, W. (1999, November 8). Is the structural adjustment approach really and truly dead? Business World.
Retrieved 17 February 2013, from http://www.tni.org/article/structural-adjustment-approach-really-andtrully-dead
28 Bases Conversion and Development Authority. (2010). Annual report 2010: setting new goals, charting new
directions, 33. Retrieved 18 February 2013, from http://www.bcda.gov.ph/file_attachments/0000/5226/
BCDA_AR2010_FINAL.pdf
29 Bowen, J. T. & Leinbach, T. R. (1995). The state and liberalization: the Airline industry in the East Asian NICs.
Annals of the Association of American Geographers, 85(3), 468-493.
30 Camus, M.R. (2012, August 30). Ayala overbid on FTI not so drastic. Business Mirror.
32 McKay, S.C. (2006). Satanic mills or silicon islands? the politics of high-tech production in the Philippines. Ithaca:
Cornell University Press, 150-154.
33 Bangko Sentral ng Pilipinas. (2010). Results of the 2010 survey of information technology-business process
outsourcing services. BSP Publications. Retrieved 28 February 2013, from http://www.bsp.gov.ph/downloads/
Publications/2012/ICT_2010.pdf
34 National Statistics Office (1977-2010).
Cornell University Press, 56.
36 ABS-CBN. (2012, April 6). IT-BPO revenues hit $10.1 billion in 2010. ABS-CBN News. Retrieved 28 February
2013, from http://www.abs-cbnnews.com/business/04/06/12/it-bpo-revenues-hit-101-billion-2010.
37 Bangko Sentral ng Pilpinas. (n.d.). Foreign-to-total equity ratio by IT-BPO Category, 2005-2009. Retrieved 28
February 2013, from http://www.bsp.gov.ph/statistics/keystat/ict/itbpo_3.2.htm
38 National Statistics Office (2009-2010). Philippine Statistical Yearbook. Quezon City: National Statistics Office.
39 Based on data from Bangko Sentral ng Pilipinas. (n.d.). Economic and financial statistics. Retrieved 29 February
2013, from http://www.bsp.gov.ph/statistics/efs_ext3.asp; and National Statistics Office (2000-2010).
Philippine Statistical Yearbook. Quezon City: National Statistics Office.
40 Data from the National Statistical Coordination Board (various years). National Accounts of the Philippines.
41 Banzon-Bautista, C. (1989). The Saudi connection: agrarian change in a Pampangan village, 1977-1984.
Agrarian Transformations: Local Processes and the State in Southeast Asia. Berkeley: University of California
Press, 144-158; Bangko Sentral ng Pilipinas. (n.d.). Consumer expectations survey, 2007-2013. Retrieved 28
February 2013, from http://www.bsp.gov.ph/publications/regular_consumer.asp
42 National Statistics Office. (2012). 2011 Survey on overseas Filipinos. Retrieved 28 February 2013, from http://
www.census.gov.ph/content/2011-survey-overseas-filipinos-sof
43 Institute for Migration and Development Issues. (2008). Table 62: Regional data of families receiving cash, gifts
and other forms of assistance from abroad Family Income and Expenditures Survey (FIES). Philippine Migration
and Development Statistical Almanac. Retrieved 14 May 2013 from, http://almanac.ofwphilanthropy.org/
index.php?option=com_con10t&task=blogcategory&id=104&Itemid=122
62
Chapter 1
Cornell University Press, 146-165.
45 Based on data derived from The World Bank. (2012). World development indicators and Global Development
Finance. World DataBank. Retrieved 20 February 2013, from http://databank.worldbank.org/ddp/home.do;
The other nine countries are Djibouti, Ukraine, Iraq, Bolivia, Armenia, Congo, El Salvador, Paraguay, and Cape
Verde.
46 These estimates are in constant 1985 pesos, and were derived from data on the Ownership of Dwellings and
Real Estate (ODRE) industry group in the quarterly National Accounts of the Philippines reports published by
the National Statistical Coordination Board. Ownership of dwellings refers to the imputed rents of owneroccupied dwelling units, while real estate refers to commissions from real estate sales and mortgages, and
receipts from renting and leasing of residential and commercial space. The estimate for 2002 is 17 percent
of the published value for gross value added by ODRE, which is the approximate share of real estate in the
ODRE industry group in 2003, while the estimate for 2010 is 31 percent of the published value for ODRE
GVA, which is the share of real estate in the ODRE industry group for the 4th quarter of 2010. Sourced
from National Statistical Coordinating Board (2003), Third Quarter 2003 Gross National Product and
Gross Domestic Product by Industrial Origin, and (2010), Fourth Quarter 2010 Gross National Product
and Gross Domestic Product by Industrial Origin, National Accounts of the Philippines, Retrieved 4 May
2013, from http://www.nscb.gov.ph/sna/2003/3qtr-2003/2003ser3.asp & http://www.nscb.gov.ph/
sna/2010/4th2010/2010ser4.asp
47 National Statistical Coordinating Board. (2006). 3rd Quarter 2006: Gross national product & gross domestic
product by industrial origin. National Accounts of the Philippines. Retrieved 4 May 2013, from http://www.
nscb.gov.ph/sna/2006/3rdQ2006/2006ser3.asp
48 Lucas, D. (2007, May 20). OFW remittances fueling growth in real estate. Philippine Daily Inquirer. Retrieved
4 May 2013, from http://globalnation.inquirer.net/news/breakingnews/view/20070520-67002/OFW_
remittances_fueling_growth_in_real_estate.; Balea, J. (2009, September 29). RP property sector on way to
recovery. ABS-CBN News. Retrieved 4 May 2013, from http://www.abs-cbnnews.com/business/09/27/09/
rp-property-sector-way-recovery
49 Data on remittances from Bangko Sentral ng Pilipinas. (n.d.) Economic and financial statistics. Retrieved 29
February 2013, from http://www.bsp.gov.ph/statistics/efs_ext3.asp
50 Balea, J. (2009, September 29). RP property sector on way to recovery. ABS-CBN News, 29 September 2009.
Retrieved 4 May 2013, from http://www.abs-cbnnews.com/business/09/27/09/rp-property-sector-wayrecovery
51 Lucas, D.L. (2008, April 11). OFWs boost Robinsons land housing sales. Philippine Daily Inquirer. Retrieved
4 May 2013, from http://business.inquirer.net/money/topstories/view/20080411-129653/OFWs-boostRobinsons-Land-housing-sales.
52 Montealegre, K.A.M. (2011, November 1). ALI says project launches on track with goal. Manila Times.
53 Data sourced from Housing and Land Use Regulatory Board. (n.d.) License to Sell Statistics. Retrieved 13 May
2013, from http://hlurb.gov.ph/license-to-sell-statistics/
54 Data derived from National Statistics Office. (2012). Index of construction statistics. Retrieved 13 May 2013,
from http://www.census.gov.ph/old/data/sectordata/databldgperm.html
55 Colliers International. (2011). Philippine real estate market report: Q1 201,1 Quarterly Update, 4.
56 Cahiles-Magkilat, B. (2012). Local office space shortage forecast. Manila Bulletin, 29 May 2012. Retrieved 14
February 2013, from http://www.mb.com.ph/node/360753/local-office-.
57 Colliers International. (2011, June 21). Philippine real estate market report: Q1 2011 Quarterly Update, 4;
Quintos, L. (2012). BPO boosts office space pre-leasing. Manila Times. Retrieved 14 February 2013, from http://
www.manilatimes.net/index.php/business/top-business-news/25247-bpo-boosts-office-space-pre-leasing
58 Data derived from National Statistics Office, 2012.
59 Colliers International. (2010). The knowledge report: property market overview, 2nd Quarter, 10.
60 For a more substantial discussion of this theme, see Shatkin, G. (2005). Colonial capital, modernist capital,
global capital: the changing political symbolism of urban space in Metro Manila, the Philippines. Pacific Affairs,
78(4), 577-600.
61 Kelly, P. (2003). Urbanization and the politics of land in the Manila region. The Annals of the American
Academy of Political and Social Science, 175.
63
62 Provincial Government of Cavite. (2009). Socio-Economic and Physical Profile 2009, 106.
63 Quezon City Government. (2002). Quezon City Comprehensive Land Use Plan, 2(2).
64 Data sourced from SM Development Corporation (2011). SM Development Corporation Company
Presentation, April 2011; SM Development Corporation (2001-2011). SM Development Corporation Annual
Report.
65 SyCipGorresVelayo& Co. (2012). Independent Auditors Report, SM Development Corporation, 35.
66 Harvey, D. (2005). A brief history of neoliberalism. Oxford: Oxford University Press, 2.
67 For a discussion of neo-liberalism in Korea, see Pirie, I. (2006). Economic crisis and the construction of a neoliberal regulatory regime in Korea. Competition and Change, 10(1), 49-71.
68 Harvey, D. (2005). A brief history of neoliberalism. Oxford: Oxford University Press, 19-36.
69 Coronel, S. (2003). Open for business. iMagazine, 9(3). Retrieved 14 May 2013, from http://i-site.ph/
Analysis/business.html
70 Kelly, P. (2003). Urbanization and the politics of land in the Manila region. The Annals of the American
Academy of Political and Social Science, 170-187.
71 Coronel, S. (2003). Open for Business. iMagazine, 9(3). Retrieved 14 May 2013, from http://i-site.ph/
Analysis/business.html
Cornell University Press, 143.
73 Torres, T. (2011, March 14). SC gives green light for Senate to probe Villar on C-5 road allegation. Philippine
Daily Inquirer. Retrieved 10 May 2013, from http://newsinfo.inquirer.net/inquirerheadlines/nation/
view/20110314-325418/SC-gives-green-light-for-Senate-to-probe-Villar-on-C-5-road-allegation
74 Collas-Monsod, S. (2010, April 9). Who junked compassion and decency? Philippine Daily Inquirer. Retrieved
10 May 2013, from http://opinion.inquirer.net/inquireropinion/columns/view/20100409-263313/Whojunked-compassion-and-decency
75 Goss, J. (1998). The struggle for the right to the city in Metro Manila. Philippine Sociological Review, 46(3-4),
88-120.
76 Banzon-Bautista, M.C.R. (1998, July-December). Culture and urbanization: the Philippine Case. Philippine
Sociological Review, 46(3-4), 21.
77 Berner, E. (1997). Defending a place in the City: localities and the struggle for urban land in Metro Manila.
Quezon City: Ateneo de Manila University Press, 21.
78 Krinks, P. (2002). The economy of the Philippines: elites, inequalities and economic restructuring. New
York: Routledge, 199-201; Rivera, T. C. (1994). Landlords and capitalists: class, family, and state in Philippine
manufacturing. Quezon City: University of the Philippines Press, 33.
79 Batalla, E.V. (1999). Zaibatsu Development in the Philippines: the Ayala Model. Southeast Asian Studies, 37(1),
18-49.
80 JG Summit Holdings, Inc. (2007). 2007 Annual Report, 122.
81 Brenner, N. and Theodore, N. (2002). Cities and the geographies of actually existing neoliberalism. In Brenner,
N. and Theodore, N. (eds.) Spaces of neoliberalism: urban restructuring in North America and Western Europe.
Oxford: Blackwell.
82 Gonzales, I.C. C. and Visto, C.S. (2004, February 19). SM unit buys BagoBantay property for P695 million.
Business World.
83 Gonzales, I.C. C. and Visto, C.S. (2004, February 19). SM unit buys BagoBantay property for P695 million.
Business World.
84 Osorio, M.E. P. (2008, April 29). Rufino group bags primest lot in Global City for P2.032B. Philippine Star.
85 Camus, M.R. (2012, August 30). Ayala overbid on FTI not so drastic. Business Mirror.
86 Lorenzo, A.B. L. (2007, July 26). Metropac on Fort Bonifacio: biting off more than it could chew. Business
World 2007 Anniversary Report.
87 Bases Conversion and Development Authority (2010). Annual report 2010: setting new goals, charting new
directions. Retrieved 13 May 2013, from http://www.bcda.gov.ph/file_attachments/0000/5226/BCDA_
AR2010_FINAL.pdf
AR2010_FINAL.pdf
64
Chapter 1
89 Bases Conversion and Development Authority (2009). Annual report 2009: a catalyst for transformation.
Retrieved 13 May 2013, from http://www.bcda.gov.ph/file_attachments/0000/2647/BCDA_
AR2009_112210.pdf
90 Dumlao, D. (2012, July 5). Ayala Land unveils P65-B business district project in QC. Philippine Daily Inquirer.
Retrieved 13 May 2013, from http://business.inquirer.net/69289/ayala-land-unveils-p65-b-business-districtproject-in-qc.
AR2010_FINAL.pdf
92 Gross floor area figures are estimates derived from Ayala Land, Inc. (2005). 2004 Annual Report, 16. Retrieved
13 May 2013, from http://ir.ayalaland.com.ph/uploads/files/ALI_Annual_Report_2004.pdf; Ayala Land, Inc.
(2011). Ayala Land, Inc. 2010 Integrated Annual and Sustainability Report, 3. Retrieved 13 May 2013, from
http://www.ayala.com.ph/CSR/ali_2010_annual_report.pdf. Ayala Land reports gross leasable areas for all its
commercial centers, and the estimate for NCR was derived by subtracting gross floor areas of Ayala Center
Cebu (119,565 sq.m. for 2000, 128,686 sq.m. for 2010) and Marquee Mall in Pampanga (70,000 sq.m. for
2010) from this reported figure. Revenue figures were reported in 2004, Ayala Land, Inc. (2005). 2004 Annual
Report, 16 and 2010, and Ayala Land, Inc. (2011). Ayala Land, Inc. 2010 Integrated Annual and Sustainability
Report, 34. Retrieved 13 May 2013, from http://www.ayala.com.ph/CSR/ali_2010_annual_report.pdf
93 Data on gross floor area were derived from Robinsons Land Corporation and Subsidiaries (2006). SEC
Form 17-A Annual Report Pursuant to Section 17 of the Securities Regulation code and Section 141 of the
Corporation code of the Philippines for the Fiscal Year Ended September 30, 2005, 2, and Robinsons Land
Corporation and Subsidiaries (2011). SEC Form 17-A Annual Report Pursuant to Section 17 of the Securities
Regulation code and Section 141 of the Corporation code of the Philippines for the Fiscal Year Ended
September 30, 2010, 3. Data on revenues sourced from JG Summit Holdings, Inc. (2002). JG Summit Holdings,
Inc. 2001 Annual Report, 67; Robinsons Land Corporation (2011). Robinsons Land Corporation 2010 Annual
Report, 34.
94 Data derived from SM Prime Holdings, Inc. (2003). Continuing the uptrend: SM Prime Holdings, Inc. 2002
Annual Report, 14-16, 25; SM Prime Holdings, Inc. (2011). SM Prime Holdings, Inc. Annual Report 2010,
16, 48.
95 Rankings derived from Forbes. (2012). Philippines 40 Richest List. Retrieved 17 May 2013, from http://www.
forbes.com/philippines-billionaires/list/.
96 Firms operating in distinctly different segments, and/or are not structured as subsidiaries of another property
development firm within the conglomerate, are listed; subsidiary brands, e.g. Alveo, Avida, and Amaia for
Ayala Land, Inc., are not listed as separate entities.
97 SM Development Corporation was consolidated with SM Prime, SM Investment Corporations mall
development arm, in May 2013.
98 Date of first construction. SM Development itself was acquired, as Ayala Fund Inc., in 1986, and renamed SM
Fund Inc. It was renamed SMDC in May 1996.
99 Date of first construction in the Philippines. Lucio Tans Eton Properties was first established in Hong Kong in
the `80s, where its business is worth US$ 2.6 billion. http://business.inquirer.net/75247/biz-buzz-buying-airrights
100 Formerly Fil-Estate Land, Incs., acquired by the Alliance Global Group in 2011. See Dumlao, D. (2011, January
12). Alliance Global takes 60% control of Fil-Estate Land. Philippine Daily Inquirer. Retrieved 17 May 2013
from http://business.inquirer.net/money/breakingnews/view/20110112-314057/Alliance-Global-takes-60control-of-Fil-Estate-land
101 Joint venture with Ashmore Group, a London-based private equity fund, and Ongpins RVO Capital Ventures
Group.
102 Through San Miguel Corporation, although Mr. Cojuangco divested of his stake in San Miguel Corporation in
mid-2012.
103 Founded as a joint venture with Edgar Sia II of MangInasal.
104 As Camella Homes. Vista Land and Lifescapes incorporated 2006.
105 Data sourced from the annual reports of these conglomerates from 2000 to 2011.
65
C h apter
Industrial Decay:
The Hollowing-Out of
Manufacturing and Employment
Opposite the growth that has allowed Filipino capitalists to accumulate vast
wealth is industrial sector decline and hollowing-out.
In the period 2000-2010, while 7,726 new firms emerged from real estate,
renting, and business activities, and 425,101 new jobs were generated, firms in
the formal sector incurred net losses and jobs were lost.1 Further back in the
`50s, the Philippines was expected to be one of most-likely-to-succeed Asian
nations. Industrial growth indeed peaked in the `70s, averaging 7.8 percent2
throughout the decade. Not long after, however, early industrialization attempts
were abandoned and infant industry promotion stalled. This was immediately
replaced by structural adjustment in the `80s, which would have tragic effects
on the countrys industrial sector; its poorest average growth performance was
0.5 percent in the period 1981-90.3
The first decade of the millennium saw a remarkable and definitive shift in
Philippine economic structure. Big capital adjusted and diversified from
agriculture and manufacturing into services and nontradables, particularly
utilities, property, retail trade, and infrastructure. The previous chapter shows
the tremendous gains this shift has earned for big capital. This chapter will
discuss what was lost, and what this loss means for the country.
Lacking policy support and shunned by capital, manufacturing continues to
shrink while the economy has increasingly informalized. What is being touted
as modest growth is characterized by low job generation, highly-skewed
distribution, and vulnerability to financial shocks. Issues of structural infirmities
and appropriate industrial deepening are ignored.
67
The premise of restructuring

Immediately after World War II, the Philippines had embarked on importsubstitution industrialization, which was slowly abandoned after barely one
and a half decades. While vestiges of old protection remained, there was no
real attempt to promote infant industry, even as export-orientation became a
clear project throughout the late `60s and the `70s. Philippine industrialization
strategy consisted of tentative and uneven set of policies, which ushered the
primacy of liberalization in the development discourse.4 Past protectionist
biases5 under an inward looking strategy of industrialization6 were tagged as
the root causes of the long-term sluggishness of the economy.7
The narrative that the Philippines squandered its development potential took
root. Government itself summed up the essence of the countrys unilateral
Tariff Reform Program that commenced in 1981, thus:
In the `70s, industrial and trade policies were biased towards importsubstituting activities which resulted, among others, in the overprotection
of certain local, domestic market-oriented industries. Said excessive
protection, in turn, led to market distortions that discriminated against
investments in agriculture and exports and encouraged the production
of finished consumer goods over intermediate and capital goods.
The initiative to reform the tariff system came from the recognition
that over two decades of protection through high tariffs have proved
counter-productive rather than supportive of the countrys development
objectives. Realizing the need for a change in policy to remedy the
situation, government official policy shifted from emphasis on importsubstitution to promotion of exports. 8
The analysis found widespread support from members of the economics
profession who offered additional arguments in support of policy reform.
According to them, it was selective export promotion favoring large enterprises
and the adoption of capital intensive technologies that aggravated the bias
against agriculture and labor-intensive industries, which then resulted in high
68
Chapter 2
S t a t e o f Fr a g m e n t a t i o n : T he P hi l ippi n es i n T r a n sitio n
tariffs.9 They maintained that these twin policies discouraged backward linkages,
penalized downstream industries, and encouraged the use of imported inputs.10
The egalitarian undertones of the critique were alluring. This argument was that
protection rewarded a narrow segment of consumer goods manufacturers,
but discriminated against exporters and producers of capital and intermediate
products.11 This linked directly to two other weaknessesthe regional
concentration of industries and the underdevelopment of small- and mediumscale enterprises.12 Metro Manila became the preferred location because of
its proximity to supply of imported inputs and the availability of more favorable
tax and credit concessions. In contrast, small producers did not enjoy the same
privileges captured by big businesses, and they had limited access to technical
assistance and technology transfers afforded to large industry through licensing
agreements and foreign equity participation.
Another set of critique focused on the least defensible and much-censured
political-economy frameworkthe capture of the state by particularistic
elite interests. The dominant perspective on the Philippine state (covering an
unbroken period from the colonial era to post-Martial Law) emphasized the
significant role of national oligarchy in the systematic plunder of the economy.13
Post-war import substitution was designed to enable the elites to diversify
their stakes in the economy14. Contented to be appendages of multinational
corporations and by the protection high tariffs provided, the elite simply
concentrated on the export of raw agriculture.15
Viewed as an instrument of elite dominance rather than as an agency
representing broad national development interest, the state suffered low
credibility. It didnt help that corruption and wasteful showcase projects bled
the national coffers and led to massive foreign debt obligations. Little wonder
that many saw a captured government and its protectionist interventions as the
worst possible policy combination.16
Since the main strands of criticism had revolved around state capture and the
interventionist policies that discriminated against agriculture, small manufactures,
and labor, the dominant response was to open up the market. For the most
part, it was also an ideological response.
Industrial Decay: The Hollowing-Out of Manufacturing and Employment
69
Belief in the market, on the one hand, stressed that industrial policies may
be unnecessary, as structural transformation of a developing country can
be expected to occur naturally, i.e. even without the benefit of industrial
promotion policies.17 Disdain for government, on the other, led to a judgment
that government could not be allowed to pick winners by favoring specific
sectors or firms, and that it should be concerned only with general support like
infrastructure, research and development, and education.
Specific reforms aimed at reducing governments role have been institutionalized
more systematically starting from the time of President Fidel V. Ramos. The
1992-1998 Medium Term Development Program expressly identified the
private sector as the engine of growth, and laid down the programs for the
restructuring of the bureaucracy, on top of the continuing program to open up
the economy and the privatization program.18
The domestic push to roll back state action coincided with a global project led by
the United States and the international financial institutions to re-subordinate
the South. This meant quashing emerging Southern development agenda to
increase political-economic activism of developing countries, while allowing a
dose of state-assisted capitalism.19 The debt crisis in the early `80s made it
easier for structural adjustment programs to be imposed on countries like the
Philippines that needed relief. The IFIs dictated the direction of reforms in the
Philippines.
The remarkable growth of the East Asian newly industrializing countries or
NICsin particular, South Korea and Taiwanwas misread as newly discovered
formula for economic development in the late twentieth century.20 Exportorientation, cheap labor, currency undervaluation, free markets, and minimum
state intervention became the key ingredients.21 Completely overlooked
was the historical use of state intervention through subsidy and protection to
achieve industrialization goals.22 SAPs, too, explicitly proscribed the use of
these interventionist instruments.
Against this backdrop, the stage was set for the policies for economic liberalization.
70
Chapter 2
Reorienting industry through policy reform

The most advanced and most consistently implemented reform agenda since
the `80s and over five post-Marcos administrations is economic liberalization,
which encompasses efforts to liberalize trade, privatize public assets and
sectors, and relax restrictions on foreign direct investment policies.
Trade liberalization
These trade reforms implemented since 1981 (see Table 1) have had three key
features: one, the biggest push to reform has been unilateral and consistent since
the `80s; two, these commitments have been sealed in international agreements,
going back on which would incur costs; and three, the government has been
aggressive and often liberalized beyond what international commitments required.
Still feeling the effects of the debt crisis, the Philippines had to go to the IFIs
for balance of payments and fiscal relief. The result was a couple of structural
adjustment program loans that implied several instalments of the Tariff Reform
Program. In the period 1981-85, TRP1 brought down all the tariff rates to
within the zero-to-50 percent range, cutting both the average tariff and the
variation in tariffs across industries. Future instalments of the TRP were done
through a series of Executive Orders. TRP2, implemented through EO 470,
brought down tariffs to within the three - 30 percent range. Tariffs on industrial
products were cut by TRP3, through EO 264, to further go down to range three
- 10 percent by year 2000. The same July 1995 EO dealt the largest overhaul
of the countrys tariff code,23 with rate reductions on 4,142 tariff lines in the
manufacturing sector, and a target of a uniform five percent tariff by 2004.
TRP4 started as early as 1998, but with the most modifications taking place
in 2001, mandating a band of zero - five percent range instead of the uniform
five percent tariffs. Only few sensitive agricultural products were exempted.
TRP affected manufactured goods the most, with tariff rates coming down to
almost zero in 15 years, between 1988 and 2003. Among the most aggressive
cuts were on: radio, television, and communication equipment, from 21.83
percent in 1988 to 0.09 percent in 2003 (or a 99.6 percent cut); paper and
71
paper products, from 34.5 percent to 3.6 percent (89.6 percent cut); textiles,
from 38.73 percent to 4.96 percent (87.2 percent cut); and footwear, from
36.21 percent to 5.45 percent (84.9 percent cut).24
The marked unilateral aggressiveness of the TRP was stalled in 2003 when
tariffs were either increased to a 5 - 15 percent range, affecting more than a
thousand product lines, or frozen at 2003 levels affecting even more product
lines.25 The re-calibration was done in response to pressure from domestic
industries, as well as an attempt to check further revenue losses.26
It was hardly the end of trade liberalization, though. Having abandoned
unilateral liberalization, the country turned to multilateral, regional, and bilateral
agreements to continue opening up.
The country joined the ASEAN Free Trade Agreement in 1993 and the World
Trade Organization in 1995. In 1996, EOs 288, 313, and 328 lifted quantitative
restrictions in favor of tariffs and set minimum access volumes for agricultural
imports, in compliance with the countrys commitments. With WTO rules as
basic framework, the Philippines often applied tariffs more generous than most
favored nation bound rates, and closer to AFTA rates, until the re-calibration
in 2003. Still, various trade and economic agreements were signed through
ASEAN and bilaterally resulted in further tariff reductions, though within the
framework of reciprocity. By 2012, the Philippines had specific commitments
to Korea, Japan (regional and bilateral), New Zealand, and India.
The sweeping reforms drastically brought down average nominal tariffs, cutting
in half `80s 42 percent to about 20 percent in 1985; rates further fell to a mere
sixth of its `80s level and to 7.12 percent in 2012. Retaining some sensitive
products, agriculture registered the highest average nominal tariff at 11.92
percent; mining, the lowest at 2.30 percent; manufacturing, 6.18 percent.27
Investment policy
In tandem were trade liberalization and the increased openness in investment
regime. Deemed as the most beneficial form of capital flows,28 foreign direct
investments became a major economic target. The strategy had been two72
Chapter 2
pronged: expansion of the areas open for foreign participation and updating of
policies to encourage export-oriented investments. (See Table 2)
To integrate and harmonize various investment policies, EO 226 (1987 and
amended in 1995) enacted the Omnibus Investment Code, created the Board
of Investment, and made available fiscal and non-fiscal incentives for domestic
and foreign investors. Republic Act 7042 or the Foreign Investment Act of 1991
allowed foreign equity participation of up to hundred percent in all areas, whether
catering to domestic or export markets, except those included in the Foreign
Investment Negative List. This was further refined by RA 8179, removing List C,
and allowing foreign participation in small- and medium-sized enterprises for a
minimum paid-in capital of US$200 million. In year 2000, RA 8762 or the Retail
Trade Liberalization Act opened up retail businesses to full ownership, subject
only to qualifications that included a minimum capital requirement of US$7.5
million; foreign companies were also allowed to engage in rice and corn trade.
At the same time, the financial sector was also liberalized. Following the easing
of restrictions on entry into domestic banking and branching in the early `90s,
RA 7721 liberalized the entry and scope of operations of foreign banks in
the country. The impact was immediate, from only four foreign banks prior to
RA 7721 to 18 branches and subsidiaries by early 1995.29 Rural banks were
also liberalized for foreign equity (RA 10754), and so was the operation of
investment houses (RA 8366).
For its proponents, trade liberalization did not proceed fast enough; they had
to push for second best scenario. While waiting for zero tariffs on imports,
appropriate policies were put in place to provide exporters with imported
inputs at almost free trade prices and to approximate for them the net effective
protection received by the import substituting industries.30 The earliest
implemented policy sought to utilize the bases vacated by the US military. The
Bases Conversion and Development Act (RA 7227, 1992) created free ports
out of these properties. RA 7844 (1994) mandated the formulation of an
export development plan and provided fiscal incentives to exporters, while
RA 7916 (1995) created special economic zones that would provide special
incentives to locators. Following these were laws that created other SEZs and
free ports (RA 7922, 7903, 9490 and 9782).
73
The passage of the Mining Act of 1995, which signalled openness, allowed
100 percent foreign ownership and up to 50 years lease. The Supreme Court,
in January 2004, declared the law unconstitutional, but reversed its decision in
December of same year.
Privatization
Completing the triad of major economic reforms was an ambitious privatization
program. At the height of Martial Law, President Ferdinand Marcos expanded
the states economic role by: expanding existing government-owned or
-controlled corporations; creating new enterprises ostensibly to support his
vision of New Society; and confiscating the commercial interests of his political
rivals.31 Government also absorbed the failing ventures of its cronies when
the country fell into recession in the period 1980-82. The economic fallout
and the governments weakened capacity to fend off structural adjustment,
notwithstanding, privatization was stalled until the last months of Marcosrule.
By the time Marcos fled the country, the government was left with 105 parent
GOCCs, 144 subsidiaries, and 18 subsidiaries of subsidiaries, plus an additional
60 acquired assets the new government sequestered from the deposed
presidents cronies.32
Under post-EDSA governments, privatization facilitated the re-entry of old
interests into some of the strategic assets, and later on, when the traded
sectors showed remarkable decline, the shift towards utilities and property
development. It did not help that in the clamor for reforms post-EDSA, which
centered on arguments for efficiency, equity, anti-corruption, fiscal recovery,
and belief in markets, none in the government was invested in claiming personal
stakes in the assets being auctioned off.
The key privatization policies implemented were determined and comprehensive,
initially covering non-performing assets and non-strategic proprietary interests,
then expanding to strategic industrial ventures and utilities (oil, water services,
electricity, telecommunications), and land. (See Table 3) Capping these off were
mechanisms for private participation in key infrastructure and development
areas, which would evolve from build-operate-transfer schemes to publicprivate partnerships. The government has privatized 480 assets by July 200133;
74
Chapter 2
29 more assets would be privatized after the Privatization and Management

Office took over, starting in 2001 until end-2012.34 Under the presidency
of Gloria Macapagal-Arroyo, the Electricity Power Industry Reform Act also
privatized NPCs generating or operating plants; 26 of these as of June 2010.35
Water service delivery also got introduced to privatization with the breaking up
of the MWSS into two areas that were bid out under long-term concessions to
private contractors.
The unravelling
In the third quarter of 2013, the Philippines registered a real GDP growth rate of
7.0 percent. This was significant because while there had been 58 consecutive
quarters of positive growth since 1999, there had only been 14 instances of
growth beyond seven percent. In this case, it was the fifth consecutive quarter
the seven-percent mark was breached in the Benigno S. Aquino III presidency,
the first time such a feat was achieved.36 Equally significant were the successive
upgrades given to the Philippines by credit rating agencies in the past three years.
But alongside these feats has been the decline of industry and manufacturing
industry. While trade performance has barely budged, FDIs have remained
stagnant, with economic activity shifting from manufacturing to services and
non-tradables, and the employment sector weakening. All these signifying
three decades of failure to generate expected outcomes from reforms.
Missed targets: poor trade performance, low investments

Undoubtedly, the Philippines has become more integrated to the global
economy, doubling its trade to GDP ratio from 1980 (52 percent) to 2000
(105 percent)37, which is hailed as success. Since 2000, however, it has been
on a continuous slide, indicative not just of actual trade capacity (which at
65 percent in 2012 was only a little more than a fifth from 32 years ago),
but also of the restructuring away from manufacturing that has ensued. The
other main trade indicators are: merchandise trade as a percent of GDP has
fluctuated very near the 1980 level (46.9 percent in 2012 vs 43.3 percent in
1980) and manufactures exports seemed to have peaked in 1999. Ravaged by
75
competition and marginalized by declining terms of trade, agricultural exports

are now at less than one percent of GDP. The new entrant is services trade,
which hovers within 12 - 13 percent of GDP.38
Not even economists claim that the suspension of TRP4 has been inimical
to trade could explain the devastation of the trade sector. Since it joined the
WTO, the Philippines has always registered lower trade restrictiveness both in
terms of MFN applied tariffs and market access, 3.7 percent and 2.77 percent
respectively, compared to ASEAN members taken collectively, 5.02 percent
and 4.36 percent, in 1995-2009. Yet it experienced less than three-fifths the
trade growth ASEAN did (4.33 percent vs 7.68 percent).39
Unable to graduate from primary products or hasten industrial innovation,
Philippine trade has always been in deficit. Average shortfalls hovered around
US$70-100 million in the `50s and `60s, and increased more than five-fold
(US$546 million) in the `70s.40 During liberalization period this ballooned to
billions of dollars representing significant percentages of GDP. From US$1.5
billion in 1980 (five percent of GDP), the deficit grew to US$2.6 billion (six
percent of GDP) in 1990, fluctuating in the 2000s (US$1.6 billion/two percent
of GDP in 2000; US$3.6 billion/two percent of GDP in 2010), and peaked
again at six percent of GDP and US$14.2 billion in 2012.41
Despite governments efforts, the country has also not been a favorite
destination of foreign investments. Reviews of SEZs and free ports have been
mixed in terms of the investments they have been able to attract, though they
claim to have gained some. The Subic Free Port, for instance, claims to have
attracted a total of US$8.8 billion between 1992 and 2012.42
Overall, from a net outflow of US$106 million in 1980, FDIs have grown to US$1.6
billion in 2010, representing less than one percent of GDP. In the past three years, a
modest spike in FDIs has been observed, peaking at US$2.8 billion or 1.12 percent
of GDP in 2012. The countrys performance, however, has paled in comparison
to its closest neighbors, which in nominal terms have received at least three times
(Vietnam, US$7.4 billion in 2011) to seven times (Indonesia, US$19.9 billion in
2012) as much FDI, representing at least twice (Indonesia, 2.3 percent in 2012) to
five times (Vietnam, six percent in 2011) as much as ratio of GDP.43
76
Chapter 2
Not only has the opening up in investment regimes failed to usher in sizeable
amounts of FDIs, it has also resulted in domestic investments downward shift.
Gross capital formation as percent of GDP is now a quarter less than its 1980
level (29.08 percent in 1980, 20.5 percent in 2010, and 21.5 percent in 2012).44
It is private participation in key infrastructure, amounting to US$54.3 billion
in the period 1990-2011, or two-thirds more than the total net FDI inflows
(US$32.3 billion) for the same period, that showed modest performance.
Almost a quarter of these investments (US$12.8 billion) were made in 1997
when investments in telecoms, transport, and water and sanitation were at their
highest. Other than this, and energys peak in 2009, private investments in
these sectors tapered off outside key moments, together averaging US$2.4
billion in the last decade. Even then, the contribution across the four sectors
varied, with energy consistently getting significant share, while water and
sanitation only had small additional investments in 2006 and 2009.45
The combination of poor trade performance and limited domestic and foreign
investments are now grave indicators that the reforms have not worked. Add
to this governments deliberate withdrawal from the economy, it was inevitable
that the countrys economic base would weaken and hollow-out.
Manufacturing decline
The Philippines manufacturing sector has underperformed compared to its
Asian neighbours. Philippine industrys peak, 7.8 percent average growth in the
`70s, was systematically torn down, achieving a mere 0.5 percent growth rate
in the `80s. Industrial value-added dwindled progressively from 39 percent of
GDP in 1980 to 32.7 percent in 2013. The manufacturing sector slid down
faster from 26 percent to 22.8 percent in the same period.46
The dip in the countrys industrial and manufacturing performance was in sharp
contrast to the increasing Asian shares in global manufacturing output since the
`70s. ASEAN neighbors showed marked improvement from the `70s to the
`90s, with Malaysian and Thai manufacturing shares to GDP increasing by 60
percent and 55 percent, respectively, and Indonesias more than doubling (120
percent increase).47
77
The Asian Development Bank attributes the countrys dismal performance to

the failure of the trade liberalization in the 1990s and even in the recent high
growth period.48 This has resulted in de-industrialization49 and continuous
decline in shares of manufacturing for more than two decades now.50 While
maturing economies are expected to experience de-industrialization and
growth in higher-end services share, the Philippines case is peculiar as it began
de-industrializing even before it could actually take off.
The performance of manufacturing has shown some variations across sectors
and product lines. Among the hardest hit by liberalization was textiles, which
together with garments had been considered as base industries contributing
substantially to both manufacturing output and employment in the `60s and
the `70s. From its heyday during the import substitution period to the early
`90s, textile experienced sustained output reduction and factory closures.51 In
the more dynamic garments sector, the number of establishments more than
tripled between 1983 and 1988, until its share in the number of manufacturing
firms settled at 13 to 15 percent of total.52
The electronics sector benefited from the open investments regime, taking full
advantage of the EPZ and SEZ setup. It was also regarded as one of the fastest
growing export industries, with revenues growing twenty-fold from US$1.5
billion in 1990 to US$31 billion in 2010; its exports accounted for 66 percent
of the total in the period 2000-2007.53 The success of the sector owed much
to the relocation of Japanese and Asian NICs affiliates in the region54, the same
affiliates buying most of the export sales from the local firms.55 Yet while
performing great exports-wise, the electronics sector also demonstrated what
ailed Philippine manufacturing. The heavy reliance on electronics, or more
pointedly the failure to cultivate new emerging winners, made the country
susceptible to a slowdown once new capacities had been run in and new
facilities were built up in other locations.56 In addition, a slowdown in demand
meant substantial fluctuation in export earnings, as shown in the wake of the
global financial crisis of 2008.57 The sector also interacted little with other
domestic sectors58, precluding the development of backward and forward
linkages and increase in sectoral value-added.
78
Chapter 2
Another casualty has been the automotive industry. Specific support to the
industry has paved the way for the development of vehicle assembly and more
importantly, parts and components manufacturing, which has accounted for
as much as 80 percent of industry output.59 The industry has been nurtured
through a policy of local content requirement, high tariffs, and restrictions on
importation of motor vehicles.60 But failing to establish linkages between foreign
assemblers and local parts producers, and to reduce car prices,61 the wave of
liberalization has also swept the industry. On top of the unilateral compulsion,
changes have been made to comply with WTO agreements on Trade Related
Investment Measures.62 Prior protection and privileges were removed in 2003
and tariffs were cut down to zero in 2010.63 Not only have these changes
undermined domestic auto parts manufacturers64, in fact killing related assembly
activities like those in passenger jeepneys (e.g. Sarao and Francisco Motors),
they have also made importation cheaper and have eclipsed the domesticallyassembled car sales, which grew by a miniscule three percent in the period
1998-2003; import grew 39.5 percent in the same period.65 Absent the
wall of tariff protection and amid the general paleness of the economy, the
exit of Ford Group Philippines at the end of 2012 dealt a fatal blow to the
governments Automotive Export Program. Ford cited low supply base and the
lack of economies of scale as reasons.66
Much has been said about the important role of SMEs in the economy. There is
no escaping the reality that most of the establishments in the country are micro
and small-scale. Their performance has been affected by the unabated slide in
overall performance of domestic firms, especially in industry and manufacturing;
by poor linkages; and by the inability of these businesses to establish economies
of scale. Many of the bigger establishments have either been privatized or
closed down, so that by 2012, nine in 10 of formal establishments in the
country were micro enterprises, or those that employed less than 10 workers.
Medium and large enterprises together accounted for only 0.87 percent of
formal establishments, and only 204 firms employed more than 2,000 workers
in 2011.67 At present, the concentration of their economic activity, and hence
also of employment, is heavily skewed in favor of Luzon, dispersal of industry
being yet another unmet objective of the reform process. (See Figure 1)
79
Weak employment generation

The number of establishments in the formal sector increased in the 20-year
period between 1990-2010 by almost 385,000, but this was accompanied by
a decrease of 920,000 jobs in the formal sector. The biggest job losses were
in wholesale and retail trade (1.3 million) and manufacturing (694,000).68
Among the losses were in textile and garments, whose job contributions were
cut to only two-fifth and two-thirds of their peak contributions to manufacturing
employment after liberalization.69 Jobs in the electronics sector increased
almost ten-fold since 198570, contrasting with the deeper job cuts in other
sectors. The shift to (or if one of the original objectives of the reform were to
be used, the failure to temper the tendency for) capital intensive operations in
manufacturing71, while it happened, was not enough to explain massive formal
job losses. The biggest determinant was sluggishness in manufacturing and the
shift to more informal employment arrangements.
Services now dominate the economy, accounting for 53.4 percent of
employment, agriculture, 30.9 percent, and industry, 18.6 percent.72 This
employment mix is far from ideal. One reason is that productivity per worker
in services (US$3,937 in 2011), while three times as high as in agriculture
(US$1,262), is only half that of industry (US$7,731). Manufacturing (US$9,236)
yields the highest value-added.73 Another is that on average manufacturing pays
better than services, and third, manufacturing jobs require lower educational
attainment compared to services.74 In addition, the lack of employment
opportunity is more severe in the provincesonly three in ten formal jobs is
outside of Luzon.
On top of the already massive losses in the formal sector, the overall employment
picture now is even worse. The formal sector accounts for only 17 percent of
total employment, or only 6.3 million employed workers as of 2011. Over
33 million Filipinos work under informal conditionsas own-accounts workers
or employers in own informal enterprise; as contributing family workers; as
employees holding informal jobs or are paid domestic workers; and as ownaccount workers engaged in the production of goods for exclusive use by own
80
Chapter 2
household. Informality in the formal sector is also high, characterized by the

absence of formal contracts and lack of benefits and social protection.75
The country has only managed to generate 6.4 million new jobs, or a measly
two percent average annual increase between 2000 and 2010. Unemployment
has been on the rise since the `80s, reaching its worst in the period 2000-2004
when it was almost double-digit (9.8 percent in 2001) for five consecutive
years. More recently, the improvement in the jobs situation in 2011 was shortlived, as almost one million jobs were lost the following year. For 2012 and
2013, joblessness remained stuck at seven percent, with further haemorrhaging
taking place, especially in the agriculture sector.76 Furthermore, as of 2013,
underemployment remains high at 19.8 percent.77
Confronting the issues

Through the Development Roundtable Series, Focus on the Global South started
a conversation in the period 2008-2011 among several stakeholders and
interested groups on a variety of topics including what had gone wrong with
the countrys industrial sector. The DRTS cited predictions from several studies78
about the trade reform program: that it would result in a small decline in the
number of jobs in agriculture and services, and new jobs (will be) created in
manufacturing; that real GDP will increase and income distribution will improve,
with the poorest quintile income group receiving the largest share of the GDP
growth.79 Clearly, the predictions were all off-mark. The country suffered from
a trade deficit resulting from trade liberalization and concentration of exports
in only few industries; there was no creation of a diverse basket of exports.
Trade liberalization did not improve the state of manufacturing, and as a result
the sector did not produce expected jobs to make up for job reductions in the
agriculture and service sectors. Overall, per capita income did not improve and
the average Filipinos standard of living remained roughly the same.
Not with a small amount of convenience, then, has it become fashionable
again to revive the state question. The captured state remains and therefore
the process of reform is bound to be undermined. Recently, this view has been
updated by throwing into the mix vulnerability to external shocks and internal
81
instability. The conclusion, however, is that the less than ideal institutional
settings of the political leadership and economic technocracy largely
determines the poor economic performance of the country.80
It is true, and is in fact also the contention of this book, that entrenched elite
interests have capture the state, and dominate a big chunk of political and
economic life. However, as discussed in Chapter 1, this domination also adjusted
to the economic restructuring that happened in the last three decades. The
argument that the weakness of state structure undercuts potential benefits
from policy reform, therefore, offers an incomplete picture at best.
First, liberalization was offered as response to the problem and market
reforms were expected to loosen the grip of the soft state enmeshed in rent
extraction.81 Second, the marketization agenda has been bankrolled by no
less than the IFIs with huge resources at their disposalsurveillance, the ability
to release loans in tranches and subject to the countrys compliance with
agreed conditions, and a governance agenda which they peddled the world
over. Third, except for the stalling of TRP4, for which bilateral, regional, and
international commitments already compensated, the policy of opening up has
been uninterrupted and unchanging.
It is not enough to allege that the fault lies elsewhere. Political capture, weak
governance, high transactions costs, bad weatherthese explain only part of
the problem. A significant part of the failure has to do with ideology, and three
related issues need to be reckoned with in the interest of moving forward.
One is that trade openness is not the end-all and be-all of reform. Economist
Dani Rodrik, reacting to the controversial World Bank study of Dollar and Kraay
of post-`80s globalizers, which included the Philippines, concluded that:
When the analysis focuses on indicators of trade policy, we find no
evidence that rapid/deep trade liberalizers did better than other
countries (and some evidence to the contrary)The claims regarding
the beneficial effects of trade liberalization on poverty have to be seen
as statements based on faith rather than evidence. 82
82
Chapter 2
Two, the liberal reforms and the entities that ensured that reforms stayed in place
effectively denied the country critical policy options that had been available to the
East Asian NICs when they were starting out. These included the deliberate use of
subsidies and incentives to direct economic activity and to impose discipline, and
the nurturing of public enterprises for strategic economic and related purposes.
Three, the over-preoccupation with political economy (state capture, corruption,
and rent-seeking) resulted in the almost total shunning of government role in
the economy. To reiterate, the need for institutional change has been huge; it
includes wide-ranging reforms that have been proven very difficult to move.
But we have also seen that the market has not been the best arbiter of values
or the perfect allocator of resources. To arrest the decay of Philippine industry,
even as the push for better governance and institutions continue, more focused
and pro-active government interventions are needed. Beyond securing marketfriendly policies, they are needed to support new technologies, innovations,
and investments, as well as to properly manage these support and investment,
and to facilitate greater coordination within industry. As former World Bank
chief economist Justin Yifu Lin has noted, neoliberal restructuring
was not an effective economic strategy for most developing countries,
which typically are trapped in multiple levels of distortions and need
gradually to gradually organize their transition out of these second-, thirdor nth-best situations. The Washington Consensus framework ignored
the requirement that developing countries governments play a key role in
overcoming the issues of coordination and externality in the process of
technological innovation, industrial upgrading, and structural change. 83
Of critical importance is to learn from all the mistakes and shortcomings of the
pastprior to, during, and after reformand to build workable policy mixes to
address these weaknesses and their negative impacts. This process necessitates
looking at the possibilities offered by all available policy instruments in trade (e.g.
tariff re-calibration to the maximum allowable as committed internationally),
investment (e.g. directing fiscal incentives towards clearly identified sectors),
public enterprise (e.g. the option of re-entry in power generation to provide
relief as well as to encourage more competition in the electricity market),
among many other potential interventions.
83
A future for industrial policy

The country has experienced a modest but uninterrupted growth since 1999
despite its inability to attract more FDIs or improve its trade performance. The
economy has adjusted by moving away from the losing traded sectors while
capital has trooped to the more lucrative property development and utilities,
to the disadvantage of agriculture and manufacturing. The result has been low
employment generation and increasing inequality. Notably, unemployment has
been on the rise again since 2011 even as growth has started breaching the
seven percent mark, making the challenge of inclusive growth all the more
urgent.
There are calls and renewed interest in the revival of the manufacturing sector
to realize inclusive growth. According to the Asian Development Bank, (t)he
Philippines biggest need is to develop stronger industrial base to enable the
economy to walk on two legs of industry and modern services, to create
productive job opportunities for the growing working-age population, and
proposes more targeted public sector support, which focuses on specific
industries and products, for industrial upgrading and diversification. 84
The call for a more activist approach to industry by government is not new. For
instance, there have been prior recommendations for government to intervene
to address the constraints and spur upgrading in the electronics sector.85 But it
has only been in recent years that a convergence has developed around what
an increasing number of economists have been saying, what IFIs have started to
push, what at least some sections of industry have been asking for, and what
many advocates have been proposing. In 2012, the government responded
and launched the Manufacturing Industry Roadmap initiative.86 The guidelines
for the initiative specifically directed identified industry clusters to recommend
measures to overcome constraints, manage liberalization, and upgrade the
industry.
The Roadmap initiative is a positive step, but how far will it go? Silent on the
specific failure of trade reform, it would be a disappointment if the policy menu
will not encompass all options. The initiative allows horizontal (e.g. protection
84
Chapter 2
of property rights) and vertical (e.g. limited tax incentives and direct credits)
interventions, as well as coordination mechanisms, but it is unclear whether tariffrelated measures and public enterprise are allowed in the mix. The timidity of
the Roadmap contrasts with the views of prominent economists such as Justin
Lin, former chief economist of the World Bank, who has called for an ambitious
agenda for the developing state, consisting of providing information about new
industries, coordinating related investments across different firms in the same
industries, compensating for information externalities of the pioneer firms, and
nurturing new industries through incubation, attracting foreign investment, and
encouraging clustering. The state also needs to lead in improving hard and soft
infrastructure to reduce transaction costs for individual firms and facilitate the
economys industrial development process.87 Lin calls his proposed strategy
for developing countries like the Philippines the New Structural Economics.
Beyond the actual incentives and possible policy adjustments, the success of
industrial policy also hinges on how it is able to build domestic knowledge by
facilitating greater interaction among industry players, and between industry
players and the academe and research community. It will also depend on how
labor-management relations are negotiated, which places importance on where
labor comes into the process. More than just labor, creating a constituency for
industrial policy is vital, as there will no doubt be difficult decisions that need to
be mediated, e.g. the sharing of resources, the impact on the environment, how
to decide on whose favor a trade-off will be resolved, how to get consensus
on policy and direction, etc. What industrial policy advocate and University
of the Philippines Professor Rene Ofreneo calls as industrial culture needs
to be revived. According to him, it is important to have industrial visioning
accompanied by public-private cooperation and consultation on industrial
programming.88
There is now an emerging consensus that the future of the Philippine economy
lies in reversing three decades of neoliberal self-destruction. The question is:
does political will exist to take the country in this direction?
85
Table 1.
Major Economic Reforms, 1980-2012: Trade Liberalization89
Policy
Year
Objective/Coverage
1980-85
TRP1 aimed to reduce the range of nominal

tariffs from 0-100% to a range of 10-50%.
Implementation was suspended in 1983.
Import Liberalization Program (ILP)

EO 49, EO 70
1986
TRP1 revived under Cory Aquino through

a series of EOs, more than halving the
restricted imports to only 823 from 1,798 in
1985.90
EO 306
1986
Tariff reduction on crude oil from 20% to

15%.
RA 6647
1988
Further restructured import duty rates,

ranging from a low of 5% to a high of 75%.
1991-95
Program de-emphasized the role of tariffs

in industrial and trade promotion. Non-tariff
restrictions converted into tariffs.
1991
Clustered tariff rates around four bands: 3

percent, 10 percent, 20 percent, and 30
percent, covering 95% of total tariff lines
by July 1995. Limited number of items has
0, 5%, 15%, 25% and 50% on a limited
number of items. Harmonized Commodity
Classification and Coding System (HS)
adopted.
EO 8
1992
Tariffication of quantitative restrictions (QRs)

on 153 commodities. Increased the tariff
rates of relevant commodities by 100% of
their old levels, with built-in 5-year phase
down of tariffs.
EO 313
1996
Increased tariff rates on sensitive products:

meat and meat products, poultry, cereals and
grains, vegetables.
Tariff Reform Program 1 (TRP1)
EO 470
Established a four-tier structure of tariffs: 3%

for raw materials and capital equipment not
locally available; 10% for raw materials and
capital equipment locally available; 20% for
intermediate goods; and 30% for finished
goods.
EO 189
1994
Tariff reductions on capital equipment and

machinery
EO 204
1994
Tariff reductions on textiles, garments, and

chemical inputs
86
Chapter 2
EO 264
1995
Tariff reductions on 4,142 lines in the HS

system in the manufacturing sector; EO set
stage for the four-tier system
EO 288
1996
Tariff reductions on non-sensitive

agricultural products.
EO 461
1998
Imposed tariff of 3% on imported crude oil

and refined petroleum products
1998
Set the tariff reduction schedule for 23

industries identified as export winners:
copper products; fertilizer; motor vehicle
parts and components; iron and steel
products; jewelry; electronics; ceramics;
marble products; marine products;
processed foods; petrochemical and
oleochemical products; leather goods;
footwear; lumber; particle board;
fiberboard; veneer and plywood; textiles
and garments; basketwork; seaweeds and
carageenan; holiday dcor; furniture; and
fresh fruits.
EO 465

Set tariff schedule for 2001-2004 for all
products (excluding certain meat products
in HS Chapter 2, rice, corn and sugar). Main
objective is to achieve a tariff band of 0-5%
in industrial and non-sensitive agricultural
products by 2004.
EO 334
2001
Note: Implementation of TRP4 was stalled

in 2003, starting with EO 241 which
suspended tariff reductions for 3 years
(2003-2005). With Memo 18, the Bureau
of Plant and Industry imposed additional
requirements for all imported fresh fruits and
vegetables91, as a response to pressure from
domestic vegetable producers.
In 2004, EO 375 increased tariffs on certain
iron and steel products from 3% to 7%.
Completing what liberalizers call as back
pedalling on reforms was EO 574 in 2006,
which recalibrated MFN rates (Chapters
1-97), maintaining 2006 rates for product
lines until 2010.
87
Other MFN Tariff Issuances92

EO 440
2005
Tariff reductions on crude petroleum oils and

refined petroleum products.
EOs 818 and 819
2009
Extended zero tariff on milling wheat; and

cement and cement clinker.
EO 790
2009
Tariff reductions on biofuels and biofuel

blends.
EOs 691, 765, 766
2009
Temporary tariff reductions, for price

stabilization, on crude petroleum oils and
refined petroleum products; wheat; and
cement and cement clinker. An automatic
tariff mechanism indexed to world oil
priceswas created for petroleum products.
EOs 21 and 22
2011
Zero tariff on milling (food) wheat; and

cement and cement clinker
EO 898
2010
Tariff reductions on certain iron and steel

products.
EO 890
2010
Granted zero tariffs on crude oil, petroleum

products and asphalt.
EO 70
2012
Tariff reductions on capital equipment, spare

parts and accessories imported by BOIregistered new and expanding enterprises.
WTO Treaty Obligations
1996
Lifted QRs, replaced with maximum bound

rates committed under the WTO-UR in
agriculture. Repealed the following laws
providing for QRs: RA 1296 (Onions, Potatoes,
Garlic, and Cabbages, Except for Seedling
Purposes); RA 2712 (Coffee); PD 1297
(Ruminants for Breeding, Slaughter and Beef);
Para. 10 of Section 23 of RA 7607 (Magna
Carta for Small Farmers); Para. (a) of Section
15 of RA 7308 (Seed Industry Development
Act); Section 4 of RA 4155, as amended
(Virginia Tobacco); and, PD 1483 (Foreign
Cigar Leaf Tobacco for Blending Purposes).
Created the Agricultural Competitiveness
Enhancement Fund
EO 313
1996
Interim tariff protection to sensitive

agricultural products. 170 tariff lines were
subject to tariff quotas, specified the tariff
rate equivalent for each agricultural QR.
EO 486
1998
Reduced to 144 the number of tariff lines

subject to tariff quotas.
RA 8178
Agriculture Tariffication Act
88
Chapter 2
EO 627
2007
Reduction of MFN rates on certain agriculture

products (e.g. mechanically deboned meats) as
compensation for special treatment afforded
to rice under Annex 5 of WTO-AoA (7 year
extension of special treatment until 2012).
ASEAN Free Trade Area-Comprehensive Effective Preferential Tariff (AFTA-CEPT)

Commitments
EO 49
2000
Transferred products from the unprocessed

agricultural product temporary exclusion list
(UAP-TEL) and general exemption (GE) list
into the inclusion list (CEPT-IL).
EO 448
2005
Tariff reductions on certain articles to

implement commitments to the ASEAN
Integration System of Preferences (AISP).
Lifted suspension on tariff reductions on
petrochemicals and certain plastic products
(EO 161, 2003), reducing tariffs from 10% to
5% in line with AFTA-CEPT commitment.
EO 486
2006
EO 703
2008
Note: The Association of Petrochemical

Manufacturer of the Philippines (APMP)
obtained a writ of preliminary injunction
from RTC of Makati in 2007; the order
of the lower court was reversed and writ
dissolved by the Supreme Court in 2011.93
80% of product lines in inclusion list slapped
zero tariff.
ASEAN Industrial Complementation Scheme (AICO)

EO 575
EO 679
2006
2007
Tariff reductions on certain imported

articles in favor of Toyota Motor Philippines
Corporation; Toyota Autoparts Philippines,
inc. (COE Nos. Toyota/2006 /35 and
Toyota/2006/36)
EO 677
EO 678
2007
2007
Tariff reductions on certain imported articles

in favor of Philippine Auto Components,
inc. (COE Nos. Denso/2007/11 and
Denso/2007/12)
2008
Tariff reductions on certain imported articles

in favor of Honda Cars Philippines, inc. (HCPI)
and Honda Parts Manufacturing Corporation
(COE No. Honda/2006/46)
EO 702
ASEAN-China Free Trade Agreement

EO 613
2007
Tariff reductions based on the normal track.
EO 618
2007
Tariff reductions based on the sensitive track.
89
EO 814
2009
2009-2012 tariff commitments under the

normal track; transfer of certain tariff lines
from the sensitive to the normal track
EO 71
2012
Tariff reduction based on highly sensitive list.
2012
Tariff reduction based on the sensitive list;

transfer of certain tariff lines from the sensitive
to the normal track (pharmaceutical goods,
glass, semi-finished or iron and non-alloy steel,
motor vehicles, electrical apparatus).
EO 72
ASEAN-Korea Free Trade Agreement (AKFTA)

EO 638
2007
Grants reciprocal tariff rate treatment on tariff

lines included in the sensitive track
EO 639
2007
Grants reciprocal tariff rate treatment on tariff

lines included in the sensitive track
EO 812
2009
Tariff reductions 90% of the products in the

normal track to zero with flexibility
2010
Transfer from the sensitive track to the normal

track (coconut/copra, palm kernel or babassu
oil and fractions thereof, whether or not refined,
but not chemically modified).
2011
Temporary waiver of the reciprocal

tariff treatment on certain articles based
on Philippines-Korea agreement on the
compensatory measure due to delayed
implementation of Philippine tariff concessions
2012
Tariff reductions on certain products included

in the highly sensitive list. 2016 rates were
pegged for highly sensitive products including
poultry, meat, vegetables, plastic and other
petrochemical products, electrical apparatus
between 5-40%. Note: The agreement
actually allows for rates up to 50% for highly
sensitive products.
2012
Tariff reductions on certain products included

in the sensitive list. Most items in the sensitive
list had rates of between 15-20% except
frozen fish (5%) and wheat (7%) for 20122015. Rates would be reduced for all products
to 5% by 2016. Transfer of certain tariff lines
from the sensitive to the normal track (copra,
cement, pharmaceutical products, iron and
non alloy steel, electrical apparatus).
EO 895
EO 52
EO 73
EO 74
90
Chapter 2
Japan-Philippines Economic Partnership Agreement (JPEPA)

EO 767
2008
Tariff reductions set for 2008-2018, with

in-quota and out-quota rates for all products
covered between zero and 41 %.
EO 905
2010
Further tariff reductions on motor vehicles

and components, parts and/or accessories.
ASEAN-Japan Comprehensive Economic Partnership Agreement (AJCEPA)

EO 852
2010
Tariff reductions based on treaty agreement.
ASEAN Trade in Goods Agreement (ATIGA)
EOs 892 and 894
2010
Invocation of protocol for special

consideration for rice and sugar. Tariff for
rice maintained at 40% and for sugar at 38%
for 2010-2011, for gradual reduction to 5%
by 2014.
ASEAN-Australia and New Zealand FTA (AANZFTA)

EO 851
2010
Tariff reductions based on treaty

commitments.
ASEAN-India Comprehensive Economic Cooperation

EO 25
2011
Tariff reductions based on treaty

commitments.
91
Table 2.
Major Economic Reforms, 1980-2012: Investment Policy
Policy
Year
Objective/Coverage
Created the Board of Investments.
EO 226
Omnibus Investment
Code of 1987
Article 39, Title III
Amended by RA 7918
1987
1995
Grants fiscal incentives to BOI-registered firms: income

tax holiday; tax exemptions (on imports of spare parts
and capital equipment, breeding stocks and genetic
materials); tax credits (on domestic breeding stocks and
genetic materials, raw materials and supplies); exemptions
on wharfage dues and export tax; additional deductions
from taxable income (labor expense, necessary and
major infrastructure works).
Grants Non-fiscal Incentives: allowance to employ
foreign nationals in certain positions; simplified customs
procedures; importation of consigned equipment;
privilege to operate a bonded manufacturing/trading
warehouse.
EO 63
1987
Grants non-fiscal incentives, especially the provision of a

special investors resident visa, to foreigners investing at
least US $50,000 in any DOT-accredited tourism-related
project or in any tourism establishment
Allowed up to 100% foreign equity participation in all
areas, except those that are included in the Foreign
Investment Negative List (FINL).
RA 7042
Foreign Investments Act
of 1991
Amended by RA 8179
1991
1996
List A: areas reserved for Filipinos as mandated by

the Constitution or specific laws, e.g. mass media,
cooperatives, small-scale mining. List B: defense/firearms;
activities associated with risk to public health and morals;
small-scale enterprises; small natural resource-based
export enterprises
List C: areas adequately served by existing establishments
Removed List C. Allowed non-Filipino participation in small
and medium-sized domestic enterprises, with minimum
paid-in capital US$250,000.
RA 7227
Bases Conversion and
Development Act of
1992
Amended by RA 7917
in 1995 and RA 9400
in 2007
92
Chapter 2
1992
1995,
2007
Established the Subic Bay Metropolitan Authority and the

Bases Conversion and Development Authority Group
which includes the Clark Development Corporation, the
Poro Point Management Corporation, the Camp John Hay
Management Corporation, etc.
RA 9400 converted SBMA, CDC, Poro Point, John
Hay and Morong into separate customs and taxation
territories.
1992
Established a 5-year Countrywide Industrialization Fund,

managed by Philippine National Bank, the Development
Bank of the Philippines, the Land Bank of the Philippines,
and a Countrywide Industrialization Office; with specific
clause on foreign exchange contribution as one of the
criteria for financial assistance.
RA 7652
Investors Lease Act
1993
Allowed foreign investors to lease private land for up to

50 years, renewable once for an additional 25 years,
for the creation of industrial estates, factories, assembly
or processing plants, agro-industrial enterprises, and the
development of land for industrial, tourism, commercial,
or other productive use.
EO 98
1993
Established the Export Development Council
RA 7368
Countrywide
Industrialization Act of
1992
Formulation of an Export Development Plan as part of

the medium-term Philippine Development Plan.
RA 7844
Export Development Act
of 1994
RA 7721
Foreign Bank
Liberalization Act of
1994
1994
Grants additional incentives to exporters: Exemption

from Presidential Decree No. 1853, provided that the
importation shall be used for the production of goods and
services for export; Duty-free importation of machinery,
equipment and spare parts; Tax credit for imported
inputs and raw materials, and for increase in current years
export revenue
1994
Allowed foreign bank participation in the domestic

market, though with some restrictions. Foreign bank
ownership is limited to a 60% stake in any new or
already-existing Philippine banking subsidiary.
DOF Order No.

100-94
DOF Insurance Sector
Liberalization Order
1994
Allowed foreign insurance companies to operate in the

domestic insurance market through branches, newly
incorporated subsidiaries and the acquisition of domestic
firms.
RA 7942
Mining Act of 1995
1995
Allowed 100% foreign ownership of mining properties, up

to 81,000 hectares of land up to 50 years and auxiliary
entitlements of water, timber and easement rights.
RA 7916
Special Economic Zone
Act of 1995
Amended by RA 8478
1995
1999
Established ecozones as separate customs territory;

established the Philippine Economic Zone Authority
(PEZA).
93
RA 7903
Zamboanga City
Economic Zone Act of
1995
1995
RA 7922
Cagayan Special
Economic Zone Act of
1995
1995
RA 9490
Aurora Special Economic
Zone Act of 2007
Amended by RA 10083
Established the 16,120-hectare Zamboanga City Special

Economic Zone and Freeport in Zamboanga City.

Established the 54,000-hectare Cagayan Special
Economic Zone and Freeport in Sta. Ana, Cagayan
province.
Established the 12,923-hectare Aurora Pacific Economic
Zone and Freeport in Casiguran, Aurora province.
2007
2010
Converted the Bataan Economic Zone into the

1,742-hectare Freeport Area of Bataan in Mariveles,
Bataan province.
RA 9728
Freeport Area of Bataan
Act of 2007
2007
RA 8366
Investment House
Liberalization Act of
1997
1997
Allowed foreign firm participation in the domestic

investment house industry, with ownership of up to
60% of company stock, subject to a minimal paid-in
capitalization of PhP300M.
RA 8762
Retail Trade Liberalization
Act of 2000
2000
Opened up Philippine retail industry to foreign players,

including full ownership subject to a minimum capital
requirement of US$7.5M.
2004
Encouraged the development of a domestic shipping

industry where at least 60% of stock is owned by
Filipinos, granting fiscal incentives to qualified domestic
ship operators while loosening shipping rate regulations
and mechanisms
2009
Established the Tourism Infrastructure and Enterprise

Zone Authority to oversee the creation and operation of
tourism enterprise zones (TEZs), whose specified lands
are exempt from UDHA and CARP. Provided lease of
lands within TEZs to foreign investors for a maximum
period of 50 years, renewable once for a period of
25 years, in alignment with the Investors Lease Act.
Numerous fiscal incentives are also offered to investors
operating within TEZs. Foreign investors who have made
a minimum investment of $200,000 are also entitled to a
special investors resident visa.
RA 9295
Domestic Shipping
Development Act of
2004
RA 9593
National Tourism Policy
Act of 2009
RA 10574, Foreign
Equity Law
Amending RA 7353,
Rural Act of 1992
94
Chapter 2
2013
Allowed foreigners to own, acquire or purchase up to

60% of voting stocks in rural banks.
Table 2b: Deregulation and Related Policy

EO 59
1993
Provided for the mandatory interconnection of public

telecommunications carriers to create a fully integrated
nationwide telecommunications network, encouraging
greater private sector investment in telecommunications
EOs 185, 213
1994
Allowed new investors to enter shipping routes already

served by franchise operators, and deregulated shipping
passenger and freight pricing schemes.
EO 219
1995
Liberalized domestic and international civil aviation
1998
Encouraged the entry of new participants in the

downstream oil industry by extending fiscal incentives
for investors and amending oil pricing regulations and
mechanisms.
2001
Liberalized the power industry, encouraged competition

in generation and supply through privatization and
unbundling of the system, establishment of open access
and electricity tariff unbundling.
RA 9184
Government
Procurement Reform Act
of 2003
2003
Standardized the process of competitive bidding of

government procurement procedures; with specific
provision on procurement from both domestic and
foreign suppliers, consistent with the countrys obligations
in international treaties and agreements. (Article XII,
Section 43)
EO 29
2011
Open Skies Policy
RA 8479
Oil Industry Deregulation
Act of 1998
RA 9136
Electric Power Industry
Reform Act of 2001
95
Table 3.
Major Economic Reforms, 1980-2012: Privatization
Policy
Year
Objective/Coverage
1986
Privatization of Government-Owned and Controlled

Corporations (GOCCs); Established the Philippine
governments privatization program; Created the
Committee on Privatization and the Asset Privatization
Trust (APT).
EO 215
1987
Allowed Private Generation of Electricity; Established the

right of private sector producers, including foreign firms,
to build and operate electric power generation facilities
through cogeneration, Build-Operate-Transfer, and BuildOperate-Own schemes.
RA 6957
Build-Operate-Transfer Act
of 1990
1990
Established the framework for the financing,

construction, operation and maintenance of public
infrastructures by private sector firms.
Amended by RA 7718
1993
The fixed term under which a private contractor

owned at least 60% by Filipinos may operate
infrastructures is not to exceed 50 years.
Presidential Proclamation
50
RA 7181
Asset Privatization Trust
Extension Act
Amended by RA 7661
Amended by RA 7886
1992
1993
1995
RA 7227
Bases Conversion and
Development Act of 1992
Amended by RA 7917 in
1995 and RA 9400 in 2007
1992
1995,
2007
Collectively extending the life of the Asset Privatization

Trust from December 8, 1991, until December 31,
1999, with modification on where the proceeds of
successful privatization efforts are to be directed.
Authorized the sale, lease and joint venture

development of former military camps such as Fort
Bonifacio and Villamor Airbase.
1993
Authorized the President to enter into negotiated

contracts with Independent Power Producers (IPPs);
powers in effect for one year.
RA 8041
National Water Crisis Act
of 1995
1995
Authorized the President to enter into negotiated

contracts in water services; reorganized the
Metropolitan Waterworks and Sewerage System
(MWSS) and the Local Waterworks and Utilities
Administration (LWUA).
EO 298
1996
Empowered the APT to use other modes of privatization

like joint ventures, BOT schemes, management schemes,
lease-purchase, and securitization agreements.
2001
Created the Privatization Council and the Privatization

Management Office under the Department of Finance.
RA 9136
Electric Power Industry
Reform Act of 2001
2001
Privatized NAPOCOR.
EO 8
2010
Reorganized the Build-Operate-Transfer Center into the

Public-Private Partnership Center, with a reassignment
from the Department of Trade and Industry to the
National and Economic Development Authority.
RA 7648
Power Crisis Act of 1993
EO 323
96
Chapter 2
Figure 1.
Geographical Distribution of Formal Establishments and Employment
In Percent, 2012
Total Employment
Formal Establishments
14.0%
18.7%
14.4%
15.6%
71.6%
Luzon
65.6%
Visayas
Mindanao
Source of Basic Data: National Statistics Office. (2012). 2012 Updating of the List of Establishments (ULE): Final
Result. Retrieved 10 October 2012, from http://www.census.gov.ph/content/2012-updating-list-establishmentsule-final-result
97
Notes
1 National Statistics Office. List of establishments, 2000-2010.
2 National Statistical Coordination Board (NSCB). National Accounts of the Philippines, 1946-2012.
3 National Statistical Coordination Board (NSCB). National Accounts of the Philippines, 1946-2012.
4 See for example: Bautista, R., Power, J. & Associates. (1979). Industrial promotion policies in the Philippines.
Manila: Philippine Institute of Development Studies.
5 Philippine Institute for Development Studies. (2008, March). Industrial agglomeration and industrial policies: the
Philippine experience. Philippine Institute for Development Studies Discussion Paper No. 2008-13. Retrieved
19 February 2013 from, http://http://www.pids.gov.ph/dp.php?id=4300&pubyear=2008
6 Medalla. E. et al. (1995). Catching up with Asias tigers. Makati City: Philippine Institute for Development Studies.
7 Bautista, R. and Tecson, G. (2003). International dimensions. In Balisacan and Hill, (Eds.), The Philippine
economy: development, policies and challenges. Quezon City: Ateneo de Manila University Press.
8 Tariff Commission. Primer: tariff reform program. Retrieved 19 February 2013 from, http://www.
tariffcommission.gov.ph/tariff1.html
9 Bautista, R. and Tecson, G. (2003). International dimensions. In Balisacan and Hill, (Eds.), The Philippine
economy: development, policies and challenges. New York: Oxford University Press. Medalla, E. (1998, May).
Trade and industrial policy beyond 2000: an assessment of the Philippine economy. Philippine Institute for
Development Studies Discussion Paper Series No. 98-05.
10 Medalla, E. (1998, May). Trade and industrial policy beyond 2000: an assessment of the Philippine economy.
Philippine Institute for Development Studies Discussion Paper Series No. 98-05.
11 Bautista, R., Power, J. & Associates. (1979). Industrial promotion policies in the Philippines. Manila: Philippine
Institute of Development Studies.
12 Bautista, R., Power, J. & Associates. (1979). Industrial promotion policies in the Philippines. Manila: Philippine
Institute of Development Studies.
13 Anderson, B. (1988). Cacique democracy and the Philippines: origins and dreams. New Left Review, 1(169)
as cited In De Dios, E. and Hutchroft, P. (2003). Political economy. In Balisacan and Hill, (Eds.), The Philippine
economy: development, policies and challenges. Quezon City: Ateneo de Manila University Press.
14 De Dios, E. and Hutchroft, P. (2003). Political economy. In Balisacan and Hill, (Eds.), The Philippine economy:
development, policies and challenges. Quezon City: Ateneo de Manila University Press
15 Studwell, J. (2013). How Asia Works. New York: Grove Press.
16 Medalla, E. et al. (1995). Catching up with Asias tigers. Makati City: Philippine Institute for Development
Studies.
17 Medalla. E. et al. (1995). Catching up with Asias tigers. Makati City: Philippine Institute for Development
Studies.
18 The 1992-1998 Medium Term Development Program.
19 Bello, W. (2001). The future in the balance: essays on globalization and resistance. Oakland, Calif.: Food First
Books.
20 Bello,W. and Rosenfeld S. (1990). Dragons in distress: Asias miracle economies in crisis. San Francisco: Institute
for Food and Development Policy.
21 World Bank. (1993). The East Asian miracle: economic growth and public policy. New York, N.Y.: Oxford
University Press.
22 Studwell, J. (2013). How Asia Works. New York: Grove Press.
23 Clarete, R. (2005). Philippines: ex-post effects of trade liberalization in the Philippines. [This chapter was
presented at the conference, Adjusting to Trade Reforms: What are the Major Challenges for Developing
Countries]. Retrieved 30 May 2013, from http://www.unctad.info/upload/TAB/docs/TechCooperation/
philippines_study.pdf
24 Clarete, R. (2005). Philippines: ex-post effects of trade liberalization in the Philippines. [This chapter was
presented at the conference, Adjusting to Trade Reforms: What are the Major Challenges for Developing
Countries]. Retrieved 30 May 2013, from http://www.unctad.info/upload/TAB/docs/TechCooperation/
philippines_study.pdf
98
Chapter 2
25 United States Trade Representative. (2005). National trade estimate report for 2005. Retrieved 29 February
2013, from http://www.ustr.gov/archive/assets/Document_Library/Reports_Publications/2005/2005_NTE_
Report/asset_upload_file415_7493.pdf
26 World Trade Organization. (2005). The Philippines: growth prospects are linked to continued trade
liberalization reforms. Trade Policy Review. Retrieved 29 February 2013, from http://www.wto.org/english/
tratop_e/tpr_e/tp249_e.htm
27 Tariff Commission. (2012). 2012 MFN Tariff structure: executive orders. Retrieved 29 February 2013, from
http://www.tariffcommission.gov.ph/MFN%20Tariff%20Structure%202012.pdf
28 Aldaba, R. (2010, April). Foreign direct investment policy. Unpublished AER Report.
29 Bunye, I. R. (2012, June 24). Philippine banking history Part IV. Sun Star Manila. Retrieved 29 February 2013,
from http://www.sunstar.com.ph/manila/opinion/2012/06/24/bunye-philippine-banking-history-partiv-228490; Only 14 branches according to Milo, M S. and Pasadilla, G. O. (2005). Effect of liberalization on
banking competition. Philippine Institute for Development Studies Discussion Paper No. 2005-03.
30 Manasan, R. (1990). A review of fiscal incentives for exports in the Philippines. Philippine Journal of
Development, 31(17), 2.
31 Ofreneo, R., Marasigan, L., Center for Labor Justice and UP SOLAIR. Several articles for the DRTS TWG
on trade, industrial policy and privatization [Abridged version]. Retrieved 29 February 2013, from http://
focusweb.org/philippines/fop-articles/articles?start=5
32 Romano, G. (1996). Philippine public enterprises and privatization. Mandaluyong: Fiscal Administration
Foundation, Inc.; as cited in Ofreneo, R., Marasigan, L., Center for Labor Justice and UP SOLAIR. Several
articles for the DRTS TWG on trade, industrial policy and privatization [Abridged version]. Retrieved 29
February 2013, from http://focusweb.org/philippines/fop-articles/articles?start=5
33 Privatization and Management Office. The Philippine privatization program. Retrieved 29 February 2013, from
http://www.pmo.gov.ph/about.htm
34 Privatization and Management Office. List of assets fully disposed/privatized CY 2001 to 2012.
[Communication with author, August 2013].
35 National Economic Development Authority. Philippine Development Plan 2011.
36 Based on National Statistical Coordination Board. (2014). National accounts of the Philippines: data and charts.
Retrieved 29 February 2013, from http://www.nscb.gov.ph/sna/DataCharts.asp
37 Data indicators from the World Bank Database. Retrieved 29 February 2013, from http://data.worldbank.org/
indicator
38 Data indicators from the World Bank Database. Retrieved 29 February 2013, from http://data.worldbank.org/
indicator
39 The World Bank. Country snapshot Philippines. World Trade Indicators 2009/2010. Retrieved 29 February
2013, from http://info.worldbank.org/etools/wti/2b1.
http://info.worldbank.org/etools/wti/2b1.asp?pillarID=1&indList=66,118,152,161,190&cid=153
comparator=a4&vr=Value&timeperiod1=t1&timeperiod2=t2&timeperiod3=t3&timeperiod4=t4
40 NSO and Central Bank as cited in Mangabat, M. (1998, October). Effects of trade liberalization on agriculture
in the Philippines: institutional and structural aspects. Working paper (ESCAP Regional Co-ordination Centre
for Research and Development of Coarse Grains, Pulses, Roots and Tuber Crops in the Humid Tropics of Asia
and the Pacific) No. 37.
41 Data is for external balance in goods and services in current dollars and % of GDP. From World Bank Data.
Retrieved 29 February 2013, from http://data.worldbank.org
42 Subic Bay Metropolitan Authority. Performance indicators. Retrieved 29 February 2013, from http://www.
mysubicbay.com.ph/about-us/performance
43 FDI data are from the World Bank. Retrieved 29 February 2013, from http://data.worldbank.org
44 From World Bank. Retrieved 12 October 2012, from http://data.worldbank.org
45 From World Bank. Retrieved 29 February 2013, from http://data.worldbank.org
48 Felipe, J and Estrada, G. (2007 September). Benchmarking developing Asias manufacturing sector. Economic
Research Department Working Paper Series No. 101. Manila: Asian Development Bank.
49 Balisacan, A.M. and Hill, H. (Eds.). (2003). The Philippine economy: development, policies and challenges.
Quezon City: Ateneo de Manila University Press.
99
50 Rowthorn, R and Ramaswamy, R. (1998). Growth, trade and deindustrialization. International Monetary Fund
Working Paper (WP/98/60).
51 Intal, P.S. Jr. and E. See. (2006). Whither the Philippine manufacturing sector: looking back, way forward. Paper
presented at the Production Networks, Industrial Adjustments, Institutions, Policies and Regional Cooperation
Conference, DLSU-Angelo King Institute, Manila, Philippines.
52 Habaradas, R. (2008). Adjustments in the garments and textiles industry in the Philippines in view of the postquota regime. DLSU-AKI Working Paper Series 2008-09.
53 Goboleo, D. (2009). Electronics industry: surviving the global financial crisis and attaining competitiveness.
Policy Advisory 2009-07. Congressional Planning and Budget Department, House of Representatives.
54 Austria, M. (2006). Enhancement and deepening of the competitiveness of the Philippines electronics industry
under a bilateral setting. Philippine Institute for Development Studies Discussion Paper Series No. 2006-09.
55 Department of Trade and Industry. (2011). Philippine electronics industry profile. Retrieved 29 February
2013, from http://www.philexport.ph/c/document_library/get_file?uuid=8659b363-97ff-4ffd-b7e8364fa03c492f&groupId=127524
56 Lall, S. (2000, August). Export performance and competitiveness in the Philippines. Queen Elizabeth House
Working Paper Series QEHWPS49. Queen Elizabeth House. University of Oxford. Retrieved 29 February from
http://www3.qeh.ox.ac.uk/pdf/qehwp/qehwps49.pdf
57 BSP data showed that from the peak of US$31B in 2007, electronics exports went down to US$28.5B in
2008 and US$22B in 2009 before recovering back to US$31B in 2010, only to fluctuate back to US$23.8B
in 2011 and US$22.6B in 2012. Bangko Sentral ng Pilipinas. Economic and Financial Statistics. Retrieved 29
February 2013, from http://www.bsp.gov.ph/statistics/efs_bop2.asp
58 Gereffi 1999 & 2001 as cited in Austria, M. (2006). Enhancement and deepening of the competitiveness
of the Philippines electronics industry under a bilateral setting. Philippine Institute for Development Studies
Discussion Paper Series No. 2006-09.
59 Ofreneo, R. (2003). TRIMS and the automobile industry in the Philippines in transnational corporations, learning
and innovation: implications of the TRIMS agreement. Technology Policy Briefs, 2(1).
60 Aldaba, R. (2007 November). Assessing the competitiveness of the Philippine auto parts industry. Philippine
Institute for Development Studies Discussion Paper Series No. 2007-14.
61 Abrenica as cited in Aldaba, R. (1997, September). Micro studies: Philippine car assembly sector. Philippine
63 Aldaba, R. (2011, June). Globalization, competition, and international production networks: Policy directions
for the Philippine automotive industry. Philippine Institute for Development Studies Policy Notes No. 2011-13.
Retrieved 12 October 2012, from http://dirp4.pids.gov.ph/ris/pn/pidspn1113.pdf
64 Ofreneo, R. (2003). TRIMS and the automobile industry in the Philippines in transnational corporations, learning
and innovation: implications of the TRIMS agreement. Technology Policy Briefs, 2(1).
66 Mendoza, A. (2012, July 4). Shock, sadness and frustration at Fords announcement. Philippine Daily Inquirer.
Retrieved 12 October 2012, from http://business.inquirer.net/69033/shock-sadness-and-frustration-atford%E2%80%99s-announcement
67 Data based on NSO, List of Establishments, 2011, also cited in Chavez, J.J. and Fabros, A. (2012). Philippine
industry and employment: a snapshot. Issues Views, Action. Quezon City: AER.
68 From National Statistics Office. List of Establishments, 1990-2010.
69 Habaradas, R. (2008). Adjustments in the garments and textiles industry in the Philippines in view of the postquota regime. DLSU-AKI Working Paper Series 2008-09.
70 Santiago, E. (n.d.). About the electronics industry: a snapshot. Semiconductors and Electronics Industry of the
Philippines (SEIPI). Retrieved 12 October 2012, from http://siteresources.worldbank.org/INTPHILIPPINES/
Resources/ErnestoSantiago.pdf
71 Intal, P.S. Jr. and E. See. (2006). Whither the Philippine manufacturing sector: looking back, way forward. Paper
presented at the Production Networks, Industrial Adjustments, Institutions, Policies and Regional Cooperation
Conference, DLSU-Angelo King Institute, Manila, Philippines.
100
Chapter 2
72 Data from National Statistics Office. Labor Force Survey, 2013. Retrieved 12 October 2012, from http://
www.census.gov.ph/content/2013-annual-labor-and-employment-status-annual-estimates-2013
73 Data from World Bank. Retrieved 12 October 2012, from http://data.worldbank.org
74 Yap, J. T. (2012). Regional economic integration and inclusive growth: the story line. Presentation during the
launch of the Manufacturing Roadmap, October 19, 2012.
75 Chavez, J.J. and Fabros, A. (2012). Philippine industry and employment: a snapshot. Issues Views, Action.
Quezon City: AER.
76 Employment data here are computed from National Statistics Office, Labor Force Survey, various years, based
on October surveys, unless otherwise indicated.
77 National Statistics Office. (2013, December 27). 2013 Annual labor and employment status (Annual estimates
for 2013). Retrieved 12 October 2012, from http://www.census.gov.ph/content/2013-annual-labor-andemployment-status-annual-estimates-2013
78 Particular studies cited were: Habito, C. and Cororato, C. (2000). WTO and the Philippine economy: an
empirical and analytical assessment of Post-WTO trade reforms in the Philippines. Study report for USAID/
Philippines AGILE Program; and Cororaton, C. and Cockburn, J. (2005). Trade reform and poverty in the
Philippines: a computable general equilibrium microsimulation analysis. CIRPEE Working Paper No. 05-13.
Quebec: Laval University,
79 Malaluan, N. (2011). Philippine trade liberalization: faith damns, losers can only weep. Development
Roundtable Series Papers. Quezon City: Focus on the Global South.
80 Raquiza, A.R. (2012). State structure, policy formation and economic development in Southeast Asia: the
political economy of Thailand and the Philippines. London and New York: Routledge.
81 Fabella, R.V. (2000, June). The soft state, the market and governance. Philippine Review of Economics, 42(1).
82 Rodrik, D. (2000). Comments on Trade, Growth and Poverty, by D. Dollar and A. Kraay, Harvard University.
Retrieved 12 October 2012, from http://www.sss.ias.edu/files/pdfs/Rodrik/Research/trade-growth-poverty.
PDF
83 Lin, J. Y. (2012). The quest for prosperity: how developing economies can take off. Princeton: Princeton
University Press, p. 41.
84 Usui, N. (2012). Taking the right road to inclusive growth: industrial upgrading and diversification in the
Philippines. Mandaluyong City, Philippines: Asian Development Bank, p. 9.
85 Austria, M. (2006). Enhancement and deepening of the competitiveness of the Philippines electronics industry
under a bilateral setting. Philippine Institute for Development Studies Discussion Paper Series No. 2006-09.
86 Similar roadmap initiatives have also been launched for agriculture; forestry, fishery and mining; construction
and mass housing; energy and water; and transport, highway development network, and air cargo logistics,
but the manufacturing part seems most advanced. Aldaba, R. M. (2012, October 19). Inception workshop
crafting the Philippine Manufacturing Industry Roadmap. Powerpoint presentation, Makati City.
87 Lin, J. Y. (2012). The quest for prosperity: how developing economies can take off. Princeton: Princeton
University Press, pp. 119-120.
88 Ofreneo, R. (2012). Labor and ADB against stagnant industrialization. Action for Economic Reforms Yellow
Pad. Retrieved 10 October 2012, from http://aer.ph/?p=4865
89 The Tariff Commission has its own listing of EOs related to FTAs: Tariff Commission. Implementing executive
orders for free trade areas. Retrieved 10 October 2012, from http://www.tariffcommission.gov.ph/special_
eos_on_ftas.htm
90 Mangabat, M. (1998, October). Effects of trade liberalization on agriculture in the Philippines: institutional and
structural aspects. Working paper (ESCAP Regional Co-ordination Centre for Research and Development of
Coarse Grains, Pulses, Roots and Tuber Crops in the Humid Tropics of Asia and the Pacific) No. 37. Retrieved
10 October 2012, from http://ageconsearch.umn.edu/bitstream/32680/1/wp980037.pdf
91 USDA Foreign Agricultural Service. (2009). Food and agricultural imports regulations and standards. FAIRS
County Report: Philippines. Retrieved 10 October 2012, from http://gain.fas.usda.gov/Recent%20GAIN%20
Publications/Food%20and%20Agricultural%20Import%20Regulations%20and%20Standards%20-%20
Narrative_Manila_Philippines_7-17-2009.pdf
92 TRP4 was first signed in 2001 but was shelved in 2003 with EO 241 (see note on table). Tariff reductions
since then have been aligned with international/bilateral obligations. However, there are some issuances that
appear to still be unilateral, for instance those included in this table.
93 Supreme Court of the Philippines. (2011). En Banc: G.R. No. 177130. Retrieved 10 October 2012, from
http://sc.judiciary.gov.ph/jurisprudence/2011/june2011/177130.htm
101
C h apter
Agrarian Atrophy and

the Changing Countryside
The agricultural sector is the Philippines biggest loser in economic restructuring

and globalization, reduced to a grim state some 40 years after peaking in
productivity in the `70s.
From contributing almost one-third of the countrys output during the `70s, the
sectors share has plummeted to an abysmal 11.5 percent of GDP in 20111.
Denied the opportunity to reach its full potential after experiencing productivity
for a short period, it grew merely at an average of 1.1 percent in the `80s, two
percent in the `90s and 2.9 percent in the period 2000-2010.2 Rural poverty
has remained high and huge trade imbalances have become trademarks of
agriculture.
Profound social, economic, and geographical changes have swept Philippine
rural economy. These changes have been most obvious in the physical
landscape of rural areas: the once idyllic barrios that had been immortalized in
the paintings of Filipino artist Fernando Amorsolo became the site in the late
`90s of commercial complexes and gated residential enclaves rising alongside
agricultural lands cultivated by farmer-tillers who had once dominated the
scene. Around urbanizing provinces like Cavite, Bulacan, Nueva Ecija, and
Batangas, European-themed houses standing next to waterlogged fields of rice
have become common.
There has also been an exodus of labor from the countryside into cities and
other countries, usually driven by the search for better economic opportunities.
Still, agriculture has remained the second largest absorber of the countrys
103
labor force, next to the services sector, which has also seen increasing
unemployment. The countryside has become an arena for an interesting
interplay of out-migration, increasing joblessness, and aging labor.
The nationwide agrarian reform effortbitterly derided by agrarian reform
advocates as an orphan program due to the halfhearted full backing from
government and to its chronic underperformancehas wrought decisive
shifts in the structure and ownership of Philippine farms. But the landed elite
have managed to retain control of their assets in one form or another using
evasion tactics and land use reclassifications. More recently, there have been
pressures to reconfigure the investment and property rights regime of the rural
economy. A spate of foreign and domestic agribusinesses interests have caused
new concerns about alleged global land-grabbingthe redistribution of lands
away from peasants and towards new globally-oriented rural capitalists.
All these changes have placed Philippine agriculture at its current juncture
characterized by the withering away of production and reconfiguration of the
countryside.
Philippine agriculture in retreat

The highest level of growth in the sector was recorded all the way back in the
`70s (6.2 percent), a consequence of surging public investments in agriculture
by the Marcos government.3 Soon afterwards, however, the worldwide slump
in rural commodity prices, the imposition of structural adjustment, and the
1983 recession all resulted in much lower agricultural growth rates that were
barely able to keep up with the expanding national population. The growth
rate of the sector declined drastically in the `80s, contracting by 0.1 percent
from 1981 to 1985, and stagnating throughout the `90s. The sector showed
modest improvements from 2001 to 2005 (3.6 percent), only to be knocked
down again by the onset of the 2008 global financial crisis.4
Across major crop varieties, especially those cultivated for export, the
experience has been little short of disastrous. The prolonged slump in world
prices affected the countrys top exports sugar, coconut, and copra. World
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Chapter 3
prices crashed, from less than a third to just over two-fifths relative to 1974
prices. The sugar industry arguably suffered from the most dramatic downturns,
having collapsed in the `80s-`90s.5 The area cultivated to sugarcane, though,
did not change significantly between 1970 and 1990 (only a 6.25 percent
decrease; from 400,000 to 375,000 hectares in the period 1970-1990).6
Coconut was the other loser, growing only 0.6 percent in the `90s. Beyond
these prime export crops, vegetable, banana, tuna, coffee, and cacao industries
all suffered similar shake-ups.
Staple crops did not fare better; the domestic corn sector was a major loser.
Deluged by massive maize imports from 1995 onwards, growth in this sector
stalled and it lost almost one-fifth of cultivated lands (3.15 million hectares in
1993 versus 2.59 million hectares in 2012).7 Likewise, while rice production
volume increased by 71 percent, between 1994 and 2012, to 18 million metric
tons, the rice industry has not kept pace with the countrys population growth.
From being a rice self-sufficient nation in the `70s, the Philippines increasingly
relied on rice imports to plug shortfalls in supply. By 2008, the Philippines
officially became the largest rice importer in the world, shipping in about 2.5
million metric tons of rice imports in that year alone.8 The country scaled down
imports in 2011 and set an explicit target for rice self-sufficiency for 20139,
but failed to achieve it.
Becoming a chronic food importer, from being a major agricultural exporter,
has been one of the most profound changes experienced by local agriculture.
Agricultural export earnings have not moved since the `70s and the country
has not fared well compared with the nearest regional neighbors. Agriculture is
now but a shadow of what it was in the `70s when it accounted for 54 percent
of all exports in 1975.10 In the last two decades, liberalization has resulted in
gaping trade imbalances: from a surplus of US$292 million in 1993 (before the
country joined the WTO), the sector produced a deficit of US$764 million in
199711, which ballooned to US$3.1 billion in 2012.12
One cannot even talk about bright spots, only that some sectors such as
poultry, livestock, and feed-grains have been less afflicted by trade liberalization
and other policies than others.
105
Owing to its parlous state, agriculture has contributed diminishing shares in

GDP, experienced stagnant employment, and suffered decreasing productivity.
The decline in agricultures total economic output has clearly been a key factor
in the weakening of its capacity to absorb rural laborthis suggests that it
has been the labor productivity of agriculture that has lagged vis--vis other
economic sectors, with such condition translating into perpetually-low incomes.
Value-added per worker in agriculture was a low US$1,262 in 2011, less than
a third that of services (US$3,937) and one-sixth that of industry (US$7,731).13
The waning of agriculture has affected its capacity to abate poverty, with
rural areas hosting three of four poor Filipinos in 2009. Almost three in five
(56.8 percent) rural households were poor, marked by unevenness across subsectors and commodity groups. Poverty was highest among forestry workers
(68 percent) and corn growers (64.1 percent); followed by farmers of coconut
(56.2 percent), coffee and cacao (53.6 percent), sugar cane (53.2 percent),
and vegetables (48.1 percent); and lastly landless workers (49.2 percent).14 In
all these, rural women experienced deeper poverty.
Rural income inequality has become even more skewed over the years, with
the rural Gini index rising from 0.3796 in 1985 to 0.4977 in 2009.15 The
disparity has also been largely based on the inequitable access to and control
of land. The Gini index of landholdings stood at 0.54 in 1980; it grew to an
even more unequal level, 0.57, in 1991, where it remained until the last official
estimates on landowning asymmetries in 2002.16 This has made the Philippines
one of the most unequal rural societies in Southeast Asia, where comparable
ratios of our regional neighbors such as Indonesia (0.46), Thailand (0.47), and
Vietnam (0.53) are notably lower.17
The anti-agriculture state

That agriculture has been a neglected, under-invested sector has long been an
accepted fact, especially by small farmers and rural development advocates.
The roots of the problem, however, extend far beyond the issue of state
under-spending; from the structural adjustment programs to prioritization of
debt-servicing, agriculture was the sacrificial lamb of the rise of the neoliberal
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Chapter 3
policymaking orthodoxy. Capping it all was the lackluster performance of the

Comprehensive Agrarian Reform Program, which from its inception had been
burdened with all forms of resistance from the landed elite.
Poor public investment

To begin with, agriculture was one of the foremost casualties of the model
debtor strategy adopted by every administration since that of Corazon Aquino.
With automatic appropriations for debt-service payments eating up to 29
percent of the national government budget annually, available public resources
that could have addressed the worst of the sectors woes in the `80s, and its
ensuing doldrums afterwards, were reduced to pitiful levels.
The prioritization of debt, and the resulting poor investment in the sector, has
been the biggest culprit in the stagnation of our agriculture. The high watermark of spending during the Marcos dictatorship (5.5 percent of total state
budget) rapidly decreased to 3.3 percent in 1988, and 3.6 percent during
Gloria Macapagal-Arroyo.18 In the course of those two decades, national
government expenditure for agriculture, agrarian reform, and natural resources
per capita dropped from an already meager PhP121.24 in 1980 to an even
lower PhP104.91 in 2007. It was only in 2008or 25 years after the 1983
debt crisisthat the budget allocation for the sector again reached five percent
of the total19. Under the administration of Benigno Aquino III, however, the
budget share of agriculture once again declined, dropping to its lowest level at
roughly 2.3 percent in 2011.20
The government itself has acknowledged the gross inadequacy of state spending
as a problem. In a 2011 report, the Congressional Oversight Committee on
Agricultural and Fisheries Modernization concluded that, Although there
were other contributing factors, insufficiency of funds still accounts as the
primary reason for the lack of infrastructural development in the country.21
By 2010, only 49 percent of all irrigable lands were receiving official irrigation
services. The paving of roads, meanwhile, lagged for more than two decades;
although official government figures reported that 75.15 percent of major
national roads had been paved as of 2010, more than 69 percent of all local
roadsfar more likely to have been regularly used by small farmersremained
107
unpaved.22 Funding for the land reform program has similarly suffered and
public agricultural research has been negligible.
With the governments capacity to provide support services has all but withered,
widespread pawning of assets has emerged as the primary arrangement among
small farmers to obtain essential agricultural loans.23 Next to informal lenders,
subsidized credit programs or directed credit programs have been the major
source of credit for small farmers and fishers.24 Yet instead of prioritizing credit
in allocations for the already debt-diminished resources of the Department of
Agriculture, the government abolished a large number of DCPs in 1986.
Belying its name, the Agriculture and Fisheries Modernization Act of 1997
further withdrew resources from the sector, particularly from smallholder
agriculture. AFMA abolished all DCPs and consolidated the funds allocated
for them into the Agri-Industry Modernization Credit and Financing Program, a
lending program coursed through private banks. This was a hapless, ill-thought,
policy since in reality the agriculture sector has been the least prioritized sector
of commercial lenders, with an average share of only three to four percent
in the total loans granted by all banks from 1998 to 2002 (compare this to
86 percent in the services sector and 11 percent in the industry sector). Not
surprisingly, rather than smallholders, large agribusinesses and plantation farms
producing export crops like banana and pineapples have been able to access
these realigned marketized credit facilities.25
The government has retreated from its role as a comprehensive provider of
vital services, which in some cases exclusive market forces have filled up.
Smallholder agriculture and poor peasants have suffered from this, finding
farming an increasingly unviable proposition.
Unrelenting liberalization
As discussed in Chapter 2, the countrys accession to the WTO in 1995
opened the floodgates to agricultural liberalization, but even prior to this the
government had already embraced unilateral liberalization. In the `80s, the
government had embarked on an ambitious Tariff Reform Program through
two structural adjustment loans from the World Bank. By the early `90s, the
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Chapter 3
Philippines had one of the most open agricultural markets in Southeast Asia.
The Corazon Aquino administration, pre-occupied with repaying the foreign
debt and still corralled by particularistic economic interests, implemented stop
and go liberalization. This stood in sharp contrast to the relative consistency
with which the Ramos administration would pursue its liberalization agenda.
Under Ramos, the country would join the WTO and accelerate the trade
liberalization program.
Under the WTO, specifically under the Agreement on Agriculture, agriculture
import quotas were converted into tariffs and trade of sensitive products such
as sugar, coffee, potatoes, pork, poultry meat, and live animals was liberalized.
Although permitted to retain limits on rice imports, the country was also
required to admit minimum imports the equivalent of one percent of domestic
consumption in 1995, eventually rising to four percent in 2004.26 However,
because rice production by then had already been deprived of state support
and caught up in the broad atmosphere of agrarian malaise, the country ended
up importing more than it was obligated to in order to supply local needs. Worse,
these imports consequently depressed the price of rice, further discouraging
local farmers from selling their products. The country fell sharply behind the
production rate of its two top suppliers, Thailand and Vietnam, where the state
strongly supported agriculture.
Not only has the WTO membership transformed the countrys high degree
of self-sufficiency into a permanent state of import-dependence, it has also
steadily marginalized small farmers. Government customs revenues, which could
have been used for agricultural investment, have progressively been reduced.
Worst, employment projections have been off. In the 1994 ratification debates,
half a million jobs were projected to be generated yearly, but employment in
agriculture instead sunk to 10.8 million jobs in 2001 from 11.2 million in 1994.27
By early 2000s, government officials were themselves attesting to the disastrous
repercussions of Philippine inclusion in the WTO. No less than President Gloria
Macapagal-Arroyo herself proclaimed then a need to reengineer the WTO
to ensure there is a level playing field in the international trading regime.28
However, while temporary suspensions were made in the Tariff Reform
Program, commitments in the WTO were never calibrated. The country also
109
started negotiating and signing regional (with ASEAN) and bilateral trade and
investment agreements. With the fast-tracking of the ASEAN Free Trade Area,
most agricultural products, including the most sensitive unprocessed agricultural
products, were committed for inclusion in the free trade agreement.
CARP: back in the emergency room?

Watered down since its creation in 1988, and beset by incessant opposition
and inertia throughout its 25-year life, land reform failed to progress and is now
faltering. The ensuing conflicts, confusions, and uncertainties have thwarted
the programs expressed goals of delivering social justice to landless tillers and
raising the productivity of smallholders. So slow, in fact, has the programs
implementation that it has had to be extended twice, mainly through the
policy advocacy efforts of agrarian reform and rural development advocates.
In 1998, CARPs land acquisition and distribution component had been given
its first 10-year extension and an additional funding of PhP50 billion through
RA 8532. Then in 2009, CARP or RA 6657 was given five more years to
be completed through CARP Extension with Reform or RA 9700, signed 7
August 2009.
The stalling of the land reform program has been widely recognized to be
the outcome of protracted resistance of vested landed interests, a gross lack
of political will on the part of the Philippine government, and high levels of
incapacity, inefficacy, and long-entrenched corruption within the Department
of Agrarian Reform itself. To avoid redistribution, targeted landowners have used
every possible trick in the book and harnessed every possible legal loophole.
They subdivided their land among family members, sold their land to dummies
or proxies, converted land to commercial and industrial uses, tied up the process
in the courts, cut off funding for reforms, remade the facts on the ground, and
engaged in outright physical resistance. In a number of cases, farmers who had
received Certificates of Land Ownership were ordered off by the authorities,
even if they had already taken possession of the land and had been working it
for years.29 Even worse, intimidation and assassination of activists, including land
reform advocates, such as Rene Penas and Eric Cabanit, became commonplace
during the presidency of Gloria Macapagal-Arroyo, and continued in the Benigno
Aquino III administration.
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Chapter 3
Cutting off funding for the program was a critical weapon, especially during
the Arroyo administration. Congress repeatedly slashed the budget for land
acquisition, with little effort from other government officials to restore the level
of funding that was needed to make redistribution successful.
As one study co-sponsored by DAR and the German aid agency GTZ
(German Technical Cooperation) noted, From a financial perspective, the
glaring lesson learned is that the program has not been a priority of all branches
of government. Even if the Executive Branch could harness public interest to
promote development interventions such as CARP, a landlord-dominated
Congress could choke off the program by not providing the necessary support
for its logistical requirements.30
CARP is now the longest running social justice program being implemented in
the Philippines post-EDSA 1986 era. DAR reported that from 1987 to 2010,
some 2.3 million farmer beneficiaries were awarded lands under the program,
with at least one million farmer beneficiaries benefitting under its leasehold
component. Taken at face value, this immediately translates into 2.3 million new
small owner-cultivators and one million new leaseholders granted economic
and decision-making powers through agrarian reform. Unfortunately, time and
again, the veracity of these accomplishment reports have been questioned.31
In 2008, a 12-province survey by Centro Saka Inc. (an NGO working on agrarian
reform-related issues) was conducted to validate the accomplishment figures of
DAR on private agricultural lands. Even as it discovered that 95 percent of its
respondents had been awarded lands, 82 percent had been given titles, and
85 percent had been able to immediately occupy the lands they had been
awarded, with the survey also revealed that there were numerous ghost
beneficiaries in three of the 12 provinces studied. There was even a barangay
that had never existed, but which DAR cited officially as residence of awarded
beneficiaries under CARP.32
Records show that all land reform programs from 1972 until 2013 distributed
a total land area of 8.352 million hectares to 5.45 million beneficiaries.33
However, the second extension of CARP still suffers from delays and
underperformance. Coming at a later stage, and covering more problematic
111
landholdings, implementing the mandate of CARP/CARPER has become even

more challenging.
Under the administration of President Benigno Aquino III, much attention has
been focused on the fate of Hacienda Luisita, one of the biggest landholdings
in the Philippines, owing to its being owned by the Cojuango clan to which
the president belongs. The Supreme Court has declared the stock ownership
option chosen by the Cojuangcos as a method of agrarian reform to be
unconstitutional, paving the way for the redistribution of the land to the
plantations 6,000 plus workers. While developments around Hacienda Luisita
have grabbed the limelight, the progress of land reform elsewhere has been
painstakingly slow, and occasionally in danger of being reversed.
During the briefings on the 2014 budget, the Secretary of Agrarian Reform
admitted that land reform would not be completed by the end of June 2014.
Secretary Gil de los Reyes said that the backlog in undistributed lands stood
at almost 700,000 hectares, 450,000 of which were private landssome
of the most prized lands in the countrysubject to compulsory acquisition.
According to him, it would take up to the end of June 2016 to complete the
distribution process, two years past the deadline set by law.34
As it turns out, these remaining lands are the most contentious, most tedious,
and most difficult landholdings to acquire and distribute. It is hardly reassuring
that most of these continue to be concentrated in notorious bastions of
landlordism such as the provinces of Negros Occidental, Camarines Sur, North
Cotabato, Masbate, and Isabela. These provinces also happen to have higher
poverty incidences than other parts of the country. (See Table 1)
The DAR chiefs announcement of a unilateral extension of land redistribution has
added to the anxieties of small farmers and land reform advocates who already
have been alarmed by the streamlining of the Department of Agrarian Reform.
While the administration projects this as simply a rationalization of the DAR
bureaucracy, many in civil society sees it as the phasing out of the department.
Agriculture Secretary Proceso Alcalas admission that the functions of the DAR
would be divided between the Department of Agriculture and the Department of
the Environment and Natural Resources has lent credence to this interpretation.35
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Chapter 3
Asked what was blocking completion of land acquisition and distribution

according to schedule set by the law, the agrarian reform secretary pointed to
technical problems associated with land inventories, land record discrepancies,
and classification of lands.
It is hard, however, to conceal the real reason.
In many parts of the country, more and more cases of revocation of Certificates
of Land Transfer have been occurring, the most publicized of which are in
Quezon. Indeed, there has been a 4.6 percent increase in the number of
cases filed at the Agrarian Reform Adjudication Board between 2012 and
2013. There is a judicial counter-offensive by landlords taking place, and it is
likely to intensify as land reform finally focuses on the most productive private
lands in the Western Visayas and Mindanao. The struggle over Hacienda
Luisita case is not the climax of agrarian reform. The tenacity with which the
Cojuangcos had held on to the plantation might simply presage the intensity
of the coming battle in the Visayas and Mindanao, where big landed families
will use every legal loophole, along with coercion, to retain effective control
of their lands.36
The countrysides new face?

The lack of public investment, the stymieing of CARP, and the imposition
of trade liberalization and other policies biased against agriculture have all
contributed to the under-development that now afflicts the rural economy.
However, to echo what has been said in this books introduction, this
represents only half of the story. Even as structural adjustment and neoliberal
globalization have knocked off the agricultural sector from its privileged place
in the countrys traditional political economy, the agrarian sector has also been
subtly re-articulated or re-integrated into the emerging globalized circuits of
production and consumption in the archipelago.
This re-articulation of the agricultural sector is giving rise to a new face of
the countryside in both subtle and conspicuous ways. Both labor and capital,
like much of the rural landscape itself, have adjusted to the contemporary
113
conjuncture within and beyond the agricultural sector, with new actors and
forces coming to fore over the years.
CARPs uneven implementation and land conversion spree

While small farms have always dominated agriculture, the limited success in
the implementation of CARP further brought down farm sizes in the last three
decades. In the 2002 Census of Agriculture, the average farm size was 2.01
hectares, down from the average size of 3.59 hectares in the `60s. The number
of farms with size of less than one hectare has also increased dramatically. In
the `60s only 249,773 or 11.15 percent of total farms were below one hectare
in size and most farms (50.2 percent) were within the one to 2.99 hectare
range. In 2002, there were 1.9 million farms below one hectare, or 40 percent
of total.37
In 2010, Dr. Ted Mendoza of the University of the Philippines in Los Baos
estimated that average farm size decreased further to 1.4 hectares. This was
almost half a hectare down from the 2002 average farm size of 2.01 hectare.
This figure was almost at par with the average 1.7 hectare award normally given
to an agrarian reform beneficiary, according to the DAR.38
In Luzon, since the unfinished distribution of rice and corn lands under
Marcos Presidential Decree No. 27 was also included in CARP, changes
in land ownership structure and tenurial arrangements in the rice and corn
lands continued. As political economist Rene Ofreneo put it as early as
1980, though PD 27 and CARP implementation was limited, it nevertheless
dramatically altered the feudalistic structure in the rice and corn lands and
caused the emergence of a new class with a more varied structure from
what was previously the dominant class groupings of landlords, kasamas or
sharecroppers and independent owner-cultivators, and the minority grouping
of lessees or namumuwisan, sub-lessees, and landless rural poor.39
Agrarian reform has broken the traditional landlord-tenant relationship and
has replaced it with more impersonal and money-oriented contractual
arrangements involving either rural capitalists or what some analysts term as
the new haves.
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Chapter 3
The feudal landlords of the Philippine countryside were supplanted by rural

traders, retailers, and large farmers, especially as source of credit. In exchange
for loans and the supply of ever-more expensive inputs, small farmers prearranged the sale of their produce to these creditors, almost always at
underpriced rates. As much as four-fifths of all marketed agricultural surplus
was estimated by sociologist Peter Krinks to have been purchased by cartels of
these agricultural traders in 2002, comprising the biggest form of exploitation
of growers.40
Contract-growing arrangements and other contracts that orchestrated
agricultural activities, especially in the production and distribution of new
commercial crops, have been one of the major trends in the agricultural sector
over the past decades.41 These have enabled some former landowners to
retain their strategic influence over the agrarian political economy, even in the
absence of direct control over land and production due to the partial success
of land redistribution efforts.
In other cases, such as in the Visayas, agrarian reform implementation has been
sluggish and marked with conflict, violence, and harassment of potential farmer
beneficiaries due to the stiff resistance of local landowners against CARP. In
Mindanao, however, land- and plantation-owners have ensured that relations of
production in the agricultural sector would continue to favor their economic
interests by using the 10-year deferment granted to commercial farms to break
workers unions and to solidify their base within these unions in order to lay
the ground for retention of ownership or control over their landholdings. Rural
analysts Saturnino Borras, Jr. and Jennifer Franco claimed that on the eve of the
expiry of the deferment period in 1998, commercial farm owners successfully
retrenched militant workers while executing what they termed pre-nuptial
deals with their preferred beneficiaries.42 These deals were leaseback
agreements, joint ventures, contract growing arrangements, and other such
alternative venture arrangements the terms of which had been dictated by
commercial farm owners on their preferred beneficiaries.
With the implementation of these AVAs, farm workers who had been awarded
lands were forced to accept and maintain the status quo. Those who opposed
were either quickly marginalized or retrenched. Cases abound where conflict
115
broke out because the former landowner pitted two parties of claimants to
the plantation, one representing management and the other representing
the farm workers. Most of these AVAs have not been properly deliberated,
monitored, and governed by the DAR-prescribed guidelines for commercial
farms. The Presidential Agrarian Reform Council (PARC) is the approving body
on AVAs, while an AVA Task Force the main monitoring arm. Unfortunately, the
AVA Task Force was only created in 2003 and started functioning in 2005. By
then, most AVAs as dictated by commercial farm owners were already ongoing. Of the 20 applications for AVAs in 2005, only two have been approved
by the PARC.43
Similarly, the conversion of agricultural lands to non-agricultural uses was also
a primary evasion tactic of landowners against CARP. These conversions
pushed urban expansion in Central and Southern Luzon and other major
urban centers. Between 1991 and 1997 alone, 56,966 hectares of agricultural
farmlandnearly the same size of Metro Manilawas officially approved
both by the DAR and the Department of Justice for conversion to other uses.
Non-government estimates of the volume of land conversions throughout the
`90s suggest, however, that more than 200,000 hectares of farmland may
have been converted for development by realtors, both legally and illegally.44
In Cavite from 1991 to 1994, there was an alarming 617 percent increase in
the amount of rural lands withdrawn from agriculture. Two-thirds (65 percent)
of these lands were larger landholdings more than 25 hectares in size and
therefore covered by CARP.45
These conversions were facilitated under Philippines 2000 of the Ramos
administration and was further hastened when the DOJ came out with
Opinion No. 44 (DOJ 44), which stated that all agricultural lands reclassified
into residential, commercial, and industrial use before June 15, 1988 were
exempted from CARP. Earlier, under the Local Government Code of
1991, local government units (LGUs) had been given powers over land use
reclassification. To lay down the legal requirement for the conversion and
exemptions, landowners (many of whom were also elected officials at the
local level) wielded their power and influence to have their agricultural lands
reclassified for other uses by the local government.46
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Chapter 3
Land conversions were highest in the designated growth corridors like

CALABARZON, endangering food security and displacing agricultural labor. A
Philippine Center for Agrarian Reform and Rural Development study shows that
land conversions in Cavite drastically reduced local production, forcing food
vendors to source out the produce they sold from as far as Divisoria and Central
Luzon. Rising demands for rice and other food along with the influx of migrating
workers to the agri-industrial zone exacerbated the situation. The study noted
that while there were sectors which benefitted from the conversion, former
tenants and those farmers who chose to been farming became worse off.
Many of the former tenants who had sold their lands remained underemployed
or unemployed after the conversion.47 Those who remained in farming, on the
other hand, complained of higher production costs, strained relations with nonfarming neighbors, additional transportation costs, among others.
Rural migrants, new haves and aging farmers

Stagnating wages and productivity have compelled rural households to shift
livelihoods. As documented by agricultural economist Jeanne Frances Illo,
farming households have oftentimes responded to tough times by establishing
micro-enterprises and subcontracting garments production work by increasing
their levels of waged work and renting out their farming assets.48
Perhaps the most significant livelihood strategy that rural households have
adopted is labor migration, both within the country and abroad. Rural-tourban migration has been a long-term trend, with highly-agricultural areas
such as the Ilocos Region, Cagayan Valley, Western Visayas, Central Visayas,
Eastern Visayas, and Central Mindanao experiencing net outflows.49 Once
within the city, though, members of agricultural households have only been
able to find marginal forms of employment in the services (e.g. as sales clerks),
manufacturing (as factory workers), and the informal sectors.50 Alternatively,
when a family can pool enough money or undertake the necessary education
investments, overseas migration have become an option, with choice jobs in
nursing, physical therapy, and maritime fields.51 When a member of a rural
household is able to successfully secure overseas employment, the financial
returns have been more considerable.
117
In 2006, among Bulacan and Pangasinan farmers, families with a member

working abroad enjoyed annual average incomes 146 percent higher than
those without migrant members, while those with domestic migrant members
earned average incomes 8.8 percent lower. This extra income from foreign
remittances has enabled the rural households to invest more in the education
of their children, buy and upgrade farming and household assets, and construct
better homes.52
The promised gains of overseas work have become a major reason for pawning,
leasing and, in some cases, outright selling of lands in the rural areas. Households
aspiring to send a family member abroad use their lands as collateral to pay for
placement fees for overseas work, with family members sliding back into being
tenants or farm workers. This was the case for seven of 20 participants in a
focused group discussion conducted by Focus on the Global South in 2012
among heirs of agrarian reform beneficiaries in Baranggays Pulo and Mangga in
San Isidro, Nueva Ecija. The discussion revealed that to be able to send a family
abroad, the parents pawned their awarded land. The family members earnings
abroad were later used to redeem the lands, while some went into other
businesses such as rice trading and duck raising, or diversified into planting
watermelons, melons, and other crops.53
The rising numbers of OFWs has also prompted gradual changes in the agrarian
class relations. Among the farmer-OFWs interviewed in the FGD, at least 20
percent lent out money to other farmers, and required the latters land as
collateral. The arrangement allowed them to take control of the rice fields, and
in most cases they hired the farmers who had pawned the land as farm workers
who were then paid a share of the output. Such arrangements continued until
the debt plus interests were fully paid. In case the farmers were unable to
redeem their pawned lands, the initial transaction turned into a foreclosure
or what the farmers called as sanglang-bili. Because of this, some ended up
owning more than the prescribed seven-hectare retention limit under CARP.
Since most of the transactions were informal, the actual titles would not bear
this out especially if the lands had not been fully paid under PD 27 or CARP.
This occurrence in Nueva Ecija has been replicated in other areas. In 2010,
Ofreneo coined the term new haves to describe OFW families who have
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Chapter 3
accumulated enough money to buy up land and properties and to start

small-businesses such as rice trading, micro-lending, and jeepney and tricycle
operations.54 A decade earlier, geographer Philip Kelly had noted the same
patterns in Cavite: those with regular cash remittances from abroad were
usually the wealthiest residents, the new village creditors and renters, and
were owners of capital goods like rice mills, threshers, and hand-tractors; they
also lent operating capital to farmers. He also found that to some degree the
wealthiest class of tenant farmers also played the role of creditor/renter
directly cultivating their own land and were engaged in diversified range of
activities including fruits and vegetables cultivation, livestock, and even the
operation of sari-sari stores.55
The migration waves have drawn human resources away from agricultural
production in more ways than one. Overseas work immediately removes the
migrant in question from the agrarian economy, while the remittances sent by
overseas workers are often used to enable other family members to engage in
business and occupations other than farming. It also affects the aspirations and
attitudes of rural households.
For instance, Kelly, in his 2000 study of two Cavite villages, observed that like
many other rural Filipinos, the residents of Barangay Bunga had largely developed
aspirations to work overseas to improve their income. Since the benefits for
those who were able to send a family member abroad were demonstrated in
terms of solidly built houses, comfortable furnishing, and electrical appliance,
increasing numbers of families also sought work overseas as well. Wrote Kelly:
Like most other Filipino villagers, people in Bunga aspire to the foreign
currency earnings of working abroad and the financial security that it
can provide in a local context. Relatively few households have had such
an opportunity, but the benefits to those that have are immediately
apparent. []
Although the numbers involved in overseas work remain relatively
small its effect is felt beyond this number alone. For every person that
is abroad, or who has previously been abroad, there is one person, or
perhaps more, who need not engage in the grueling work involved in
119
harvesting or planting rice because of the dollar income that is coming

in. In addition, the possibility of working abroad has an effect on the
aspirations and work attitudes of the younger generation. Thus, in one
case, a farmers son could refuse to work for his father while he did
nothing but wait for his papers to come through to become a seaman.56
Another lasting impact of rural out-migration has been the loss of the younger
generations and second liners in farming. Indeed, it has been widely noted that
the waves of migration to the urban areas produced a youth bulge.
In a 2004 study by Xenos and Gultiano, it was found that 19 percent of all youth
in Metro Manila and 10 percent of those in other urbanized areas had lived
in another province or rural municipality only five years earlier. With overseas
work and urban employment as options, a great disinterest towards farming
seemed to have prevailed among the children of peasants. Paraphrasing Kelly,
subsistence agriculture appeared to have gradually become an anachronism
in the minds of the younger generation, only reinforced by the commonplace
perceptions among farmers themselves that their occupation was lowly.57
The ageing population of farmers has become a major concern among civil
society advocates, government, and policy makers. A 2008 survey by the nongovernment Philippine Peasant Institute on small owner-cultivators found that
the farming sector was an ageing population. Out of the 1,816 respondents
covering six crops across the country, 80 percent were 40 years old or older,
with 52 percent belonging then to the 40-59 year old range. A quarter (24
percent) was at least 60 years old or older, and there were even farmers aged
80 years old or older who still farmed despite their age.58 In 2010, Dr. Ted
Mendoza of UPLB made a more alarming observation that farmers may be a
dying breed, because the average age of farmers had become 57 years and
rural youth labor decreased as younger generations left in search of off-farm
opportunities.59
This trend in the aging of Filipino farmers has not gone unnoticed, with TESDA
Director General Joel Villanueva, taking note of the need to address the ageing
farming population, saying that there is a need to create a pool of workers in
the agriculture sectorfarmers are aging and soon, there will be a dearth of
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Chapter 3
farmers in the country. Many echo this sentiment, and stress the likely impact
of the farmers ageing population and low farming incomes on the countrys
bid to achieve food security. There has been recognition that unless agriculture
is made an attractive option, it will continue to lose the young, with labor
shortages in the rural economy in the future becoming a threat.60
Powerful agribusiness
Despite the decline of the agriculture sector, a new class of rural capitalists
has emerged over the past two decades, i.e. rural bankers, rice millers, traders
of farm inputs and equipment, and small industrialists and businessmen, who
provide credit and alternative marketing outlet for farm produce. Some of the
previous landowners have ended up in this class, while others have found ways
to evade agrarian reform by parceling out their lands.
The other capitalists that have emerged are those who concentrated on
agribusiness, companies which provided the agricultural inputs and equipment
needed because of the Green Revolution. This is the reason why a big number
of big land-owning families, in many cases in partnership with trans-national
corporations have maintained their economic and political clout. As Quitoriano
puts it, the symbiosis of big landownership and politics defines the ability of
these families to maintain control of big landholdings against every conceivable
rule that should prove otherwise.61 This group includes landowner groups
(e.g. Philippine Banana Growers and Exporters Association/PBGEA) that
successfully lobbied for deferments under CARP or opposed environmental
bans by LGUs (e.g. the ban against aerial spraying issued by Davao).
Since the time of Macapagal-Arroyo, efforts to promote international
investments in agriculture have become aggressive. A 2010 World Bank
report listed the Philippines as the second most preferred destination for land
investments in the East Asia and the Pacific region with at least 3.1 million
hectares affected by these investments, in turn giving rise to fears of global
land grabbing.62 The government has actively encouraged developed
countries and/or foreign agribusiness corporations to go into contract farming
and joint venture or to lease large tracts in the country for the production, sale,
and export of foods and biofuels. These investments have been reflected as
121
accomplishments from foreign trips or negotiated under bilateral and multilateral

trade agreements like those with China and Japan.63
The World Bank, through its various sub-bodies, has facilitated this spate of land
investments in the country. The International Financial Corporation and Foreign
Investment Advisory Services have been helping the Philippines in its land
investment program. FIAS reviewed Philippine investment incentives in 2002,
with the objective of removing constraints to FDIs. In 2006, FIAS, working with
the Multilateral Investment and Guarantee Agency, again provided inputs for
the development of a program for foreign investment retention, expansion, and
diversification. In 2008 and 2009, FIAS together with the Board of Investments
identified a pipeline of potential investments in land in the Philippines amounting
US$1 billion, covering 200 new expansion opportunities for investors.64
These land investmentsepitomized by the 1.24 million hectare RP-China Farm
Deals of 2007has generated much attention in the context of the multiple
crises of food, fuel, finance, and climate that beset the global economy in the
latter half of the 2000s. The intermeshing of these crises have prompted foreign
governments like the Gulf States to acquire lands in the developing world to
safeguard their food and energy supply amid growing global vulnerabilities.
Land concessions by Philippine government to these foreign governments have
almost always been justified on flawed assumptions of the lands in question
being idle or marginal while the investment arrangements have been
trumpeted with premature, overly-optimistic estimates. Negotiations around
these arrangements have also been unsystematic and non-transparent. There is
no centralized public database of these foreign and domestic land deals, which
has made it difficult to gather conclusive information on their scope, substance,
and impacts.
Although not much information has been made available to the public on the
extent of land investments or land grabbing in the Philippines, it is clear that it
has already penetrated into Philippine agriculture.
In 2009, the Philippine Agricultural Development and Commercial Corporation
(PADCC) reported that 1.997 million hectares of agricultural lands in the
Philippines were being matched for investment by foreign governments
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Chapter 3
and agribusiness corporations. According to 2012 data from the Board of

Investments, PhP7.151 billion in approved foreign agricultural investments
poured into the country from 2003 to October 2012, with nearly 60 percent
of all investments coming in from 2008 onwards from various South Korean,
American, Thai, Dutch, Japanese, and other companies partnering with
Philippine firms.65
What remains unclear at this point, however, is how much of these investments
can be counted as proper land deals and how much agricultural investments
have taken place beyond the scrutiny of the BOI. PADCC, for one, has admitted
that it can only monitor investments directly negotiated with them, submitted to
them by investors or forwarded to them by the BOI. Direct negotiations done
at the local level, possibly between foreign investors and individual farmers/
farmers organizations and/or LGUs remain unmonitored and unreported. Only
occasional media reports shed light on some of these deals, like in the case of
the 94,000 hectares leased by South Korean company Jeonnam Feedstock
Limited for corn production in Mindoro Occidental.66
Other controversial projects have likewise been exposed such as the EcoGlobal Deal in 2009 and the A. Brown Oil Palm Plantation in 2011, both in
Mindanao.67 All these indicated that the hectarage already committed to land
investments as reported by PADCC may be understated. Investors involved
include not just foreign governments and their agencies (such as the NEH
Group of Bahrain and FEAICO of Saudi Arabia), but also private corporations
(like the non-agricultural SL Agritech and Metro Pacific Investment Corp.), and
global finance-backed prospectors (e.g. AgriNuture and the Black River Capital
Food Funds Holdings Pre. Ltd.).68 The non-transparent manner by which these
investments were negotiated raises concerns over the lack of coherence and
consistency in monitoring and regulating them.
These big land investments are marginalizing small farmers in two ways: they
push up the value of land and make small farms even more unviable, and they
encourage the shift of agricultural lands to non-food production. An additional
question is whether these investments are in accordance with laws on agrarian
reform, forest lands management, and indigenous peoples rights.
123
Initial studies on foreign land investments show adverse effects on agrarian

reform beneficiaries and non-CARP small owner-cultivators.
In Isabela and Quezon provinces farmers who leased their lands to foreign
corporations are now bankrupt and have been served notices of foreclosure
by the Land Bank, mainly because the promised increase in income did not
materialize.69 The lack of support services after land redistribution prompted
these farmers to lease their lands, often becoming marginal farm workers in
the new ventures. These investments were predominantly in bio-fuels, pushing
the farmers away from food production, and weakening their capacity to feed
themselves. This phenomenon now threatens the countrys food security as
these investments have not been made on idle, marginal, unproductive and
untenured lands as originally intended. The threat has already been observed
in the Aurora Pacific Economic zone cases, where rice production has been
affected in order to make way for the infrastructures of the Philippines newest
Freeport.70 In Sarangani province, Blaan women tribal leaders decry the hunger
in their community, as almost 500 hectares of land previously planted to rice,
corn, banana, and root crops were converted to jathropa production.71
In the case of Mindanao, the entry of investments in various agreements and
contracts like joint ventures, leaseholds, public-private partnerships (PPPs),
and the aggressive expansion of crops for biofuels all brought constraints on
the agrarian reform program. In 2010, the Alternative Forum for Research
in Mindanao (AFRIM) mapped out the entry of biofuel crops in the island
such as jathropa, oil palm, napier grass, and rubber. As new investments were
being promoted in contiguous areas, agrarian reform communities (ARCs)
were pushed as recipients of the agreements. But without transparency and
supervision on contracts, these have threatened farmer-beneficiaries and
cooperatives security in relation to control and access to the awarded land.
Instead of securing land for the ARCs, lands were brought back under the
management of former landowners or new investors, through various types
of contract. Other case studies have also uncovered that lands converted to
biofuels used to be planted to rice, some of which had irrigation facilities. Some
land deals have led to the cancellation of farmers CLOAs, violated their land
rights, and are feared to lead to a re-concentration of land ownership.72
124
Chapter 3
New vulnerability
The January 2014 Labor Force Survey73 dismayed many when it showed
that the country lost more than 810 thousand jobs in agriculture throughout
2013.74 Authorities were quick to defend that this was because, due to climatic
changes, the planting season also changed; those who were supposed to work
the farm in that quarter had to wait longer. The explanation did not cover
everything, but it pointed to a new vulnerability agriculture faced.
As a number of international studies have confirmed, the Philippines is one of
the most vulnerable to extreme weather events, adding to the constraints the
agricultural sector has to address. Rice is particularly a sensitive crop farmers
plant 60 percent of the countrys rice during the rainy season, a period when
strong typhoons has occurred in recent years. From 2000 to 2012, major
typhoons caused economic losses, estimated at $3.85 billion (see Table 2).
A substantial portion of these were agricultural losses. Inadequate support
services including the absence of crop insurance and direct compensation has
made the recovery after each disaster more difficult and relegated farming as
a high-risk undertaking.
Looking to the future

Data are still incomplete, and need to be coherently linked together, but the
threats to the countrys agriculture are evident. The sector has been losing
human resources; traditional farming households have barely kept up with low
productivity and even lower incomes. Land speculation and foreign investments
are adding upward pressure to land prices and to entice farmers to lease their
lands, some of them losing their CAR-awarded lands in the process. Migration
to the cities and abroad are opening up an avenue to escape rural poverty,
but it is not available to all. The problems in industry prevent the sector from
absorbing excess rural labor, making them suffer the blight of urban poverty.
The twin challenge then is the restoration of agriculture and the completion
of agrarian reform, on the one hand, and the revival of industry, on the other.
125
Table 1.
Top Provinces with Highest Land Redistribution Backlog, 1997, 2008, 2011
and Poverty Magnitude and Incidence, 2012
Provinces
Remaining Lands
for Distribution
in Hectares
under CARP
Poverty
(2012)
1997 (a)
2008 (b)
2011 (c)
Magnitude
(poor
population)
Incidence
(in percent)
Negros
Occidental
154,246
147,888
144,861
916,694
32.3
Camarines Sur
86,365
54,433**
63,042
771,984
41.2
Masbate
78,229
57,007
33,156
448,333
51.3
South
Cotabato
74,863
60,186
40,703
430,210
32.0
Negros
Oriental
69,391
34,892
24,027
638,466
50.1
Leyte
66,067
60,260
36,007
713,063
39.2
Albay
42,418
Not in the
top 10
Not in the
top 10
511,636
41.0
Northern
Samar
40,833
Not in the
top 10
Not in the
top 10
309,089
50.2
Iloilo
32,991
Not in the
top 10
25,019
580,937
26.2
Camarines
Norte
32,503
Not in the
top 10
Not in the
top 10
160, 390
28.7
Isabela
Not in the top 10
49,708**
57,730
365, 024
24.4
Lanao del Sur
30,311*
43,988**
39,567
687, 138
73.8
Maguindanao
Not in the top 10
Not in the
top 10
29,034
571,223
63.7
Sorsogon
Not in the top 10
32,796
Not in the
top 10
297, 931
40.7
Saranggani
Not in the top 10
30,161
18,450
269, 112
53.2
Based on National Statistical Coordinating Board data, February 2014
(a) Workable balance based on the Ramos Legacy in Agrarian Reform: A Transition Report. In 1997, Congress
debated first extension period of CARP and enacted RA 8532, which mandated an additional PhP 50 billion
funding for the programs land redistribution component.
(b) Based on DARs Data as of March 2008, which was computed and used by Focus on the Global South
staff during the Reform Carp Movement campaign.
(c) Based on the PARC-DAR Data, March 2011.
* ranked 12th in 1997.
** no explanations on why there was an increase in the 2011 figures.
126
Chapter 3
Table 2.
Estimated economic losses and human displacements from
storms cyclones impacting the Philippines, 2000 to September 2013
Year
Notable Typhoons
(1M + affected)
Affected Persons
Economic Losses
(in US$)
2013
(*Yolanda not included)
707,528
1.68
2012
Bopha
7,560,480
918.14
2011
Sendong, Pedring, Quiel, Juaning,

Falcon
9,468,676
527.24
2010
Juan
2,595,545
284.42
2009
Pepeng, Ondoy
12,221,663
932.70
2008
Fengshen, Halong
6,851,979
441.63
2007
1,922,309
10.22
2006
Reming, Milenyo
7,821,808
330.92
2005
20,011
2.0
2004
Marce
3,241,278
138.87
2003
466,261
35.302
2002
982,194
13.53
2001
Nanang, Feria
3,450,437
99.06
2000
Seniang, Reming, Edeng
6,187,431
83.46
63,497,600
3,853.17
TOTAL
Source of Basic Data: EM-DAT: The OFDA/CRED International Disaster Database. (2014). Retrieved 13 February
2014, from http://www.emdat.be, Universit Catholique de Louvain, Brussels (Belgium).
127
Notes
1 Data computed from National Statistical Coordination Board. National Accounts of the Philippines, 19462012. Retrieved 19 February 2013, from http://www.nscb.gov.ph/sna/2013/2nd2013/tables/1Q2Rev_Summary_93SNA.pdf
2 Computed from the National Statistical Coordination Board. National Accounts of the Philippines, 19462012. Retrieved 19 February 2013, from http://www.nscb.gov.ph/sna/; Cited in Chavez, J.J. and Fabros,
A. (2012). Philippine industry and employment: a snapshot. Issues, Views, Action. Quezon City: Action for
Economic Reforms.
3 Bernabe, R. (2007). Potential impact on Philippine agriculture: bilateral and regional free trade agreements.
Rural Development Review, 1(2), 4.
4 National Economic and Development Authority. (2013). Philippine development plan 2011-2016 :
competitive & sustainable agriculture & fisheries sector (Chapter 4), 102. Retrieved 10 October 2013,
from http://www.neda.gov.ph/wp-content/uploads/2013/09/CHAPTER-4.pdf
5 Balisacan and Hill, (Eds.), The Philippine economy: development, policies and challenges. Quezon City:
Ateneo de Manila University Press, 178.
6 Krinks, P. A. (2002). The economy of the Philippines: elites, inequalities and economic restructuring.
London: Routledge, 105, 113.
7 Bureau of Agricultural Statistics. Philippine agriculture in figures, 2012. Retrieved 10 October 2013, from
http://countrystat.bas.gov.ph/?cont=3
8 Virola, R. A. (2011, August 8). Rice self-sufficiency or rice security?: some statistics on rice and
exports. Statistically Speaking. Retrieved 10 October 2013, from http://www.nscb.gov.ph/headlines/
StatsSpeak/2011/080811_rav.asp#tab4
9 Tobias, A. et al. (2012). Handbook on rice policy for Asia. Los Baos, Philippines: International Rice
Research Institute. Retrieved 10 October 2013, from http://books.irri.org/9789712202858_content.pdf
10 Balisacan and Hill, (Eds.), The Philippine economy: development, policies and challenges. Quezon City:
Ateneo de Manila University Press, 180.
economy of permanent crisis in the Philippines. Quezon City: University of the Philippines Press, 142.
12 Valencia, C. (2013, April 12). Agri trade deficit widens by 30% . The Philippine Star. Retrieved 19 February
2013, from http://www.philstar.com/business/2013/04/12/929582/agri-trade-deficit-widens-30
13 Chavez, J.J. and Fabros, A. (2012). Philippine industry and employment: a snapshot. Issues Views,
Action. Quezon City: Action for Economic Reforms; Valencia, C. (2013, April 12). Agri trade deficit
widens by 30% . The Philippine Star. Retrieved 19 February 2013, from http://www.philstar.com/
business/2013/04/12/929582/agri-trade-deficit-widens-30
14 Tabuga, A.D. et al. (2012). Poverty and agriculture in the Philippines: trends in income poverty and
distribution. Philippine Institute for Development Studies Discussion Paper, No. 2012-09, 27.
15 Tabuga, A.D. et al. (2012). Poverty and agriculture in the Philippines: trends in income poverty and
distribution. Philippine Institute for Development Studies Discussion Paper, No. 2012-09, 12.
16 Focus on Poverty. (2012, January 25). Poverty in the Philippines: resource inequality. Retrieved 10 October
2013, from http://www.focusonpoverty.org/poverty-in-the-philippines-resource-inequality/
17 Food and Agriculture Organization of the United Nations. Table 1- Number and area of holdings, and Ginis
index of concentration: 1990 round of agricultural censuses. Retrieved 10 October 2013, from http://
www.fao.org/economic/the-statistics-division-ess/world-census-of-agriculture/additional-internationalcomparison-tables-including-gini-coefficients/table-1-number-and-area-of-holdings-and-ginis-index-ofconcentration-1990-round-of-agricultural-censuses/ar/
18 Philippine Government. (2012, July 24). 2013 Budget message of President Aquino. Official Gazette. Retrieved
10 October 2013, from http://www.gov.ph/2012/07/24/2013-budget-message-of-president-aquino/
19 Bureau of Agricultural Statistics. Philippine agriculture in figures, 2012. Retrieved 10 October 2013, from
http://countrystat.bas.gov.ph/?cont=3 and Presidential Agrarian Reform Council (2011)
20 www.gov.ph/2010/08/24/2011-budget-message-of-president-aquino/
21 Congressional Oversight Committee on Agricultural and Fisheries Modernization. Infrastructure :
executive summary. Retrieved 10 October 2013, from http://cocafm.gov.ph/wp-content/uploads/
downloads/2011/02/Infrastructure.pdf
128
Chapter 3
22 National Economic and Development Authority. (2013). Philippine development plan 2011-2016 :
competitive & sustainable agriculture & fisheries sector (Chapter 4), 102. Retrieved 10 October 2013,
from http://www.neda.gov.ph/wp-content/uploads/2013/09/CHAPTER-4.pdf
23 Ballesteros, Marife. (2003). Property rights in land reform areas. Philippine Institute for Development Studies
Policy Notes, No. 2003-14, 3.
24 Llanto, G. M. (2005). Rural finance in the Philippines: issues and challenges. Makati City, Philippines:
Philippine Institute for Development Studies.
25 Llanto, G. M. (2005). Rural finance in the Philippines: issues and challenges. Makati City, Philippines:
Philippine Institute for Development Studies.
26 Bello, W. (2005). The anti-development state: the political economy of permanent crisis in the Philippines.
London: Zed, 141-143
27 Bello, W. (2009). The food wars. London: Verso, 158.
28 Bello, W. (2005). The anti-development state: the political economy of permanent crisis in the Philippines.
London: Zed, 179.
31 Manahan, M.A. (2013). The state of agrarian reform under President Benigno Aquino IIIs government
beyond the numbers: a struggle for social justice and inclusive rural development. Quezon City: Focus on
the Global South-Philippines.
32 Flores-Obanil, C. B. (2008) Private agricultural land distribution under CARP. Quezon City: Centro Saka Inc.
33 Data is for 1972-2012 and cover the accomplishments of both DAR and DENR. February 5, 2014,
Congressional Hearing of Committee on Agrarian Reform, House of Representatives. Presentation of
Secretary Virgilio de los Reyes.
34 See Walden, B. (2013, September 16). Waterloo for agrarian reform. Philippine Daily Inquirer. Retrieved 10
October 2013, from http://opinion.inquirer.net/61273/waterloo-for-agrarian-reform
35 Walden, B. (2013, September 16). Waterloo for agrarian reform. Philippine Daily Inquirer. Retrieved 10
36 Walden, B. (2013, September 16). Waterloo for agrarian reform. Philippine Daily Inquirer. Retrieved 10
37 Bernabe, R. (2007). Potential impact on Philippine agriculture: bilateral and regional free trade agreements.
Rural Development Review, 1(2), 4.
38 Mendoza, T. (2011). Agriculture during President Gloria Macapagal Arroyo: the challenges under Pnoy
administration. Paper discussed during the series lecture series Re: UP Assessment of the Presidency
andAdministration of President Gloria Macapagal Arroyo (2001-2010). Held at Center for Leadership,
Citizenship, and Democracy, NCPAG, UP Diliman Quezon City, on 18th November 2011.
39 Ofreneo, R. (1980). Capitalism in Philippine agriculture. Quezon City: Foundation for Nationalist Studies.
London: Routledge, 104.
London: Routledge, 141-142.
42 Borras, S. Jr. and Franco, J. C. (Eds.). (2005). On just Grounds: struggling for agrarian justice and citizenship
rights in the rural Philippines. Manila: Institute for Popular Democracy.
43 Flores-Obanil, C. and Manahan, M.A. (n.d.). Leaseback arrangements: reversing agrarian reform gains.
Written for the Peoples Campaign for Agrarian Reform Netwrok, Inc. (AR Now!) in collaboration with the
Philippine Center for Rural Development Studies (CENTRO SAKA Inc.)
44 Ochoa, C.L. (1999). The rural sector and the Ramos administration. Kasarinlan, 14(3/4), 171. Retrieved 10
October 2013, from http://www.journals.upd.edu.ph/index.php/kasarinlan/article/viewFile/1419/pdf_61
45 Cardenas, D. C. (n.d.). Effects of land-use conversion on local agriculture the case of Cavite, Philippines.
Retrieved 7 June 2014, from ftp://ftp.fao.org/es/esa/beijing/cardenas_landuse.pdf
46 Ochoa, C.L. (1999). The rural sector and the Ramos administration. Kasarinlan, 14(3/4), 171. Retrieved 10
October 2013, from http://www.journals.upd.edu.ph/index.php/kasarinlan/article/viewFile/1419/pdf_61
47 Cardenas, D. C. (n.d.). Effects of land-use conversion on local agriculture the case of Cavite, Philippines.
Retrieved 7 June 2014, from ftp://ftp.fao.org/es/esa/beijing/cardenas_landuse.pdf
48 Illo, J. F. (n.d.). Labor in Agriculture and Fisheries, 10-11.
49 Porio, E. (1997). Urban governance and poverty alleviation in Southeast Asia: trends and prospects.
Quezon City: Center for Social Policy and Public Affairs, 23.
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50
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Illo, J. F. (n.d.). Labor in Agriculture and Fisheries, 9.

Illo, J. F. (n.d.). Labor in Agriculture and Fisheries, 13.
Illo, J. F. (n.d.). Labor in Agriculture and Fisheries, 15-16.
Focused Group Discussion conducted by Focus on the Global South, headed by Flore-Obanil, C. B.
(2012).
Ofreneo, R. (2012). Migration and development: when will the turning point come? Philippine Institute
Growth and Prosper for All. Ed., Filomeno Sta. Ana, Action for Economic Reforms.
Kelly, P. (2000). Landscapes of globalization: human geographies of economic change in the Philippines.
Kelly, P. (2000). Landscapes of globalization: human geographies of economic change in the Philippines.
Porio, E. (1997). Urban governance and poverty alleviation in Southeast Asia: trends and prospects.
Quezon City: Center for Social Policy and Public Affairs, 32.
Unpublished research by Philippine Peasant Institute, in collaboration with the Japan Coalition for NGO
Cooperation (JCNC), 2008.
Mendoza, T. (2011). Agriculture during President Gloria Macapagal Arroyo: the challenges under Pnoy
administration. Paper discussed during the series lecture series Re: UP Assessment of the Presidency
andAdministration of President Gloria Macapagal Arroyo (2001-2010). Held at Center for Leadership,
Citizenship, and Democracy, NCPAG, UP Diliman Quezon City, on 18th November 2011.
Jaymalin, M. (2011, October 2013). Shortage of farmers looms with aging agri workers TESDA.
PhilStar.com. Retrieved 6 June 2014, from http:// http://www.philstar.com/headlines/742783/shortagefarmers-looms-aging-agri-workers-tesda
Quitoriano, E. (2008). In the hands of farm workers: can banana commercial farms survive? Pasig City,
Philippines: Development Academy of the Philippines.
Deiniger, K. (2010). World Bank: Large scale land acquisition: what is happening and what can we do?
Presentation to Land Day Event hosted by the Global Donor Platform and FAO/SDC/IFAD on 24 January
2010. Retrieved 10 October 2013, from http//www.donorplatform.org/content/view/332/210/ as cited
In Flores-Obanil, C. and Manahan, M.A. (2011, Janury-June). Three years to go: PNoy government to hurdle
landlords, inefficient system and deficient budget. Policy Review, Focus on the Global South Philippines,
1(3-4).
Flores-Obanil, C. B. (2010). Organized resistance. Inkota Brief, May 2010. Retrieved 10 October 2013,
from http://www.inkota.de/material/suedlink-inkota-brief/152-land-grabbing
Manahan, Mary A. (2011, October 19). Is Asia for sale? trends, issues, and strategies against land grabbing.
In Food Sovereignty in Southeast Asia, Kasarinlan, 26(1-2).
Data sourced from National Statistical Coordination Board. Investment Statistics 2003 to October 2012.
Retrieved 6 June 2014, from http://www.nscb.gov.ph/fiis/DataCharts.asp
Dela Cruz, R.J. (2011). The new conquistadores and one very willing colony: A discussion on global land
grabbing and the Philippine experience. Italy: International Land Coalition.
Dela Cruz, R.J. (2011). The new conquistadores and one very willing colony: A discussion on global land
grabbing and the Philippine experience. Italy: International Land Coalition.
Manahan, M.A. (2013). The state of agrarian reform under President Benigno Aquino IIIs government
beyond the numbers: a struggle for social justice and inclusive rural development. Quezon City: Focus on
the Global South-Philippines.
Carranza, D. T. (2011). Implications of biofuels investments on land rights and livelihoods of the rural poor:
three cases of biofuels investments in Luzon. Rural Poor Institute for Land and Human Rights Service, Inc.
(RIGHTS, Inc.). Powerpoint presentation. National Conference on Lands and Agro Investment Deals, April
14, 2011, Davao City.
Banzuela, R.S et al. (2012). Land grabs in the Philippines: a country case study. Preliminary unpublished
draft. PAKISAMA and AFA, 2012.
Dela Cruz, R.J. (2010). Agrofuels. Preliminary draft.
Carranza, D. T. (2011). Implications of biofuels investments on land rights and livelihoods of the rural poor:
three cases of biofuels investments in Luzon. Rural Poor Institute for Land and Human Rights Service, Inc.
(RIGHTS, Inc.). Powerpoint presentation. National Conference on Lands and Agro Investment Deals, April
14, 2011, Davao City.
Data from National Statistics Office. Labor Force Survey, 2013. Retrieved 12 October 2012, from http://
Data from National Statistics Office. Labor Force Survey, 2013. Retrieved 12 October 2012, from http://
Chapter 3
C h apter
A Labor Exporting State:

The Globalization of the
Philippine Migration Model
The Philippines offers the best and worst in overseas migration.
With four decades of sustained and large-scale labor export under its belt, the
countrys migration enterprise has engendered a national economy, staggering
in its scale, reach, and consequence. It is an economy significantly defined by
and extremely dependent on international labor flows. It is said that no other
phenomenon has paved the way for such deep and pervasive changes within
the Philippine economic and social landscape. Migration has led to some inroads
and gains, while at the same time emphasizing contradictions and challenges
that has characterized the countrys development trajectory and position in
global political economy.
Today, the Philippines ranks among the worlds top labor exporting nations,
with at least 10 percent of the population living and working abroad, a figure
which in itself indicates the countrys primary participation in global economic
affairs. The Philippines has deployed migrants in over 200 countries across the
globe, in almost all kinds of jobs. Filipino workers fill up practically the entire
roster of the worlds labor needs, from being manual laborers to skilled service
workers, to highly educated and experienced professionals. Filipino migrant
workers have been trying their luck overseas since the galleon trades during the
Spanish period, but the current migration flows have the distinction of having
the most extensive number of people deployed abroad and incomparable
dollar earnings remitted back home, transnational flows that keep the economy
afloat. That the countrys most profitable export has always been its people is
now undeniable.
131
Four decades of overseas labor migration

1970s. When overseas contract work was initially explored in the `70s, it was
presented as a short-term response. With the Middle East economic boom
requiring more and more workers, the Marcos administration expressed
optimism that contract migration would at least partly address unemployment
and the balance-of-payments position.1 During this period, unemployment
levels reached an average of 11.8 percent, double-digit figures which rose to
an all-time high of 12.7 percent toward the end of the Marcos dictatorship in
1985.2
The countrys overseas employment program was enshrined in the 1974
Labor Code (Presidential Decree 442), through a provision that aimed to
promote the overseas employment of Filipinos and to secure for them the
best possible terms and conditions of employment by creating the Overseas
Employment Development Board and the National Seamen Board. With the
temporary labor export framework laid down, the `70s ushered the outflow of
short-term contract workers to the Middle East, largely made up of engineers
and construction laborers who carried out numerous ambitious infrastructure
projects in Saudi Arabia and neighboring oil-rich nations.
Escalating conflict in war-torn Mindanao also resulted in the displacement of
thousands of Filipinos, some of whom migrated to Sabah, and were accepted
as refugees by the Malaysian government. Under the Marcos administration,
attempts to redirect rising agrarian tensions in other parts of the archipelago
also resulted in a complex and volatile societal configuration in Mindanao.
Following this government-facilitated internal migration to Mindanao under
Marcos, historical ties between Mindanao and Sabah developed an added
dimensiondisplaced Filipino citizens fleeing to the neighboring island.
1980s. Contract work statistics sharply rose in the `80s, soon after the
creation of important government bodies mandated to administer overseas
labor migration and maximize opportunities that were opening up in the Gulf
and other prospective destinations. From only 1,863 Filipino workers in 1971,
the number of overseas contract workers shot up almost 20 times to 36,035
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five years later. This number increased to 314,284 in 1982, the year the
Philippine Overseas Employment Administration was formed. In the `80s, other
contract work destinations would also open up. Beyond the Gulf countries,
neighboring Asian nations would start receiving more foreign laborers, as their
industrialization projects took off.3
In the Philippines, attempts to propel an export-oriented, labor-intensive
economy would not fare well. In fact, the spike in overseas deployment figures
in the 1980s coincided with the implementation of Structural Adjustment
Programs in the Philippines, which brought down average tariff rates significantly.
Rather than bolster the bid to industrialize, these programs would result in the
decimation of existing industries in the country, which in turn would displace
hundreds of thousands of farmers and workers.
1990s. With the entry of the Philippines into the World Trade Organization
regime, overseas migration intensified further, as implementation of the
liberalization program also escalated. Instead of reaping expected benefits in
employment and productivity, by following prescriptions such as acceding to
the Agreement on Agriculture, employment in agriculture dropped from 11.29
million in 1994 to 10.85 million in 2001.4
In the case of manufacturing, promising domestic industries that had
developed in the `50s and the `60s collapsed or weakened under the impact
of globalization and liberalization. The garments industry suffered tremendous
blows; the one million jobs it was capable of generating in this period would
drastically shrink (700,000 in factories and 300,000 in households) to a mere
10th of its previous size, only 100,000 workers by 2010.5
Alongside the devastation of agriculture and manufacturing, the country
also experienced a significant rise in the number of female overseas workers,
ushering in the oft-cited feminization of labor migration. By the `90s, more than
half of Filipino workers entering the global labor force were women. According
to deployment data from the POEA, female new hires have surpassed males
since 1993.
A Labor Exporting State: The Globalization of the Philippine Migration Model
133
Unlike preliminary trends in occupation and destination, with the male majority
taking on construction or transport jobs, over the course of the mid-`80s to the
`90s a notable increase in placements to more service-oriented occupations
occurred along with the rise in number of women migrants. A sizable
number of these female migrant workers ended up as domestic workers and
entertainers, among other vulnerable occupations that were considered prone
to exploitation, isolation, and abuse. Apart from deployment to the Middle
East, female migrants proceeded to other countries in Asia, such as Malaysia
and Singapore that begun to require domestic and other care workers as their
economies expanded. Other destinations such as Spain and Italy also opened
up. The feminization of migration brought with it other issues, especially after
the rising number of migrant women cases, including but not limited to those
of Flor Contemplacion, Sarah Balabagan, and Maricris Sioson, grabbed public
attention and became national tragedies.6
First decade of 2000s. By 2004, female new hires comprised 74 percent of
deployment. It was during this period that President Gloria Macapagal-Arroyos
government set an explicit target in annual labor deployment of one million
overseas Filipino workers in its Medium Term Philippine Development Plan
(MTPDP 2004-2010).7
Overseas migration has obviously become a necessary means for survival not
only of Filipino households, but also of the Philippine government. As Maruja
Asis (2006) observes, the government, not just its people, has come to rely
on overseas employment as a strategy for survival. After years of pushing the
official line that it does not promote overseas employment, the government set
a target in 2001 to deploy a million workers overseas every year.8 By 2006,
the one million mark was breached, reportedly the only jobs generation target
that was categorically met in the course of Arroyos six-year term.9
The impact of the global economic crisis during the years 2008-2009 further
demonstrated the vulnerable position of Filipinos working abroad. The global
crises exposed the Philippine governments constrained capacity to cope with
an influx of returning migrants and provide them adequate social protection.
According to reports, in 2009 a little more than 12,000 OFWs lost their jobs
after factories shut down and workplaces downsized at the height of the
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global economic downturn. Some six thousand workers mostly from Taiwan
and the United Arab Emirates were forced to go home, while thousands more
reportedly opted to stay overseas, some as irregular migrants without secure
job placements, thinking that their opportunity to earn was still better abroad
despite the dismal conditions they faced.10
Ironically, the crisis which sent thousands of these OFWs back home served
as a push to further intensify overseas deployment. When POEA figures came
in, the years 2008 and 2009 still showed increases in both deployment and
remittances over previous years, and this even in the face of global economic
slowdown.11
Labor-exporting state
In the last four decades, as response to the rising significance of migration in the
countrys political economy, the Philippine state has developed an advanced
infrastructure for overseas labor deployment and management. Today, the
Philippines is credited for a far-reaching complex of migration-related agencies
and mechanisms that as a whole systematizes migration flows, consequently
institutionalizing the states central role in labor export. (Annex 1 details this
elaborate labor migration infrastructure)
Over-regulation, under-performance, and mismanagement

The states migration management stance has a narrow approach to overseas
migration, using as indicator of migrant worker well-being the rise and fall in
dollar remittances and deployment. As some advocates have put it, theres a
tendency to reduce migrant Filipinos into commoditiesfor-exports consumers
with purchasing power to be captured, cases to be filed, casualties to be
repatriated, or victims to be saved. Migrant NGOs and civil society groups,
many of which have been organized to fill the gaps in policy advocacy and
service provision, openly challenge this implicit stance. They also point out
that some government programs tend to be inadequate, ineffective, and
reactive, lacking the benefit of careful planning, sufficient funding, and
adequate staffing.
135
A case in point is how the POEA conducts its job. The agency sets employment
guidelines and standards for various worker sectors, which include seafarers,
entertainers, and domestic workers (covering repatriation, minimum 15 days
paid leave, regular rest days, and so forth). It is tasked to monitor compliance
and adjudicate violation cases, as well as impose penalties and fines. However,
it has been raised that POEA seems understaffed for the tasks it is mandated
to handle. For instance, in 2007, POEA employed six full-time inspectors for
the countrys 1,422 active agencies and the 479 agencies that applied for
new licensesa ratio of about one inspector for every 317 agenciesIndeed,
POEA records indicate that not all agencies are inspected every year. Rather,
POEA prioritizes inspections, looking first at agencies whose licenses are up for
renewal and those that have a record of recruitment violations or have filed
requests to change their location or add office space.12
Apart from poor performance in monitoring recruitment agencies, POEAs
adjudication process has been riddled with delays and backlogs. Thus, it has
been suggested that while services are available for workers, they may end up
losing interest or faith in migration mechanisms and programs, given the slow
and tedious process involved.
POEAs monitoring and adjudication performance is just one source of a
recurring critiquethat the Philippine state tends to over-regulate migration in
design, while underperforming in practice.
Other irregularities associated with mechanisms for managing migration flows
have given state intervention in migration a bad name13. The OWWA-managed
overseas welfare fund, which pools the US$25 membership fees from
departing OFWs, is one example. Over 600,000 OFWs have been provided
some form of service, including the thousands who were repatriated from the
Gulf war in 1991, those affected by the war in Lebanon in 2006, and more
recently from Syria, using the PhP100M emergency repatriation fund set aside
for wars, crisis, and epidemics. While the importance of the OWWA fund is
widely acknowledged, there have been issues raised regarding transparency
and other irregularities in the management of these OFW dues. In the years
2003-2004, OWWA fund transfers to Philhealth, supposedly to extend health
services to migrant workers and their families, highlighted how limited the voice
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is of migrant workers in decision-making and the overwhelming control the

state has on a quasi-government funding facility.
The president appoints members of the OWWA board, and throughout various
administrations what has been seen is that the president exercises significant
discretion on the use and disbursement of OWWA money. After the controversial
2004 Presidential elections, cases against former President Gloria MacapagalArroyo were filed, due to alleged irregularities in the use of OWWA funds in the run
up to the 2004 polls. According to the case proponents, OWWA resources had
been used to distribute those controversial Philhealth cards (bearing the presidents
image) to voters, in order to shore up support for the incumbent president, who
was then running for a full term. Apart from reports regarding alleged diversion
of OWWA funds, Commission on Audit (COA) reports also showed millions in
unliquidated cash advances, fanning suspicion that the OWWA was turned into
a cash cow or a lucrative elections war chest, offering massive discretionary
funds, with almost negligible transparency and accountability crosschecks, readily
available for the use of politicians in power.14
Active promotion; limited protection

Beyond the controversies hounding POEA or OWWA, however, is government
migration management infrastructure, which has remained severely limited,
functioning mainly as a mitigating mechanism to address numerous attendant
issues that crop up throughout decades of intensified OFW deployment.15
Instances of restricted intervention have grabbed attention throughout the
years, several of these demonstrating the states incapacity, ineptitude, and/or
indecisiveness in the face of dire situations. The results have been detrimental,
the worst being the cases of migrant workers arriving in boxes (reports say that
on average, remains of six OFWs arrive in NAIA each day), while the supposedly
more fortunate ones figure out their own recourse, jumping out of buildings16
or hitch hiking to cross borders, left to their own devices. The various wars and
crises in the Middle East were a source of these recurring storylines (whether
in Iraq, or Kuwait or Lebanon). As these global stories of conflicts and wars
underscored the risks that imperiled Filipino migrant workers, other incidents
have also highlighted the suffering and abuses OFWs experienced even in times
of relative peace, as in the case of Filipino domestic workers in the Arab states.
137
In the 1991 Gulf war, thousands of Filipinos were forced to flee the conflict
zone, catching government largely unprepared to evacuate the massive numbers
of affected OFWs. Beyond repatriation, efforts to immediately respond to the
crisis and eventually place a deployment ban were openly challenged in various
ways, especially by migrant workers themselves who have time and again
subverted government deployment bans, serving a hard collective rebuke that
taken together seems to be saying, your effort to protect us is heartwarming
but we need work. In fact, in several news reports, OFWs interviewed have
said in different ways that they would rather risk death in a war zone, than
passively wait to die of hunger back home. In the face of poor prospects back
home, the complex reality now is that many migrants stay on or sneak back
into these danger zones, despite government efforts to protect and promote
their welfare.
As the Gulf war raged in the Middle East, another more quiet but insidious
situation was exposed in Japan in the `90s, where thousands of Filipina workers
had been deployed in clubs and bars. When the badly beaten and wounded
remains of 22-year old Filipina entertainer Maricris Sioson was flown back in late
1991, the Philippine public was confronted with yet another tragic illustration
of the vulnerabilities and paradoxes that constituted overseas Filipino migration.
While official records from Japan listed the cause of death as hepatitis, subsequent
autopsies conducted showed multiple head injuries and stab wounds, including
one resulting from the insertion of a blade in her genital area. The suspicious
circumstances surrounding Siosons unresolved death underscored the dangers
that countless Filipina migrant workers who go abroad for employment faced,
such as physical and sexual abuse that could cost them their lives.
Siosons case also exposed the limited jurisdiction of the Philippine state
to pursue and resolve cases that take place overseas. In later years, various
mechanisms would be instituted to protect Filipinas working in Japan. More
stringent entry requirements for entertainers would be put in place, aimed
at regulating the entertainment industry but then ironically resulting in higher
incidence of irregular migration. One example was the clandestine forms of
marriage migration that would serve as back door for thousands of Filipina
workers who had been denied legal entry through formal channels that became
too restricted and overly regulated.
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These events of the early `90s demonstrated some complexities of migration

and the tricky balance involved in governing these transnational flows,
underscoring the harsh and serious undertones that make up the migration
storyline. These are just some of the more glaring cases that show specific
ways by which the states twin mandatespromotion of overseas deployment
and the protection of OFW welfarerun in conflict. Governments protection
system tends to be seriously compromised by the overwhelming push for
overseas deployment. In other words, the prevailing thinking here is that it is
impossible to protect OFW welfare while still heavily promoting and relying on
overseas employment.
The non-government Center for Migrant Advocacy stresses that there cannot
be a model specifically on protection and promotion of the human and labor
rights of OFWs and their families if the overall thrust of the government is to
deploy a million OFWs annually.17
Then again, the clash between active intervention in marketing and deployment
on one hand and the mandate to protect, on the other, is even more
pronounced when looking at the more practical, logistical details of extending
assistance and protection to OFWs. Even as migrant protection mechanisms
are deemed inadequate or even poorly designed, the more obvious fact is that
migrant protection mechanisms simply cannot cope with constant increases in
demand for services, given the continuous outflow of Filipinos by the millions.
As Jeremiah Opiniano of Overseas Consortium puts it: While government is
trying its best to serve and protect Filipinos, the numbers may be too much for
resource-strapped agencies to handle.18
Increased demand; tighter controls

The logic behind this and other criticisms raised against the governments
migration management system is rather intuitive. First, as the state continues
to rely on overseas deployment, it also continues to expose its citizens to
attendant, inherent risks in overseas labor migration. Despite the widely
acknowledged benefits of overseas work, labor migration goes hand in hand
with increased vulnerability of foreign workers who are provided with less
protection and have limited access to services as non-citizens of receiving
139
countries. At the same time, once migrant Filipinos move abroad, the authority,
reach, and power of the Philippine government to protect and promote their
welfare become severely undermined.
In labor receiving countries, a parallel set of policies and institutions has similarly
evolved to regulate migration even as the demand for foreign workers continues
to grow. Middle East labor migration expert Atiya Ahmad writes, with the
booming of the Gulf states petrodollar-driven economies from the early `70s
onward, a vast and consolidated assemblage of government policies, social and
political institutions, and public discourse developed to manage and police the
regions foreign resident population. Anchored by the kefala or sponsorship
and guarantor system, this assemblage both constructs and disciplines foreign
residents into temporary labor migrants.19
Beyond the Gulf states, in varying degrees, there are in other parts of the
world similar temporary labor arrangements creating migration management
infrastructures and setting parameters and conditions by which foreigners
may stay and work. These restrictive structures are consequently engendering
vulnerabilities for migrant workers that are in turn aggravated by abuses in
labor relations, exploitation in the workplace, and marginalization in daily life
in a foreign country. In Malaysia, for instance, foreign worker documents are
registered under the name of the employer who has the prerogative to cancel
these documents, should they see it fit. Policies such as this are considered
a means of social control intended to regulate an influx of migrants in an era
of intensified labor migration. These restrictive policies also open up room
for arbitrary decision-making and abuses. These place the migrant workers
completely at the mercy of their employers, while they live and work
beyond the reach of their own states protection and authority. Under these
circumstances, migrants do not only have limited protection but also restricted
access to avenues of redress after an incident of abuse or exploitation has
occurred.20
Although not all employers abuse their power over migrant workers, there is
nonetheless a recurring pattern of exploitation and abuse recorded throughout
decades. These documentations further suggest the expansion of repressive
and un-free labor conditions in the global economy. Parameters set by restrictive
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regimes for labor management and social control directly or indirectly produce
indentured conditions for migrant labor. As a global system of legal and illegal
labor trafficking becomes even more vital to globalized economy, cases of
passport confiscation, contract substitution, non-payment of wages, inhumane
working and living conditions, and physical and sexual abuse continue to
mark the landscape of labor migration. In the case of domestic workers, the
combination of total dependence on their employers, their isolation from the
world outside the household, and restricted movement as a consequence of
prevailing views on women in certain societies, creates a situation rife with
physical, emotional, and sexual abuse. Worse, rape has become a common
occurrence, particularly in the Middle East, where millions of OFWs are
deployed and numerous domestic workers have reported giving in to the wishes
of the master in order to keep their jobs. With the predominance of women
among deployed workers, particularly in the Middle East, the expansion of
labor migration shows a global system in which labor trafficking and sexual
trafficking increasingly intersect.
Migration as necessity, migration as choice

Four decades of labor export have demonstrated that the best way to protect
OFWs is to ensure sufficient work opportunities in the Philippines; that overseas
migration should be seen as only one option and not the only option to earn a
decent living and improve the lives of Filipino families.
Incumbent President Simeon Benigno PNoy Aquino III himself has said during
the 2012 Abu Dhabi Dialogues held in Manila that to become an economic
refugee has become the fate of the Filipino and that the phenomenon has
become prevalent that it has now been given a namePhilippine diaspora.
He however emphasized that it was his governments mission to reverse this
trend and to make working abroad not a necessity, but a choice.
Beyond setting a favorable investment climate or managing migration, however,
the state needs to take a more active role in crafting and implementing a
comprehensive development agenda to revive the domestic economy.
141
Migration, if left unchecked, impacts on the job security of migrant workers.

The domestic workforce has now become more attuned to global labor needs,
leaving them vulnerable to shifts and turns as they individually respond to shortterm signals and conditions in international labor markets. The government,
however, has not been able to anticipate consequences and lay down longterm solutions to this.
The situation of nurses is a case in point. In the `90s and early 2000s, there was
a significant increase in the number of enrollees and in the number of nursing
schools in the country. At the same time, previous graduates of other courses
and professionals took up nursing degree in order to take advantage of the high
salary and immigration offers received by nurses abroad. While more and more
fresh nursing graduates were being produced, an increasing number of existing
health professionals was also migrating. But while the countrys health system
has been in dire need of experienced health professionals, it has not been able to
accommodate the growing number of nursing graduates each year. The drastic
response of some nurses has been to serve as volunteers or interns without
pay to gain experience that will make them more competitive in a constricting
global market. The alarming increase in the number of unemployed nurses has
pushed the Secretary of Labor to issue a statement advising jobless nurses to
explore openings in health related BPO accounts.21
Sustaining a migration economy

Oversees labor migration has been transforming the Philippine economic
landscape in ways unseen before and often unexpected, but it has not altered
the economy to such extent that factors contributing to the migration push will
be eliminated.
Functioning as an important release valve, both in times of crisis and times of
relative stability, overseas labor flows absorb an estimated 25 percent of the
countrys labor force and support at least five million households.22 While
overseas employment has been expanding steadily, domestic employment
generation still has not been growing fast enough to accommodate an increasing
number of new labor entrants each year. Amidst this backdrop, Filipino workers
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have continued to migrate to find work elsewhere, indicating that the temporary
release valve has now become a permanent catch basin. Surveys showed that
in 2010 one in every five Filipinos wanted to migrate to another country and
live there, if it were only possible. The Commission for Filipinos Overseas also
reported that in 2010 about 9.5 million overseas Filipinos comprised 4.4 million
permanent migrants, 4.3 million temporary migrants, and 704,916 irregular
migrants.23
Overseas migration has sustained infusion of income crucial to the survival of
millions of Filipino families and of the economy as a whole. Migrant remittances
have become an important source of foreign receipts and a critical driver
of consumption and overall economic activity. Former National Economic
Development Authority Chief, Cayetano Paderanga, Jr. has explained the
phenomenon: our economy will not collapse without remittances but we
would be faced with a difficult situation. Remittance is already a feature of the
economic situation.24
For those in the business sector, overseas migration and rising remittances now
constitute the important engine driving a unique business model operating in
the Philippines. In an interview with CNN, Jaime Augusto Zobel de Ayala chair
and CEO of the countrys oldest and largest conglomerate, the multibillion
dollar Ayala Corporation, said that consumption and remittances were at the
core of the Philippines unusual resilience, even amidst the global economic
slowdown. The world has gone through a fairly seismic shift. Whats been
quite extraordinary in the Philippines is that a component of the economy thats
been lacking in many developed countries, which is the demand component of
consumption, has been alive and well in the Philippines, he said.25
The Philippines ranks among the worlds top remittance-receiving countries,
alongside huge countries like India, China, and Mexico. From only US$103
million in 1975, remittance flows went up to a record-high of US$23.8 billion
in 2012, functioning as a stable source of financial transfusion that bankrolled
growth in various sectors in the economy.26
Remittances, on average, roughly equal 10 percent of GDP. The substantial
increase in OFW deployment and remittances has also bolstered the substantial
143
increase in net factor income from abroad (NFIA, now called net primary
income/NPI), which went up from6.5 percent of GNP (now, gross national
income/GNI) in 1985 to a high 24.9 percent in 2010.27
Remittances have also been performing strongly, even in comparison with
the countrys export earnings. When the countrys labor export program
begun, remittances only amounted to five percent of export earnings. Today,
OFW remittances amount to nearly half of export revenues. Compared to
the countrys main export commodities, OFW remittances have clearly
increased at a much faster pace, catching up with top earners, which included
electronics. In 2000, OFW remittances amounted to only 27 percent of total
electronics export earnings, which already stood at US$22.5 billion. In 2011,
OFW remittances hit the US$20 billion mark, while electronics exports stayed
relatively at the same level, US$23.7 billion.28
As source of dollar inflows, Filipino migrant remittances have also outranked foreign
direct investments, portfolio investments and official development assistance. In
2008, the Philippines registered US$1.4 billion in FDI, US$-1.3 billion in portfolio
investments and US$0.6 billion in ODA. These amounts paled in comparison to
OFW remittances of US$16.42 billion that same year.29
OFW-driven consumption boom

Remittances have a direct impact on household consumption. Consumption
comprises up to 70 percent of the Philippine economy, reports the government;
in 2007 private consumption, which constitutes the largest proportion of GDP
on the expenditure side, continued its stable growth at 5.9 percent fueled by
remittances from overseas workers.30
OFWs have often been urged to invest in the Philippine economy. There may
well be small enterprises financed by OFW money, but there seem to be hardly
any successful medium and big enterprises that owe their existence to direct
investment by OFWs. OFW money has, in the main, gone into consumption, and
the biggest beneficiaries of the OFW remittances have been local corporations
that have succeeded in cornering a huge chunk of that remittance money through
the sale of goods and services and directing it to investment calculated to corner
144
Chapter 4
even more of it. The migration phenomenon is, in fact, closely linked to the
emerging Philippine economic winners. Recognizing the reliability of remittances
and OFW consumption, more and more business targets are planned according
to migrant family spending patterns. Various surveys are being conducted to
examine consumption patterns of migrants and their families, reflecting the kind
of serious attention devoted to the OFW market. For example, the BSP conducts
a quarterly consumer expectations survey, with a special segment dedicated to
the spending behavior of overseas Filipinos.31
Migrant household behavior analysis now routinely feeds into forecasts and
expansion plans of a growing number of industry players, as businesses anchor
their models on chasing the OFW boom. For instance, within the real estate
sector, estimates show that more than 30 percent of migrant earnings are
allotted to household improvements or home purchase; while some company
reports record as much as 70 percent of yearly sales attributed to the OFW
segment. CDC Holdings recently reported Php900 million in sales mainly
from the OFW segment when it announced plans for new construction of
residential units designed for OFW families. Its the diversification to midlevel markets made possible by the OFW boom that is being credited for the
growth and reinvigoration of the real estate sector particularly in areas outside
Metro Manila. Even more established corporations such as Ayala Land have
also similarly ventured into this market, diversifying their high-end property
portfolio with new plans to construct more affordable housing projects that
cater to mass market segments. This growth in turn is spilling over to other
sectors, such as the construction industry, which according to the Philippine
development report grew 13.3 percent boosted by remittance fueled
residential construction in 2007.32
Other sectors, such as telecoms, airlines, and banking, have similarly fashioned
their investment and expansion plans with the intention of taking part in the socalled OFW boom. While advertising and marketing pitches have been shaped
according to the OFW thematic, customized products, such as family SIM
packages, joint banking, mobile phone transfers, and so forth, have also been
designed with migrant households in mind. Budget airlines, such as Cebu Pacific,
have announced the introduction of new flights, expanding to destinations with
a large Filipino population to be able to corner the growing OFW market.
145
The direction of this growth is at once global and local. Communications

companies, money transfers, banks, and real estate firms have begun to set up
offices in key OFW destinations, while also taking part in government-organized
road shows abroad. Locally, malls are also developing new promotions to
keep OFW income captured within the area of its commercial establishments,
through packaged services for OFWs and their families, consistently identified
as a major client base of shopping centers.
Businesses have been expanding with the goal of securing a substantial piece
of the OFW pie, which in turn is aimed at cornering the whole range of goods
and services that constitute the OFW family lifestyle. Major malls such as SM
and Ayala malls have launched OFW-targeted facilities such as Global Pinoy
Center and VIPinoy. SMs Global Pinoy Center is a one-stop shop dedicated to
migrant Filipinos and their families. Global Pinoy Center offers a members only
lounge in SM malls, which comes with a package of amenities, discounts, and
services that facilitate practically every possible transaction that households
would like to carry outfrom shopping to banking, to securing loans, and
receiving remittance transfers, of course carried out through SM corporations
banking arm, Banco de Oro, now the Philippines largest bank.
Remittances and big business

Big business interest in OFW dollars is evident throughout the entire chain of
transactions and consumption, from housing to malling to banking. Migrant
remittances circulate within the many arms of the few bustling conglomerates
in the country.
One dynamic link between OFW remittances and big business is illustrated
in the case of the multibillion-dollar remittance transfer industry, which
directly facilitates migrant money transfers. On the global level, mainstays
of the global remittance industry, such as Western Union, make billions of
dollars off transaction fees and foreign exchange revenue. Facilitating almost
an estimated fifth of remittances sent worldwide, Western Union enjoys the
largest share of the global remittance market at 18 percent. In 2011, the
company raked in US$4.2 billion in transactions fees, US$1.15 billion in foreign
exchange revenues, and US$1.16 billion in net income.33
146
Chapter 4
In the Philippines, the countrys largest banks, SMs Banco de Oro and the
Ayalas Bank of the Philippine Islands (BPI), have also been cornering the lions
share of the countrys remittance market. In 2008, BDO facilitated US$4.2
billion in remittances, equivalent to 25.7 percent of OFW transfers that year,
while BPI, sliding to the second spot, cornered US$3.75 billion of the remittance
market.34 Like Western Union, remittance transfer services offered by these
major players earn from transaction fees and foreign exchange revenues in the
billions.35
Key features of the Philippines remittance-driven economy can be traced
in the links between these top banks and the countrys major corporations,
which are part of multibillion-dollar conglomerates that have business interests
in virtually every sector of the economy. Banco de Oro is connected with
SM Prime Holdings, Inc, with interests in retail, malls and real estate. BPI, the
countrys oldest and erstwhile biggest bank, is part of the Ayala group of
companies, which also has a stake in real estate and property development,
telecommunications, utilities, retail and commercial complexes, practically the
whole range of services thats been thriving off OFW remittances. In 2011,
Ayala Corporation registered a PhP9.4 billion net income driven by its core
businesses, particularly banking and real estate. BPI and Ayala Land both
set record high in net income in 2011, at PhP12.8 billion and PhP7.1 billion,
respectively.36
While corporations identify clear gains from the migration economy, for many
OFWs and the rest of the country the benefits may not be as evident or
lasting, while the costs have remained high. Even as the global remittance
industry exemplifies the immense gain that can be made from moving migrant
earnings across the globe, viewed from the other side, it also points to several
flaws in the way this unique business model operates. In the course of these
global transfer gains, the migrants themselves barely have any say on how and
where these pooled resources should be reinvested.
According to Francis Calpotura of the Transnational Institute for Grassroots
Research and Action, corporations are profiting off high costs of sending
remittances, which deduct a significant share from individual migrant earnings.
Studies show that if money transfer fees were cut in half, 33 million people
147
could be lifted out of poverty in the developing world. Immigrant workers

spend up to a weeks wages to pay these monthly fees. For families in the home
country, the fee represents almost two months worth of wages, Calpotura
explained.
Easing domestic unemployment and poverty

The more disturbing aspect of this remittance-driven economy is that it spurs
economic activity and growth without generating domestic employment or
distributing gains from economic growth.
Economic expansion in the Philippines migration economy has hastened the
shift towards services, while further weakening both the industry and agriculture
sectors. Even as dynamic activity has spurred growth in the service sector, many
of these developments are in the areas of sales, real estate, and consumption
with limited forward or backward linkages that could catalyze growth in other
sectors of the economy. At the same time, services accounts for more than
half of total employment and about 40 percent of underemployment, which
further raises questions regarding the quality of jobs that are actually generated
in these segments.
While remittance-driven economy has not produced local jobs, the economic
growth in general has been exclusivist. Increased economic activity, particularly
the expansion in real estate and malls construction, have boosted profits for
some domestic corporations, but have hardly made a positive impact in other
key economic indicators. Over-all domestic income growth has remained
concentrated in the hands of a few big corporations directly benefitting from
OFW consumption. It is certainly not a coincidence therefore that mall magnate
Henry Sy has been hailed as the countrys richest man, and that among the
Fortune 40 Richest Filipinos, are people from similar or related type of business.
Growing dependence on labor migration may be easing pressure on the domestic
economy but this trend also conceals social and economic conditions that
would have been more pronounced had it not been for overseas migration, in
turn, making it more convenient for the countrys elites to postpone necessary,
yet long overdue structural reforms. While masking the problematic condition
148
Chapter 4
of jobless growth, overseas migration also lessens the blow of the absence
of an effective population policy. It has been raised that without remittance
inflows, the countrys employment crisis and poverty level would be at a much
worse state. What has been suggested is that without OFW migration the
number of unemployed Filipinos is expected to double.
With an additional three million workers that cannot be accommodated by the
formal domestic labor market, there will also be a significant increase in unstable
and/or provisional jobs in the informal sector, as well as drastic reductions in
OFW remittances and an anticipated slowdown in economic activity.37 Some
estimates put the number of poor Filipinos at 30.1 million in 2006, which was
over three million more than the 26.8 million indicated in official poverty figures,
had it not been for remittances.38
Unpacking the migration experience

The Philippines provides an important picture of how migration has transformed
developing countries in ways that exacerbate uneven internal development
and reinforce global disparities. Failing to address structural conditions that
underpin the push and pull of overseas labor flows, decades of labor export
have contributed to a shift towards a remittance-dependent and largely
consumption-driven, services-centered economy, which in turn has required
continued labor export expansion. Under such global conditions, peripheral
economies are designated the role of global labor suppliers, as their hollowedout domestic economies depend increasingly on overseas migration flows,
not only to rake in the much needed financial infusion from remittances, but
also to serve as band-aid solution to the failure to generate jobs at home. In
the case of the Philippines, the current model of consumption-driven growth,
characterized by the proliferation of shopping malls and residential property
development, has spurred a growth model that has benefited a few sectors,
without generating the much-needed development outcomes, particularly in
the areas of employment, productivity, and poverty levels.
In this regard, more and more people in developing countries seek to escape
conditions of economic stagnation and poverty, as the demand for cheap labor
149
continues to rise in both old and new centers of the global economy. Even
as these conditions have often been the result of the same dynamics of a
global capitalist system that has created prosperity in the developed world, as
well as widening disparity across the globe, sustained overseas migration and
remittance transfers appears to be propelling capitalist expansion along the
same lines instead of addressing factors that heighten the push and pull towards
labor migration.39
It is difficult to imagine a Philippine economy without OFWs and their
remittances. Indeed, what has taken four decades to evolve seems almost
impossible to undo, and not because of the time it has taken to reach this stage.
While the phenomenon still opens up opportunities, the challenge is how to
harness the resources and the breathing space labor migration provides, and
how to use it to help build a more robust domestic economic foundation. The
state again becomes a key playerwhat it does or does not do will seal the fate
of Filipino migrant labor.
150
Chapter 4
ANNEX 1
Elaborate labor migration infrastructure
The states migration infrastructure is a work in progress, developing gradually

over the last four decades the facilitation of deployment and mitigation of
negative consequences of migration. The government infrastructure took
shape following (1) the creation of specific agencies related to migration
processes and the delivery of programs and services for overseas Filipinos;
(2) the re-orientation of existing departments (e.g. the Department of Foreign
Affairs and the Department of Labor and Employment) to underscore explicit
responsibilities in the context of migration; and (3) the legislation of policies and
laws that advance the welfare and rights of Filipinos overseas.
With the active involvement of the state, overseas employment graduated from
being an individual initiative facilitated by small private or informal recruitment
networks like in previous waves of migration. Since the `70s, overseas
employment has been transformed into a government-regulated process, even
as there have always been explicit articulations that the Philippine government
does not actively promote overseas migration.
The origins of this policy framework traces back to the `70s, in several key
legislation and programs, starting with the New Labor Code of 1974. During
this period under the Marcos dictatorship, with the anticipated thrust to escalate
labor export, important agencies, including the National Seamen Board and the
Overseas Employment Development Board, were formed under the rubric of
what was then called the Ministry of Labor and Employment.
The formation of the Philippine Overseas Employment Administration and the
Overseas Workers Welfare Administration in the `80s signaled that the labor
export thrust was to go full swing. The POEA, created by virtue of EO 797,
assumed the functions of the Overseas Employment Development Board,
the National Seamen Board, and the overseas employment functions of the
Bureau of Employment Services; and was tasked to formulate and undertake,
in coordination where necessary with the appropriate entities concerned, a
151
systematic program of promoting and monitoring the overseas employment of

Filipino workers taking into consideration domestic manpower requirements,
and to protect their rights to fair and equitable employment practices.40
POEA regulates the recruitment industry, facilitates government-to-government
arrangements on worker deployment, while delivering pre-employment
services, including the conduct of public education and information campaigns,
pre-deployment orientation seminars, and anti-illegal recruitment seminars.
Originally called the Welfare Fund for Overseas Workers upon its creation in
1984, OWWA serves as the lead agency responsible for the protection and
promotion of OFW welfare and well-being. OWWA carries out its welfare
functions in conjunction with its mandate to manage the overseas welfare fund
pooled from the US$25 membership contributions collected from departing
OFWs. While the POEA generally covers OFW functions up until deployment,
OWWA develops and implements programs for migrant Filipino workers who
are already overseas, covering the delivery of welfare services and benefits,
including insurance and repatriation in times of crisis, drawing from OFW
membership contributions.41
Today, the Department of Labor and Employment, under which both POEA
and OWWA fall, also establishes Philippine Overseas Labor Offices, special
field offices operating alongside existing embassies and consulates of the
Philippines. Headed by the Philippine Labor Attach, an official of the DOLE,
the POLO can be found in various destination countries that host a sizeable
Filipino worker constituency.
The passage of the Migrant Worker and Overseas Filipinos Act of 1995 (RA
9042, later amended by RA 9422 and RA 10022), touted as the first legal
instrument of its kind in Asia, further altered the landscape of government
functions, reconfiguring the bureaucracy in recognition of the needs of a
growing OFW sector.42
Aside from DOLE, the Department of Foreign Affairs has also been reframed,
mandated to respond to the needs and concerns of the growing migrant Filipino
population. In RA 9042, the DFA along with the entire complex of Philippine
foreign service posts has been explicitly tasked to make the protection and
152
Chapter 4
advancement of migrant worker welfare as highest priority concerns. In

this regard, embassies and consulates the world over are required to extend
assistance to nationals, providing services to an extensive sector of migrant
workers in different parts of the world.43
Other pertinent policies instituted in the last decade include three laws signed
in 2003: the Overseas Absentee Voting Act (RA 9189, amended in 2012 by
RA); the Anti-Trafficking in Persons Act (RA 9208); the Citizenship Retention
and Reacquisition Act (RA 9225).
On top of these national laws, the Philippines is also signatory to a number
of regional and international commitments on migrant workers. The Philippine
government has also ratified the UN Convention on the Rights of All Migrant
Workers and their Families, as well as the UN Protocol to Prevent, Suppress and
Punish Trafficking in Persons, Especially Women and Children.
153
Table 1.
Annual OFW Deployment and Remittances, 1975-2012
Year
Deployed
Overseas
Filipino
Workers
Remittances
(US$ Million)
Year
Deployed
Overseas
Filipino
Workers
Remittances
(US$ Million)
1975
36,035
103.00
1994
719,602
3,008.1
1976
47,835
111.0
1995
653,574
4,877.5
1977
70,375
213.0
1996
660,122
4,306.6
1978
88,241
290.85
1997
747,696
5,741.8
1979
137,337
364.74
1998
831,643
7,368.0
1980
214,590
421.3
1999
837,020
6,794.6
1981
266,243
545.87
2000
841,628
6,050.5
1982
314,284
810.48
2001
867,599
6,031.3
1983
434,207
944.45
2002
891,908
6,886.2
1984
350,982
658.89*
2003
867,969
7,578.5
1985
372,784
687.2
2004
933,588
8,550.4
1986
378,190
680.44
2005
988,615
10,689.0
1987
449,271
791.91
2006
1,062,567
12,761.3
1988
471,030
856.81
2007
1,077,623
14,449.9
1989
458,626
973.0
2008
1, 236,013
16,426.9
1990
446,095
1,181.1
2009
1,422,586
17,348.1
1991
615,019
1,500.3
2010
1,470,826
18,762.9
1992
686,457
1,769.5
2011
1,687,831
20,116.9
1993
696,630
2,229.6
2012
1,802,031
21,391.3
Source: Philippine Overseas Employment Agency. OFW Statistics -- Compendium of Statistics. Retrieved 17
March 2014, from http://www.poea.gov.ph/html/statistics.html; and Bangko Sentral ng Pilipinas. Overseas
Filipinos Remittances, various years and 2008-2012 Overseas Employment Statistics. Retrieved 12 May 2014,
from http://poea.gov.ph/stats/2012_stats.pdf. Retrieved 17 March 2014, from http://www.rappler.com/
business/12143-philippine-economy-can-t-do-without-ofw-remittances-neda
154
Chapter 4
Notes
1 Tigno, J. (1990). International Migration as State Policy: The Philippine Experience as Model and Myth.
Kasarinlan, 6, 1-2.
2 Tigno, J. (1990). International Migration as State Policy: The Philippine Experience as Model and Myth.
Kasarinlan, 6, 1-2.
3 A few of these nations such as Taiwan and Korea also started off as migrant-sending countries that have
slowly graduated into more established destination economies, following a successful bid to industrialize,
overtaking the Philippines, contrary to earlier forecasts that predicted its rise all the way to the top of
Asias industrialized heap.
4 For the full discussion, refer to Bello, W., Malig, M.M., Docena, H. & De Guzman, M. (2004). The antidevelopment state: the political economy of permanent crisis in the Philippines. Quezon City: University of
the Philippines Press.
5 Ofreneo, R. (2011). Garments: Seeking protection through free trade? Business World, S1/4 to S1/5.
6 Flor Contemplacion, Sarah Balabagan, Maricris Sioson are Filipina migrant workers to Singapore, the
Middle East and Japan, respectively, who have become symbols of the multiple vulnerabilities, abuse and
injustice faced by OFWs. Maricris Sioson, a Filipina entertainer in Japan in the 1990s, returned dead a few
months into her stint in Japan supposedly due to hepatitis, although subsequent autopsy in the Philippines
showed evidence of foul play. In 1994, the execution of Flor Contempacion, blamed for the death of a
young Singaporean boy and another Filipina worker, has placed a glaring spotlight on government neglect
and limited capacities, after Philippine authorities intervened too late to change the outcomes of what is
considered a wrong and unjust case. The rape and near execution of Sarah Balabagan, who had killed
her employer in self-defense, also brought to public attention the plight of Filipina domestic workers in
the Middle east, many of whom suffer from various forms of abuses and rape, with little or no access to
justice and redress, where receiving country mechanisms tend to be skewed in favor of nationals.
7 Medium Term Philippine Development Plan 2004-2010.
8 Asis, M.B. (2006). The Philippines Culture of Migration. Retrieved 14 February 2013, from http://www.
migrationinformation.org/feature/display.cfm?ID=364.
9 Instead of 1.6 million jobs being created in 2005, only 700,000 new jobs were added to the labor market
or 43.7 per cent of the 1.6 million target. In 2006, job creation declined to 648,000 (40.5 per cent of 1.6
million) and even further down in 2007, to 599,000 (37.4percent). For full discussion, see Ofreneo, et al,
2008, Governments Job Target: A Report Card Trabaho, Saka, Pangisdaan, Negosyo: Ramdam ba ang
Asenso?
10 In a country where migration as a livelihood strategy is so deeply entrenched, those labor migrants who
have lost their jobs and returned to their country of origin hope to leave again as soon as possible (Reister,
2009). It was noted, too, that alternatives like self-employment are rather unpopular, citing that those who
were able to take a loan of PhP 50,000 (apporx. US $ 1,000) offered by the OWWA (Overseas Workers
Welfare Association) used the money to bridge the period before finding new employment abroad. (Ang,
A. and Custodio, A. M. (2012). Impact of the global crisis on overseas workers and the families-left-behind:
a snapshot of the Philippine case. Asian Social Science).
11 Recognizing the precarious position of its nationals, the Philippine government set down a crisis package
plan that extended assistance and funds for returning OFWs. The main program for OFW returnees
consisted of three options: (1) training for domestic placement; (2) training for overseas placement; and
(3) a loan of 50,000 pesos for entrepreneurial activity. Feedback from OFW returnees underscored how
unprepared and ill-equipped the state was even just to temporarily re-absorb a few thousand migrants,
a mere fraction in a sea of millions that have been accommodated by the global labor market. Reports
noted, for instance, how OFW families used the 50,000 peso loan not for entrepreneurial activity but
instead as a bridge fund to tide them over while their stream of regular income was cut. A study by
Ang and Custodio (2012) noted that The resilience of the OFWs themselves have somehow cushioned
the impact. There were OFWs who have returned to the country and sought government help while
most chose to stay in the host countries using up their savings and trying to look for other jobs in other
155
economic sectors or the shadow economy. This implies that despite retrenchment and unemployment,
most migrants avoided returning to the Philippines (yet). Those who have returned tried to leave again as
soon as possible. Many planned to work overseas for up to 10 years more before settling back, while
some intended to leave the country and establish life (be citizens) in their host countries. Ang, A. and
Custodio, A. M. (2012). Impact of the global crisis on overseas workers and the families-left-behind: a
snapshot of the Philippine case. Asian Social Science, 8, 3.
12 Aguinas, D.R. (2008). Managing Temporary Migration: Lessons from the Philippine Model. Migration Policy
Institute, Insight: Program on Migrants, Migration & Development.
13 For instance, recognizing the potentials of OFW remittances early on, the government has attempted to
play an active role not just in worker deployment but also in channelling remittances from abroad. For
one, the Bangko Sentral ng Pilipinas (BSP) has been tasked to monitor remittance flows as well as regulate
formal remittance channels, such as banks and more recently telecommunications companies. Indeed, the
Philippine migration enterprise is acknowledged as a profitable project not just for the multimillion dollar
recruitment industry, the remittance market or the workers themselves. The government has also tried
to cash in on this enterprise, in various ways, since the start of the labor export program, for instance by
issuing executive orders to dictate the channels by which remittances could be sent and establishing an
overseas welfare fund from pooled OFW membership fees, administered by a government appointed
board of directors. In the early 1980s, for instance, the Marcos administration issued Executive Order
857 more commonly referred to as forced remittance, requiring OFWs to send 50 to 70 percent of their
earnings through formal banking channels. This allowed government to have control over remittance flows
as well as partake of the earnings, which has not been possible with the informal padala system that was
more popular among OFWs at the time. The executive order was heavily criticized by migrant workers
and other groups for its impositions and punitive provisions. It was lifted in 1983.
14 Aning, J. (2012). New case filed vs Arroyo for OWWA fund transfer. Philippine Daily Inquirer. Retrieved 12
February 2013, from http://newsinfo.inquirer.net/126595/new-case-filed-vs-arroyo-for-owwa-fund-transfer.
15 For instance, it is constantly brought up that even while domestic workers and female migrants have been
enduring difficulties, abuse and injustice abroad, it was not until resounding public outcry following the
hanging of Flor Contemplacion that the government took notice. The truth of the matter here is that the
passing of a migrant workers protection law in 1995 (RA 8042) was borne out of the emblematic and
tragic death of an OFW who could not be assisted by the state, a sad reality that reflects underpinning
contradictions and limitations of a so-called model management strategy.
16 Herbert Docenas The Jumpy Ladies of Lebanon provides an incisive account of the plight of Filipina
domestic workers during the war in 2006. Docena, H. (2006, August 27). The jumpy ladies of Lebanon.
The Philippine Center for Investigative Journalism, Overseas Flipinos.
17 Center for Migrant Advocacy (CMA). (2009). The Philippines: A Global Model on Labor Migration?
18 Opiniano, J. M. (2010, June 12). Can RP go beyond seeing OFWs mitigating economys shortfalls? The
Philippine Star. Retrieved 12 February 2013, from http://www.philstar.com/letters-editor/583195/can-rpgo-beyond-seeing-ofws-mitigating-economys-shortfalls
19 Georgetown University and Center for International and Regional Studies. (2011). Migrant labor in the Gulf:
working group summary report. Doha, Qatar: Center for International and Regional Studies, Georgetown
University School of Foreign Service in Qatar, 3.
20 Recently, reports have surfaced pointing to sex-for-flight schemes perpetrated by some Philippine officials
abroad, accused of preying on distressed Filipina workers, who flee to government facilities for assistance.
21 Need a citation
22 Overseas flows here refer to both temporary and permanent migrants, which are estimated at 9.5 Million
in 2010, according to official figures from the Commission on Filipinos Overseas. The 2009 Family Income
and Expenditure Survey registered 5.03 million families receiving income from abroad.
23 Permanent migration has been rising steadily while irregular migration has considerably decreased, from
its peak at almost two million in the 1990s Commission on Overseas Filipinos, 2010 Stock Estimates.
Retrieved 14 February 2013, from http://www.cfo.gov.ph/pdf/statistics/Stockpercent202010.pdf.
24 Ordinario, C. (2012). Remittances: How Filipinos Abroad Keep the Philippines economy alive. Business
Mirror. Retrieved 14 February 2013, from http://businessmirror.com.ph/home/top-news/22545remittances-how-filipinos-abroad-keep-the-philippiness-economy-alive.
156
Chapter 4
25 CNN Talk Asia. (April 2012). Interview with Brothers running the Philippines Ayala Corporation, Jaime
Augusto Zobel de Ayala, Fernando Zobel de Ayala. Retrieved 14 February 2013, from http://www.
transcripts.cnn.com/TRANSCRIPTS/1204/27/ta.01.html.
26 Bangko Sentral ng Pilipinas, Overseas filipinos remittances. Economic and Financial Statistics. Retrieved 14
February 2013, from http://www.bsp.gov.ph/statistics/efs_ext3.asp.
27 National Statistical Coordination Board. (2014). Philippine economy grew by 7.2 percent in 2013; 6.5
percent in Q4 2013. Retrieved 14 February 2013, from http://nscb.gov.ph/sna/default.asp.
28 National Statistics Office. (2012). 2011 Survey on overseas Filipinos. Retrieved 28 February 2013, from
http://www.census.gov.ph/content/2011-survey-overseas-filipinos-sof
29 Data from the Bangko Sentral ng Pilipinas. Economic and Financial Statistics.
30 National Economic and Development Authority. (2011). Philippine Development Plan, 20112016. Retrieved 17 March 2014, from http://www.neda.gov.ph/wp-content/uploads/2013/10/
pdprm2011-2016.pdf.
31 According to the 2009 CES Survey results, 95.2 percent of respondents said they spent on food, while
65.8 percent, 49 percent and 10.5 percent said they spent on education, debt repayment and the
purchase of a house, respectively. Bangko Sentral ng Pilipinas, Overseas filipinos remittances. Economic
and Financial Statistics. Retrieved 14 February 2013, from http://www.bsp.gov.ph/statistics/efs_ext3.asp.
32 National Economic and Development Authority. (2011). Philippine Development Plan, 20112016. Retrieved 17 March 2014, from http://www.neda.gov.ph/wp-content/uploads/2013/10/
pdprm2011-2016.pdf
33 Western Union. (2011). Western Union Annual Report 2011. Retrieved 17 March 2014, from http://
ir.westernunion.com/files/doc_financials/WU2011AR.pdf.
34 ABS-CBN. (2009). BDO named RPs top remittance bank in 2008. ABS-CBN News. Retrieved 17 March
2014, from http://www.abs-cbnnews.com/business/07/18/09/bdo-named-rps-top-remittance-bank-2008
35 Bank of the Philippine Islands charges USD 11-13 to send $ 1 to $ 1000 dollars door to door from the US
to Metro Manila, while Banco de Oro charges between $ 9-11 dollars.
36 Ayala Corporation. (2011). Ayala Corporation Annual Report. Retrieved 17 March 2014 from http://
annualreport.ayala.com.ph/uploads/Ayala_2011_Annual_Report.pdf
37 Ordinario, 2012. Philippine economy cant do without OFW remittances Neda. Rappler.com. Retrieved
17 March 2014, from http://www.rappler.com/business/12143-philippine-economy-can-t-do-withoutofw-remittances-neda
38 While migration is improving household incomes and quality of life, it is doing little to improve inequality in
the country, with the disparity among different household groupings remaining high. See Pernia, E. (2008).
Migration, remittances, poverty and inequality: The Philippines. Discussion Paper No. 01. UP School of
Economics, University of the Philippines.
39 Even a recent ADB report concluded, In the near term, the Philippines services-led growth can be
sustained by strong consumption backed by remittance inflows and the BPO industry. However, strong
growth of manufacturing is needed to deal with the countrys long term development challenges of job
creation and poverty reduction. In this regard, migration has served as a crutch, which generated vibrant
activity in the service sector, while diverting attention away from industry-led growth. In fact, in the era of
the remittance driven economy, the industry component has shrank, from 38.8 percent of GDP in 1980
to 31.7 percent in 2009. Meanwhile, the service sector has grown to comprise 55.2 percent of GDP in
2009, from only 36.1 percent in 1980. (Usui, N. (2012). Taking the right road to inclusive growth: industrial
upgrading and diversification in the Philippines. Metro Manila, Philippines: Asian Development Bank).
40 Executive Order No. 797 Reorganizing the Ministry of Labor and Employment, creating the Philippine
Overseas Employment Administration, and for other purposes, Malacaang, Manila, 01 May 1982.
41 Overseas Workers Welfare Administration. Migrant Workers and Overseas Filipinos Act of 1995 (RA
8042). Retrieved 17 March 2014, from http://www.poea.gov.ph/rules/ra8042.html
42 Mandatory Remittances (EO 857) The deliberate thrust to reap benefits of the lucrative overseas employment
project can be gleaned from government intervention such as Executive Order 857, which in 1982 compelled
OFWs to remit a percentage of their earnings through the formal banking system. This was later revoked in
1983 following the outcry from migrants and from international agencies such as the ILO (Tigno, J. (1990).
International Migration as State Policy: The Philippine Experience as Model and Myth. Kasarinlan, 6, 1-2).
157
43 By virtue of Batas Pambansa 79, the Commission on Filipinos Overseas (CFO) was also earlier formed
in 1980 to promote the interests and well-being of Filipino emigrants and permanent residents abroad,
while preserving and strengthening ties with Filipino communities overseas. The commission provides
orientation seminars and offers programs and services for Filipino immigrants which encourage ties with
the motherland and diaspora pilanthrophy.

More recently, in 2010, a Joint Congressional Oversight Committee has been established, as per provisions
in the recent amendments of RA 9042. The committee is comprised of members of the Senate and the
House of Representatives, and steered by the chairperson of the Senate committee on labor, employment
and human resources and the House committee on overseas worker affairs.
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Chapter 4
C h apter
A Fragile Frontier:
Environmental Vulnerability and
Conflicts over Natural Commons
The Philippines is on the brink of an ecological crisis; its already fragile

ecosystems continue to be pushed to the limits.
On the surface, the situation appears to be the classic Garret Hardin
concept of the tragedy of the commons,1 a caution against the unabated
consumption of ecological resources that are open for exploitation by all.
Thus, although moneyed interests and corporations have been accused of
ecological exploitation, it has also become fashionable to blame the poor
for the destruction of the countrys natural environment and its ecosystems.2
Allegedly, poor swidden farmers cause the deforestation of the upland areas;
poor fishers with their unsustainable practice of trawling and dynamite fishing
overfish coastal waters and deplete marine resources; informal settlers pollute
waterways and rivers; and so on.
To manage the resources efficiently, Hardins notion guided policies that centered
on exclusion via market mechanisms. The belief is that privatizing access will
regulate and optimize extraction of natural wealth. The two key assumptions
here are that one, common tenurial systems lead to overexploitation; and two,
that the state can act as responsible regulator that can harmonize community
interests with private interests.
The countrys experience, unfortunately, has been about increased private,
particularly corporate, extraction of common pool resources producing the
crisis and systematically eroding community and environmental rights. In the
recent decade, concerns over climate change have drawn the Philippines into
159
global adaptation efforts, roping it into international negotiations and attracting

it to incentives-based initiatives.
In the meantime, enclosures, or what Karl Polanyi referred to as a revolution of
the rich against the poor,3 have highlighted equity and social justice issues that
underlie growing activism among communities.
Deepening crisis of the Commons

The Philippines experienced environmental vulnerability so massive that in the
1990s the plunder of resources(was) at a rate that is fastest in the world(so
that) there are a few places you can go in the Philippines without meeting some
sort of ecological disaster.4 (See Figure 1)
The Philippines depends on many vital ecological resources and functions for
the countrys economic activities and the survival of its people. Many of these
resources are threatened.
From 50 percent in the 1950s, the countrys forest cover and frontiers has
shrunk to 24.27 percent by the advent of the new millennium5, and further
declining to 19 percent in 2007.6 The loss of forest cover has led to disastrous
consequences, such as flashfloods (Ormoc, November 1991; Cagayan de
Oro, Iligan City and parts of northern Mindanao, December 2011) which has
claimed thousands of lives, displaced hundreds of thousands of people from
their homes, and destroyed livelihoods.
Freshwater resources are getting exhausted fast. Many regions are experiencing,
or are expected to experience by 2015, water shortages. Aggravating scarcity is
the worsening contamination of available freshwater sources, through leaching
of industrial, agrochemicals, and animal wastes in agro-industrial areas; and
through sub-surface discharges from latrines and septic systems, and infiltration
of polluted urban run-off. More than half of the countrys groundwater used
for drinking is contaminated with coliform, while 50 of its rivers are considered
biologically dead.7
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S t a t e o f Fr a g m e n t a t i o n : T h e P h i l i pp i nes i n T r ans i t i o n
The decline and degradation of coastal and marine resources are evident in
the depletion of fish stocks caused by overfishing and harmful fishing methods,
destruction of corals and mangroves, and pollution of waterways. Sedimentation
as a result of deforestation is deemed a major cause of coral damage, with
other factors such as mine tailings, direct extraction, and destructive fishing
methods contributing. Official (government) and alternative reports predict
that sustainable yield limits for fisheries may have already been breached8,
affecting the economic yield of our seas.
Extractive industries worsen watershed stress. It is estimated that one-seventh
of the mining and exploration concessions in the country contribute highly to
watershed stress; demand for water exceeds the available supply by at least
one-third.9 From 1986 to 2005, at least 10 mining operations were involved in
15 cases of water pollution and environmental degradation.10
A series of super typhoons that hit the countrySendong in 2010, Bopha in
2011, and Haiyan in November 2013further exposed the perils that extreme
weather events pose for the Philippines.11 Severe climatic anomalies such as
droughts, huge volumes of rains and floods, and increase in the number of
typhoons and tropical storms that visit the country annually, have also been
recorded. The Philippines ranks third in the list of countries most vulnerable to
climate change, only trailing behind Vanuatu and Tonga.12
The countrys vulnerability is expected to increase in the future. This is a worrying
prospect as the coping capacity of most of the population is constrained by
poverty and limited access to social capital. Worse, environmental governance
is bogged down by institutional fragmentation and lack of coherence.
Governing the environment

With relevant laws and policies that can be traced way back to the colonial
period, the Philippines is said to have among the best environmental protection
laws and regulations in the world. (See Table 1) However, it is not only in the
implementation that the country has fared poorly. The countrys environmental
governance has also been encumbered by its economic logic.
A Fragile Frontier: Environmental Vulnerability and Conflicts over Natural Commons
161
Environmental laws have been clearly linked to basic development policies.

They were crafted in response to increasing urbanization, industrialization,
and the pressure of rapidly growing population. After the Marcos regime, the
Philippine government under former President Corazon Aquino renewed hopes
for solving the countrys worsening environmental crisis. The government then
passed an impressive array of groundbreaking laws aiming to address various
ecological problems.
President Cory Aquinos main contribution was the creation of the Department
of Environment and Natural Resources as the main government agency
responsible for the sustainable use, management, and disposal of the countrys
resources and ecosystems. This was a departure from the Martial Law years
when environmental concerns had been addressed by small agencies with
limited resources and narrow mandates.
In recognition of the enormity of the problem and the limited capacity of the
state to respond to the environmental crisis, the 1991 Local Government Code
assigned power to the local government units to help solve environmental
problems.13 The LGC decentralized certain powers and devolved functions,
programs and projects on forest management, protected areas and wildlife,
environmental management, mines and geo-sciences development, and land
management. In principle and theory, such decentralization should encourage
local community and citizens participation in decision-making, planning, and
implementation of projects and programs, and should serve as their protection
against further environmental destruction.
However, environmental programs have provided little space for local
communities, especially forest users and dwellers, to be effective participants.
Local communities continue to be treated as passive receivers of projects, which
have been often donor-driven, and have fixed approach and methodology
and limited timeframe. Many state-led community-based forest management
programs are also paternalistic in their approach toward local forest users,
subsistence farmers, and indigenous peoples own practices and land claims.
This is reflected in the way that the state treats them: as occupants of state
protected lands, whose practices have to be restricted and who oftentimes
have to be evicted, especially from contested fertile lands.14
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The `90s represented a watershed in environmental planning and policy making.

President Fidel V. Ramos presented himself as the president who would make
the Philippines an economic tiger without compromising the environment.
Under his term, a string of relevant policies were institutionalized: the National
Integrated Protected Areas System of 1992; the Philippine Fisheries Reform
Code of 1998; and the Indigenous Peoples Reform Act of 1997.
President Joseph Estrada focused on pollution control through the Comprehensive
Air Pollution Control and the Solid Waste Management Act of 2000. President
Gloria Macapagal-Arroyos legacy was the Clean Water Act of 2004 and the
Climate Change Act of 2009. The current administration of President Benigno S.
Aquino III issued Executive Order No. 23 against illegal logging.
However, the overall neoliberal economic model has over-determined the
direction of environmental governance in the country.
The loosening of restrictions on foreign trade and investments, the privatization
of most state-owned companies, and the deregulation of markets, all responded
to the high global demand for raw materials such as wood, minerals, and natural
resource products. The governments development framework has also paved
the way for the dominance of resource-extraction and corporate interests in
the Philippine Commons.
Under President Fidel V. Ramos, this was highlighted by the Mining Act of
1995, which introduced aggressive minerals development across the country
and relaxed long-standing mining restrictions, allowing for 100 percent foreign
ownership of mining properties and auxiliary entitlements to water, timber,
and easement rights. In 2004, the Supreme Court declared the Mining Act
unconstitutional on the basis of its foreign ownership clauses, but this was later
on reversed due to the strong lobby by the Chamber of Mines and President
Gloria Macapagal-Arroyo.
President Benigno S. Aquino IIIs administration continues the friendly approach
towards mining, aiming at an almost fourfold increase in investments in mineral
development, processing, and exploration projects. Executive Order No 79,
issued in 2012, made some concessions to the concerns of rural and indigenous
163
communities by closing off some sensitive areas to future mining, but has
legitimized most existing mining licenses, including the most controversial ones.
Riding on a strong anti-corruption and anti-poverty agenda, the government
is also aggressively pursuing private-public partnerships as the key strategy to
generate opportunities for job creation and human resource development,
virtually the same framework as the build-operate-transfer schemes in the
1990s that bankrolled the governments privatization and public investment
program.15
Significant attempts to adapt to new challenges have been frustrated by business
considerations. With the threat of climate change in the mind of legislators, the
2008 Renewable Energy Act was passed with the aim of transforming the
countrys energy mix to one that would be predominantly reliant on renewable
sources like hydropower, solar, wind, and biomass. However, half-hearted
commitment on the part of the Executive and resistance from business, which
said renewable energy development would make power even more expensive,
stalemated any move in the direction of renewable energy. Instead, business
interests, notably that of the Aboitiz groups, took advantage of projections of
electricity demand to promote coal, the dirtiest energy sourceboth in terms
of its impact on health and climate changeas the answer to the power crisis.
From less than 10 per cent in 1991, coal plants now generate over 30 percent
of the countrys power. There are currently 11 coal-fired plants in the country,
and plans are being accelerated to set up more.16
The Aquino III administration has not stopped the momentum for coal production
and use. Indeed, the presidents first Secretary of Energy, Rene Almendras,
publicly proclaimed his goal of making the Philippines self sufficient in coal
and his plan of exploring 30 coal areas in the country.17 While the expansion
of coal industry is being justified as a temporary step while renewable energy
projects are waiting to come on stream, the reality is that a massive fossilfuel based energy infrastructure is becoming permanent, together with all the
damaging consequences for the environment and public health.
Decades of environmental damage are, therefore, not simply inevitable results
of rapid population growth, or economic and human activities. To a large extent,
they are consequences of a development model that relies on the corporate
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Chapter 5
private sector and the market as the arbiter of value and best allocator of
resources, which is often incompatible with environmental protection and
sustainable development.
The Philippines subscribes to ecological modernization,18 where economic
growth and environmental conservation/protection are made to work side
by side. Unfortunately, economic growth and a consumption-heavy pattern
of development have only made the environment a casualty, and the people
relying on them for livelihood and sustenance, virtual environmental refugees.
The agents of plunder

Population growth and the intensification of land use through agricultural
expansion and land conversion have been the convenient explanation for the
environmental stress experienced in the country.
The countrys population almost tripled since the `70s, exerting tremendous
pressure on natural resources. Not only has there been over-extraction,
increasingly dense population centers have also contributed to massive
pollution and solid waste generation.19 In the countryside, intensive pesticides
and chemical fertilizers use has been associated with long-term decline in land
productivity. This has been compounded by threats of soil erosion as one
of the most serious forms of land degradation.20 As the population grows,
economic competition for land also intensifies, prompting the conversion of
prime productive lands into non-agricultural purposes.
Climate change has recently entered the picture as the new culprit. But hardly
is the grave environmental vulnerability solely attributable to the usual suspects.
There is a great deal of truth in the claim that in the Philippines money easily
translates into economic power, dealing with the men who make enormous
profits out of nature would eventually lead to dealing with politicians and
military officials [whom] they control.21 The experience in post-EDSA, and
especially in the last decade, confirms exactly just that.
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Big money in natural exploitation

Access to natural resources through license agreements and permits has been
dominated by large-scale operators.
In 1992, the Asian Development Bank estimated that a commercial logger could
earn up to a net of PhP100,000 per hectare at first cutting. In the same year,
a study by the Washington-based Environmental Policy Institute revealed that
only 97 companies or families are parties to timber license agreements.22 TLAs
were purchased at low prices, and were called by a former DENR Secretary as
the privilege of the powerful.23 The low prices were part of the incentive
scheme instituted to attract private participation in the forestry sector.
Efforts to democratize forestry reforms24 reduced the number of TLAs to only
four by 2012, and only one of them is still in actual operation. But commercial
loggers still have found ways to circumvent this.25
By 1999, a TLA could be automatically converted into an Integrated Forest
Management Agreement granting a 25-year renewable contract to develop,
manage, protect and utilize 500 to 40,000 hectares of forest land.26 IFMA
holders were exempted from forest charges on plantation products and could
claim all relevant incentives under the Omnibus Investment Act.27 IFMAs also
enabled TLA holders to renew, for another 25 years, their tenure over state
forest land. Multinational corporations have continuously cornered TLAs and
IFMAs in upland areas.
Large-scale conversion of forests was originally intended to ease population
pressure, increase agricultural output, and extinguish pressures from the
peasantry and communist insurgents seeking agrarian reform.28 But forest
conversion has now become the main tool for expanding agribusiness. More
recently, this was augmented by the Biofuels Act of 2007 (RA 9367) as it
has allowed the expansion of plantation and non-food monocrop agriculture,
necessitating the clearing of forests. As expected, multinational companies,
mostly emerging ethanol producers from East Asia, in joint ventures with local
businesses have been the ones able to take advantage of the law.29
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Chapter 5
Decentralized development of special economic zones has also led to largescale land conversion, often involving cleared forest lands. The Aurora Pacific
Economic Zone and Freeport Authority is a case in point. Created through
RA 10083, the APECO seeks to convert 12,923 hectares of the Casiguran
municipality into an eco-tourism, agro-industrial, and commercial hub. Despite
protests from residents and advocates that the proposed ecozone would
undermine agrarian reform, lay to waste prime irrigated land, and displace
indigenous communities30, and despite too the projects temporary suspension
in February 201331, APECO is expected to eventually proceed as it comes with
appealing economic projections.
Finally, governments promotion of mining proceeds from expected windfalls
from investments. While advocates decry their measly contribution (less
than one percent of GDP and 0.5 percent of total employment in 20082011),32 mining companies have enjoyed full concessions allowed by law. As
of June 2012, six large-scale mining explorations were fully owned by foreign
companies. The explorations required more than US$50 million and cover
108,872.5 hectares of land in the country.33
The captured climate agenda

Given its currency, and the international support it generates, climate change
adaptation has become the newest opportunity for mitigating environmental
stress. Unfortunately, even this has been hijacked by big players. Marketbased climate change solutions, like the Reduction in Forest Degradation and
Deforestation and the Clean Development Mechanisms, are schemes by which
developed countries can buy credits from projects that supposedly reduce
greenhouse gas emissions in developing countries, instead of cutting their own
emissions in their own backyards. The government prioritizes them both as
climate-mitigation strategies and as sources of climate finance.34 However,
the investment angle seems to have overtaken the environmental goals these
programs are supposed to encourage, with the Philippine government packaging
them to attract foreign investors. There were 16 REDD-ready projects in the
country as of 201235, which the government hoped to leverage to attract other
investments in ecosystem services.
167
The promotion of REDD as forest conservation and climate change mitigation

strategy is clouded by concerns over its impact on community rights and control
over forest use, as well as on the broader issue of the commodification of
nature. The offset mechanism in REDD allows high greenhouse gas emitters
such as developed countries and corporations to purchase forest carbon credits
and avoid their responsibilities to cut emissions. It is a new permit to pollute36
that exposes precious natural resources to the risks of market volatility and
instability... and promotes new ways to extract revenues from nature... whereby
ecosystems and biodiversity are valued more in monetary terms than for the
varieties of life that they sustain.37
The CDM has not fared better. A Focus on the Global South special report
found that, not only has CDM benefitted mainly the countrys oligarchsthe
richest families and largest corporations that have interests in dirty industries
which have huge carbon footprints such as oil, gas and coal-based energy,
aviation and extractive industries like mining and loggingbut that some
projects funded by the CDM have had unclear climate change mitigation
value.38 CDM projects have become money-making schemes for corporations
and local elites.39 In fact, the multi-billion peso CDM may be promoting rather
than mitigating climate change by rewarding polluters with additional stream of
revenues.
The CDM has also been linked to the privatization of state-owned power
generation projects. Two CDM registered projectsthe Ambuklao and Binga
Hydro-electric Power Plantswere privatized under EPIRA and sold to SNAboitiz Power Benguet in 2008.40 These CDM projects involved the revival
of the grid-connected Ambuklao dam and the upgrading of the Binga Hydroelectric Power Plant.41 In September 2007, a month after the Philippine
government opened the bidding process, SN Aboitiz enlisted the services of a
private firm, Point Carbon, to advise the company on the CDM possibilities of
Ambuklao and Binga. The joint venture won the contract for the AmbuklaoBinga hydro power plants in May 2008; in September 2008 it submitted both
projects to the CDM Board.42 They qualified as CDM projects, as offsets to
fossil fuels.
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Chapter 5
An ominous alliance with IFIs

The policy thrust towards open access and exploitation did not just come
naturally. International financial institutions such as the World Bank and the
Asian Development Bank, in a bid to broaden the countrys sources of finance,
have supported these policies. These two IFIs provided technical assistance
and loans for the privatization and reform of the power, water, forestry, and
fisheries sectors. The ADB, for example, financed every Forestry Sector
Program in the period 1986-2012 amounting to US$100-120 million.43
The Philippines is also considered a pioneer of sorts in the ADBs private sector
operations. The country is one of the largest users of private sector loans
covering all modalities from equity investments to complementary financing
in the most significant sectors. The ADBs private sector operations extended
loans to two Philippine companies, the Masinloc Coal-Fired Power Station and
Marinduque Copper Mining Corporation, which became notorious for causing
massive and irreversible environmental destruction, human displacement, and
loss of livelihoods for host communities.44
The WB, on the other hand, was one of the major actors that pushed for
the passage of the Mining Act of 1995 and therefore was partly responsible
for the expansion of mining in the Philippines.45 Its private sector arm, the
International Finance Corporation, also extended loans and investments
to private mining explorations in the country. In 2012, the IFC approved an
equity investment of US$9.4 million to Mindoro Resources Ltd., a junior mining
company based in Edmonton, Canada operating in the Philippines. IFCs equity
investment supported MRLs resource drilling, feasibility and other studies,
and exploration activities for its nickel, copper, and gold prospects in Agata,
Agusan del Norte.46
Moreover, to bankroll the SN-Aboitiz Benguet Power projects that already got
CDM financing, the IFC provided it with a US$100 million loan.47
169
Inequity and exclusion from accessing resource

Celso Roque, former president of Haribon Foundation and Cory Aquinos DENR
Undersecretary, bluntly put it: poverty and the distorted distributional aspects
of the political economy have grave ecological consequences.48 Punctuated
by structural problems, the ecological crisis manifests as an equity issue.49
Negative impacts vary across sectors, but indigenous peoples, women, and the
rural and urban poor carry a disproportionately heavier weight.
Marginalizing indigenous peoples

Unequal land rights and deforestation intersect in the uplands50, aggravating
social injustices.51 Government usually assumes that forest lands and uplands are
uninhabited, marginal or unproductive, therefore justifying their appropriation
and conversion to other uses. Such assumption has effectively displaced
subsistence farmers, forest communities, and indigenous peoples, and has
disregarded their particular tenancy arrangements and production patterns.52
There are real physical changes in communities landscapes when a forest is
felled by logging, when minerals are extracted from the ground or when large
tracts of land are converted from agricultural to commercial, tourism, and
industrial uses. With communities lacking recourse, these changes have had
similar effects brought about by resource grabbing.
Indigenous peoples are among the most heavily affected by the ecological
crisis. Despite the safeguards provided by the Indigenous Peoples Reform Act,
IPs rights are routinely violated by mining companies. No less than the United
Nations Special Rapporteur for the human rights and fundamental freedoms of
indigenous peoples raised the alarm on this situation, noting:
Of particular concern are the long-term devastating effects of mining
operations on the livelihood of indigenous peoples and their environment.
The activities are often carried without their free, prior and informed
consent, as the law stipulates. Communities resist development projects
that destroy their traditional autonomy, community structures and cultural
values, a process described as development aggression. Indigenous
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Chapter 5
resistance and protest are frequently countered by military force

involving human rights abuses, such as arbitrary detention, persecution,
killings of community representatives, coercion, torture, demolition of
houses, destruction of property, rape and forced recruitment by the
armed forces, the police or so-called paramilitaries.53
By 2008, more than half of ancestral domains of IPs have been directly affected
by mining and logging operations, a great majority of which (72 percent)
operated without securing free prior and informed consent or FPIC.54 Cases of
misinformation, bribery, intimidation, and harassment in the operations of mining
in ancestral lands have been documented, as have been the increasing number
of killings and human rights abuses perpetrated on anti-mining communities
over the years.55
Unfortunately, the government has been slow in responding. For instance, it
has yet to act on the 2009 recommendation of the UN Commission on the
Elimination of Racial Discrimination on the complaint of Subanen leaders against
Toronto Ventures, Inc., a Canada-based mining company. The United Tribal
Council of Elders, representing IPs in Monkayo, Compostela Valley elevated an
FPIC violation case and desecration of sacred sites complaint against the mining
company to the UNCERD. The slow response of government has meant the
continued harassment of the IPs.56
The financial opportunities opened up by recent climate mitigation projects
have also contributed their share of threats, including exposing IPs and forest
dwellers to corruption by private interests. The Shift2Neutral company headed
by Brett Goldsworthy became notorious when it was found by an Australian
Court to have operated a fake carbon credits scheme by shifting paper
certificates instead of saving forests and cutting greenhouse emissions57. The
company allegedly operated in Malaysia, Indonesia, the Solomon Islands, the
Democratic Republic of Congo, and Brazil. By 2009, it has penetrated Mindanao
and Samar, signing deals with IPs to supply certification services of indigenous
rainforest lands for the sale of carbon credits. Goldsworthy promised the IPs
money to preserve 1.7 million hectares of their land. It turned out to be a fake
undertaking, generating no carbon credits and providing no details about how
171
to reduce deforestation in the project area. The company was exploiting the IP
community by taking money off the supposed carbon credits generated from
the IP areas, but there were no actual reforestation or offset projects operating.58
Shift2Neutral and TVI certainly do not tell the whole story of REDD or mining,
but it highlights how prone to exploitation forest dwellers and IPs can be in the
face of big investments and unscrupulous private operators. The uneven flow
of information and the divide-and-rule tactics employed by some officials from
government and the extractive industry create confusion and foment conflicts
within IP communities. Some of the worst problems arise when corporations
and even formal administrative hierarchies of the government manage to coopt traditional leaders, driving wedges within communities.59
Impact on women
Women are considered a vulnerable group primarily due to their unique role
as food producers and providers. They are involved in every stage of food
production do most of the work involved in sowing, weeding, fertilizing and
harvesting the staple cropssuch as rice, wheat and maizewhich allows for
more than 90 percent of the rural poors diet.60
Rural women rely mostly on natural resources and the immediate environment
for their sustenance. Seventy-five percent of households in Asian countries
(including the Philippines) rely on firewood and biomass such as wood,
agricultural crops, wastes, and forest resources for their energy and livelihood.61
With resources dwindling, the ability of women to rely on these resources has
been diminished.
The large-scale conversion of agricultural lands has introduced women into
new forms of production relations. Women farmers displaced by the Cavite
Export Processing Zone in the 1990s, for instance, were also converted into
cheap labor for industries as part of the strategy to depress wages. Women
represented the biggest chunk (77 percent) of shopkeepers in the factories of
CEPZ except for metalwork.62 Farmers opposing APECO anticipate that this
will also become their story once the special economic zone pushes through.63
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More vulnerable sectors

Environmental stress reduces the poors already limited access to resources.
Poor communities comprise the waterless areas in the country, accounting
for more than 1.5 million households with no access to safe drinking water.64
Due to their inability to pay, the poor have either less access to water services
or they access lower quality water, or both. In certain cases, lack of access
is due to governance issues, involving unresolved contested land and right-ofway issues, as well as water access conflicts. Like logging and mining permits,
water rights through water permits or certificates of public convenience
have to be secured to extract and use water resources. The National Water
Resources Board issues water permits as a tool to allocate rights and resource
use. However, NWRBs principle and practice of first come, first served in the
water permit application process is problematic in light of competing water uses
(e.g. competition between mining and domestic use, and among water service
providers).
Governments failure to manage and coordinate competing claims often
marginalizes the poorer sections of the population. Mining permits overlap with
protected areas, public agricultural lands and areas for commercial logging.65
Mining tenements also overlap with ancestral domains. This has been a result
of a confusing permit application and award process, land conversion and poor
enforcement of environmental laws.66
Unresolved conflicts and the poor implementation of laws can only result
in perverse outcomes. The province of Palawan is a particularly egregious
example. Despite being declared by UNESCO as a Man and Biosphere
Reserve67, the province has received 429 mining applications, and now hosts
two large-scale (Rio Tuba Nickel Mining Corporation and Citinickel Mines and
Development Corporation) and several small-scale mines.68 Mining even in core
and restricted areas, where extractive activities are supposedly not allowed,
have been given a go-signal, resulting in the destruction of forest, agricultural
and coastal areas, and the desecration of Palawan tribes sacred grounds and
worship sites.69
173
The future of environmental activism and search for just alternatives

When the power to allocate resources and to define who gets to own or
exploit land, forests, and waters rests solely with the state and its agencies, and
corporate and private interests influence these choices and decisions, sociocultural and environmental ends are undermined.
Genuine devolution, decentralized power, and community-based comanagement of resources have remained incomplete two decades after
the passage of the LGC. Community-based management of resources has
long been introduced. In the `70s the irrigation sector formed local irrigators
associations; the `80s saw the rise of community-based forest management;
while coastal-based resource management was introduced in the `90s.
However, co-management of resources has remained piecemeal and has yet
to be fully realized in the country.70 Resource use continues to generate
tension and contentions between state and society.
By and large, local governments lack autonomy from entrenched interests and
the dominant classes. Local officials usually rely on local bosses and patrons
to finance their electoral campaigns, making them either perpetrators or
accomplices in the destruction of the commons.
Yet local governments can also be mechanisms for popular interventions and
pro-environment policies. To date, 40 provinces have issued local ordinances
that restrict, regulate, or oppose mining, especially metallic and large-scale
mining.71 The South Cotabato Environmental Code which bans mining and the
25-year moratorium on mining issued by the province of Mindoro in 199972,
are notable examples. Such local initiatives are, however, undermined by
national issuances. EO 79 calls for the harmonization of local issuances with
national laws, weakening local autonomy in favor of national laws and policies.
Notwithstanding various constraints, and perhaps because of them, local
environmental activism has seen resurgence in recent years.
Slain tribal leader Macli-ing Dulag has become the icon of the IP struggle
against incursions on ancestral lands and resource grabbing since the `80s.
174
Chapter 5
Direct community action has increased in variety and militancy. Blockades,

hunger strikes, and land marches have been introduced. Environmental activism
has also been able to tap changes in public policies and agrarian relations, the
availability of influential political allies, and the existence of divisions and splits
within the elites for the advantage of many advocacies.73
Reacting to weak government presence in water services, public and
community actors have banded together to implement innovative models
of water management. Bacolods public water utility signed a not-for-profit
partnership with the Residents Association of Tinagong Paraiso and a local
NGO to establish community tap stands. The Philippine Association of Water
Districts has encouraged communities to manage and maintain water sources
for the cities. Some public water utilities have also started to invest in agroecological farming practices and in community livelihoods, believing that a
good environment will produce good water.74
Local groups work with IP communities to preserve unique systems of
resource management and conservation rooted in the indigenous culture. One
such system is the internationally-recognized muyong of the Ifugaos.75 Others
have deployed modern technology to enhance community participation.
With the aid of three-dimensional (3-D) mapping, the Philippine Association
for Intercultural Development has helped the Tagbanwas of Palawan recover
22,400 hectares of ancestral land and water bodies from local government
control.76
Activists have also used the the legal and judicial route, like the Subaanen
people of Zamboanga Peninsula who were able to secure a Writ of Kalikasan
from the Supreme Court in August 2011.77 Still others have gone through the
legislative route to push for policy reforms. The Pambansang Koalisyon ng mga
Kababaihan sa Kanayunan (National Coalition of Philippine Rural Women) has
successfully pushed for the recognition of rural womens rights to land.78
Social movements have also done the more radical forms of land occupation or
self-installation to claim their stake on land. Organized groups such as the Task
Force Mapalad, Negros Farmers Council and KATARUNGAN have launched
land occupations in agrarian hotspots, like Negros Island. However, such forms
175
have usually been met with violence, as what happened to Dexter Condez,
indigenous youth leader and spokesperson of the Ati community that occupied
their ancestral land, who was killed in February 2013 by suspected goons of
local land prospectors.79
These acts of common-ing80 are acts of active citizenship to protect and
safeguard vital resources, to restore some control over these resources to the
politically and economically marginalized. They advance just alternatives
that aim to reconfigure relationships between state and society; debunking
Hardins tragedy of the commons, while underscoring successful community
management of common pool resources. At the same time, they prove to be
practical and workable solutions that do not rely on market mechanisms or the
corporate private sector.
Transnational resistance and activism is also the mark of contemporary
environmental struggles. As a response to socio-economic and political
processes associated with globalization, agrarian transformations and escalating
ecological crisis, transnational networks have increased in the past decade.81
More and more, local and national struggles and movements are linked with
other social movements and networks throughout Southeast Asia and other
parts of the world. An example is the growing climate justice movement. In the
country, the Philippine Climate Justice Movement82 emerged from the need
to respond to climate change and the proliferation of limited market-based
solutions. PMCJ has links with other movements working in Asia and globally. Its
interest lies in creating linkages and coalitions among diverse types of actors in
an effort to weave local and national issues into regional and global advocacies.
These acts of common-ing operate on four fundamental principles. One, a
conservation-first approach takes precedence over a return on investment
approach. Two, the role of the state (e.g. in public utilities and the building
of technical capacity) is crucial in ensuring the protection of the environment
and in guaranteeing peoples rights over corporate profits. Three, unrestrained
activities by large-scale mining and logging companies undermine the rights of
forest dwellers, indigenous peoples, farmers, women, and other basic sectors,
and bring tremendous risks to the commons. And therefore, the power of
corporations, especially in the extractive industries, must be rolled back.
176
Chapter 5
Land, natural resources, and the commons have become sites of intense social
and political actions, conflicts, mobilization, and activism. The threatened
resistance83 of communities has prompted networks of civil society
organizations and social movements of the poor to stand up in defense of the
commons and the common property systems that sustain them.
177
Table 1.
Evolution of Environmental Policy in the Philippines 1866-2012
Period
Laws/Policy
Year
Spanish Period
Article 268 of the Law

of Waters of 1866
1866
Suspended operations of industrial

establishments found contaminating
and polluting water.
American Period
Spooner Amendment
to the Army
Appropriations Bill
1901
Disallowed disposition of timber,

public lands or mining rights until the
establishment of a permanent civil
government.
Strengthening of
Forestry Bureau
1902
Delimited lands for forest and

agricultural purposes.
Act 4003
Fisheries Act of 1932
1932
Prohibited the use of explosives and

toxic substances for fishing, and
other illegal fishing practices.
Commonwealth Act
137
Mining Act of 1936
1936
Regulated the use, exploration,

disposition and development of
mineral lands and ores; the policing
and sanitation of mines, easements
and drainage; and disposal of
wastes/tailings.
Commonwealth Act
383
Anti-dumping Law of
1938
1938
First law to directly deal with waste

disposal, prohibited the dumping into
waterways of any substance that
may cause an elevation of river beds
or block streams.
RA 3931
1964
Created the National Water and

Air Pollution Control Commission;
set the national policy to maintain
reasonable standards of purity for
the countrys waters and air for
domestic, agricultural, industrial and
other legitimate purposes. It was
later re-organized into the National
Pollution Control Commission.
RA 4850
Laguna Lake
Development Authority
Act
1966
Created Laguna Lake Development

Authority for the specific natural
resource management of Laguna
de Bay. Amendment in 1975
through P.D. 813 included explicit
environmental management and
prevention of ecological disturbance
and pollution as a mandate.
Commonwealth
Period
Pre-Martial Law
Period
Amended by PD 813,
1975
178
Chapter 5
Objective/Coverage
Martial Law
Period
RA 6234
1973
Created the Metro Waterworks and

Sewerage System (MWSS), with
mandate to construct, operate and
maintain the sewerage and sanitation
and water supply of Metro Manila.
PD 198
1973
Created the Provincial Water

Utilities water districts to operate
and administer water supply and
wastewater disposal in provincial
areas.
PD 463
Mineral Resources
Development Decree
1974
Revised Commonwealth Act 137

(Mining Act); modernized the system
of administration and disposition of
minerals; promoted and encouraged
the development and exploitation of
mineral resources.
PD 389
Forestry Reform Code
of the Philippines
1974
Instituted the system (criteria,

guidelines and methods) for the
classification of lands; recognized
areas needed for forest covers
and promulgated the reforestation
program of government. The
Code instituted 16 various special
permits and leases for the use or
occupancy of forests. The revision
through PD705 in 1975 updated
the proper classification and
delimitation of the lands in public
domain and the management,
utilization and development of forest
lands. In 1982, through PD 705, the
Integrated Social Forestry Programs,
the first community-focused forest
management strategy in the country,
was established. The program
featured 25-year Community
Forest Stewardship Agreements
with communities for communal or
household-level agroforestry farms;
encouraged the formation of local
forest associations.
PD 281
1975
Created the Pasig River Development

Council for the regulation and control
of pollution in the Pasig River.
PD 856
Sanitation Code
1976
Required cities and municipalities to

provide an adequate and efficient
system for sewage collection,
transport and disposal in their areas
of jurisdiction.
Amended by PD 705,
1975?
179
180
Chapter 5
PD 600
Marine Pollution
Control
Amended by PD 979,
1976
1976
Regulates and controls the pollution

of seas.
PD 984
Pollution Control Law
1976
Provides guidelines for the control

of water pollution from industrial
sources, requires provision of
sanitation, and sets penalties for
violations; requires all polluters to
secure permits.
PD 1067
The Water Code of the
Philippines
1976
Establishes the basic principles

and framework relating to the
appropriation, control and
conservation of water resources;
defines the rights and obligations
of water users and owners; and
identifies the agencies to administer
the Code.
PD 1121
1977
Created the National Environmental

Protection Council), an inter-agency
committee that oversaw the
implementation of projects, policy
formulation, research and monitoring
of environmental issues, under the
President.
PD 1096
National Building Code
1977
Requires new buildings to be

connected to a waterborne sewerage
system.
PD 1151
Philippine Environmental
Policy
1977
Recognized the right of peoples to a

healthy environment; environmental
management defined as a major
policy focus; required Environmental
Impact Assessment for all activities
which have impacts on the
environment.
PD 1152
Philippine Environment
Code
1978
Comprehensive state policy on

environmental management covering
air, water, land use, natural resource
management and conservation,
wildlife, use of fertilizers and
pesticides, forest, flood control and
calamities, mineral resource use,
waste management, etc. and the
role of local government and private
individuals.
PD 1586
Environmental Impact
Assessment
1978
Established an Environmental Impact

Statement System as required under
Section 4 of PD 1151.
1986-1992
(Corazon
Aquino
Presidency)
Proclamation 2146
1981
Proclaimed certain areas and types

of projects as environmentally critical
such as heavy industries, resource
extractives, and infrastructure. The
proclamation declared 12 types of
environmentally critical areas such
as mangroves, coral reefs, areas
declared by national laws, etc.
PD 1899
1984
Established small scale mining

as a new dimension in mineral
development; defined small scale
mining as using maximum of 20
hectares, using intensive labor
and manual input, without heavy
mechanized or heavy equipments or
explosives, and moving a maximum
of 50,000 dry metric tons of ore
annually.
Philippine Constitution
of 1987
1987
Mandates the State as the caretaker

of public domain and provider of
access to natural resources; puts
social equity at the center of forest
policy agenda.
EO 192
1987
Reorganized the Department of

Environment, Energy and Natural
Resources, created on January
30,m 1987 under EO 131, into the
Department of Environment and
Natural Resources; abolished the
NEPC and absorbed functions of
policy formulation, program planning
and implementation of Environmental
Impact Assessment system into the
Environmental Management Bureau.
RA 6716
Rainwater Harvesting
Act
1989
Mandates the construction of water

wells and rainwater collectors in all
barangays.
RA 7160
Local Government
Code
1989
Identifies the role of local

government in environmental
management; gives mandate for
the position of an Environmental
and Natural Resource Officer; and
upholds the role of LGUs in mineral
use management.
RA 6969
Toxic Hazardous, and
Nuclear Waste Act
1990
Regulates the use and disposal of

toxic, hazardous and nuclear wastes.
181
1992-1998
(Fidel V. Ramos
Presidency)
182
Chapter 5
RA 7076
Peoples Small-Scale
Mining Law
1991
Replaced PD 1899. Mandates the

State to promote, develop, protect
and rationalize viable small-scale
mining activities for employment
and an equitable sharing of the
nations wealth and natural resources.
Excludes protected areas such as
forest parks and marine reserves and
ancestral domains without the FPIC
of indigenous people from possible
small scale mining areas. Created
the Peoples Small Scale Mining
Protection Fund.
Philippine Agenda 21
1992
Integrates sustainable development

into official policy; a response to
the Agenda 21 of the original Earth
Summit in 1992.
RA 7586
National Integrated
Protected Areas System
(NIPAS) Act
1992
Gives protection to outstandingly

remarkable areas and biologically
important public lands; establishes
strict nature reserve, park,
monument, sanctuary, reserve, etc.
as established by law, conventions or
international agreements which the
Philippine Government is a signatory
to; and buffer zones. Prohibited a
range of activities in these protected
areas.
RA 7942
Philippine Mining Act
1995
Liberalizes the mineral industry;

promotes the utilization, exploration,
development and conservation of
mineral resources.
DENR Administrative
Order 96-40
DENR Administrative
Order 99-34
1995
DENR AO no.96-40 gives the Revised

Implementing Rules and Regulations
of RA 7942, specifically contains
guidelines on Financial or Technical
Assistance Agreements. AO 99-34
gives clarificatory guidelines for
AO 96-40, specifically on area
status and clearance of application
for exploration permit, mineral
agreement and FTAAs; renewal and
requirements.
EO 263
1995
Adopts community-based forest

management (CBFM) as the national
strategy; seeks to deepen community
management of forests; allocates use
rights to upland communities through
communal leases of 25-years,
renewable for another 25 years.
1998-2001
(Joseph E.
Estrada
Presidency)
RA 8435
Agriculture and
Fisheries Modernization
Act
1995
Promotes development compatible

with the preservation of the
ecosystem in areas where agriculture
and fisheries activities are carried
out. Promotes rational and equitable
use of natural resources, prevention
of the further destruction of
watersheds, and rehabilitation of
existing irrigation systems.
RA 8041
National Water Crisis
Act
1995
Authorized the President to address

the nationwide water crisis relating
to issues of water supply, distribution
and finance, the protection and
conservation of watersheds, the
waste and pilferage of water, and
graft and corruption in the water
agencies; paved the way for the
privatization of the MWSS.
RA 8371
Indigenous Peoples
Rights Act
1997
Recognizes the rights of indigenous

peoples to ancestral lands and selfdetermination and empowerment.
Contains several rights including
the right to free prior and informed
consent (FPIC). Creates the Ancestral
Domains Management Program
(ADMP), a resource management
program focusing on indigenous
peoples awarded with tenurial rights
under the Certificate of Ancestral
Domains Claims (CADCs).
RA 8550
Philippine Fisheries
Code
1998
Recognizes the rights of marginalized

sectors in natural resources
management; encourages the
formation of local associations in
the fisheries sector; identifies and
delineates municipal waters for
artisanal fishing.
RA 8749
Comprehensive Air
Pollution Control Act
1999
Bans incinerators and allows

communities and citizens to file suit
against polluters.
RA 9003
Ecological Solid Waste
Management Act
2000
Provides the legal framework for

the management, control, transfer,
transport, processing and disposal of
solid waste in the country.
RA 9147
Wildlife Resources
Conservation and
Protection Act
2001
Mandates the conservation and

protection of wildlife species and
their habitats to promote ecological
balance and enhance biological
biodiversity.
183
2001-2010
(Gloria
MacapagalArroyo
Presidency)
184
Chapter 5
Proclamation 396
2003
Enjoins government agencies,

including government-owned and
controlled corporations, and the
private sector, schools, civil society
groups and the citizenry to engage
in tree planting activity. Proclamation
643 declares June 25 as Philippine
Arbor Day and upholds tree planting
as essential to the re-greening of the
country.
RA 9275
Clean Water Act
2004
Provides a comprehensive and

integrated strategy to prevent and
minimize water pollution from landbased sources.
EO 318
2004
Adopts Sustainable Forest

Management as a national strategy
based on the World Summit
on Sustainable Development in
Johannesburg.
EO 481
2005
Creates the National Organic

Agriculture Program, which aims
to promote organic agriculture
development, conserve
environmental resources and
promote social equity.
RA 9627
Philippine Biofuels Act
2007
Promotes the local production

and development of biofuels from
coconut, jathropa, sugarcane,
cassava and corn, through the
expansion of plantation and nonfood monocrop agriculture; identifies
the target blend of bioethanol and
biodiesel for the country; places
biofuels development as a major
strategy for energy security of the
country
RA 9729
Climate Change Act
2009
Institutionalizes the governments

climate change response
mechanisms; harmonizes existing
policies and programs; provides
a framework for the National
Climate Change Strategy; created
the Philippine Climate Change
Commission.
Amended by
Proclamation 643,
2004
2010-2012
(Benigno S.
Aquino III
Presidency)
EO 23
2011
Declares a moratorium on the cutting

and harvesting of timber in the
natural and residual forests; creates
the Anti-Illegal Logging Task Force.
EO 26
2011
Establishes the National Greening

Program which aims to plant 1.5
billion trees covering about 1.5
million hectares from 2011 to 2016
in public lands.
EO 79
2012
Harmonizes local and national laws

on mining and specifies revenue
sharing between national and local
governments.
Office of the President,

Administrative Order 34
2012
Creates the Inter-Agency Committee

on Institutional Arrangements for
Land Management and Agricultural
Support Services Delivery to
harmonize agency functions on land,
agriculture and natural resources.
185
Environmental Vulnerability Map

Data on Forest, Water Balance and Quality,
Coastal and Fishery Resources and Natural Hazards
Ilocos Region
Region 1
Cordillera Administrative Region

CAR
Cagayan Valley
Region 2
Central Luzon
Region 3
A
National Capital Region
NCR
CALABARZON
Region 4-A
B
Bicol Region
Region 5
Eastern Visayas
Region 8
D
MIMAROPA
Region 4-B
Western Visayas
Region 6
Central Visayas
Region 7
Caraga
Region 13
F
Zamboanga Peninsula
Region 9
Northern
Mindanao
Region 10
F
E
X
Autonomous
Region in Muslim
Mindanao
ARMM
Davao Region
Region 11
SOCCSKSARGEN
Region 12
Water Demand in 2025 (in Million cu metre; High growth)

X
186
A 21328 21835 4638

B
C
D 12135 4362 Others
E
F
Chapter 5
F
Ilocos Region
Region 1
Density of Forest (2003): 17.29%
Water Demand in 2025 (in Million cu metre; High growth): 4427
Water Pollution % of share Domestic Use: 5.20%
Water Pollution % share Industrial Use: 3.30%
Water Pollution % share Agricultural Use: 11.50%
X
Cordillera Administrative Region
CAR
F
Cagayan Valley
Region 2
A
Central Luzon
Region 3
Water Pollution % share Industrial Use: 9%
B
CALABARZON
Region 4-A
X
MIMAROPA
Region 4-B
187
C
Bicol Region
Region 5
X
NCR
Water Pollution % share Agricultural Use: 0%
D
Western Visayas
Region 6
F
Central Visayas
Region 7
F
Eastern Visayas
Region 8
F
Zamboanga Peninsula
Region 9
188
Chapter 5
F
Northern Mindanao
Region 10
E
Davao Region
Region 11
E
SOCCSKSARGEN
Region 12
F
Caraga
Region 13
X
Autonomous Region in Muslim Mindanao
ARMM
Water Pollution % share Industrial Use: 0%
Water Pollution % share Agricultural Use: 3%
189
Notes
1
The commons as used in this chapter refers to collective ecological resources such as water, land,
biodiversity, forests, air, and other natural resources. Hardin, G. (1968). The tragedy of the commons.
Science 16, 12431248.
2 Magno, M. (1993). The growth of Philippine environmentalism. Kasarinlan, 9(1), 7-18.
3 Polanyi, K. (1944). The great transformation. New York: Rinehart, 35.
4 Cavanagh, J. and Broad, R. as cited in Bello et al. (2004). The Anti-development State: The Political Economy
of Permanent Crisis in the Philippines. Quezon City: UP Sociology Department and Focus on the Global
South, 217.
5 The latest available forest cover data based on satellite images date back to 2003. Prior to that, there were
only estimates from government, academic, and non-governmental organizations. The consensus for the
1950s was that the countrys forest cover stood at 50 percent and it declined in the 1960s due to the
logging boom. The current forest cover includes plantations and other mono-crop farms. For more details,
see Department of Environment and Natural Resources- Forest Management Bureau. Philippine forestry
statistics 2011.
6 National Economic and Development Authority. (2011). Philippine development plan 2010-2016.
7 National Water Resources Board. (1998). Master plan study on water resources management in the
Republic of the Philippines:final report. Japanese International Cooperation Agency Report.
8 Tambuyog Development Center. (1997). Coastal resource management: the fishers way. Lundayan Journal
Special Issue. Retrieved 17 March 2013, from http://www.tambuyog.org/cgi-bin/downloads/default.
asp?categ=1
9 Miranda, M. et al. (2003). Mining and critical ecosystems: mapping the risks. Washington D.C.: World
Resources Institute, 23.
10 Landingin, R. and Aguilar, J. (2008, July/September). Dirty past. Newsbreak Special Edition: The Big Dig:
Mining Rush Rakes Up Tons of Conflict. Retrieved 17 March 2014, from http://www.slideshare.net/
no2mininginpalawan/newsbreak-special-issue-onmining
11 Allison, S. (2013, November 12). Analysis: did climate change cause super typhoon Haiyan? Daily Maverick.
Retrieved 17 March 2014, from http://www.dailymaverick.co.za/article/2013-11-12-analysis-did-climatechange-cause-super-typhoon-haiyan/#.UtPXT_bYmhl
12 United Nations University, Institute for Environment and Human Security and The Nature Conservancy.
(2012). World Risk Report 2012. Berlin : Bundnis Entwicklung Hilft.
13 Ragragio, R. M. (1993). Sustainable development, environmental planning and peoples initiatives. Kasarinlan:
Philippine Journal of Third World Studies, 9(1), 35-53.
14 Rotz, S. (2011). Governing forests, carbon and climate change: deconstructing the carbon commodification
project and the application of REDD in Philippine forestlands. Master Dissertation, York University.
15 Ofreneo, R. (2011). Panalo ba ang Pilipino?: three decades of privatization. Development Roundtable Series
Papers. Quezon City: Focus on the Global South and DRTS.
16 Questions for Department of Energy, Office of Representative Walden Bello, House of Representatives,
Sept 12, 2012.
17 Questions for Department of Energy, Office of Representative Walden Bello, House of Representatives,
Sept 12, 2012.
18 Ecological modernization is a perspective in environmental social science. See, for example, Buttel, F.H.
(2000). Ecological modernization as social theory. Geoforum, 31, 57-65. Retrieved 17 March 2014, from
http://www.ic.ucsc.edu/~rlipsch/EE80S/Buttel.pdf
19 Aguinaldo, E. (2009, Philippine national report . Presentation at the Regional 3R Forum in Asia Toward a
Resource Efficient, Sound Material-Cycle Society, November 11-12, 2009, Tokyo, 11-12; World Bank.
(2004). Philippines environment monitor 2004: assessing progress. Washington D.C.: World Bank.
20 Francisco, H. A. and delos Angeles, M. S. (1998). Soil Resources depreciation and deforestation: Philippine
case study in resource accounting. (n.p.): Food and Agriculture Organization. Retrieved 17 March 2014,
from http://www.fao.org/DOCREP/006/AB604E/AB604E03.htm
190
Chapter 5
21 Gutierrez, E. (1989, August). Girding for a green offensive. Conjuncture, 8, 15. In J. Teehankee, The state,
illegal logging, and environmental NGOs in the Philippines. Kasarinlan, 9(1), 20. Quezon City: Third World
Studies Center, 1993.
22 Teehankee, J. (1993). The state, illegal logging, and environmental NGOs in the Philippines. Kasarinlan, 9(1),
19-24. Quezon City: Third World Studies Center.
23 Teehankee, J. (1993). The state, illegal logging, and environmental NGOs in the Philippines. Kasarinlan, 9(1),
22. Quezon City: Third World Studies Center.
24 E.g. the Integrated Social Forestry Programme, the Forest Land Management Agreement, and CommunityBased Forest Management.
25 Acosta, R. (2004). Impacts of incentives on the development of forest plantation resources in the Philippines.
In T. Enters and P. B. Durst (Eds.), What does it take?: the role of incentives in forest plantation development
in Asia and the Pacific. Bangkok: Food and Agriculture Organization. Retrieved 13 November 2012, from
http://www.fao.org/docrep/007/ae535e/ae535e0c.htm#fn116
26 IFMA Primer. . Retrieved 4 September 2013, from http://forestry.denr.gov.ph/primer.htm#ifma
27 Acosta, R. (2004). Impacts of incentives on the development of forest plantation resources in the Philippines.
In T. Enters and P. B. Durst (Eds.), What does it take?: the role of incentives in forest plantation development
in Asia and the Pacific. Bangkok: Food and Agriculture Organization. Retrieved 13 November 2012, from
http://www.fao.org/docrep/007/ae535e/ae535e0c.htm#fn116
28 Coxhead, I. and Jayasuriya, S. (2003). Environment and natural Resources. In Balisacan, A. and Hall, H., (Eds.),
The Philippine Economy: Development, Policies, and Challenges, (400). New York: Oxford University Press.
29 Corpuz, P. G. (2013, July 10). Philippines: biofuels annual, biofuels industry situation and outlook. Global
Agricultural Information Network Report. USDA Foreign Agricultural Service: Manila.
30 Roman Catholic Prelature of Infanta, Fastenopfer (Swiss Catholic Lenten Fund) and Mensen met een
MissieNetherlands. (2012). The APECO Imbroglio and the anti-APECO struggle: a special report of the
international solidarity mission to Casiguran, Philippines, February 6-12, 2012.
31 Cevalio, C. (2013, July 8). Aquino to discern Apecos fate, awaits NEDAs full report. The Guidon. Retrieved
5 September 2013, from http://www.theguidon.com/2013/07/aquino-to-discern-apecos-fate-awaitsnedas-full-report
32 Alyansa Tigil Mina (ATM). (2011, September). Position Paper on the Continued adoption of the Aquino
government of the revitalization of the Philippine mineral industry policy, 5.
33 Department of Environment and Natural Resources, Mines and Geosciences Bureau. Complete list of
existing financial or technical assistance agreements as of June 30, 2012. MRMS Report. 004-A.
34 Purugganan, J. (2010). Case study of CDM governance in the Philippines. In T. Reddy, (Ed.), Governing
climate finance: Critical perspectives from Africa, Asia and Latin America. ISS Roundtable Report:
Capetown.
35 Asian Development Bank and the Center for People and Forests. (2010). National REDD + strategies in Asia
and the Pacific: progress and challenges, Background Paper. Mandaluyong City: Asian Development Bank, 1.
Retrieved 19 June 2012, from http://www.adb.org/sites/default/files/pub/2010/national-redd-strategies.pdf
36 Guttal, S. (2012, June). New permits to pollute: REDD and the green economy. Focus on Trade, No. 160.
Retrieved 6 September 2013, from http://focusweb.org/content/new-permits-pollute-redd-and-greeneconomy
37 Guttal, S. (2012, June). New permits to pollute: REDD and the green economy. Focus on Trade, No. 160.
Retrieved 6 September 2013, from http://focusweb.org/content/new-permits-pollute-redd-and-greeneconomy
38 Docena, H. (2010). The clean development mechanism projects in the Philippines: costly, dirty, moneymaking Schemes. Focus on the Philippines Special Reports. Quezon City: Focus on the Global South, 1.
39 Docena, H. (2010). The clean development mechanism projects in the Philippines: costly, dirty, moneymaking Schemes. Focus on the Philippines Special Reports. Quezon City: Focus on the Global South, 1.
40 A joint venture between Filipino Aboitiz Power Corporation and Norwegian Statkraft Norfund Power Invest.
41 Focus on the Global South. (2012). Whose clean development?: communities speak out. (Bangkok: Focus
on the Global South, 2012).
42 SN-Aboitiz Power Benguet Inc. Binga Hydroelectric Power Plant, Project Design Document Form (CDM
PDD) Version 3, 14.
191
43 See Asian Development Bank. Projects in the Philippines. Retrieved 12 September 2013, from http://www.
adb.org/countries/philippines/projects.
44 Manahan, M.A. and Chavez, J.J. (2005). An ominous alliance: the Philippine-ADB development partnership.
In The ADB and policy (mis) governance in Asia. Quezon City: Focus on the Global South.
45 Doyle, C. et al. (2011). Mining in the Philippines concerns and conflicts. Fact finding mission to the Philippines
report. West Midlands, UK: Society of St. Columban.
46 Manahan, M.A. (2011). The international finance corporation in the Philippines: an overview. Retrieved 2
July 2012, from http://focusweb.org/philippines/deglobalization/articles/502-the-international-financecorporations-involvement-in-the-philippines-an-overview
47 SN-Aboitiz Power Benguet Inc. Binga Hydroelectric Power Plant, Project Design Document Form (CDM
PDD) Version 3, 14.
48 Manila Bulletin, October 24, 1990 as cited in Magno, M. (1993). The growth of Philippine environmentalism.
Kasarinlan, 9(1), 13.
49 Magno, M. (1993). The growth of Philippine environmentalism. Kasarinlan, 9(1), 7-18.
50 Leonen, M. (1993). The Philippines: dwindling frontiers and agrarian reform. In M. Colchester and L.
Lohmann, (Eds.), The struggle for land and the fate of the forests, (278). London: The Rainforest Movement,
the Ecologist and Zed Books.
51 Colchester, M. (2013). Colonizing the rainforests: the agents and causes of deforestation. In M. Colchester
and L. Lohmann, (Eds.), The struggle for land and the fate of the forests, (1-15). London: The Rainforest
Movement, the Ecologist and Zed Books.
52 Borras, S. (2006). Redistributive land reform in public (forest) lands? lessons from the Philippines and their
implications for land reform theory and practice. Progress in Development Studies, 6(2), 123-145.
53 Stavenhagen, R., as quoted in Alyansa Tigil Mina (ATM). (2011, September). Position Paper on the
Continued adoption of the Aquino government of the revitalization of the Philippine mineral industry policy,
6.
54 Philippine Partnership for the Developmentof Human Resources in Rural Areas. (2008). Philippine Asset
Reform Report Card. Quezon City.
55 Position Paper on the Continued adoption of the Aquino government of the revitalization of the Philippine
mineral industry policy, 6.
56 In 2011, TVI issued a public apology for operating in the Subanen ancestral domain without FPIC. As of this
writing, the Philippine government has yet to issue an official response to the UNCERD.
57 Lang, C. (2012, June 9). The strange case of Brett Goldsworthy. REDD-Monitor. Retrieved 5 September
2013, from http://www.redd-monitor.org/2012/06/29/the-strange-case-of-brett-goldsworthy/
58 Lang, C. (2012, June 9). The strange case of Brett Goldsworthy. REDD-Monitor. Retrieved 5 September
2013, from http://www.redd-monitor.org/2012/06/29/the-strange-case-of-brett-goldsworthy/
59 Advocates of indigenous peoples rights know these stories too well. Recent trend shows indigenous
peoples leaders being recruited as PR managers and consultants for mining companies, as can be
observed from advertisements on television and in social media.
60 Association for Womens Right in Development (AWID). (2011, October 2). Africas latest land rush: the
effect of land grabs on womens rights. Retrieved 21 July 2012, from http://www.awid.org/News-Analysis/
Friday-Files/Africa-s-Latest-Land-Rush-The-Effect-of-Land-Grabs-on-Women-s-Rights
61 United Nations Statistics Division. (2010). Worlds women 2010: trends and statistics. New York: United
Nations.
62 Kelly, P. (2000). Landscapes of globalization: human geographies of economic exchange in the Philippines.
London: Routledge, 55.
63 Roman Catholic Prelature of Infanta, Fastenopfer (Swiss Catholic Lenten Fund) and Mensen met een
MissieNetherlands. (2012). The APECO Imbroglio and the anti-APECO struggle: a special report of the
international solidarity mission to Casiguran, Philippines, February 6-12, 2012
64 Dargantes, B. Manahan, M.M. and Batistel, C. (2011). Treading troubled waters. Development Roundtable
Series Papers. Quezon City: Focus on the Global South and DRTS.
65 Data from the Philippine Association for Intercultural Development website. Retrieved 7 July 2012 from
http://www.pafid.org
192
Chapter 5
66 Malayang III, B. (2000). The changing role of government in forest protection. In P. Utting, (Ed), Forest policy
and politics in the Philippines: the dynamics of participatory conservation. Quezon City: Ateneo de Manila
University Press.
67 Conservation International. (2006). Priority Sites for Conservation in the Philippines: Key Biodiversity Areas.
Retrieved 3 August 2012 from http://www.conservation.org/global/philippines/publications/Documents/
MKBA_Overview.pdf
government of the revitalization of the Philippine mineral industry policy, 9-10.
government of the revitalization of the Philippine mineral industry policy, 10.
70 Prof. Ernesto Serote of the University of the Philippines School of Urban and Rural Planning made this
remark as part of his input at a workshop on national land use organized by KAISAHAN on June 1, 2010.
71 Alve, K. (2012, June 1). Governors brace for court battle over mining EO. Philippine Daily Inquirer. Retrieved
6 July 2012, from http://newsinfo.inquirer.net/218033/governors-brace-for-court-battle-over-mining-eo
72 Pasimio, J. (2012). Investments on mining and their impacts: our story. Presentation at the Roundtable
Discussion on Investments, Risk and Dangerous Legacies, organized by Focus on the Global South, Alyansa
Tigil Mina, FIAN-Philippines, Pambansang Koalisyon ng Kababaihan sa Kanayunan, Peoples Development
Initiative, Alternative Forum for Research in Mindanao, November 20, 2012, Balay Kalinaw, UP Diliman,
Quezon City.
73 Caouette, D. and Turner, S. (Eds.). (2009). Rural Resistance and the Art of Domination. In D. Caouette and
S. Turner, Agrarian angst and rural resistance in contemporary Southeast Asia, 34-35. New York: Routledge,
32-33.
74 Dargantes, B. Manahan, M.M. and Batistel, C. (2012). Of water justice and democracy: alternatives to
commercialization and privatization of water in Asia. Bangkok: Focus on the Global South.
75 Rotz, S. (2011). Governing forests, carbon and climate change: deconstructing the carbon commodification
project and the application of REDD in Philippine forestlands. Master Dissertation, York University, 95.
76 Land Watch Asia. (2009). Defending the gains of tenurial reforms: Philippines country paper. Securing the
Right to Land. ANGOC, 148.
77 The Writ of Kalikasan is a legal remedy that ensures the protection of Filipinos right to a balanced and
healthful ecology in accord with the rhythm and harmony of nature enshrined in Section 16, Article II of
the Philippine Constitution. The Subaanens petition sought the protection of the environment of the whole
Zamboanga Peninsula, especially its sacred places, mountains and tropical forests against mining, illegal
logging and other extractive industries.
78 See Section 2, 14 and 15 of Republic Act 9700, Comprehensive Agrarian Reform Program Extension
with Reforms (CARPER), Retrieved 12 July 2012 from http://www.lawphil.net/statutes/repacts/ra2009/
ra_9700_2009.html
79 Data from field research by Mary Ann Manahan, April 16-17, 2012.
80 Elinor Ostrom, 2009 the Nobel Prize winner for Economics, popularized the concept of the commons in
contemporary times. She brings forward the dual challenges of sustainability: protecting and safeguarding
vital resources from growing pressures of exploitation and equity: ensuring that the politically and
economically marginalized groups have access and control to these resources. Ostrom stresses that people
steward a resource when they take part in collectively deciding for whom and how the resources are used
and shared. This act of stewardship is called common-ing, or exercising active citizenship. See Ostrom, E.
(1990). Governing the commons. New York: Cambridge University Press.
81 Caouette, D. and Turner, S. (Eds.). (2009). Rural Resistance and the Art of Domination. In D. Caouette and S.
Turner, Agrarian angst and rural resistance in contemporary Southeast Asia, 34-35. New York: Routledge.
82 For more information, visit the Philippine Movement for Climate Justice website: http://climatejustice.ph/
83 Focus on the Global South uses the term threatened resistance to mean that communities defending
their lands, lives and livelihoods are always under threat from various anti-reform forces, the state and its
military, and private and corporate entities. The term first appeared in an internal document/concept note
for a workshop on land in 2010. Also see Manahan, Mary A. (2010). Is Asia for sale? trends, issues, and
strategies against land grabbing. In Land Struggles: LRAN Brie ng Paper Series. Quezon City: LRAN.
193
C h apter
Shantytown Nation:
The Urban Underclass
and Struggle for Space
Urbanization in the Philippines has been unfolding at breakneck pace, with state
policies favoring city growth, waves of rural-to-urban migration, and property
development surges transforming vast swathes of the countryside and cities all
contributing to this kind of urbanization.
Metro Manila today qualifies as one of the worlds teeming megacities; in
2010, the metropolis ranked as the 6th most populated urban region in the
globe, ranking below only the Tokyo-Yokohama, Jakarta, Seoul-Incheon, Delhi,
and Shanghai metropolises.1
Yet views on the Philippines urbanization experience amidst the atrophy of
agriculture and industry remain deeply divided. On the one hand, rapid urban
expansion has been viewed by numerous city dwellers as beacon of progress
and globalization; but from the other view, urbanization has also brought
yawning gaps between urban gentrification and the decay of a significant
portion of the cities, as well as the unfettered growth of the underclass. The
urban underclass has not only generated tensions with respect to the gentrified
districts of the cities; it has also been the target and victim of increasing
accumulation by dispossession and urban disaster-proofing. At the root of
these resurgent tensions lay fierce disputes over scarce urban space: over those
who own and determine its use, over those who stand to benefit or to be
excluded from its development, and over how it will shape and reshape the
city in the years to come.
195
Yet Manilas experience in urban expansion has also called attention to

unprecedented problems in urbanization found not only in the Philippines but in
other developing countries. National and city governments have systematically
neglected public spaces and infrastructure. Metro Manilas carrying-capacity
for public and private vehicles has been strained, leading to losses from traffic
congestion daily4 of a projected PhP2.4 billion in potential income, and to the
deterioration of the urban environment. Of all the contradictions afflicting
contemporary Metro Manila, however, the most divisive has been the rise in
slums and the expanding ranks of the citys underclasswhose population in
2010 was estimated at 4.57 million persons or 37 percent of total population.5
Urban underclass6
The Philippines has long been recognized as a country characterized by
high degree of urbanization, given its prevailing level of socio-economic
development. With 65.7 percent of Filipinos (60 million people) recorded to
be dwelling in towns and cities in 2010, the Philippines is the top lower-middle
income country in Asia-Pacific in terms of its share of urban to total population.7
It is the second most urbanized country in Southeast Asia, after Malaysia, and
the seventh most urbanized country in the entire Asian continent.8
Alongside population growth explosion of the past few decades, the radical
transformation of the city landscape has also become one of the main signals
of rapid urbanization in Metro Manila and outlying areas from the mid- `70s
to the 2000s. Metro Manila reached a 100 percent level of urban land use in
the `70s9, and experienced several construction booms in the periods 19931997, 2003-2008, and 2010-2013. Metro Manilas peripheriesnamely
the provinces of Cavite, Laguna, and Rizal to its south and Bulacan to the
northhad been largely agricultural until the early `80s, but they afterwards
experienced rapid sub-urbanization, marked by the development of leisure
estates (e.g. golf courses and luxury resorts), memorial parks, residential
communities, commercial hubs, and industrial zones. By 2000, 67.4 percent of
these provinces population was living in urban areas10, from only 36.5 percent
in 1970.11
196
Chapter 6
S t a t e o f Fr a g m e n t a t i o n : T h e P h i l i pp i n e s i n T r a ns i t i o n
While traditionally seen as a sign of economic development, the countrys

urban expansion has been characterized by patterns of uneven development.
Most significantly, it has been marked with the growth of a proletariat and
sub-proletariat population living in more than 500 dispersed shantytown
communities12particularly in Quezon City, Manila, Caloocan, Navotas,
Las Pias, Paraaque, Marikina, and Makati City13. The growth of the slum
population from 2000 to 2006 (3.4 percent annually) has significantly exceeded
the population growth of urban and metropolitan areas (2.3 percent).14
Urban poverty is generally lower than rural poverty (12.8 percent versus 36.7
percent for farmers and 41.4 percent for fisherfolk in 2009) but its magnitude
is much greater (5.7 million urban individuals versus 1.68 million farmers and
0.35 million fisherfolk). Its growth too has been faster (30 percent versus -4.9
and -13.5 percent from 2006-2009).15 Not all the poor are in the slums, and
neither are those living in the slums all qualify as poor (based on official income
classification). Nevertheless, the slums present additional precariousness,
exhibited in the lack of access to adequate shelter and basic services, and
overall deplorable environmental conditions.
Without adequate intervention, Metro Manilas slums will increase to 53.6
percent of its population, and one-third of all residents of large towns and cities
(33.7 percent) will likely be slum dwellers by 2050, estimated by the Philippine
Institute for Development Studies.16
Pool of cheap urban labor

Slum dwellers and the urban poor have occasionally been believed to be
un-integrated into the larger urban economy. The reality, however, is that
participation in the urban labor markets has been one of the main reasons why
most of the urban underclass have settled in Metro Manila and other big cities
through the phenomenon of rural-to-urban migration.
Chapter 2 discussed how the urban areas captured the biggest shares of
formal employment and formal establishments, while Chapter 3 showed the
slow progress in addressing rural problems, in terms of access to land, inequity,
Shantytown Nation: The Urban Underclass and Struggle for Space
197
and economic exclusion. This has compelled the rural poor to flock to urban
centers in search of better economic opportunities and higher wages. From
the `50s onwards, the population growth rate and net migration inflow into
Metro Manila have outstripped almost all other regions. In the period 19751980, the net interregional migration rate into NCR was 3.70 percent, settling
into a still high 2.12, throughout 1985-1990.17 The economic preference for
the Greater Metro Manila region also precipitated a significant movement of
less affluent populations to the fast-urbanizing cities of adjacent provinces.
This partly explains why the provinces that registered the greatest population
growth in the two decade period 1990-2010 were those directly adjacent
to Metro Manila: Cavite (5.05 percent), Rizal (4.77 percent), Laguna (3.77
percent) and Bulacan (3.37 percent).18
Their pattern of participation in urban labor markets defies common
perceptions that the urban poor are lazy parasites that feed off the heightened
productivity of cities while contributing little economic value in return. Indeed,
from the very beginning of Manilas post-War reconstruction, it was through
the cheap labor of the urban underclass that the metropolis infrastructure
was built; its industries and retail outlets manned at the more menial levels;
its public commuting systems operated; and its homes and commercial
complexes maintained and protected. In his 1997 study of Manila urban poor
organizations and movements, sociologist Erhard Berner cited a passage by the
late Jaime Cardinal Sin to emphasize the significant role that the urban poor
played in the day-to-day workings of the metropolis:
When these people from the provinces come to Manila, when they
become this grand metropolis cooks, waiters, market vendors, tailors,
sewers [sic], carpenters, plumbers, masons, jeepney drivers, policemen,
soldiers, teachers, even when they get a job and earn P3000 monthly,
where are they to live legally? Our urban and national economy
profits from their presence. Our basic needs for food, clothing, shelter,
transportation, security, personal services, and even foreign exchange
would be seriously frustrated were our urban poor to hold back their
contribution to their economy. 19
198
Chapter 6
Given the record of jobless growth in the past decade, it is true that
unemployment and underemployment have deeply affected the urban
underclass, even as they contribute to the daily sustenance and development of
the urban economy. Still, many of them find employment in the limited formal
sector as construction workers, security providers, factory workers, porters,
and shipping and transport operators. Occasionally they have even served as
military and police personnel, as well as rank-and-file government employees.
Urban economist Marife Ballesteros cited that only a third (32 percent) of
the urban population living in shantytowns and other blighted areas actually
fell below the national poverty line in 2006. Most slum dwellers, according
to Ballesteros, consisted of minimum wage earners and casual laborers who
were forced to live in slums due to the discouraging transport costs of settling
in peri-urban areas where residential properties were more affordable.20 Still
other families living in the slums were of middle-class standing, income- and
occupation-wise.
Those members of the urban underclass who have been unable to successfully
enter Metro Manilas narrow formal labor markets have been constrained
to eke out their living in the informal sector, where they have served as the
metropolis main pool of domestic workers, tricycle and jeepney drivers,
unskilled laborers, street vendors, automobile repairers, as well as self-employed
micro-entrepreneurs and small-scale home-based producers (ex. handicrafts).21
In 2007, one-fifth (22 percent) of all employment in Metro Manila took place
in the informal sector; since 1995, the informal economy has been estimated
to comprise more than one-third of the Philippines non-agricultural GDP.22 A
significant portion of this has been serviced by the urban underclass, without
whose labor the urban economy would have encountered severe bottlenecks
and setbacks.
For all the important functions that they perform for Metro Manilas economy,
the work of the underclass is rarely compensated at levels that enable them
to purchase decent living spaces that will allow accessibility of the urban labor
markets that they seek. Wages for formal laborers and the everyday incomes
of informal workers in NCR have failed to keep pace with the rising costs of
living in the city. The gap between minimum wages and average daily expenses
were estimated by different groups to be anywhere from over 100 percent23
199
to roughly 260 percent in 2013.24 In two decades that preceded this, the
increasing casualization of labor, which took severe toll on formal employees
compounded this. In June 2008, the Bureau of Labor Statistics reported that
around 25 percent of the 3.01 million workers in non-agricultural firms had nonregular status, with the manufacturing sector leading the way in flexibilizing
their work arrangements.25
The slum dwellers

Real estate speculation and rising demand for property development have
occasioned the skyrocketing of land prices in Metro Manila. (Refer to Chapter
1 for details) Noted Ballesteros: Majority of households are unable to pay for
the cost of housing and land Average annual housing price appreciation in
the Philippines (i.e. Manila) is 32 percent per year, the highest among other
major cities in Asia.26 During the second quarter of 2013, a single square
meter of property in key business centers of Metro Manila such as Makati,
Fort Bonifacio, and Ortigas Center was estimated by Colliers International to
cost up to PhP325,27527easily worth more than a lifetimes savings for poor
households. In 2003 a JICA survey reported that commercially-oriented renters
in Mandaluyong city offered an average monthly rental rate of PhP6,940 per
apartment to their tenants, who were likely to have come from the top quintile
of households in NCR.28
The fundamental dilemma of the urban underclass is being deprived of or
disconnected from the assets that can offer them a means of subsistence in
the countryside on the one hand and being fully dependent on their continued
ability to access limited markets for their goods, services, and/or labor on the
other. Yet their main obstacle for being able to live near where these markets are
located is the same precondition that discourages them from residing in the city
in the first placethe prohibitive price of urban land. For many, to fully forgo the
economic openings of Metro Manila, or to locate their homes in provinces and
city fringes where land is more affordable, are both difficult options.
Left with few options, extralegal slum dwelling emerges as a way to access
urban markets and circumvent prohibitive land prices. By setting up makeshift
200
Chapter 6
residences within once-idle public/private properties or high-risk areas, slum

dwellers are able to sustain their livelihoods and employment, propping up
particular segments of the urban informal economy in the process. In this way,
the emergence of shantytowns create two solutions in one strokefirst, the
underclass find provisional shelter and subsistence, and secondly, they provide
cheap labor for the lower-ranked, yet essential activities of the urban economy.
In 2010, the Metro Manila Development Authority reported that 44.9 percent
of Metro Manilas shantytown population was residing in neglected government
lands while 33.6 percent lived on privately-owned properties; 15.8 percent
were along danger zones such as floodways and riverbanks; 3.3 percent were
in areas slated for priority development; and 2.3 percent were in areas already
affected by government priority projects.29
Of all the residential districts of Metro Manila, slum areas generally have the
most unhealthy and hazardous living conditions, being located oftentimes along
dead rivers (ex. the Manggahan Floodway), trash-lined coastal regions (Manilas
port area district), across traffic-ridden major thoroughfares (Sitio San Roque of
North Triangle), and within dumpsites and landfills (Payatas in Quezon City).30
Such slum communities are bombarded daily with the worst forms of water, air,
noise, and solid waste pollution; they are also the most affected by flashfloods,
and sea and river surges. Shantytown dwellers are the most vulnerable of all
populations in the city, and with the growing impacts of climate change, that
vulnerability is only poised to increase into the future.
The extralegal status of slums scarcely eases the ordeal of members of
the urban underclass. Typically excluded from government registries and
regulatory instruments, they are also marginalized in terms of basic services,
such as education and health, potable water and sanitation, power and
telecommunications, infrastructure, public security mechanisms, and so on.
In general, public facilities in Metro Manilas shantytowns are resource-deficit:
in public schools, the average pupil-classroom ratio for the whole of NCR in
2012-2013 was 75.89 students per class31; likewise, in a 2003 study of UNHabitat it was revealed that slums were significantly correlated with poor public
delivery of potable water, sanitation services, and quality of homes and other
201
infrastructures32. The slums have often been bypassed by the formal water
providers, leaving residents to spend up to one-fifth of their income to pay
independent water providers that charge them more than seven times the
usual cost.33
Not only are the shantytown inhabitants more vulnerable to disease because
of their environment, insecurity, and malnutrition; the systematic neglect of
slums by public authorities compromises their levels of capabilities, e.g. as human
capital. Such neglect also ensures that this situation persists across generations.
Urban apartheid
Control over urban space is the crucial dividing line between the citys haves
and have-nots, and in Metro Manila it is represented by skewed land ownership
(according to a survey in 1983, 44 percent of land was in the control of a
small coterie of families).34 As stated in Chapter 1, urban land has emerged as
strategic commodity and real estate development an enduring money making
machine in the Philippines. This has effectively intensified the struggle for
urban space.
Housing is a key development issue, and not just for the urban underclass. The
Greater Manila Region (NCR, Central Luzon, and CALABARZON) is projected
to account for half (49.9 percent) of the total (5.8 million housing units) national
housing backlog by 2016.35 This is a big challenge as state spending on housing
has been less than 0.1 percent of GDP, trailing far behind neighboring countries
such as Singapore (2.089 percent), Indonesia (1.012 percent), Thailand (0.742
percent), and Malaysia (0.383 percent).36 As a result, the countrys housing
program has been dismal; weak project targeting and monitoring mechanisms,
rising resettlement and administrative costs, unreliable data on poverty, and
self-interested interventions by politicians and unscrupulous public officials
have often been cited too as reasons for this outcome.37 In the period 20042010, government was only able to accomplish 21 percent (812,463 out of
3.7 million units needed) of its target.38 Less than two out of 10 recipients of
socialized housing and housing subsidies came from the poorest 40 percent.
Almost half went to the richest 20 percent.39
202
Chapter 6
It was, however, the privatization of housing development that sealed the

segmented housing market for the private developers. Although often regarded
as a crowning achievement in the struggles of urban poor organizations, NGOs,
and church groups40, the Urban Development and Housing Act, enacted in
1992, clipped the states responsibilities as a direct provider of housing, leaving
the responsibility to private developers to allocate only 20 percent of their
residential projects for socialized housing.41 Numerous incentives such as
tax exemptions were extended to attract private investment in the socialized
housing sector. In 1994, the approval of the Comprehensive Shelter Finance
Act similarly strengthened the foothold of private companies in socialized
housing.
The strategy failed to alleviate the housing situation; the high cost of land instead
became a disincentive for socialized housing and kept it at the peri-urban areas,
as seen in the number of socialized housing licenses granted by the Housing
and Land Use Regulatory Board. While only 11.13 percent of total licenses
issued for NCR, 2007-2009, were for socialized housing, the corresponding
figure for Regions III and IV-A was 66.42 percent42. It also did not help that the
financing assistance schemes for these projects, via the Social Security System
and the Pag-IBIG Fund, have been more suited to formal sector employees
rather than those with informal income sources.43
Similarly, the privatized and decentralized nature of urban administration,
characterized by the high degree of influence exercised by private developers
over public urban planning and management processes, has precluded a more
comprehensive and equitable approach to urban housing and development.
The state has mainly functioned as an enabler of property firms, with realtors
enjoying an expanded and privileged capacity to realign government plans for
urban development uses.
In the case of Makati, for example, interfacing bodies between the public
sector and leading members of the business community (e.g. the Makati
Commercial Estates Association and Ayala Land) have been put up to
institutionalize the private sectors considerable influence in urban planning,
development, investment, and upgrading of activities.44 Private contractors for
the provision of services have also been tapped for integrated traffic, security,
203
and environmental management mechanisms; their standards were considered

well above those in other parts of the metropolis. The enactment of the BuildOperate-Transfer law, the diminution of centralized metropolitan authority,
the delegation of land use zoning powers to LGUs, and the implementation of
successive privatization and deregulation programs worked towards reinforcing
this trend.
This private sector-driven development has partially insulated the consumer
classes from poor urban planning and chronically-underfunded infrastructure,
and translated into the creation of strategically-located urban spaces and
systems away from the slum eyesore. As a result, in the words of urban scholar
Gavin Shatkin, the form that Manilas market-driven urban development has
taken is one of bypass-implant urbanism: bypassing the congested arteries of
the public city and implanting new spaces for capital accumulation that are
designed for consumerism and export-oriented production. 45
From privately-managed cities like Makati, Ortigas Center, and Fort Bonifacio
to individual residential enclaves, select segments of the city have been
implanted in accordance to international standards of urban living esteemed
by the upper and middle classes of the metropolis, while bypassing the rest of
Metro Manilas woes and its poorer inhabitants.
These bypass-implant efforts have also been a factor in the continuing
stagnation of other public districts in the city-region. Public systems and
infrastructure used by more urban dwellersthe bus and jeepney system,
public highways and thoroughfares, etc.enjoy limited government attention
and/or resources, partly as a result of extensive fiscal support that has been
lavished on public-private partnershipss and privatized projects. Public projects
that aimed to address road traffic have been designed to ease private vehicle
traffic and restrict public mass transportation modes. Explains Shatkin:
[] the public sector is essentially subsidizing the privatization of
transportation and land development on a significant scale. This has
drawn public subsidy away from public space and transportation for
lower-income groups, and the consequences are evident in the steady
decline and blight experienced in the citys public spaces and the
204
Chapter 6
continuing transportation crisis. The public rationale for transportation

privatization is that segregating automobile traffic and getting people
out of cars and into mass transit will contribute to decongestion that
benefits all travelers. However, anecdotal evidence suggests that, with
the explosion in the number of automobiles, the meager road space
dedicated to affordable modes, and the irregular enforcement of traffic
regulations, the commuting experiences of low-income urban residents
has seen little improvement. 46
On the whole, this has been the trajectory of urban development: a small
number of privately-planned and managed upscale areas, on one hand, and
the seemingly endless, neglected, and poverty-ridden landscapes of the public
city on the other.
At its most extreme, the fragmentation resembles a form of social and spatial
apartheid, except here the underlying principle of segregation lies not in
race and ethnicity, but in class, wealth, and the market. What is new is the
apartheid of contrasting elements [in Metro Manila]their segregation and
mutual exclusion claims Berner, (w)hat is taking place is the exhaustive
emergence of enclaves, a de-differentiation of urban space.47
The segregation is made palpable by walls, gates and road blocks, iron bars on
windows, and security checkpoints in middle-class, and at times even workingclass subdivisions. Bomb detection devices, state-of-the-art round-the-clock
surveillance, and implicit dress codes have been adopted in nearly all high-end
shopping centers, business districts, and occasionally in public transport hubs.
Anti-squatting, anti-informal vending, and anti-begging policies are enforced by
city governments; and more recently, high-technology security apparatuses,
such as CCTV cameras, have been installed at key junctions, intersections,
and central business district entry points with the expressed purpose of
strengthening city security.48 Even electric fences have gradually become
parts of this ubiquitous security landscape, as has been the case with recent
subdivisions and residences surrounded by depressed communities in Quezon
City. All these carry the implicit intention of limiting interpersonal interactions
between those who live in their highly-policed residential and business enclaves
and those outside of them.
205
The social fabric of the metropolis has become increasingly polarized and
fragmented, fuelling growing anti-squatter sentiments by those who view them
as perennial security threats and dangers. Many otherwise liberal middle class
people share these sentiments. For instance, Neal Cruz, a respected columnist,
has this to say:
As for the owner, he is forced by the local government to pay realty
taxes but the local government does not help him reclaim his property.
Instead, the taxes he paid are used to pamper the squatters. Officialdom
has even changed the term squatter to informal settler so as not
to offend the sensibilities of the squatters. But a squatter, by any other
name, is still a squatter.
Squatting, by any other name, is robbery in band. A person or group
of persons takes over, by force, somebody elses property without
his knowledge and permission. Yet under present laws, there is no
punishment for this type of robbery in band. And the government,
national or local, does nothing to help the victims. They are afraid of the
lawbreakers. That is like a whole town in the old American West afraid
of a gang of bandits terrorizing its citizens. Who is the Lone Ranger or
Wyatt Earp who would fight the lawbreakers?49
With urban space and the quality of urban life becoming scarce commodities,
spatial segregationand the latent class tensions that issue from ithas
restructured the contemporary cityscape.
Clash of urban populations

Some of Manilas slum communities, such as those in the Tondo district, and
until recently, in Quezon Citys Sitio San Roque, have successfully managed to
survive intact for decades. This is a fact that should not be taken for granted.
If slum communities are to retain control over the lands they have settled in
despite their lack of legal titles, they must successfully negotiate through a
maze of competing and overlapping interests on a regular basis. When they fail
to do so, they become victims of forcible evictions.
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Chapter 6
The Sitio San Roque incident illustrates the crisis brewing within and around the
embattled shantytowns of Metro Manilas urban poor.
In the early morning of September 23, 2010, long before first light, throngs of
slum dwellers barricaded the entrance to Sitio San Roque along the metropolitan
thoroughfare of EDSA. Massing together by the hundreds, they were soon
confronted by 300 policemen in full riot gear, two SWAT teams and 600 other
government personnel who had come to tear down their homes to give way to
Vertis Northa PhP65 billion joint venture project of real estate colossus Ayala
Land, Inc. and the National Housing Authority2, within the budding, World
Bank-planned Quezon City Central Business District3.
Violence and pandemonium punctuated the seven-hour stand-off between
the distressed residents and the demolition teams. Before long, rocks, hollow
blocks, and glass bottles were raining in that part of EDSA. Heaps of furniture,
metal structures, and whole barangay security outposts were mounted on the
highway to obstruct traffic; high-pressure water cannons were loosed upon
the protesters. By the time the government-backed demolition ceased, at least
14 people, protesters and police alike, had been injured, and more than 130
homes had been dismantled by the NHA.
The official policy on the informal settler problem has evolved from the time when
squatting was made a criminal offense via PD 27 during Martial Law; this was
repealed in 1997. UDHA formally discourages the eviction of informal settlers,
except when they encroached on prescribed danger zones, when alreadyfunded government infrastructure projects are to be put up, or when court orders
have authorized such demolitions in private lands. Even with these preconditions,
the demolition process is mandated to fulfill numerous requirements, such as
adequate consultation, a 30-day prior notice of eviction, and the provision of
decent relocation sites.50
Unfortunately, these requirements have been routinely violated. The Urban
Poor Associates, a leading church-allied NGO advocating the rights of the urban
poor since 1992, estimates that only half of all displaced slum households have
received some form of relocation support, whether from the national or local
government.51 The relocation sites located in the peri-urban periphery of most
207
market-oriented socialized housing projects enabled by UDHA have also not

been viable, giving rise to the phenomenon of slum returnees to where they
were evicted.
Exact figures are elusive, but existing information suggests that the toll of
demolitions on informal settlers has been considerable. From 1996 to 2008
UPA noted the forcibly displacement of more than 85,000 families from their
homes.52 Throughout the first two years of the Benigno Aquino IIIs presidency,
73,000 urban families were evicted from their homes, estimated Demolition
Watch, a member of the International Network of Economic, Social, and
Cultural Rights .53 (See Tables 1 and 2)
Available documentation also reveals distinct patterns in these demolitions.
First, they have tended to take place in government-owned properties, with
UPA estimating that roughly seven out of 10 eviction incidents happening on
public properties.54 Only in 1999 were evictions from private lands higher than
those from public lands.55 Second, these demolitions on public lands have
been justified as necessary for establishing (a) large-scale infrastructure and
government projects (e.g. the Pasig River Rehabilitation Program, the R-10 Road
Widening Project, the Northrail-Southrail Linkage and Rehabilitation Project, the
Rehabilitation of the New Bilibid Prison), (b) city-wide beautification initiatives
(e.g. the APEC-related demolitions of 1996, the 2007 ASEAN Summit in Cebu,
the MMDAs Metro Gwapo Program from 2003 to 2009), and (c) commercial
zones and business centers (e.g. the Bonifacio Global City, the Quezon City
Central Business District).
Third, while in the past it may have been easier for slum dwellers located in lessconspicuous danger zones, like sewer canals, to evade eviction56, the October
2009 floods caused by Typhoon Ondoy (Ketsana) significantly escalated
pressures to demolish shantytowns in such zones in the name of disaster risk
reduction and climate-proofing. In June 2013, the government committed
to relocate 100,000 slum families residing within the San Juan, Tullahan,
Mangahan, Maricaban, Tripa de Gallina, Pasig, Estero de Sunog and Estero de
Maypajo waterways over a five-year period (2013-2018) to implement new
flood mitigation projects.57 The eviction and relocation effort, if successful,
will be the largest planned displacement in the history of the Philippines. This
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Chapter 6
will top the relocation under the Northrail-Southrail linkage project, where more
than 80,000 families have been affected since 2006.58
Fourth, a number of high-profile infrastructure projects for which large-scale
demolitions have been executed are Public-private Partnerships and privatization
efforts. These include but are not limited to: Sitio San Roque for Vertis North in
the Quezon City Central Business District, a 29.1-hectare joint-venture project
between Ayala Land Inc. and NHA59; R-10 (Tondo) and Baseco60 for the new
passenger terminal in the privatized Manila North Harbor, a joint venture
between the Harbor Centre Port Terminal Inc. and the San Miguel Corp.-led
Petron Corp.61; parts of Caloocan City and San Jose del Monte, Bulacan62 for
the Department of Transportation and Communication-approved Metro Rail
Transit Line 7 that would cost US$1.235 billion, and also involving San Miguel
Corp.63.
The clearing of shantytowns underscores the competing demands for urban
space. For the underclass, urban space, albeit in the slums, is a precondition for
subsisting in the city. For private land developers, the freeing up of strategicallylocated yet unmarketable slum lands and public properties presents a prime
opportunity for great profits. Normally, the presence of shantytowns and slum
dwellers significantly dampens the market value of any piece of urban space64,
yet during every property boom, pressures for the aggressive development of
shantytown land escalate. For local governments, urban development comes
with the promise of better local tax revenues and land rents, the occasional
kickback, as well as heightened prestige. The longstanding legal dispute
between the Taguig and Makati city governments over the control of Fort
Bonfacio illustrates this.65 Often, the interests of private developers and local
governments coincide, like in the case of the Quezon City Central Business
District. When this happens, the local government becomes an instrument in
the demolition of shantytowns. A cycle of accumulation by dispossession of
slum dwellers may therefore occuri.e., the extra-economic exercise of state
power to overcome barriers to capitalist accumulation.66
The interests of the consumer classes oftentimes overlap with that of developergovernment partnership. As asserted by urban geographer Boris Michel, slum
demolitions and repressive urban governance strategies demonstrate to
209
urban middle classes and investors that something is going on, that the state
undertakes efforts to revitalize urban misery[They] are used as a sign of the
states power as a means to foster investments by freeing urban space from
hindrances.67
Not surprisingly, the measures often succeed in raking in approval from the
consumer public. Indeed, an editorial of one noted business newspaper is
symbolic of commonplace perceptions on the slum dwellers affected by the
estero relocation issue:
To begin with, they [slum dwellers] should not have been allowed to
build illegal structures along our waterways, clogging them with trash,
worsening pollution and causing floods. Aside from the ecological
damage and health issues, the government also has to contend with the
violence and crime that have become part and parcel of these squatter
colonies.
Squatters should appreciate that the government is doing this for their
benefit They should also appreciate that the government is spending
a huge chunk of its already meagre resources to provide a humane way
of relocating them, even if most of them are not taxpayers and even
steal electricity and water, which utilities companies charge to legal
consumers as losses from pilferage.
[] Squatters should recognize the rule of law and the governments
responsibility to enforce property rights, which are essential to an orderly
and peaceful society and also for business investments to pour into the
economy. 68
Limited urban space, the threats of disaster and the need for order require
focused planning, and dealing with shantytowns are central issues. But as
slums are products of massive disparities in development across economic
sectors, between social classes and within cities, there is the substantial issue
of equity that also needs to be addressed. What should be the states role
in urbanizationcan it just continue parceling and selling tracts of lands for
private development? If the streets cannot be occupied by the underclass
210
Chapter 6
to ply their wares, practice their trade or live in proximity to their livelihoods,
if public transportation is deficient so as to marginalize non-private vehicle
owning classesfor whom then is the city?
Constraints and possibilities

The underclass displays extraordinary resilience in the face of state hostility.
Stories abound of families who, in the aftermath of demolitions, simply
resettle on cleared lands again and again after authorities leave; or who, amid
crackdowns on their informal livelihoods (e.g. vending), engage in protracted
games of cat and mouse with members of the police or the Metropolitan
Manila Development Authority.69 These resistances, however, do not always
put the community in a sympathetic light to other city residents. For example,
the use of pillboxes, urine, and human feces by San Roque settlers against the
police during a riot in July 2013 elicited condemnations from government
officials, media commentators, and the various segments of the public.70

However, the forms of resistance deployed by shantytown communities are not
always as extreme. Their struggle against dispossession and exclusion has taken
shape in both organized and unorganized manners; with or without civil society
advocacy organizations; and with or without disadvantageous long-term effects.
Social scientists like Erhard Berner and Wataru Kusaka have documented three
important modes by which everyday forms of resistance of shantytown
residents manifest. One, their associations are able to penetrate law enforcement
processes by bribing local authorities and street-level bureaucrats (the lagay or
kotong system) in order to get approval for their informal interests (such as
informal vending).71 Two, they are able to turn patronage relationships in their
favor by pledging their votes to the politician that poses as the protector of their
interests. The importance of patronage as a tactic to evade or delay eviction is
clear in displacement trends: election years see lower levels of demolitions than
non-election years.72
Three, by simply tying up a private slum land dispute in the courts (by UDHA,
a court order is necessary for these evictions), slum dwellers with support
211
from non-government or civil society organizations can impose huge costs on

private urban landowners and developers. This strategy has proven to be a
highly effective strategy by slum associations and urban poor advocates.73
As long as slum dwellers are able to continue occupying their lands, the market
value of the lot in question remains significantly depressed. Time, in this sense,
is on the side of the slum dwellers. These considerable costs partly explain why
demolitions on government-owned properties have consistently outnumbered
those on private lands over the years, and why mega-developers partnering
with government are privileged evictors.
When slum organizations are able to successfully execute such strategies in
appropriate contexts, their chances of weathering demolition threats and the
coalitions behind them considerably increase. Unfortunately, as attested by
veteran urban poor advocates themselves such as UPAs Dennis Murphy, there
are limitations to the organizing among the urban poor. While access to urban
space, livelihoods, and public goods remain at the core of the urban underclass
interests, there is a marked lack of cohesion in the agenda of the urban poor.
At times it can even be doubted whether there is something that can be called
an urban poor agenda74, and whether they are on the way to developing some
form of coherent class consciousness.
One of the greatest obstacles to the formation of an integrated urban poor
agenda is the place- and locality-based nature of their struggle. Urban poor
anti-eviction movements almost always gravitate towards defending a particular
locality, a particular community, within its particular history, livelihoods, and
social networks. Beyond the bounds of that particular locality, however, the
bonds of solidarity typically remain weak and diffused; and given the extreme
scarcity of urban resourcesjobs in the formal sector, public facilities in
proximity, substantial attention from patrons, development and social welfare
projectit is normally competition between slum communities over such
limited public and private goods that obtains.75
While the efforts of enterprising individuals and associations may translate
into common gains at the level of one shantytown community (e.g. petitioning
the local government to construct a new school facility), at levels beyond the
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Chapter 6
community in question, they may feed intense envy among other settler areas.
Differences in the main dialects spoken between shantytowns, regions, and
provinces of origin, as well as allegiances to particular politicians and ideological
groups tend to aggravate these rivalries.76
It is important not to romanticize the urban underclass. The urban underclass,
while common in their dilemma of accessing decent urban space and livelihoods,
are still far from demonstrating anything resembling a unified class agency.
Their predominant strategies for defending their lands in the metropolis remain
focused on developing vertical, rather than horizontal linkages; on cultivating
ties to those with more power and influence such as local officials, elected
politicians, the socially influential, and NGOs. For the most part, they do not
seek to transcend their particularistic, place-based struggles, in order to build
multilayered, expansive alliances with other shantytown communities. They are
at most risk of being exploited, at the same time that many of them knowingly
play into patronage and corruption. As a result, they are difficult to unite, with
some falling into transactional strategies, even as a few might aim for strategic
transformation.
But the political order quakes when the urban poor enter the arena as a
force, albeit spontaneously. This was the case in early 2001, when they were
mobilized to protest the arrest of President Joseph Estrada who, more than any
president, had assiduously cultivated their support with populist rhetoric and
programs. For over a month, the country was wracked by what was virtually
a mass uprising against the new administration of Gloria Macapagal-Arroyo
EDSA 3, as the event came to be known, underlined how much the urban
underclass felt alienated from the social and economic order.77
EDSA 3 exposed the need to fully appreciate the place and function of the
urban underclass: seemingly un-integrated into the city fabric, but in reality
connected to it economically and politically. Their cheap labor and squalid
living conditions indirectly subsidize the current level of economic development
of the metropolis at large, but increasingly, it appears to others that not even
walls, gates, and private security aides will suffice to keep at bay the threats and
risks they represent. The view that sustains is that for the good and safety of
the city, they must be resettledan effort that has failed many times before.
213
The slum dwellers have put up staunch resistance, but they are divided among
themselves, with limited solidarity for the fate of others like them. It hardly
helps that sympathy from other classes for their collective plight appears to
have been drying up. Indeed, most of them may be beginning to face a new
concerted, unified threat in their continued ability to access their urban lands.
How will they and other city dwellers respond to the fast-transforming
urban conjuncture? In the absence of a reorientation of the states role in the
metropolis, a reworking of the public housing and urban land regime, and a
heightened degree of organizing among slum dwellers, the dilemma of the
urban underclass, like the residents of Sitio San Roque, will likely deepen.
Key to a healthy integration of the urban underclass is a shift on the part of
government. Officials in the Aquino administration have talked about in-city or
on-site relocation instead of the usual off-city and off-site relocation that is really
a euphemism for mass eviction. To ensure the success of such an approach
will, however, necessitate not only amendments to UDHA to institutionalize it,
along with the social services that will be necessary to make it compulsory. It
will also require the development of a real partnership among informal settlers,
government, and civil society organizations. As Joel Rocamora, head of the
National Anti-Poverty Commission, explained: This is an entirely new scheme,
and the bureaucracy is not used to this Even the urban poor are new to this.78
Time is running out for programs like in-city, on-site relocation. Unlike in EDSA
3, the resistance and political intervention next time may no longer just be
about defending a popular politician but their own rights and interests.
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Chapter 6
Table 1.
Total Evicted Slum Families: 1996-2007
Number of
Demolitions
Year
Families
Affected
Comments
1996
72
6,975
APEC-related demolitions
1997
16
8,067
Sta. Elena Compound; Binondo; R-10; Sitio

Mendez; Smokey Mountain
1998
20
3,882
National Election
1999
36
7,873
New Bilibid Prison eviction of land invaders;

more demolitions in private lands than
government
2000
29
6,056
Pasig River Flood Control; R-10
2001
13
2,073
EDSA II; PGMA instruction: no demolition

without in-city relocation, a de facto
moratorium on demolitions
2002
15
1,043
PGMA instruction: no demolition without

in-city relocation, a de facto moratorium on
demolitions
2003
26
4,315
MMDA clearing operations
2004
925
National elections
2005
26
22,074
Northrail project (Valenzuela and Bulacan);

MMDA demolitions
2006
7,635
Southrail project; Fort Bonifacio proclaimed

lands; R-10
2007
(Jan.-June)
5,785
Southrail project; Metro Gwapo; Road

widening and flood control project of MMDA
Source: Urban Poor Associates. Eviction monitoring. Retrieved 17 March 2014 from http://urbanpoorassociates.org/
215
Table 2.
High-Profile Demolition Cases in the Administration
of President Benigno Aquino III (inclusive years)
Place of Incident
Date of Incident
Estimated
Affected
Families
Reason of
Demolition
Silverio Compound,
San Dionisio, Paranaque
March 7, 2012
April 23, 2012
25,000 families
Commercial
Development Project
in the guise of a
socialized housing
project
Corazon de Jesus,
San Juan City
January 25, 2011

January 11, 2012
122 families
121 families
Construction of City
Hall and Commercial
Development Project
Interior Dama de
Noche, Kadiwa,
Brgy. San Roque,
Navotas City
February 23, 24,25,28

March 1-2
May 5-6
May 11,12,17, 18,
2011
466 families
Government Project
Philippine National
Railway Site, Muntinlupa
2009-2012 (10+)
23,000 families
were demolished
on 2009 and 355
families remain in
makeshift tents
Government Project,
PNR Modernization
Laperal Compound,
Guadalupe, Makati City
April 28, 2011
4,000 families
Dypac Compound, Juan

Luna, Tondo, Manila
December 12, 2011
300 families
Private Land
Brgy. Commonwealth,
Batasan, Holy Spirit,
Payatas, National
Government Center,
Quezon City
2008-2012 (10+)
3,000 families
Reblocking,
Selling of Lots
Barangay SipacAlmacen and Navotas

West Navotas City
August-September
2010 (5 times)
4,000 families
North Bay
Modernization
Brgy. Mariana, New

Manila, Quezon City
August 11 and 12,

2010
200 families
Private Land
Manggahan,
Kawayanan, Paranaque
August 5 and 15, 2011
16 families
Sitio Fatima, Paranaque
October 5, 2011
42 families
Fastrack, Sitio Fatima,

Paranaque
October 21, 24, 28

November 8
December 21, 2011
200 families
216
Chapter 6
San Roque, North

September 23, 2011
Triangle, BagongPag-asa,
Quezon City
3,000 families
Bagbag, Novaliches
February 2012
500 families
Old Balara,
Quezon City
August 26, 2011
1,000 families
Welfareville,
Mandaluyong City
October 17, 2011
46 families
Pangarap Village,
Caloocan
April 28, 2011
8,000 families
For Quezon City

Business District
and Vertis Norte
MRT 7 and Business

Center
Source: Demolition Watch. (n.d.). Forced eviction incidents. Retrieved 17 March 2014, from http://
demolitionwatch.wordpress.com/forced-eviction-and-demolition-incidents-and-affected-families-2010-2012/
217
Notes
1
Demographia.(2013). Demographiaworld urban areas.(9th ed.)Retrieved 17 March 2014, from http://

www.demographia.com/db-worldua.pdf
2 Rappler.Com. (2012, July 5) Ayala Land to spend P65-B for Quezon City business district. Retrieved 17
March 2014, from http://www.rappler.com/business/8114-ayala-land-to-spend-p65-b-for-quezon-citybusiness-district
3 Quezon City Government. (n.d.). Triangle park: the Quezon City Business District. Retrieved 17 March
2014, from http://housecondophil.files.wordpress.com/2012/08/tri-park-brochure.pdf
4 Remo, M. (2013, July 6). Traffic costs P2.4B daily. Philippine Daily Inquirer. Retrieved 17 March 2104, from
http://business.inquirer.net/130649/traffic-costs-p2-4b-daily
5 Ballesteros, M. (2010). Linking Poverty and Environment: Evidence from Slums in Philippine Cities. Philippine
Institute for Development Studies Discussion Paper, No. 2010-33.
6 We use urban underclass broadly, covering not just the urban poor but also informal settlers who may not
be classified as poor but experience precarious economic and employment conditions.
7 Data derived from The World Bank (2012). World development indicators and Global development finance.
World DataBank. Retrieved 20 February 2013, from http://databank.worldbank.org/ddp/home.do
8 Data derived from The World Bank (2012). World development indicators and Global development
finance. World DataBank. Retrieved 20 February 2013, from http://databank.worldbank.org/ddp/home.
do; Carino, B. andCorpuz, A. (2009). Towards a strategic urban development and housing policy for the
Philippines. Philippine Institute for Development Studies Discussion Paper, No. 2009-21. Retrieved 17
March 2014, from http://dirp4.pids.gov.ph/ris/dps/pidsdps0921.pdf
9 Ballesteros, M. (2000). Land use planning in Metro Manila and the urban fringe: implications on the land
and real estate market. Philippine Institute for Development Studies Discussion Paper, No. 2000-20.
Retrieved 17 March 2014, from http://dirp4.pids.gov.ph/ris/dps/pidsdps0020.pdf
10 National Economic Development Authority Regional IV-A (Calabarzon).Regional physical framework plan
2004-2030. Retrieved 17 March 2014, from http://calabarzon.neda.gov.ph/rpfp0430/rpfp_3.pdf, e-page 2
11 Ballesteros, M. (2000). Land use planning in Metro Manila and the urban fringe: implications on the land
and real estate market. Philippine Institute for Development Studies Discussion Paper, No. 2000-20.
Retrieved 17 March 2014, from http://dirp4.pids.gov.ph/ris/dps/pidsdps0020.pdf
12 Ragragio, J. (2003). Understanding Slums: Case Studies for the Global Report 2003. Retrieved 17 March
2014, from http://www.ucl.ac.uk/dpu-projects/Global_Report/cities/manila.htm.
13 Ballesteros, M. (2010). Linking poverty and environment: evidence from slums in Philippine cities. Philippine
Institute for Development Studies Discussion Paper, No. 2010-33,8.
14 Ballesteros, M. (2010).Linking poverty and environment: evidence from slums in Philippine cities. Philippine
15 National Statistical Coordination Board. (2012). Fishermen still the poorest sector in 2009. Retrieved 17
March 2014, from http://www.nscb.gov.ph/pressreleases/2012/PR-201206-SS2-01_pov2009.asp.
16 Ballesteros, M. (2010).Linking poverty and environment: evidence from slums in Philippine cities. Philippine
17 Porio, M. (2009). Urban transition, poverty, and development in the Philippines: apreliminary draft,31.
Retrieved 17 March 2014, fromhttp://pubs.iied.org/pdfs/G02570.pdf
18 National Statistics Office. (2010). Population and annual growth rates for the Philippines and its regions,
provinces, and highly urbanized cities based on 1990, 2000, and 2010 censuses. 2010 Census and
Housing Population. Retrieved 17 March 204, from www.census.gov.ph/sites/default/files/attachments/
hsd/pressrelease/Population and Annual Growth Rates for The Philippines and Its Regions%2C
Provinces%2C and Highly Urbanized Cities Based on 1990%2C 2000%2C and 2010 Censuses.pdf
19 Berner, E. (1997). Defending a place in the city: localities and the struggle for urban land in Metro Manila.
Quezon City: Ateneo de Manila University Press, 8-9.
218
Chapter 6
21 Ragragio, J. (n.d.). The case of Metro Manila, Philippines. Retrieved 17 March 2014, from http://www.ucl.
ac.uk/dpu-projects/Global_Report/pdfs/Manila.pdf
22 House of Representatives. Profile of informal sector. Retrieved 17 March 2014, from http://www.
congress.gov.ph/download/cpbd/fnf_112008_profsector.pdf
23 IBON. (n.d.). Substantial wage hike urgent: gap between minimum wage, cost of living widens. Retrieved 17
March 2014, from http://www.ibon.org/ibon_articles.php?id=296.
24 Tubeza, P. (2013). NCR cost of living almost triple minimum wage. Philippine Daily Inquirer. Retrieved 17
March 2014, from http://newsinfo.inquirer.net/398567/ncr-cost-of-living-almost-triple-minimum-wage.
25 Pastrana, C. (2009). The informal sector and non-regular employment in the Philippines. Retrieved 17
March 2014, from http://www.adbi.org/files/2009.12.15.cpp.sess2.3.pastrana.paper.non.regular.
employment.philippines.pdf.
26 Ballesteros, M. (2002). The dynamics of housing demand in the Philippines: income and lifestyle effects.
Philippine Institute for Development Studies, No. 2002-01, 3. Retrieved 17 March 2014, from http://dirp3.
pids.gov.ph/ris/rps/pidsrp0201.pdf
27 Colliers International. (2013). Philippine real estate market. Research and Forecast Report No. 4Q 2013,
3. Retrieved 17 March 2014, from http://www.colliers.com/-/media/Files/MarketResearch/APAC/
Philippines/2013/RealEstateMarketReport_4Q13.pdf
28 Ballesteros, M. (2004). Rental housing for urban low-income households in the Philippines. Philippine
Institute for Development Studies Discussion Paper, No. 2004-47, 40. Retrieved 17 March 2014, from
http://dirp4.pids.gov.ph/ris/dps/pidsdps0447.pdf
29 ABS-CBN. (2010, March 3). Metro Manila squatters balloon to half a million families. ABS-CBN News.
Retrieved 17 March 2014, from http://www.abs-cbnnews.com/nation/metro-manila/03/03/10/metromanila-squatters-balloon-half-million-families
30 Ballesteros, M. (2010). Linking Poverty and Environment: Evidence from Slums in Philippine Cities. Philippine
Institute for Development Studies Discussion Paper, No. 2010-33, 10-12.
31 Money Politics. (2013). Facts & features: data a day. Retrieved 17 March 2014, from http://moneypolitics.
pcij.org/data-a-day/which-is-the-only-school-division-in-metro-manila-where-elementary-schools-meetthe-legal-requirement-of-having-a-maximum-of-45-pupils-per-classroom/
32 UN Habitat. (n.d.). Urban health inequities: Manila, Philippines. Cities & Citizens Series 6. Retrieved 17
March 2014, from www.unhabitat.org/downloads/docs/9178_19910_manilareport.pdf
33 Karaos, A.M. and Nicolas, G. M. (n.d.) The state of Philippine cities. Intersect, 24.
35 National Economic and Development Authority. (2011). Accelerating infrastructural development and
social development section. Philippine Development Plan 2011-2016.
36 Ballesteros, M. (2009) Housing policy for the poor: revisiting UDHA and CISFA. Philippine Institute for
Development Studies Policy Notes, No. 2009-04, 6. Retrieved 17 March 2014, from http://dirp4.pids.gov.
ph/ris/pn/pidspn0904.pdf
37 Aldaba, F. (2009). Poverty in the Philippines. Mandaluyong City: Asian Development Bank, 73.
38 National Economic and Development Authority. (2011). Accelerating infrastructural development and
social development section. Philippine Development Plan 2011-2016.
39 Aldaba, F. (2009). Poverty in the Philippines. Mandaluyong City: Asian Development Bank, 73.
40 Porio, E. (1997). Urban governance and poverty alleviation in Southeast Asia: trends and prospects.
Quezon City: Center for Social Policy and Public Affairs, Ateneo de Manila University, 23.
41 Cardenas, K. (2011). Globalization, Housing Markets and the Transformation of a South City: The Case of
21st-Century Manila. Paper presented at the International RC21 Conference Session 20: housing markets,
urban transformations, 16.
42 Cardenas, K. (2011). Globalization, Housing Markets and the Transformation of a South City: The Case of
21st-Century Manila. Paper presented at the International RC21 Conference Session 20: housing markets,
urban transformations,18-19.
43 Ballesteros, M. (2009) Housing policy for the poor: revisiting UDHA and CISFA. Philippine Institute for
Development Studies Policy Notes, No. 2009-04, 6. Retrieved 17 March 2014, from http://dirp4.pids.gov.
ph/ris/pn/pidspn0904.pdf
219
44 For a longer discussion, See: Boris, M. (2010). Going global, veiling the poor: global city imaginaries in
Metro Manila. Philippine Studies58 (3), 388.
45 Shatkin, G. (2008). The city and the bottom line: urban megaprojects and the privatization of planning in
Southeast Asia. Environment and Planning A 40(2), 10.
46 Shatkin, G. (2008). The city and the bottom line: urban megaprojects and the privatization of planning in
Southeast Asia. Environment and Planning A 40(2), 18-19.
Quezon City: Ateneo de Manila University Press 7-8.
48 The Official Web Portal of Makati. (2013). Makati beefs up surveillance system with 115 new CCTV
cameras. Retrieved 17 March 2014, from http://www.makati.gov.ph/portal/news/view.jsp?id=3038.
49 Cruz, N. (2012, July 26).Squatting is robbery in band. Philippine Daily Inquirer. Retrieved 17 March 2014,
fromhttp://opinion.inquirer.net/33429/squatting-is-robbery-in-band#ixzz2qMhSqEgm
50 Nicolas, G. (2011). Laperal demolition: where govt failed. Philippine Daily Inquirer. Retrieved 17 March
2014, from http://opinion.inquirer.net/5043/laperal-demolition-where-gov%E2%80%99t-failed
51 Karaos, A.M. and Nicolas, G. M. (n.d.)The state of Philippine cities. Intersect, 19-20.
52 Karaos, A.M. and Nicolas, G. M. (n.d.)The state of Philippine cities. Intersect,19.
53 Demolition Watch. (n.d.). Forced eviction incidents.Retrieved 17 March 2014, from http://
demolitionwatch.wordpress.com/forced-eviction-and-demolition-incidents-and-affectedfamilies-2010-2012/
54 Karaos, A.M. and Nicolas, G. M. (n.d.) The state of Philippine cities. Intersect,19.
55 Philippine Human Rights Information Center. (2010). Without a roofover their heads, 63. Retrieved 17 March
2014, from http://philrights.org/wp-content/uploads/2010/10/Without-a-Roof-Over-their-Heads.pdf
57 Calica, A. (2013, June 20). Estero settlers must go. The Philippine Star. Retrieved 17 March 2014,
fromhttp://www.philstar.com/headlines/2013/06/20/956008/estero-settlers-must-go
58 Philippine Human Rights Information Center. (2010). Without a roof over their heads, 56. Retrieved 17 March
2014, from http://philrights.org/wp-content/uploads/2010/10/Without-a-Roof-Over-their-Heads.pdf
59 Quezon City Official Website. (n.d.). The Quezon City business district. Retrieved 17 March 2014,
fromhttp://www.quezoncity.gov.ph/index.php?option=com_content&id=561:the-quezon-city-centralbusiness-district.
60 Asian Human Rights Commission. (2013). Philippines: immediately stop eviction drive against 250 poor
families of R10, Tondo. Retrieved 17 March 2014, fromhttp://www.humanrights.asia/news/hunger-alerts/
AHRC-HAC-013-2013.
61 Montecillo, P. (2012, April 2). North Harbor to put up newterminal. Philippine Daily Inquirer. Retrieved 17
March 2014, fromhttp://business.inquirer.net/52205/north-harbor-operator-to-put-up-new-terminal
62 Conde, C. (2011, June 7). PNoy names Mar to DOTC post. Interaksiyon.Com. Retrieved 17 March 2014,
from http://www.interAksyon.com/article/5100/pnoy-names-mar-to-dotc-post
63 Lectura, L. (2013, September 11). San Miguel still waiting for PNoys nod on start of MRT 7 construction
ABS-CBN News. Retrieved 17 March 2014, from http://www.abs-cbnnews.com/business/09/11/13/
san-miguel-still-waiting-pnoys-nod-start-mrt-7-construction.
65 Cupin, B. (2013). Makati offers Taguig income-sharing deal over Fort Bonifacio. Rappler.Com. Retrieved 17
March 2014, from http://www.rappler.com/nation/38464-makati-taguig-fort-bonifacio-income-sharing.
66 Levien, M. (2009). The land question: special economic zones and the political economy of dispossession
in India. Paper presented at the International Conference on Global Land Grabbing, 6-8 April 2009.
Retrieved 17 March 2014, from http://www.iss.nl/fileadmin/ASSETS/iss/Documents/Conference_papers/
LDPI/55_Michael_Levien.pdf
67 Boris, M. (2010). Going global, veiling the poor: global city imaginaries in Metro Manila. Philippine Studies
58 (3),393.
68 Business Mirror. (2013, March 24). Moving out of harms way. Business Mirror. Retrieved 17 March 2014
from http://www.businessmirror.com.ph/index.php/en/news/opinion/11105-moving-out-of-harm-s-way
220
Chapter 6
69 Kusaka, W. (2010). Governing informalities of the urban poor: street vendors and social order making in
Metro Manila. In Y. Kasuya and N. Quimpo (Eds.), The politics of change in the Philippines (p. 380). Pasig
City: Anvil Publisher, 2010.
70 Lozada, D. (2013). CHR: Informal settlers went too far by throwing feces. Rappler.Com. Retrieved 17
March 2014, from http://www.rappler.com/move-ph/32798-libel-case-against-qc-mayor.
71 Kusaka, W. (2010). Governing informalities of the urban poor: street vendors and social order making in
Metro Manila. In Y. Kasuya and N. Quimpo (Eds.), The politics of change in the Philippines (p. 373). Pasig
City: Anvil Publisher, 2010.
72 Philippine Human Rights Information Center. (2010). Without a roof over their heads, 63. Retrieved 17
March 2014, from http://philrights.org/wp-content/uploads/2010/10/Without-a-Roof-Over-their-Heads.
pdf
Quezon City: Ateneo de Manila University Press, 186-187.
74 Focus on the Global South. (2011). Roundtable discussion on Philippine political-economy. Retrieved 17
March 2014, from http://focusweb.org/publications
77 See Focus on the Global South. (2001, May 7). EDSA 3: asurprising uprising. Focus on the Philippines No.
20-2001. Retrieved 17 March 2014, from http://focusweb.org/publications/Bulletins/Fop/2001/FOP20.
htm
78 Esplanada, J. and Burgonio, T. (2012, August 16). Urban poor: Aquino OKd on-site, in-city housing.
Philippine Daily Inquirer. Retrieved 17 March 2014 from http://newsinfo.inquirer.net/250807/urban-pooraquino-okd-on-site-in-city-housing#ixzz2qMqnL05n
221
C h apter
Population Pressure,
Poverty, and Development
Together with the rest of developing Southeast Asia, the Philippines in the
`70s suffered from high rates of poverty, but it would be remembered for the
impressive growth that it would achieve. It would be the fastest growing in
ASEAN, with industrial growth of 7.8 percent and national output growth of
5.9 percent in the period 1971-1980.1
However, a massive structural adjustment program would sweep the country
in the `80s, ushering in the decline of industry and the stagnation of agriculture.
The massive resource outflows occasioned by huge debt repayments would
deprive the country of much needed funds for social services, the demands for
which would be made greater by shrinking employment, declining incomes, and
clamor of people both in and outside government who have become more
aware of the spoils of corruption of former President Ferdinand Marcos and
his cohorts.
Poverty alleviation would become central in government policy on economic
reform, and as main response to the need for safety nets in the post-EDSA
governments. But while addressing poverty would gain some prominence in policy
making, it would largely be subsumed within broader economic imperatives.
Overall, anti-poverty would be juxtaposed with the macroeconomic themes
of the post-EDSA governments, as seen in the notable anti-poverty programs
that would be adopted. (See Table 1)
223
The evolution of anti-poverty strategy, post-EDSA

Corazon Aquino (1986-1992) Corazon Aquino elevated poverty alleviation to
a serious governmental imperative, the first time that it became the overarching
objective of the Medium-Term Philippine Plan, with specific poverty reduction
targets included in the countrys medium-term program. Yet with the daunting
debt burden accumulated throughout the Marcos years, and intimidated by
international creditors, Aquinos government immersed itself in economic
stabilization policies pushed by the International Monetary Fund and the World
Bank. It maintained that poverty, inequality, and high unemployment have been
brought about by continued structural inefficiencies in the economy, such as
the unbridled abuse of state power, high tariffs, industrial protectionism, and
other forms of economic mismanagement, which could only be redressed
through the elimination of cronyism, the dismantling of monopolies, and the
realignment of government processes around free and fair competition.2
Seeing poverty as principally a lack of jobs and incomes, jumpstarting
demand-driven, employment-oriented growth was thus seen to be the
most immediate task. This was locally supplemented by social services and
employment-generation projects, reaching their peak with the Tulong sa Tao
program, which reportedly benefitted 110,000 rural Filipinos by means of
small enterprise development and credit-extension initiatives.3 Gender was
introduced and would gradually be embedded in national and sub-national
planning processes. Commitments to strengthen labors bargaining power
were made; non-government organizations were recognized as the prime
mover of development the lead in undertaking and sustaining programs and
projects aimed at improving the Philippine socioeconomic situation4; and the
Comprehensive Agrarian Reform Program was enshrined, at least rhetorically,
as the centerpiece program.
As the economic adjustment exerted tremendous pressure, the entrenched
traditional elites also tore at the resolve of government, resulting in governments
vacillation towards land reform in the Presidents own landholdings in Hacienda
Luisita, presaging CARPs eventual sabotage by established landlords and
dynastic politicians.
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Fidel V. Ramos (1992-1998) The Ramos administration blended continuity

and change in the anti-poverty paradigm. With depth and consistency
unmatched by any administration until then or since, the country underwent
even more macroeconomic readjustmentsall in the name of spurring global
competitiveness in the private sector, and of transporting the Philippines into
the ranks of other Newly-Industrializing Countries by the year 2000.
There was an equally ambitious and innovative shift in the MTPDPs antipoverty programs, with Ramos declaring:
In poverty alleviation, we have moved away from the old trickle down
policies to a positive bias for our poorest provincesOur object is to
help the poor help themselves by expanding their access to health
care, basic education, decent housing, credit, jobs5
Even as neoliberal restructuring of the Philippine economy escalated, there also
emerged massive, coordinated, nationwide poverty reduction programs. Ramos
Social Reform Agenda integrated the delivery of social services, asset reforms,
and social protection to address the minimum basic needs of the 20 poorest
provinces in the country. The SRA harnessed a localized and convergent
alleviation strategy. Localized because it targeted clearly defined and mapped
localities; convergent as it sought to bring together national and local agencies,
peoples organizations, NGOs and other development stakeholders throughout
the planning, execution, and monitoring stages of poverty interventions. There
had been efforts by the previous Aquino administration to incorporate the MBN
paradigmyet none of these efforts approached the scale, breadth, and level
of consolidation of the SRA. It has been claimed that, (t)hrough the SRA, the
language of reform and poverty reduction was mainstreamed in national and
local governance.6
Ramos also institutionalized the basic sectors in anti-poverty thinking and
discourse. The localities targeted for implementation were known to be
heterogeneous in terms of their concrete demands and necessities; farmers,
coastal fisherfolk, urban poor, informal workers, and indigenous peoples
especially required modified interventions to guarantee their contextual
225
importance. To discriminate between these demands, a set of 33 MBN

indicators spanning basic survival needs, security, and capability considerations
was employed throughout project prioritization and development. By means
of this Comprehensive and Integrated Delivery of Social Services, the social
services were based on those communities and sectors 10 most unmet basic
necessities. These same indicators were then used to monitor progress over
time by the programs stakeholders.
Ramos legacy included the creation of special anti-poverty infrastructure. The
National Anti-Poverty Commission became active during the first month of
Estrada, but its overall architecture was earlier laid out with the passage of the
Social Reform and Poverty Alleviation Act of 1997 (R.A. 8425). A strengthened
poverty information-gathering, resource-tracking, and monitoring apparatus
was also put in place at the Department of Social Welfare and Development
and the National Statistical Coordination Board.
The revamped anti-poverty platform facilitated a marked improvement in
outcomes. Yet under Ramos, the economy was not spared from the impacts of
its more liberal program. Towards the end of Ramos term, the Asian financial
crisis hit, wiping out most of the social gains achieved in the past half-decade.7
Land conversions and industrial estates mushroomed all over the countryside,
subverting fervent hopes for agrarian reform. The Philippines Mining Act was
legislated in 1995, subjecting hundreds of indigenous communities to the
possibility of permanent dislocation.
Joseph Estrada (1998-2001) Joseph Estrada inherited the worst concussions of the
1997 Asian Financial Crisis. To the electorate who had raised him to the presidency
with a landslide mandate, his incumbency signaled a populist sidestep of neoliberal
policy in favor of the poor, as his campaign slogan Erap para sa Mahirap seemed
to signify. Estradas medium term program would claim to advance a preferential
option for the poor by enabling a more equitable stream of revenues to LGUs
for additional poverty projects and initiatives.8
But while the ADB claimed that for the first time, an attempt is made to make
the plan revolve around a common theme of sustaining growth and reducing
poverty9 (Sustainable Development and Growth with Social Equity was its
226
Chapter 7
slogan), the theme itself had already been present, if less explicitly articulated, in
the MTPDP of the Ramos administration, and the Aquinos PRO-Poor Initiative.
The main difference, perhaps, was Estradas overriding focus on rural development,
which was elevated as central tenet of his program. Rural development was the
first priority area specified in the administrations development plan, where it
asserted that apart from the continuation of land redistribution, it is equally
important to adopt the proper policies to attract greater domestic and foreign
capital and technology.10 Mass housing earned considerable governmental
attentionfrom receiving significantly higher budgetary support compared to
the Ramos government;11 Estradas Executive Order No. 159 would decree it
outright as the centerpiece program of the Estrada Administration.12
Whatever original hopes Estrada may have had nourished were soon bogged
down by insipid outgrowths and by the brewing political crisis, triggered by
corruption issues, which would eventually kick him out of the presidential
palace. The administrations Lingap para sa Mahihirap program delivered an
omnibus package of social services to the 100 poorest families in each LGU
nationwide. Even during that time, however allegations were rife that the Lingap
program constituted nothing more than additional pork barrel funds. Future
stories of Estradas midnight cabinet would do little to deodorize the regime
and remove the stigma of graft and corruption.
Gloria Macapagal-Arroyo (2001-2010) Arroyo herself was a neoliberal
economist, and author of several market-oriented laws; expectedly her new
medium term program placed weight on generating macroeconomic stability to
nurture global competitiveness. Through structural and regulatory reforms, her
administration privatized the blue chips of government corporationsNational
Power Corporation, Philippine National Oil Company-Energy Development
Corporation, Philippine National Construction Corporation, the National
Food Authority, and the Metropolitan Waterworks and Sewerage System. It
concentrated on the the fast-growing ICT sector and the tourism industry as
lead employment generators which it expected to generate jobs in the private
sectorthe key to winning the war against poverty.13
Arroyo also emphasized microenterprise development, microfinance initiatives,
and the livelihood projects for the self-employed poor. Through the work of
227
DSWD and NAPC, Arroyos Kapit-Bisig Laban sa Kahirapan program financed

projects conceived, managed, and implemented by community stakeholders
themselves: 4,583 barangays in the 42 poorest provinces and municipalities in
the Philippines were recipients of such grants in 2010.14
Arroyo also recognized poverty as an issue of vulnerability, and the contexts
of especially-vulnerable sectors in poverty reduction such as indigenous
peoples (IPs) became central components of development plans. A variety of
shocks that prevented the poor from reaping their proper share of benefits like
economic dislocation, natural calamities, price fluctuations and even structural
adjustment were noted. An array of safety net, socialized health, food subsidy,
and refined targeting mechanisms were put in place to bring the poor and
vulnerable back into the mainstream development process.15
Midway through 2008, the conditional cash transfers of the Pantawid Pamilya
Pilipino Program (4Ps), officially commenced, becoming Arroyos second
most hailed poverty alleviation program, but also most criticized for allegedly
becoming a tool of patronage and corruption.
CCTs are safety net programs that provided cash to poor households on
the condition that they make specified investments in their childrens human
capital, particularly in health and education. First launched in the late 1990s,
according to the World Bank, over 30 countries now have some form of
CCT program.16 Implemented as the 4Ps in the Philippines, the program gives
household beneficiaries PhP500 monthly cash grant and an additional PhP300
per school-going child below 14 years old (who are required to maintain an 85
percent minimum monthly school attendance17). Each household is subsidized
for up to three children, for a maximum total monthly subsidy of PhP1,400.
Under Arroyo the 4Ps benefited 700,000 families.18
Benigno S. Aquino III (2010- ) Whereas his predecessors framed poverty
reduction clearly within overarching economic programs, Aquino III presents it
within an overwhelmingly governance lens. His mantra has been Kung walang
corrupt, walang mahirap. Working on the belief that corruption is the major
reason for rampant poverty in the Philippines, the government focuses on good
228
Chapter 7
governance and the eradication of corruption, as a necessary prerequisite

for poverty alleviation. While Aquino III enjoys great confidence from the
general public because of this, the preoccupation with anti-corruption has
been dampening both government spending and private investments related to
public works and services, at least in his first two years in office.
Notwithstanding the big noise raised against and the doubts cast upon it during
Arroyos time, the 4Ps/CCT continues under Aquino IIIs government and
has in fact become its biggest anti-poverty platform. The program received a
budget of PhP21 billion in 2011, which increased to PhP39.4 billion in 2012,
and further to PhP44.25 billion in 2013, more than doubling in just two years.
DSWD data as of May 2013 showed a 4Ps enrolment of 3.9 million householdbeneficiaries, covering 9.2 million children, nationwide.19 The program is again
expected to increase by more than 40 percent in 2014 to PhP62.6 billion to
expand coverage to poor childrens school education.20
Human resource endowments account for the Filipinos ability to sustain
themselves, so that the conditions of the 4Ps targeting education and health are
on the mark, as there is a historical negative correlation between educational
attainment and poverty.21 A family whose head has had no schooling is
four times more likely to be poor than a family whose head is a high school
graduate. The picture becomes brighter as heads of family climb higher in the
education ladder. Less than two in a hundred families whose head is a college
graduate is poor.
Thus far, debates have focused on if and how long the 4Ps/CCT can help
keep the poor afloat while waiting for more structural responses to kick in, and
around whether government resources are appropriately prioritized, including
the slashing of regular budgets for social services in favor of the 4Ps/CCT.
The real challenge, however, is in precisely identifying the structural changes
that would sustain the poverty gains expected from the 4Ps/CCT. Even a
World Bank report concedes that, while CCTs have been an effective way
to redistribute income to the pooreven the best-designed and best-managed
program cannot fulfill all of the needs of a comprehensive social protection
system. CCTs therefore need to be complemented with other interventions.22
229
The continued focus on poverty has produced mixed results. The proportion
of poor people, based on the national poverty line, has been slashed by a third
since 1985. The slight reverse swing, from 1991 to 1994, and the constant
increase in the period 2003-2009, which coincided with periods of relative
growth, indicated that the gains in poverty reduction were unstable. The cause
of much concern lately is the fact that the poverty situation in the Philippines
has not improved. According to the National Statistics Coordination Board,
25.2 percent of the population currently lives below the poverty line, a figure
that was practically unchanged from the figure of 26.3 percent and 26.6 in the
whole of 2009 and 2006, respectively. The figures are all the more disturbing
because globally, the poverty situation has actually improved since 2005.
According to the World Bank, the proportion of people living in extreme
povertyon less than $1.25 a dayfell in every developing region from 2005
to 2008.23
The population issue24

Along with its neighbors in the Southeast Asian region, the Philippines was
burdened with a high poverty rate and faced the same challenge of overcoming
underdevelopment four decades ago. Today, Malaysia, Vietnam, Indonesia, and
Thailand have drastically reduced poverty and possess vigorous economies.
In contrast, one in four Filipinos is still trapped in poverty, almost double the
proportion of the poor in Vietnam.
What accounts for the difference?
All five countries have adopted virtually the same neoliberal economic policy;
perhaps with varying degree of vigor and push from outside, but all have had
similar directions in the last decade. Corruption, another favorite variable
for comparing countries in the region, is also common among the five, with
Indonesia being a consistent topnotcher in annual surveys. State-promoted
asset and income redistribution programs in the Philippines, Thailand, Malaysia,
and Indonesia have either been weak or nonexistent.
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Chapter 7
There is, in fact, one very distinctive feature that separates the Philippines from
three of its neighbors: Vietnam, Indonesia, and Thailand managed to rein in
the growth of their populations through effective state-sponsored family
planning programs. And while successful family planning is not the whole story,
economists and demographers have a consensus that it is an essential element
in the narrative of economic advance in Southeast Asia.
One might compare the Philippines to an overloaded passenger plane that is
trying very hard to take off but cannot quite get more than a few feet above
the ground, and is fast approaching the end of the runway.
The countrys GDP grew by only 4.7 percent in the last decade. With
population growing at 1.9 percent on average per annum, the average yearly
growth rate of GDP per capita (GDP divided by total population) was only 2.3
percent. In contrast, Thailand was able to keep average population growth at
below one percent, while Vietnams GDP grew at a fast 7.2 percent.25 Indeed,
while Malaysia, Indonesia, Vietnam, and Thailand have reached the MDG of
halving the number of people living in poverty by 2015 ahead of schedule, the
Philippines is definitely going to miss it.
Many studies have affirmed the negative relationship between population
growth rate and economic growth. Not only is the relationship negative, it is
also significant; one estimate puts the Philippines would have achieved per
capita income 0.77 percentage points higher every year had it had the same
population growth as Thailand. This would have, in turn, translated into more
than four million people escaping poverty.26
The inability to address the population issue has given rise to another aspect
of inequality. The most damning evidence is given by the Philippine Family
Income and Expenditure Survey, which gives information on poverty every
three years. Consistently, poverty rates increase as family size also increases.
More significantly, poverty of larger families (those with 5-8 and 10 members)
has also been on the increase. A family with 10 or more members is five times
more likely to be poor than a family of only three members.27
231
Beyond carrying capacity

The challenge is enormous. Even if the fertility rate were to be brought down
to the replacement level of two births per reproductively active woman in
the next decade, owing to population momentumor the tendency of a
population to grow despite a rapid decline in fertility owing to a simultaneous
decline in the death ratethe Philippines will probably not see its population
stabilize until the latter part of this century. Had the country attained
replacement level fertility in 2010, the population would still have continued
to grow and reach 150 million in 2060, after which it would have stabilized.
If the replacement level fertility is achieved in 2030which is more realistic,
according to demographersthe population will stabilize at 200 million in
2080. Under a less optimistic scenario of replacement level fertility being
attained even later, say in 2050, the population will stabilize at more than 250
million people towards the last years of the century.28
The numbers are worrisome since a population of 200 million or 250
million would be a tremendous burden on the countrys carrying capacity,
or the number of people a region can support without suffering significant
environmental degradation. When carrying capacity is outstripped by
population growth, an ecological crisis develops, and then erupts in many
directions.
Chapter 5 discussed the continuous decline in the countrys ecological integrity,
burdened by so many factors, not least of which is population pressure. With
the countryside unable to support a rapidly expanding population, migration
to urban areas, especially Metro-Manila, has escalated. And with uncontrolled
expansion of shantytown communities, waterways were clogged and polluted,
with the Pasig River nearing biological death and Laguna Lake in irreversible
ecological decline by the mid-`90s.
There were two things that were new with the population shifts that began
in the late `70s and early `80s. An important study by Robert Repetto and
Wilfredo Cruz found that prior to that period the direction of internal migration
had been from the depressed rural areas to the cities. Since then, however,
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Chapter 7
internal migration also pushed people to the upland areas, open access forests,
and artisanal fisheries. Deforestation accelerated, with the country losing, by
2005, over a third of its already much reduced forest cover of about 10 million
hectares back in 1990. The Philippines now has the distinction of having the
third highest deforestation rate in the world, after Honduras and Nigeria.29
The second new feature of the population movements at the end of the `70s
was the massive exodus of Filipinos to foreign climes to work. As discussed
in Chapter 4, the labor export program was originally a small affair involving
50,000 workers when it was instituted in 1975. But with the push factor of
unrestrained population growth, it soon ballooned to become one of the
main absorbers of surplus labor, with 6.3 million Filipinos being deployed for
overseas work from 1984 to 1995. By 2011, with an estimated eight million
of its labor force overseas, the Philippines became the worlds second largest
labor exporting country. Remittances from abroad became a key source of
survival for millions of families and served as the mainstay of an economy
crippled by a combination of wrongheaded economic policies, unrestrained
population growth, and permanent ecological crisis.
Population growth and social conflict

Runaway population growth correlates negatively with economic growth, but
there is another uncomfortable correlation, but this time a positive onehigh
population growth and social conflict. It is a threat looming in countries that
have failed to manage their population wisely, like the Philippines. In Rwanda,
the genocide that took place in that country in 1994 was one of the most
tragic events of our times. The common explanation is that it was precipitated
by an ethnic conflict between Hutus and Tutsis. However, the famous
environmentalist Jared Diamonds careful study of the Rwanda genocide in his
book Collapse revealed that in many cases, fellow Hutus were also victims of
the Hutu rampage. One of the main factors behind the genocide, he argued,
was population pressure, noting how even among Rwandans, there was talk
about how a war is necessary to wipe out an excess of population and to
bring numbers into line with the available land resources. Diamond is not a
Malthusian, but he concludes that,
233
[P]opulation pressure was one of the important factors behind the

Rwandan genocide that Malthus worst-case scenario may sometimes
be realized, and that Rwanda may be a distressing model of that scenario
in operation. Severe problems of overpopulation, environmental impact,
and climate change cannot persist indefinitely: sooner or later they are
likely to resolve themselves, whether in the manner of Rwanda or in
some other manner not of our own devising, if we dont succeed in
solving them by our own actions.30
Rwanda may be an extreme case. But we have had similar dynamics of conflict
related to population pressure in the Philippines.
Beginning in the `50s there were state-sponsored and spontaneous migrations
from overpopulated Luzon and Visayas to relatively under-populated Mindanao,
known in the `60s as virgin land. Policymakers of that period routinely
pronounced Mindanao as a safety valve for demographic pressure as the
population-land ratio declined from one cultivated hectare per worker in the
agricultural hinterland in the `50s to 0.5 hectare by the early `80s. The resulting
mass migrations to the agricultural frontier intensified conflicts over land and
territory, with Muslims and indigenous peoples marginalized from their lands by
Christian settlers and becoming a minority in their own homeland.31
A key indicator of the acuteness of the demographic crisis was the flaring up
of the Moro rebellion from the `70s on, with its understandable demand for
an independent or autonomous homeland for the Bangsa Moro people to stop
the massive encroachment of thousands of impoverished non-Muslim settlers
into their ancestral homeland.
The consequences of the population-related wars in Mindanao may not be as
ghastly as the Rwandan genocide but they have nevertheless been horrific:
some 150,000 killed and over two million displaced, with Muslim Filipinos
scattered to the four winds, many finding refuge in Sabah where they are now
subject to persecution by Malaysian authorities. The conflicts have doomed a
once promising region to underdevelopment, with the World Bank estimating
the total economic costs to surpass US$10 billion.32
234
Chapter 7
Like Diamond in the case of Rwanda, we are not claiming that population
pressure was the only factor in the massive crisis in Mindanao that broke out in
the `70s and continues until today. Undoubtedly, inequality, religion, and culture
also played a role. But looking at these figures, one cannot but conclude that
unrestrained population growth has been a major factor in the conflicts in the
Southern Philippines, and a major variable behind its poverty.
The role of the state

As asserted earlier, population management alone does not explain why some
countries develop and others dont. In the five Southeast Asian countries cited
above, Malaysia was the country with a higher average population growth rate
than the Philippines in the period 2000-2010. It was also only 0.3 percentage
points ahead of the country in terms of average GDP growth rate in the same
period. And most astounding, income inequality in Malaysia was worse than
in the Philippines, and was highest among the five countries. Yet less than four
in 100 Malaysians were poor, and all of them earned at least US$1.25 a day.
What was different about Malaysia, and is it something that countries like the
Philippines already have missed out on?
The key factors that seem to spell the difference between Malaysia and the
Philippines were structural adjustment and the role of government. When
the Philippines started its economic decline in the `80s, bent by a heavy debt
burden and enslaved by structural adjustment, Malaysia was just starting to find
its footing. While there were privatization initiatives in Malaysia in the `80s, for
the most part government remained an active force in the economy. Not only
did public enterprises like the state oil company Petronas served as engines
of growth, but the government promoted a local content policy to build up
an automobile industry that would also trigger upstream industries designed
not only to supply the car manufacturing sector but other industries as well.
Government also undertook the controversial bumiputra program designed
to redistribute more wealth towards what the Mahathir government regarded
as the economically disadvantagedrelative to the Chinese minorityMalay
population. Governments leading role was one of the reasons Malaysia
235
became one of the fastest growing countries in Southeast and the entire Asian
region during the `80s and for the first half of `90s. During the Asian financial
crisis of 1997-98, and beginning this new century, it grew moderately.
Whereas Malaysia was able to take hold of its economic adjustment, the
Philippines did its own through an almost complete dereliction of the states
role, making the structural adjustment harsher and more debilitating for some
sectors. So, while in both the Malaysian and Philippine cases inequality has not
abated, absolute poverty has almost been eradicated in Malaysia, but not in
the Philippines.
Deep-seated inequalities
Due to the Philippine economys openness and exposure, growth has been
volatile and anti-poverty gains susceptible to external shocks, especially during
the `80s debt crisis, the 1997 Asian financial crisis, and the 2008 global financial
crisis. On top of this, population growth was not tamed. As a result, the number
of poor Filipinos still increased by almost a million since 2006 from 22.6 million
to 23.7 million people in 2012. (See Table 2) In terms of inequality reduction,
while some slight progress was made between 1985 and 2000, since 2002 the
proportion of poor in the population has remained stable.
The fortunes of Filipino capitalists also give us a glimpse of the dynamics of
exclusive growth in the country. According to Forbes magazine, for instance,
Henry Sys family net worth of US$9.1 billion (as of June 2012) increased by
US$1.9 billion from 2011, an amount equivalent to 10 percent of the total
growth of the Philippine economy over the same period. Moreover, examining
the net worth of the 40 richest Filipinos on the Forbes list, the accumulated
income growth of these 40 families alone already added up to US$13 billion,
more than three-fourths of the total US$17 billion income growth of the
Philippine economy in 2011.33
The flip side of this exclusive accumulation has been the incremental increase
in overall household incomes and the continued dependence of more Filipino
families on OFW transfers, which have not been going towards investments or
236
Chapter 7
savings, but largely served as the primary income source for daily household
expenditures. According to the Family Income and Expenditure Survey, in terms
of overseas income, from 3.6 million in 2003, almost two million more families
reported receiving income from abroad, bringing the number up to five million
families. Over the last decade, the percentage of households receiving income
from abroad increased from 18 percent in 2000 to 27 percent in 2009.34
The volatile poverty reduction and exclusive growth have been punctuated by
unalleviated inequality since 1985. In 2012, the richest 10 percent captured
a share of the national income that was only slightly less than the combined
shares of the poorer 60 percent of the population. Worse, the shares of
income of the poorest 60 percent have hardly increased since 1985; it has
been roughly 70 percent of national income remains at the hands of the top
40 percent. (See Table 4)
This deep-seated inequality is explained by the various disparities in the country.
Economic activity has traditionally been cornered by a few industrialized hubs.
The demise of agriculture since the `70s also meant the immiseration of the
rural population, who to this day constitutes bulk of the countrys poor.
We have seen in Chapter 2 that industry and employment are concentrated
in the NCR and a few other metro centers, a bias mimicked by the regional
sources of growth in the country. Put simply, the 25-year trend would show that
economic growth has failed to reach the poor. This has been most pronounced
in the lack of employment opportunities.
Three regions, all in the main island of Luzon, capture a third of total employment.
It is, however, not the case that the poor just sit around all day doing nothing.
In fact, the high-poverty regions are not necessarily the high-unemployment
regions. The regions that consistently rank high in poverty rates register lower
unemployment compared to the national average. The consistent high-poverty
regionsBicol Region (45.1 percent), Eastern Visayas (41.4 percent), Zamboanga
Peninsula (43.1 percent), Caraga (47.8 percent) and ARMM (45.9 percent)all
have unemployment rates below the national average, with ARMM registering
less than one-fourth the rate of the region with the highest unemployment rate
(2.3 percent versus NCRs 10.4 percent). They do, however, register higher
237
underemployment, with the Bicol Region having nearly twice the national
underemployment rate. A clear exception is ARMM, with over half of the
national underemployment rate (9.9 percent versus 19.1 percent). (See Table 3)
That the people in the poorest regions tended to hold jobs highlights a grim
picture. The poor may be employed, but they are either unpaid family workers,
or earn very low incomes. Most of them can also be safely assumed to have
informal work status.
The regions of Mindanao, all with poverty rates higher than the national average,
also had population growth rates higher than the national average especially in
the period 1990-2000. This tapered off in 2000-2010, especially for Caraga
and ARMM. For the industrial hubs, NCR, Calabarzon, Central Visayas and
Davao Region, population growth rates had been either very close to or higher
than the national average. (See Table 3) The data give a glimpse of internal
migration patternsaway from conflict and high-poverty areas, and into lowpoverty areas known for high economic activity.
Losing the war on poverty

In sum, the Philippines have made little progress in the war against poverty that
successive administrations have proclaimed since the EDSA Revolution in 1986.
Two initiatives, the Reproductive Health Law and the Conditional Cash Transfer
Program, may contribute to breaking the impasse. Nonetheless, an RH program is
more in the nature of a necessary but not sufficient condition to reduce poverty.
Bringing down the fertility rate will only result in poverty reduction in combination
with other factors. Similarly, the CCT program may contain poverty in the short
term but it will not reduce it. Its main impact will be felt in the long-term since its
main thrust is to break the intergenerational cycle of poverty.
Without decisive efforts to effect redistribution of assets and a more active role
on the part of government to reverse the destructive consequences of doctrinaire
neoliberal policies and place the country on the path of sustainable development
with the adoption of activist strategies like industrial policy, the evidence suggests
that the struggle against poverty and inequality shall not be won.
238
Chapter 7
Table 1.
Major Anti-Poverty Programs Post-1986
Administration
Key
AntiPoverty
Programs
Macroeconomic
Themes
Anti-Poverty Themes
Corazon Aquino
(1986-1992)
Program
to Refocus
Orientation
on the Poor
Tulong sa
Tao Program
Diminished the arbitrary

abuse of state power
and rent-seeking
Correction of
protectionist forms
of economic
mismanagement
Emphasis on promoting
free and fair
competition through
privatization and
deregulation
Promotion of the private
business sector and civil
society involvement in
development
Poverty reduction is
equally concerned with
equity and social justice
Gender equity concerns
introduced into
development planning
Promotion of labors
bargaining power
Significant space of civil
society engagement in the
formation of government
policies
Enshrining asset reforms
(CARP) as the centerpiece
program of government
Fidel V. Ramos
(1992-1998)
Social
Reform
Agenda
Community
Integrated
Delivery
of Social
Services
(CIDSS)
Intensifying market
reforms of liberalization,
privatization and
deregulation
The private sector
as the main driver of
development
Emphasis on the
government as providing
a ripe environment for
global competitiveness
Mainstreaming of the
Minimum Basic Needs
approach to poverty
reduction
Introduction of
comprehensive, localized
and convergent poverty
reduction programs
Institutionalization of the
concept and collaboration
with the Basic Sectors
Establishing of groundwork
of future anti-poverty
infrastructures
Joseph Estrada
(1998-2001)
Lingap para
sa Mahirap
Sectoral focus
on agricultural
modernization
Role of government
to provide institutional
architecture for
competitive markets, and
help ease transitions in
disadvantaged population
Continuation of market
reforms of privatization,
deregulation and
liberalization
Maintenance of MBN
approach to povertyreduction
Operationalization of the
National Anti-Poverty
Commission
Renewed emphases of
land redistribution and
the provision of socialized
housing
239
Gloria MacapagalArroyo
(2001-2010)
Kapit-Bisig
Laban sa
Kahirapan
/ KALAHICIDSS
Pantawid
Pamilya
Pilipino
Program
(4Ps)
Government to
provide the enabling
environment where
private enterprise can
serve the public good
Action on employment
and livelihoods as
the key to addressing
poverty reduction
Focus on agriculture,
ICTs and Tourism as
prime growth sectors
Continuation of
structural and regulatory
reforms
Benigno S.
Aquino III (2010- )
Continuation Strong emphasis

and
given to public-private
expansion
partnerships (PPP)
of donorfunded and
supported
anti-poverty
program
(CCT / 4Ps)
Central focus on the

vulnerable aspects of
poverty and the differing
contexts of vulnerable
groups
Mainstreaming of
community-driven,
bottom-up methods of
anti-poverty interventions
Initial attempts with
conditional cash transfer
interventions
Transparency and
anti-corruption as a
cross-cutting priority; in
direct response to the
Presidents rallying cry
Kung walang corrupt,
walang mahirap.
Source: Urban Poor Associates. Eviction monitoring. Retrieved 17 March 2014 from http://urbanpoorassociates.org/
Table 2.
Philippine Poverty Indicators
Headcount Poverty
(% of Population)
(In Million)
1985
41.0
22.2
1988
40.2
19.2
1991
39.9
21.7
1994
40.6
21.6
1997
36.8
18.2
2000
33.0
21.5
2003
24.9
20.6
2006
26.6
22.6
2009
26.3
23.3
2012
25.2
23.7
Sources: NSCB, FIES, various years.
240
Number of Poor
Chapter 7
Table 3.
Population, Employment and Poverty, By Region
Population
(in Million and
%, 2010)
Average
Population
Growth Rate
(%)
Total
% Share
19902000
20002010
19902010
PHILIPPINES
92.34
100.0
2.34
1.90
2.12
11.86
12.8
2.25
1.78
2.02
CAR
1.62
1.8
1.76
1.70
1.73
Ilocos Region
4.75
5.1
1.69
1.23
1.46
Cagayan Valley
3.23
3.5
1.85
1.39
1.62
Central Luzon
10.14
11.0
2.61
2.14
2.37
CALABARZON
12.61
13.7
3.91
3.07
3.49
MIMAROPA
2.74
3.0
2.62
1.79
2.20
Bicol Region
5.42
5.9
1.83
1.46
1.65
Western Visayas
7.10
7.7
1.42
1.35
1.68
Central Visayas
6.80
7.4
2.19
1.77
1.98
Eastern Visayas
4.10
4.4
1.68
1.28
1.48
Zamboanga Peninsula
3.41
3.7
2.18
1.87
2.03
Northern Mindanao
4.29
4.6
2.23
2.06
2.14
Davao Region
4.47
4.8
2.28
1.97
2.12
SOCCSKARGEN
4.11
4.5
2.99
2.46
2.72
Caraga
3.26
3.5
1.73
1.49
1.61
ARMM
2.43
2.6
2.89
1.51
2.20
241
Poverty Incidence and

Number of Poor
2009
2012
(% of
Population)
Number
of Poor
(in Million
and %)
Employment in October 2013

(in %)
Employed
Unemployed
Underemployed
PHILIPPINES
26.3
25.2
23.7M
(100.0%)
38.5M
(93.6%)
2.6M
(6.4%)
7.4M
(18.1%)
National Capital
Region
3.6
3.9
0.46M (1.9%)
89.8
10.2
10.4
CAR
25.1
22.8
0.37M (1.5%)
96.2
3.8
12.3
Ilocos Region
22.0
18.5
0.88M (3.7%)
92.4
7.6
19.0
Cagayan Valley
25.5
22.1
0.71M (3.0%)
97.4
2.6
10.2
Central Luzon
13.7
12.9
1.34M (5.6%)
92.2
7.8
10.3
CALABARZON
11.9
10.9
1.43M (6.0%)
91.9
8.1
18.9
MIMAROPA
34.5
31.0
0.88M (3.7%)
95.9
4.1
24.1
Bicol Region
44.2
41.1
2.28M (9.6%)
93.8
6.2
37.7
Western Visayas
30.8
29.1
2.09M (8.8%)
93.8
6.2
22.4
Central Visayas
31.0
30.2
2.09M (8.8%)
95.1
4.9
13.6
Eastern Visayas
42.6
45.2
1.88M (7.9%)
94.8
5.2
24.7
Zamboanga
Peninsula
45.8
40.1
1.41M (5.9%)
97.1
2.9
20.3
Northern Mindanao
40.1
39.5
1.76M (7.4%)
94.5
5.5
21.8
Davao Region
31.4
30.7
1.41M (5.9%)
93.3
6.7
14.9
SOCCSKARGEN
38.3
44.7
1.90M (8.0%)
97.0
3.0
24.3
Caraga
54.4
40.3
1.00M (4.2%)
96.1
3.9
19.9
ARMM
47.4
45.9
1.85M (7.8%)
96.4
3.6
13.8
Sources of Basic Data: NSCB, FIES 2009 and 2012 (First Semester Estimates); NSO, Census of Population, 1990,
2000 and 2010; NSO, Labor Force Survey, October 2011

* Details may not add up due to rounding.

242
Chapter 7
Table 4.
Income Shares, By Income Group, 1985-2009
1985
1988
1991
1994
1997 2000 2003 2006 2009 2012
Highest
10%
32.73
32.05
34.69
33.59
36.6
36.4
34.29
33.9
33.62
30.5
Highest
20%
48.08
47.77
50.46
49.54
52.33
52.3
50.68
50.41
49.69
46.8
Fourth
20%
20.95
21.21
20.68
21.05
20.33
20.41
21.17
21.23
21.04
21.9
Third
20%
14.42
14.43
13.67
13.96
13.2
13.17
13.68
13.68
13.87
17.9
Second
20%
10.12
10.08
9.31
9.5
8.78
8.75
9.03
9.08
9.42
10.1
Lowest
20%
6.43
6.51
5.88
5.95
5.36
5.37
5.44
5.6
5.98
6.8
Lowest
10%
2.77
2.83
2.55
2.56
2.28
2.3
2.31
2.41
2.59
2.9
GINI
Index
41.0
40.6
43.8
42.9
46.2
46.1
44.5
44.0
46.4
46.1
Sources: National Statistical Coordination Board. Family Income and Expenditures Survey, various years.
243
Notes
1
Chavez, J.J. and Fabros, A. (2012). Philippine industry and employment: a snapshot. Issues Views, Action.
Quezon City: AER.
2 National Economic and Development Authority. (1987). Medium term Philippine development plan, 19871992. Makati City: National Economic and Development Authority, 3.
3 Asian Development Bank. (2007). Philippines: critical development constraints. Manduluyong City: Asian
Development Bank, 2007, 60.
4 Presidential Management Staff Office of the President. (1992, June). The Aquino management of the
presidency: presidents report, 1986-1992. Retrieved 22 January 2012, from http://www.coryaquino.ph/
coryaquino/assets/images/ThePresidentReport.pdf
5 Philippine Government Official Website. (1994). Fidel V. Ramos, Third state of the nation address, July 25,
1994. Official Gazette. Retrieved 22 January 2012, from http://www.gov.ph/1994/07/25/fidel-v-ramosthird-state-of-the-nation-address-july-25-199
6 National Anti-Poverty Commission. (2005). Kalahi convergence: working together for poverty reduction.
Quezon City: National Anti-Poverty Commission, 27.
7 A full account of how the Ramos reforms led to the Philippines vulnerability in the Asian Financial Crisis is
discussed in Bello, W. et al. (2009). The anti-development state: the political economy of permanent crisis in
the Philippines. Pasig City: Anvil Publishing.
8 National Economic and Development Authority. (2001). Medium term Philippine development plan, 20012004. Makati City: National Economic and Development Authority.
9 Asian Development Bank. (2005). Poverty in the Philippines: incomes, assets and access. Mandaluyong City:
Asian Development Bank, 110.
10 National Economic and Development Authority. (1999). Medium term Philippine development plan,19992004. Makati City: National Economic and Development Authority.
11 (source?)
12 Philippine Government Official Website. (1999). Executive order no. 159, s. 1999. Official Gazette.
Retrieved 23 January 2012, from http://www.gov.ph/1999/10/12/executive-order-no-159-s-1999/
13 National Economic and Development Authority. (2001). Medium term Philippine development plan, 20012004. Makati City: National Economic and Development Authority.
14 Gudmalin, C. G. (2011). The Kalahi-CIDSS Project: impact on impoverished communities. Diaspora
Philanthropy. Retrieved 23 January 2012, from http://diasporaphilanthropy.cfo.gov.ph/Files/Diaspora2011/
Gudmalin_KALAHI-CIDSS_Project.pdf
15 National Economic and Development Authority. (2001). Medium term Philippine development plan,20012004. Makati City: National Economic and Development Authority.
16 The World Bank. (n.d.). Safety nets and transfers: conditional cash transfers. Retrieved 2 July
2013, from http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTSOCIALPROTECTION/
EXTSAFETYNETSANDTRANSFERS/0,,contentMDK:20615138~menuPK:282766~pagePK:148956~piPK:
216618~theSitePK:282761,00.html
17 Philippine Daily Inquirer. (2013, June 25). In the know: conditional cash transfer scheme. Philippine Daily
Inquirer. Retrieved 2 July 2012, from http://newsinfo.inquirer.net/432371/in-the-know-conditional-cashtransfer-scheme
18 Bello, W. (2011). The Conditional Cash Transfer Debate and the Coalition against the Poor. In V. C. Militante
(ed.), Focus on the Philippines yearbook 2010: transitions (133-140). Quezon City: Focus on the Global
South-Philippines.
19 Philippine Daily Inquirer. (2013, June 25). In the know: conditional cash transfer scheme. Philippine Daily
Inquirer. Retrieved 2 July 2012, from http://newsinfo.inquirer.net/432371/in-the-know-conditional-cashtransfer-scheme
20 Philippine Information Agency. (2013, September 2). CCT expansion in 2014 budget seen to lower high
school dropout rate. Information to Empower Filipinos. Retrieved 2 September 2013, from http://news.pia.
gov.ph/index.php?article=1781378088691
244
Chapter 7
21 Josef Yap presentation, see deleted Figure 1/2

22 Fiszbein, A. and Schady, N. (2009). Conditional cash transfers: reducing present and future poverty.
Washington DC: The World Bank.
23 See Bello, W. (2013, June 10). Global poverty down, Philippine poverty remains high. Philippine Daily
Inquirer. Retrieved 2 July 2012, from http://opinion.inquirer.net/54331/global-poverty-down-philippinepoverty-remains-high#ixzz2qN8AbsgF
24 Earlier versions of this section appeared in Bello, W. (2011, August 27). Rwanda in the Pacific: population
pressure, development, and conflict in the Philippines. Philippine Daily Inquirer. Retrieved 2 July 2012, from
http://opinion.inquirer.net/10769/rwanda-in-the-pacific
24 Data from the World Bank (please refer to deleted table 2)
26 Balisacan, A. (2007). Why does poverty persist in the Philippines? facts, fancies, and policies? SEARCA
Agriculture and Development Discussion Paper, Series 2007-1, 21.
27 Josef Yap presentation.
28 Source??
29 Repetto, R. and Cruz, W. (1992). The environmental effects of stabilization and structural adjustment
programs: the Philippines case. Washington, DC : World Resources Institute
30 Diamond, J. M. (2005). Collapse: how societies choose to fail or succeed. New York : Viking.
31 Source???
32 Source???
33 For a better sense of the nature of exclusive growth in the Philippines read Habito, C. (2012, June 25). No
free lunch: economic growth for all. Philippine Daily Inquirer. For comparison, the wealth of the 40 richest
people in Japan rose by $10.7 billion, a mere 2.8% of the economy-wide increase in income (GDP) of
$ 381 billion. Closer to home, Thailands 40 richest increased their fortunes by $9 billion to $45 billion (a
25% increase), with the rise equivalent to 33.7% or one-third of their overall income growth. Malaysias
top 40 got richer by $2.3 billion (to $64.4 billion), a 3.7% rise (a measly one-tenth of the rate at which our
own billionaires fortunes grew). This is equivalent to a mere 5.6% of the total increase in the Malaysians
incomes in 2011.
34 Over the same period, the proportion of overseas income in relation to total income also grew from 9%
in 2000 to 10.8% in 2009. Total income received from overseas registered at Php 441 billion in 2009FIES
figures regarding remittance-receiving households offer even more insight when viewed according to
income groupings. The survey indicates that higher deciles received more income from abroad. Richer
households reported a higher proportion of overseas income receipts compared to lower income brackets.
For instance, in 2006, overseas income made up almost half (44.09%) of total income of the richest
households, compared to only 7.06% of the total income of the poorest households. In this regard,
overseas income spells an important distinction between those who are relatively better off and those who
are not.
245
C h apter
Three decades into People Power,

Whither Philippine Civil Society,
Social Movements, Citizens?
The broad citizenry that took part in the 1986 EDSA uprising did not only seek
to end the Marcos dictatorship, they also hoped for democracy, though this
vision might have had varying articulations in the minds of the main actors.
In post-EDSA history, civil society and other non-state entities would assume
new roles and occupy significant spaces in politics and governance. Social
movements which were at the forefront of the anti-dictatorship struggle before
1986 would remain a political force, but presented with a more democratic
social-political environment, they would undergo reckoning among their ranks.
Meanwhile, the two other EDSAs that would follow 1986 would co-opt the
democracy project and would have narrower political aims that tended to favor
certain fractions of the political elite.
The main question now: what happened to democracy?
Legacies of people power

The split within the Communist Party and National Democratic Front fragmented
the Philippine left and contributed to the formation and emergence of civil society
groups possessing political bases and various capacities and skills that would be
used in pursuing reforms even as they continued struggle for structural changes.
As more and more CSOs and groups advocating sector-based interests became
deeply interested in interceding in the implementation of public programs
247
and projects after EDSA, the relative openness of the Cory Aquino and Fidel
Ramos governments successfully catalysed a vibrant atmosphere for critical
collaboration between government and civil society.1 This new relationship
between government and non-state groups is reflected in the vocabulary that
has entered public discoursepeople empowerment, democratization,
nongovernment organizations, peoples organizations and civil society.2
This progressive movement that now thrives outside the CPP/NDF and CPP/
NDF-influenced organizations has paved the way for these CSOs with a range
of distinct tactics and political persuasions to engage in various political arenas.
Over the years, their campaigns have led to the passage of landmark legislations
such as the Referendum Referendum Act/R.A. 6735, Voters Registration
Act/R.A. 8189, the Election Modernization Act/R.A. 8436, the Amended
Automated Electoral System Act/RA 9369, the Party List System Act/RA
7941, and Overseas Absentee Voting Act/RA 9189, among others. The
more progressive laws, including CARPER and Reproductive Health, however,
also saw social movements (peasants and womens groups; more massbased organizations) at the forefront of the campaigns. CSOs have also been
instrumental in the creation of sector-oriented state agencies like the National
Anti-Poverty Commission, the Commission on Human Rights, the National
Agricultural and Fisheries Council, the Commission on Women, as well as civil
society liaison desks across state departments and agencies. They were able to
forge a far more cooperative and porous3 relationship with well-intentioned
bureaucrats of the Philippine state and other cause-oriented civil society actors.
The participation of some of these groups in electoral politics have helped put
in office reform-oriented politicians and some new blood in politics.
In the early `90s, Philippine civil society was already being hailed as one of the
largest, best organized, and most politically active in the developing world.4
The climate of openness for government collaboration with CSOs that Cory
Aquino introduced at the onset of her administration set an example that most
future chief executives would emulate. The single largest precedent for these
new state-civil society dynamics in the revitalized democracy had been set by
no less than the framers of the 1987 Constitution, who had been instrumental
in laying down a more liberal climate for peoples participation in governance.
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The new Charter viewed civil society as means to enable the people to pursue
and protect, within the democratic framework, their legitimate and collective
interests, and affirmed CSOs right to effective and reasonable participation at
all levels of social, political and economic decision-making.5
Many provisions in the 1987 Constitution, affirmed by 76.3 percent6 of the
populace in a plebiscite, institutionalized the legacies People Power. The new
Charter re-installed a republican system of government and the institutions of
electoral democracy. It expanded the bill of rights and provided firm, nationalist
positions on the once-thorny matters of peace, foreign policy, ownership of
national resources. It paved the way for a party-list system of representation in
the Lower House of Congress, and instituted additional checks and balances
on executive powers, including the application of more stringent term limits. It
also upheld the peoples right to information and prohibited political dynasties.
Though many of the Constitutions mandates, including the provisions for the
right to information and the prohibition of political dynasties, are still without
enabling legislation and failed to get the full commitment of different post-`86
administrations, the wider political space has undergone certain major shifts
made possible only by the dismantling of the 20-year authoritarian regime.
Personalities from CSOs also started penetrating the government bureaucracy via
appointments into office particularly in agencies concerned with social services
such as the Departments of Agrarian Reform, Social Welfare and Development;
and Health. Under the watch of these cross-over reformist appointees, the
relations between CSOs and these respective government bureaus flourished.
Many of these cross-over public officials have remained recognizable allies of
the so-called moderate Left, sector-based and middle class movements, and the
spirit of dialogue with civil society7 and practice of directly consulting with
organized constituencies have become an accepted state strategy for improving
governance.8 (See Table 1)
Non-government organizations and peoples organizations entered into
agreements with government agencies during the Corazon Aquino administration
to secure institutional and project partnerships9, which further reinforced
collaborative state-civil society dynamics post-EDSA `86. Examples of these are
programs such as the PhP5 billion-Community Employment and Development
Three decades into People Power, Whither Philippine Civil Society, Social Movements, Citizens?
249
Program, several small-enterprise initiatives of the Department of Trade and

Industry, and the Department of Agricultures Livelihood Enhancement for
Agricultural Development Program.10 Other CSOs, during both the Aquino
and Ramos administrations, contributed constructive sectoral perspectives
and inputs in the crafting of key state documents, including the Policy Agenda
for People-Powered Development of 1986 and the Medium-Term Philippine
Development Plan of 1987-1992.11
But fragilities in still-emerging relationships between CSOs and the government
have not been easy to overcome. More sophisticated measures of semiclientelism whereby bargaining and co-optation involving social-movement
leaders emerged during the mid- to late- `90s, noted scholar Ben Reid of the
growing tendency of successive, patronage-ridden governments to incorporate
reform-oriented personalities into their fold to secure the greater support of
marginalized populations.12 For instance, President Joseph Estrada was criticized
for his authoritarian tendencies, little appreciation for the painstaking
processes of dialogues and consultations, and his penchant for transforming
governmental bodies into patronage machines meant to buy poor peoples
support for his administration.13
Despite the recruitment of progressive CSO personalities to their governments,
presidents would be targets of civil societys ire when their clientelist moves
became apparent. In the case of Estrada, it was links to an illegal numbers
game that led to his impeachment and eventual conviction for plunder. Support
for Gloria Macapagal-Arroyo likewise dissolved because of the Hello Garci
election scandal in 2005; came July of said year, 10 of Arroyos top officials
staged a highly-publicized resignation from the government. The Hyatt10 as they
were called had included most of the crossover administrators from the NGO
community as well as most other key reform-oriented officials in the Arroyo
government.14 Unlike Estrada, though, Arroyo demonstrated a major facility for
staying in power, allowing her to finish her term albeit as disgraced president.
The recent movement against corruption in government that the Priority
Development Assistance Fund scandal triggered in 2013 would not directly
target President P-Noy, but citizens would demand from him to make good on
his commitment to tuwid na daan (straight path) by prosecuting the guilty and
abolishing the so-called pork barrel, a budgeting and funding system vulnerable
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to corruption. Also, a large section of the CSO community that supported the
candidacy of P-Noy still believes in his presidency and is consciously setting him
apart from the kind of presidencies Estrada and Macapagal-Arroyo established.
From their nascent years until today, these groups have had to grapple with
whether and to what extent have they been able to effect reforms and
institutionalize these reforms. Occasionally, their participation in political
spaces within governmente.g. lobbying in the legislature and partnerships with
specific government agencies for specific development projectshas been
criticized as a form of co-optation.15 Some rue that their participation in these
political spaces or engagement with government has been used by the political
and economic elite to prevent the consolidation of what they perceive as more
radical anti-government, anti-systemic movements. Yet it cannot be denied
that CSOs have been responsible for some steps forward in governance and
legislative reforms.
For progressive movements that emerged during the `60s and `70s, the postEDSA political agenda has remained that towards systemic change, and though
engagement with government continues to be seen as opportunity to advance
varying political agenda and advocacies, it is still viewed as limiting. At various
moments of political crises, civil society organizations and peoples organizations
would adopt differing messages and forms of protest, but these would not
prevent them from engaging and even coalescing in campaigns directed at
scoring reforms in both the executive and legislature.
Public realms, re-shaped?

Despite the increasing prominence of CSOs in the political landscape, the arena
for political contests would not change radically. Called mostly unflattering
namescacique democracy, booty capitalism, electoral clientelismthe
countrys political system borne out of EDSA `86 continues to limit democratic
participation of most citizens to voting in periodic elections.
Perhaps, the more dramatic change has been in the way the political elites have
conducted themselves and manage their perpetuation in power. In the nearly
251
three decades since `86, the everyday practice of Philippine politics by politicians
has become all the more akin to the running of a business enterprise, rather
than the mere upkeep of time-honored patron-client relations, or the methodical
espousal of public causes, issues, and concerns. Faced with periodic threats
to their hold on public office, they have needed to reinvent themselves, their
strategies, and their tactics from time to time. Politicians and their kin have
increasingly functioned in the mould of political entrepreneurs and brokers of
backroom maneuverings.16 At the same time, these tactics have not eliminated
the use of force and terrorincluding through private armiesagainst rivals and
constituencies in bouts of equal-opportunity violence.17 Even in the most recent
elections (2013), 15 provinces were identified as election hotspots due to their
exceptional proneness to election-related violence, fraud, and fear-mongering.18
As a result, the legislature has become less representative, with not less than
three in five District Representatives elected coming from political dynasties
since 1987.19 During the 15th Congress (elected in 2010) this percentage even
rose to 67.7 percent of Lower House membership.20 These figures fare dismally
against the rates of political clan dominance in Congress in other democracies
such as the United States (six percent), Argentina (10 percent), Japan (33
percent), and Mexico (40 percent).21 In the Philippine Senate, a quarter up to
42 percent of those elected is related to former Senators. (See Table 2) Not
only has the capture of formal political spaces by those coming from these
dynastiesundermined key reforms, e.g. asset redistribution, a recent study has
also shown that congressional districts with dynastic legislators are also poorer
on average.22
The legislative arena has opened up for CSO engagement, and has enabled
CSOs to navigate the depth and breadth of debate on public issues from
agrarian reform to reproductive rights, to commercial logging, thus affecting the
outcomes of legislators voting behavior.23 This engagement has, from time to
time, produced successes. (SeeTable 3)
During the (Cory) Aquino administration, both the Urban Land Reform Task
Force and the Philippine Drug Action Network, for example, were critical in
the signing into law of urban land reform and generic drugs laws that would
benefit disadvantaged and impoverished constituencies, even if these laws
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were still flawed.24 In the same vein, womens groups scored victory with the
legislation of the Women in Development and Nation-Building Act of 1991,
which mainstreamed gender concerns into national development projects.
Through their coordinated, nationwide advocacy efforts and lobbying at the
legislature and executive branch of government, Task Force Total Commercial
Log Ban similarly managed to secure the banning of all commercial logging in
virgin forests throughout the archipelago through the passage of RA 7611 in
1992.25 Capping these was their biggest victory in policy-making participation
during Aquinos time26 when anti-US bases senators, by only a narrow margin,
refused the extension of the US Military Bases Agreement in 1991, forcing
American military forces to withdraw from bases that they had operated for
45 years (such victory now overturned by the recent signing of the Enhanced
Defense Cooperation Agreement by the Obama and Aquino governments).
With the election of Fidel Ramos in 1992, the center of gravity of civil society
involvements shifted conspicuously from the legislative to the executive arena.
Soon after assuming office, Ramos government espoused a summit approach
for directly engaging organizations representing and supporting the basic sectors
in the overall process of governance. Beginning with nationwide consultations in
1992 through the National Peace Conference to move forward the Philippines
peace negotiations with Maoist and Muslim rebels, the new administration
organized one multi-sector summit after another over the next few years, in
which a number of sector-oriented proposals were scrutinized and adopted by
government. Such summits included the Social Pact on Empowered Economic
Development Summit in September 1993, the Peoples Empowerment Caucus
and Social Reform Summit in June and September 1994, and the National AntiPoverty Summit in March 1996.
This cooperative climate would be supplemented by more pro-active
instruments, incorporating non-elite formations in the shaping of state policy
like the Presidential Council for Countryside Development and the Philippine
Council for Sustainable Development.27 Among the newly-created participatory
bodies that it established, however, the Ramos government would be most
remembered for launching its Social Reform Agenda in 1994. Hailed during its
time as perhaps the most consultative and reform-oriented social reform and
anti-poverty platform in Philippine history, the SRA channelled the outputs of
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multi-sector consultations of the SRA Summit of 1994 into no less than nine
government flagship programs aimed to alleviate the socio-economic conditions
of the basic sectors. On a general one-department, one-sector basis, CSOs and
sector representatives were able to directly liaise with state agencies on poverty
reduction matters in ways unparalleled in the past.
Through their participation in SRA interfaces, civil society and sector-based
groups were able to pressure the countrys chief executive to directly oversee
the passage of crucial, if at times highly imperfect, pieces of sector-oriented
legislation in the last few months of the Ramos administration such as the AntiRape Law (RA 8353), the controversial Fisheries Code (RA 8550) and Indigenous
Peoples Rights Act (RA 8371), the Family and Child Courts Law (RA 8369),
and the Social Reform Agenda and Anti-Poverty Alleviation Act (RA 8425).28 In
the view of many of the participating organizations in the SRA, these legislative
advances comprised the single most important step towards institutionalizing
social reform in the country.
Yet in themselves, these arenas for participation of the new actors in Congressional
debates have not guaranteed that legislative process would always be in favor
of marginalized classes and sectors. To be sure, there have been serious losses.
Despite the unification of 12 different ideological, territorial, and regional farmer
federations from across the Philippinesthe broadest coalition in the history of
the Philippine peasant struggle29the Congress for a Peoples Agrarian Reform
which had campaigned for the passage of a progressive agrarian reform law
during the Cory Aquino administration were subjected to dilutions engineered
by a landowners-dominated Lower House.30 Regardless of the efforts of
newfound umbrella bodies like the Labor Advisory and Consultative Council and
the Freedom from Debt Coalition, CSOs likewise failed to secure progressive
objectives, like a pro-labor Labor Code31 as well as the selective cancellation
of illegitimate foreign liabilities contracted during the Marcos years, and the
imposition of a cap on debt repayments.32
Civil society and sector-based groups participating in the SRA process also
encountered obstacles in Ramos governments social reform commitment. Even
as these organizations pushed consistently for the more effective implementation
of asset and equity reforms that would fundamentally reshape the Philippines
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enduring socio-economic power structures (such as the legislation of a basic

sector-friendly Land and Water Code, the distribution of targeted lands
under CARP), official rhetoric from the Ramos regime clearly manifested a
removal of explicit reference to asset reform in the earlier SRA documents,
including the 1996 NAPS agreements, indicating an deliberate evasion of the
sectors asset reform agenda. More resentments stemmed from the apparent
incapacity, unpreparedness, or even the unwillingness of government agencies
to act upon civil society inputs into the SRA process: resources and personnel
for implementing jointly-agreed projects and programs commonly proved
insufficient; monitoring instruments for following the concrete fulfilment of
commitments remained rudimentary; and there was, additionally, a marked
callousness towards sectoral dynamics and processes that was noted by
numerous CSO representatives.33
Worse, even the government continued to sprout accolades for social reform
and peoples participation in the creation and implementation of anti-poverty
framework, various other policies contradicted the promotion of the wellbeing and livelihoods of the already-marginalized sectors. Conversions of
agricultural lands skyrocketed by an alarming 1098.27 percent between 1991
and 199734; the neoliberal agenda of the administration repeatedly aggravated
the vulnerability and economic inequities confronted by the very populations
acknowledged by the SRA, while the Philippine Mining Act of 1995 (RA 7942)
trumped the protection of indigenous peoples ancestral domain purportedly
mandated by the IPRA law.35
All told, spaces for policy advocacy have opened up, and CSOs have been
recruited to various government social reform processes or platforms no matter
how selective these might seem on occasion. However, other substantive policy
agenda, particularly critical economic and hard political issues, have remained
out of reach of CSOs. Trade negotiations, for instance, have always been closed
to CSOs, some of whom even had to go to court to ask for the release of
information on trade agreements deemed harmful to certain sectors of society;
one such case that can be cited is that of the JapanPhilippines Economic
Partnership Agreement. Similarly, while CSOs have been enlisted to help with
some governance reforms, hard political imperatives that strike at elite power
have remained unrealized, such as the constitutional ban on political dynasties.
255
Breaking into the electoral arena: the party-list system

Intended by the 1986 Constitutional Commissioners to shepherd the
equalization of political power and to guarantee the right of disempowered
sectors and populations to directly intervene in the decision-making processes of
the legislature36, the Party-List System Act of 1995 (RA 7941)37 paved the way
for the participation of newly-formed left, left-of-center and sector-oriented
political parties and party-list groups in congressional elections.
Acclaimed by observers as major innovation38 in reforming the Philippines
political systema game changer, as it grants marginalized populations a
wider platform for parliamentary participationthe formal enactment of
the new system invited numerous sector-based and moderate left groups to
recast themselves as electoral formations, even while being looked upon with
skepticism by the more radical groups. However, when 14 candidates, including
the candidates from Akbayan Citizens Action Party, Sanlakas and Abanse
Pinay, garnered seats in the Philippines 11th Congress, even the radical left was
persuaded of the significance of the quickly-expanding arena of parliamentary
struggle, and thus it established its own legal mass party, Bayan Muna, in 1999.39
Other ideological and sectoral formations, such as Gabriela Womens Party and
Partidong Mangagawa, soon followed suit. From 123 party-list groups joining,
and 14 seats won, in the 1991 elections (11th Congress), ___ party-list groups,
and ___ seats won, in 2013 (16th Congress). (See Table 4)

The Party-List groups prove particularly prolific: in the 11th Congress, the 14
seats they won yielded 3,698 bills and resolutions filed, although only 20 of
these bills reached Second Reading and none were signed into law.40 In the
12th and 13th Congresses, no less than eight pieces of legislation were passed
mainly with the efforts of party-list representatives: the Anti-Death Penalty Act
(RA 9346), the Juvenile Justice and Welfare Act (RA 9344), the Anti-Trafficking
in Persons Act (RA 9208), the Anti-Violence Against Women and Children
Act (RA 9262), the Overseas Absentee Voting Act (RA 9189), the Philippine
Overseas Employment and Administration Strengthening Act (RA 9422), the
Public Attorneys Office Reorganization Act (RA 9406), and the Amended
Automated Election System Act (RA 9369).41
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In the 14th Congress, party-list groups saw the ratification of more progressive
and forward-looking laws like the Cheaper Medicines Act (RA 9502), the
Renewable Energy Act (RA 9513), the Magna Carta on Women (RA 9710), the
Anti-Torture Act (RA 9745), the CARPER Act (RA 9700), the Expanded Senior
Citizens Act (RA 9994), and the Rent Control Act (RA 9653).42 In the 15th
Congress, though, the biggest victory for party-list groups was the passage of
the Reproductive Health Bill. Indeed, there was, as one legislator noted, a a
bumper crop of progressive measures strengthening social, political, and human
rights.43 This included the so-called Sin Tax, which raised taxes on cigarettes
and alcohol, Kasambahay Act recognizing the rights of domestic workers,
Marcos Compensation Act granting reparations to human rights victims of the
Marcos dictatorship, amendment to the Overseas Voting Act removing onerous
restrictions to overseas voting, Ant-Enforced or Involuntary Disappearance Act,
and amendment to the Anti-Trafficking Act making easier the apprehension of
traffickers of women and children.
Other bills filed by these party-lists (such as a P125 wage-hike bill, and
consecutive attempts to realize the constitutional right to information) were left
unlegislated due to intractable opposing interests in Congressbut the gains,
albeit limited, decisively changed past mind-sets about congressional politics.
From being merely a citadel of the ruling elite, the Philippine legislature has
become one of the main theaters for political struggle.
Beyond the filing and sponsorship of bills, party-list groups have also used the
legislature as platform for broad advocacy and public presence. The same partylist organizations and their civil society allies, for instance, were at the forefront
of campaigns to jettison Arroyo from Malacanang from 2005 onwards, though
when efforts for Arroyos ouster eventually fizzled out, they gradually began
to focus on ensuring that more palatable politicians would be able to capture
the presidency in 2010, even while thwarting Arroyo and her allies continued
attempts to restructure the 1987 Constitution to prolong hold on power.
Even as these organizations meshed with powerful social blocs such as the
Catholic church, the progressive enterprisers of the Makati Business Club,
professional associations, prominent universities, and anti-administration
political elites in repelling the Arroyo regimes continued efforts to revise the
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Constitution, more and more of these party-list and civil society formations
gradually built organizational infrastructures for ensuring that candidates with
an acceptable reform agenda could successfully get elected to the countrys
top posts. Fired up by an unprecedented level of youth civic involvement in the
2007 polls by the million-strong Volunteers for Clean Elections, and the triumphs
of non-traditional contenders such as priest Eddie Panlilio (who clinched the
governorship of Arroyos home province of Pampanga), it suddenly seemed
that the possibilities of success for leftist and left-of-centre forces in the roughand-tumble domain of mainstream electoral politics have vastly improved since
the early `90s.
While Akbayan and its allied movements in civil society chose to support the
presidential bid of Benigno Aquino III during the 2010 national polls, Bayan Muna
and its allies threw their lots behind former Senate President Manuel Villar of the
Nacionalista Party.
The hijacking of reform

An April 2009 Supreme Court decision significantly altering the systems seatallocation formula (in essence: a restrictive two percent of total votes per seat
threshold was modified to allocate seats to non-two percent groups) instilled
some measure of hope among advocates of sector-based representatation that
the 20 percent of House seats constitutionally dedicated to the party-lists would
finally be filled up. Yet the actual implementation of this ruling by the COMELEC
in the 2010 elections proved to be a setback for bodies genuinely advocating
alternative political platforms or the interests of marginalized, underrepresented
sectors.
Even as many party-list stalwarts such as Akbayan, Bayan Muna, COOPNATCCO, Gabriela, Butil and Anakpawis found themselves back in office,
and were joined by new leftist organizations like Kabataan and ACT Teachers
party-list, more questionable party-lists than ever had wormed their way past
COMELEC accreditation procedures. According to estimates by the University
of the Philippines-based think tank Center for People Empowerment in
Governance, 79 percent of all party-lists that successfully garnered seats in the
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15th Congress were classifiable as traditional political entities, or as having

extensive association with patronage-oriented political oligarchs, previouslyelected officials and administrations, business corporations, and religious
denominations.44 Disturbingly, the son of Former President Gloria MacapagalArroyo, Mikey Arroyo, won as a sectoral representative of tricycle drivers and
security guards via Ang Galing Pinoy.
But on the whole, the participatory potential of the party-list system for non-elite
sectors has already been hijacked. A powerful, though indirect, indicator of how
unrepresentative the mechanism has become for the marginalized populations
lay in the overwhelming number of sectoral representatives boasting net worth
of more than PhP10M, a development which COMELEC officials have, since
1998, failed to address. By July 2012, 32 out of the 56 party-list representatives
were of indubitable multi-millionaire statusthe richest among them (Catalina
Bagasina of ALE) boasting a net worth of PhP133.9 million. (See Table 5)
The future of political participation

The significant contribution of Filipinos in the arena of protest politics and
in marshalling political change has been People Power, marked by massive
demonstrations affecting change without shedding blood. The 1986 and 2001
episodes ousted sitting presidents, though a largely urban poor-based uprising
in late April 2001 was brushed aside. But what has been evident is the capacity
of Philippine social movements, although in fluctuating capacities, to shore up
massive mobilizations that demand change and retribution. In each of these
crises, the capacity of existing regimes and the overall electoral process to elicit
the consent of large and/or influential segments of the Philippine body politic
has been weakened.
While some try to dismiss the mass assemblies provoked by these participatory
crises as exercises of mob rule,45 they have been among the most vivid
actions demanding structural change. At the very least, they pose a continuing
challenge to the elite consensus and have sustained the movement seeking
more substantive reforms. They have also highlighted the increasing involvement
of new actors that have started occupying political spaces for various ends.
259
In more than two and a half decades since the People Power Revolution of
1986, the limited democracy laid down by the 1987 Constitution has generally
prevailed. While elements of continuity in terms of the ascendancy of political
elites and the exclusivity of the political process have stayed, there have been
on the other hand wide-ranging changes in state-society relations, relations
among social forces, political tactics and techniques, and currents in public
culture.
The achievements of civil society have not been insignificant. Beyond the
laws that have been passed with their support, their efforts have shifted the
appreciation of political participation; and their relatively more programmatic
and cause-oriented politics has pushed the bounds of political behaviour among
ruling elites themselves.46 While this has not always translated into immediate
legal gains on the part of the party-list groups, it has fostered a more conducive
atmosphere for the development of a bloc of reform-oriented politicians and
state administrators over the long run.
The prospects for reforming the formal political process have remained mixed.
Entry into and control of the political arena is still captured by a narrow elite,
mutant NGOs have arisen (some bogus ones have been set up to siphon money
off from appropriate public use), and sector representation has been hijacked
by questionable party-list groups. By contrast, new democratic spaces have
been opened up by new media and social networks, affording citizens new
organizing and mobilizing tactics, and new platforms for political participation.
A major achievement in the democratic landscape is the capacity of CSOs to
forge larger, cross-cutting yet temporary constellations of social power that
have at separate times brought together a variety of occasionally clashing
interests to push for common goals: ousting (and electing) presidents, securing
passage of policies and laws, reshaping the trajectory of government agendas
and actions. This has been facilitated by the accumulation of competencies
by CSOs and their party-list allies, such as in pressure politics, negotiation,
lobbying, policy advocacy, media projection, programmatic research, election
campaigning, and movement leadership.47 The dynamics of civil society and
party-list groups have exposed them to both opportunities and risks. They have
articulated clearer principles and procedures, not to mention exhibiting greater
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capacity, including in political bargaining and negotiation processes in recent

years. These successes on the part of reform minded lawmakers, however,
have also pushed the political-economic elite to be more formidable in the face
of efforts to impinge on its interests.
The recent Million People March in August 2013 against the pork barrel funds
or Priority Development Assistance Funds has captured anew the imagination
of political pundits, media, civil society formations as well as the general public.
There have been efforts to initiate follow-up protest activities calling for the
prosecution of those who have been involved and for the abolition of the
source of corruptionthe pork barrel. Though attempts at differentiation
among the organizers and more established CSOs were witnessed in the lead
up to the and even in the aftermath of Million People March, this emerging
movement/s can be seen as an episode of the long tradition of People Power
even as it also presents an interesting point for study. Organizers of the march
claimed ownership by citizens of the Luneta event versus the more political
and organized groups or veterans of protest actions. Was this a conscious
attempt to break away from the People Power mould; will this generate a
positive force towards change? One might also point out the contrast to
previous ways of organizing, the march being mobilized mainly via the social
media by new, previously unknown political actors.
A final note has to be made of the potential new political constituencies that
have emerged in recent years and are still emerging. Overseas Filipino Workers
and their families, and the larger community of overseas Filipinosdespite
their much-discussed ambivalence to national politicscomprise one such
constituency, aided by their exposure to different cultures and the realization
of their significant contribution to the national economy.
The scores of idealistic youth who mobilized in the hundreds of thousands
across the archipelago during the 2007 and 2010 elections, and who have since
taken helm of good governance and anti-trapo movements form another.
Still others may be emergent local business classes and small entrepreneurs
in rural towns and districts, professionalizing and meritocratic segments of the
civil service and the armed forces, and even some urban poor populations.
261
Much easier said than done, but building political constituencies among these
different publics have been and will continue to be indispensable in the years
to come. The very success and institutionalization of political reform ultimately
hinges not upon current institutions themselves, but upon the balance of power
and relations between social forces driving and opposing them. If the
strength of CSOs and allied party-lists to press for democratic consolidation has
proven to be insufficient in itself, then the political clout of forces committed
to political reforms, the infusion of new politics and the attainment of good
governance must continue to be magnified, whether this takes the mode of
party or movement-building endeavors or both. Building such a bloc of social
forces, within and beyond the confines of activist civil society, leftist political
parties, and social movements will form the foundation of any long-term
strategy to attain political reform and decisively transform the political system
of the Philippines.
However much easier said than done building political constituencies among
these different publics may be expected to be, these efforts have and will
continue to be indispensable in the years to come, for the very success and
institutionalization of political reform efforts ultimately hinges not upon those
institutions themselves, but upon the balance-of-power and relations between
social forces driving and opposing them. If the strength of CSOs and allied
party-lists to press for democratic consolidation has proven to be insufficient
in itself, then the political clout of forces committed to political reforms, the
infusion of new politics and the attainment of good governance must
continue to be magnified, whether this takes the mode of party or movementbuilding endeavours or both.. Building such a bloc of social forces, within and
beyond the confines of activist civil society, leftist political parties, and social
movements will lie at the base of any long-term strategy at attaining political
reform and decisively transforming the political system of the Philippines.
262
Chapter 8
Table 1.
Selected Crossover Appointees during the Post-EDSA Presidencies*
Presidency
Corazon
Cojuangco-Aquino
(1986-1992)a
Fidel V. Ramos
(1992-1998)a
Joseph EjercitoEstrada
(1998-2001)b
Position
Person
Previous
Organization
Executive Secretary
Joker Arroyo
FLAG
Labour Secretary
Augusto Sanchez
FLAG
Presidential Spokesperson
Rene Saguisag
FLAG
Social Welfare Secretary
Dr. Mita Pardo de

Tavera
AKAP
Social Welfare Undersecretary
Karina ConstantinoDavid
PhilDHRRA
Environment and Natural Resources

Secretary
Fulgencio Factoran
EMJP
Environment and Natural Resources

Undersecretary
Delfin Ganapan
PFEC
Commission on Human Rights

Chair
Jose Diokno
FLAG
Commission on Human Rights

Commissioner
Sr. Mariani
Dimaranan
TFDP
Secretary for Agrarian Reform
Ernesto Garilao
PBSP
Undersecretary for Agrarian

Reform
Butch Olano
PhilDHRRA
Secretary for Environment and

National Resources
Dr. Angel Alcala
Haribon
Undersecretary for Environment

and Natural Resources
Delfin Ganapin
PFEC
Secretary for Health
Dr. Juan Flavier
PRRM / IIRR
Undersecretary for Labour and

Employment
Dr. Rene Ofreneo
UP CIDS
Secretary for Agrarian Reform
Horacio Morales
PRRM
National Treasurer
Leonor Briones
Freedom
from Debt
Coalition
Housing and Urban Development

Coordinating Council Chairperson
Karina ConstantinoDavid
HASIK /
CODE-NGO
Technical and Educational Skills

Development Authority DirectorGeneral
Ediciodela Torre
PRRM
263
Gloria MacapagalArroyo
(2001-2010)b
Benigno Noynoy
Aquino III
(2010)c
Secretary of Agriulture
William Dar
ICRISAT / IRRI
Chairperson of Commission on
Higher Education
Angel Alcala
Haribon
Presidential Assistant for Poverty

Alleviation
Atty. Donna
Gasgonia
FPE
Secretary for Agriculture
Leonardo
Montemayor
FFF / ABA
Secretary for Social Welfare and

Development
Corazon JulianoSoliman
CODE-NGO
Presidential Management Staff

Head
Vicky Garchitorena
CODE-NGO
/ Ayala
Foundation
NAPC Vice-Chair
Teresita Deles
NPC / GZO
NAPC Lead Convenor
Imelda Nicolas
WIN / UKP
Secretary for Social Welfare and

Development
Corazon JulianoSoliman
CODE-NGO
Secretary for Budget and

Management
Florencio Abad
FFF /
KAISAHAN /
ACSPPA
Presidential Adviser on Political

Affairs
Ronaldo Llamas
BISIG /
Akbayan
Presidential Adviser on the Peace

Process
Teresita Deles
GZO / NPC
Undersecretary for Tourism
Vicente Romano
(Resigned 2010)
Black and
White
Movement
NAPC Lead Convenor
Joel Rocamora
IPD
NAPC Undersecretary
Jude Esguerra
IPD
NAPC Undersecretary
Oyen Dorotan
WAND
Chairperson for Overseas Filipino

Commission
Imelda Nicolas
WIN / UKP
Chairperson for Human Rights

Commission
Loretta Rosales
IPER / FDC /
Akbayan
Chairperson for Higher Education

Commission
Dr. Patricia Licuanan
CAPWIP /
APWW /
SEAWWatch
Chairperson for Philippine Women

Commission
Remedios IgnacioRikken
CAPWIP /
PILIPINA
*Cabinet positions down to Undersecretary level only; Heads of Constitutional Commissions and select offices only
Source: a Clarke, G. (1998). The politics of NGOs in South-East Asia: participation and protest in the Philippines.
New York: Routeledge.

b Reid, B. (2008). Development NGOs, semiclientelism, and the state in the Philippines: from crossover
to double-crossed. Kasarinlan, 23(1), 4-42.

c Various news reports from Philippine Daily Inquirer, Government Websites, etc.
264
Chapter 8
Table 2.
Political Dynasties in Selected Philippine Congresses
Congressional Term
Number of
Representatives with
Relatives in Elective
Office (House of
Representatives)
Number of
Senators with
Previous Senator
Family-Members
(Senate)*
8th (1987-1992)
128
62%
6 (of 24)
25%
9th (1992-1995)
128
64%
11th (1998-2001)
136
62%
12th (2001-2004)
140
61%
7 (of 24)
29%
15th (2010-2013)
155
68%
10 (of 23)
42%
*Note: This estimate for Senators is based only for Senators with relatives who were previously elected to the
Senate this does not cover Senators with relatives in other elective positions
Source: The Rulemakers: How the Wealthy and Well-Born Dominate Congress, PCIJ (2007)
An Empirical Analysis of Political Dynasties in the 15th Philippine Congress, AIM Policy Center (2012)
An Even More Exclusive Senate?, Rappler, AIM Policy Center (22 August 2013)
265
Table 3.
Major Political Crises from 1986 to Present
Year
1986
1997b
266
President
Tension Points
Form of Resolution
Ferdinand
Marcos
Lifting of Martial Law in 1981

but reduction of elections to
publicity exercises
Tripling of size of AFP
compared to pre-Martial Law
figures
Indiscriminate politics of
plunder by First family and
associated cronies, with the
extreme alienation of the
traditional oligarchy
Protracted recession
contraction with the onset of
the Economic Crisis of 1983
Amplified public resistance
prompted by the assassination
of Benigno Aquino Jr. in 1983,
and the continued growth of
the CPP-NPA
NAMFREL reorganized
to deter and publicize
electoral fraud and
violence in the 1986 snap
elections
Launching of the Reform
the Armed Forces
Movement, and the
mobilization of the 1986
People Power Revolution
with the support of
the Church and the US
government
Ascent of Corazon
Aquino to the Philippine
presidency after Marcos
flight from the Philippines
Fidel Ramos
The first and foremost

The largest churcheffort to rewrite the 1987
supported mobilization
Constitution, mainly on
since the EDSA Revolution
the basis of bringing major
in 1986 was held on
institutional changes to the
September 21, 1997,
Philippine political system
bringing around 600,000
The most prominent to the
people to Rizal Park alone,
proposed revisions to the
and more than a million
1987 Charter included a
individuals to the streets
shift from a presidential to
across the country
a parliamentary system, the
On September 23,
lifting of term limits on public
1997, the justices of the
officials
Supreme Court thumbed
The official attempts
down the PIRMA initiative
of Ramos and his allies
on the basis of there being
were paralleled by PIRMA
no enabling law for it,
(Peoples Initiative for Reform
and glaring defects in the
Modernization and Action)
petition
an effort that purportedly
gathered 6 million signatures
supporting Constitution reform
The PIRMA initiative was
hounded by numerous
anomalies, and accused by
critics of being orchestrated
by Ramos himself
Chapter 8
2001a
Joseph Estrada
Involvement in severe
corruption scandals, illegal
gambling operations and other
immoral affairs
Alienation of majority of elites,
middle class and segments of
the poor due to exclusionary
and non-professional
presidential style
Resurgence of cronyism and
cultivation of close ties with
former coup plotters and
military adventurists
Promotion of excessive
military aggression and total
war policy against insurgents
Impeachment of Estrada
by Congress in October
2000, and massive
mobilization People Power
II, with the support of the
Catholic church, business
elites, civil society groups,
media and the military
Succession of VicePresident Gloria
Macapagal Arroyo to the
presidency
Retaliation of pro-Estrada
urban poor population
and elites through EDSA III
protests and Malacaang
riots in late April 2001
Suppression of urban
poor unrest through
mobilization of presidential
security forces and
through extensive Arroyo
political rebranding
20052006c
Gloria
MacapagalArroyo
Implication of First family

and associates in corruption
scandals and misuses of public
office
Release of wiretapped
evidence in 2005 solidifying
accusations against
widespread electoral fraud in
the 2004 election
Moderate resurgence of
the CPP-NPA and persisting
security threats in Muslim
Mindanao from Muslim
secessionists and terrorist
groups
Use of pro-Arroyo
Congress majority to abort
impeachment processes
Slapping of restriction on
permits for rallying and
public protests
Temporary curtailment of
civil liberties on FebruaryMarch 2006 to clamp
down on coup attempts
and urban mobilizations
Extrajudicial killings of
radical provincial activists
to prevent consolidation of
the CPP-NPA
Source: a Hedman, E.L. (2006). In the name of civil society: from free election movements to people power in
the Philippines. Honolulu: University of Hawaii Press

b various news sources including the Philippine Daily Inquirer, GMA News Online, and KASAMA (the
newsletter of the Solidarity Philippines Australia Network)

c various reports from the Philippine Center for Investigative Journalism
267
Table 4.
Qualified Party-Lists and Number of Seats, 11th to 16th Congresses
11th Congress
12th Congress
13th Congress
Party-List
Seats
Party-List
Seats
Party-List
Seats
APEC
BAYAN MUNA
BAYAN MUNA
ABA
APEC
APEC
ALAGAD
AKBAYAN!
AKBAYAN!
VETERANS
BUTIL
BUHAY
PROMDI
CIBAC
ANAKPAWIS
AKO
BUHAY
CIBAC
NCSFSO
AMIN
GABRIELA
ABANSE! PINAY
ABA
PM
AKBAYAN!
COCOFED
BUTIL
BUTIL
PM
AVE
SANLAKAS
SANLAKAS
ALAGAD
COOP-NATCCO
ABANSE! PINAY
VFP
COCOFED
COOP-NATCCO
AMIN
ALIF
TOTAL
AN WARAY
20
TOTAL
24
Party-List
Seats
Party-List
14
TOTAL
Party-List
Seats
14th Congress
15th Congress
16th Congress
Seats
BUHAY
AKO BICOL
BUHAY
BAYAN MUNA
COALITION OF
ASSOCIATIONS
OF SENIOR
CITIZENS
A TEACHER
CIBAC
BUHAY
BAYAN MUNA
GABRIELA
AKBAYAN
1-CARE
APEC
GABRIELA
AKBAYAN
A TEACHER
COOP-NATCCO
ABONO
AKBAYAN!
1-CARE
AKB
ALAGAD
ABONO
OFW FAMILY
COOP-NATCCO
BAYAN MUNA
GABRIELA
268
BUTIL
AN WARAY
COOP-NATCO
BATAS
CIBAC
AGAP
ARC
A TEACHER
CIBAC
Chapter 8
ANAKPAWIS
AGAP
MAGDALO
AMIN
ABONO
BUTIL
AN WARAY
ANAKPAWIS
ABAMIN
YACAP
KABATAAN
ACT TEACHERS
AGAP
LPG MARKETERS
ASSOCIATION
BUTIL
AN WARAY
ABANTE
MINDANAO
AMIN
ACT TEACHERS
ACT-CIS
AAMBIS-OWA
LPGMA
YACAP
KALINGA
APEC
YACAP
TOTAL
24
ANAD
AGRI
ANG KASANGGA
ANGKLA
BAGONG
HENERASYON
ABS
ANG GALING
PINOY
DIWA
AGBIAG!
KABATAAN
PUWERSA NG
BAYANING ATLETA
ANAKPAWIS
ARTS, BUSINESS
AND SCIENCE
PROFESSIONALS
ALAY BUHAY
TUCP
AAMBIS-OWA
AGHAM
1-SAGIP
DIWA
AVE
KAKUSA
ATING KOOP
KALINGA
AMA
ALIF
1-BAP
ALAGAD
ABAKADA
1-UTAK
ANG NARS
1 ANG PAMILYA
ANAC-IP
AVE
AGBIAG!
AANGAT TAYO
APPEND
ATING KOOP
TOTAL
40
AA-KASOSYO
ALE
TOTAL
57
Source: Commission on Elections, Tuazon, B. M. (2011). 12 years of the party list system: marginalizing peoples
representation. Diliman, Quezon City, Philippines: CenPEG Books.
269
Table 5.
The Wealth of Party-List Representatives
Average Wealth of Party-List Representatives by Congress
Congress
11th Congress
12th Congress
13th Congress
14th Congress
15th Congress
Average Wealth of Party-List Representatives (PHP)

8,594,529.34
8,947,860.63
8,620,121.18
14,957,234.86
22,935,261.82
Net Worths of Party-List Representatives in the 15th Congress in Excess of P10-million

Representative
Mercado, Homer
Cortuna, Julieta
Pangandaman, Nasser
Garin, Sharon
Abayon, Daryl Grace
Estrella, Robert Raymund
Ortega, Francisco Emmanuel III
Leonen-Pizarro, Catalina
Briones, Nicanor
Antonio, Patricio
Palmones, Angelo
Macapagal Arroyo, Juan Miguel
Batocabe, Rodel
Co, Christopher S.
Marcoleta, Rodante
Bagasina, Catalina
Tomawis, Acmad
Montejo, Neil Benedict
Noel, Florencio
Lico, Isidro
Magsaysay, Eulogio
Tieng, Irwin
Velarde, Mariano Michael Jr. M.
Guanlao, Agapito H.
Cruz-Gonzales, Cinchona
Ping-ay, Jose R.
Ty, Arnel U.
Sambar, Mark Aeron H.
Arquiza, Godofredo
Kho, David
Lopez, Carol Jayne
Party-list
1-UTAK
A TEACHER
AA KASOSYO
AAMBIS-OWA
AANGAT TAYO
ABONO
ABONO
ABS
AGAP
AGBIAG
AGHAM
AGP
AKO BICOL
AKO BICOL
ALAGAD
ALE
ALIF
AN WARAY
AN WARAY
ATING KOOP
AVE
BUHAY
BUHAY
BUTIL
CIBAC
COOP NATCCO
LPGMA
PBA
SENIOR CITIZENS
SENIOR CITIZENS
YACAP
Net Worth (PHP)

65,014,804.52
15,244,000.00
14,655,000.00
25,868,194.23
23,443,903.76
12,597,927.00
17,200,743.36
40,375,377.50
46,018,319.00
55,641,886.76
17,966,567.60
99,254,309.00
30,237,702.50
91,063,195.68
12,200,000.00
133,938,000.00
48,530,000.00
19,690,000.00
13,105,000.00
14,114,222.68
24,240,000.00
20,054,633.83
53,326,935.26
15,691,000.00
11,022,340.30
19,400,000.00
15,184,112.50
11,640,820.00
19,985,000.00
59,521,695.31
29,444,000.00
Source: Cayabyab, M.J. and Flores, M.F. (2012, December 17). Millionaires, not marginalized Pinoys, dominate
party-list seats in Congress. GMA News Online. (Based on an Undergraduate Thesis at the University of the
Philippines College of Mass Communications)
270
Chapter 8
Notes
1 International Center for Innovation, Transformation and Excellence in Governance. (2008). Crossover leadership
in Asia: staying whole in two halves (from civil society to government). Pasig City: INCITEGov, 25-26.
2 Abinales, P. N. and Amoroso, D. J. (2005). State and Society in the Philippines. Lanham, MD : Rowman &
Littlefield Publishers, 237.
3 Pinches, M.D. (2010). The making of middle class civil society in the Philippines. In Y. Kasuya and N. G.
Quimpo, The politics of change in the Philippines. Manila: Anvil Publishing, Inc., 295.
4 Clarke, G. (1998). The politics of NGOs in South-East Asia: participation and protest in the Philippines. London:
Routeledge, 136.
5 Presidential Management Staff Office of the President. (1992, June). The Aquino management of the
presidency: people empowerment, 3. Retrieved 17 March 2014, from http://www.coryaquino.ph/
coryaquino/assets/images/PeopleEmpowerment.pdf
6 ABS-CBN News. (2011, February 24). Milestones after EDSA 1: events that shaped the Philippines and
the world. ABS-CBN News. Retrieved 17 September 2012, fromhttp://www.abs-cbnnews.com/depth/02/24/11/Post-EDSA-I-milestones-2
7 Magadia, J. (2003). State-society dynamics: policy making in a restored democracy. Quezon City: Ateneo de
Manila University Press, 31.
8 Magadia, J. (2003). State-society dynamics: policy making in a restored democracy. Quezon City: Ateneo de
Manila University Press, 30.
9 Lopa-Perez, M. et al. (2008). Crossover leadership in Asia: staying whole in two halves: from civil society
to government. Pasig City, Philippines: International Center for Innovation, Transformation and Excellence in
Governance, 24.
Routeledge, 76-77
11 State-Society Dynamics, 32.
12 Reid, B. (2008). Development NGOs, semiclientelism, and the state in the Philippines: from crossover to
double-crossed. Kasarinlan, 23(1), 21.
13 Karaos, A. M. (2003). Manipulating poverty with patronage, 2001 as cited J. Magadia, State-society dynamics:
policy making in a restored democracy. Quezon City: Ateneo de Manila University Press, 165-166.
14 Reid, B. (2008). Development NGOs, semiclientelism, and the state in the Philippines: from crossover to
double-crossed. Kasarinlan, 23(1), 32.
15 Reid, B. (n.d.). EDSA II, the Arroyo government and the democratic left in the Philippines. Links International
Journal of Socialist Renewal, Issue 25. Retrieved 17 September 2012, from http://links.org.au/node/36
16 Gutierrez, E. (1994). The ties that bind. Pasig City: Philippine Center for Investigative Journalism and Institute for
Popular Democracy, 6.
17 Rocamora, J. (2007, February 6). Equal-opportunity violence. Philippine Center for Investigative Journalism
iReport. Retrieved 17 September 2012, from http://pcij.org/stories/equal-opportunity-violence/
18 Pedrasa, I. (2013, April 30). PNP monitors 15 election hotspots. ABS-CBN News. Retrieved 1 May 2013, from
http://www.abs-cbnnews.com/nation/04/30/13/pnp-monitors-15-election-hotspots
19 Coronel, S.S. et al. The rulemakers: how the wealthy and well-born dominate Congress. Quezon City,
Philippines: Philippine Center for Investigative Journalism, 48.
20 Mendoza, R. U. et al. (2012). An empirical analysis of political dynasties in the 15th congress. Working Paper
12-001. Asian Institute of Management, January 1, 2012, 24.
21 Mendoza, R. U. et al. (2012). An empirical analysis of political dynasties in the 15th congress. Working Paper
12-001. Asian Institute of Management, January 1, 2012. 24.
22 In dynastic districts, poverty incidences are higher by five percentage points), poverty gaps by one percentage
point, and poverty severity by half a percentage point than in non-dynastic districts. Mendoza, R. U. et al.
(2012). An empirical analysis of political dynasties in the 15th congress. Working Paper 12-001. Asian Institute
of Management, January 1, 2012. 27.
23 Silliman, G.S. and Noble, L.G. (1998). Organizing for democracy: NGOs, civil society and the Philippine state.
Quezon City: Ateneo de Manila University Press, 291; 301.
24 Quimpo, N.G. (2008). Contested democracy and the left in the Philippines after Marcos. New Haven, CT: Yale
University Southeast Asia Studies, 110.
271
25 Silliman, G.S. and Noble, L.G. (1998). Organizing for democracy: NGOs, civil society and the Philippine state.
Routeledge, 79.
28 National Peace Conference. (1999). The basic sectors agenda for the post-Ramos administration. Kasarinlan,
(14)3, 196-198.
29 Bello, W. et al. (2004). The anti-development state: the political economy of permanent crisis in the Philippines.
London: Zed, 73-74
32 Ariate, J. and Molmisa, R. (2009). Two decades of the freedom from debt Coalition. In T.E. S. Tadem, (Ed.),
Localizing and transnationalizing contentious politics: global civil society movements in the Philippines.
Plymouth: Lexington Books, 34.
(14)3, 196-198.
34 Ochoa, C.L. (1999). The rural sector and the Ramos administration. Kasarinlan, (14)3, 171.
(14)3, 197-198.
36 Tuazon, B. M. (2011). 12 years of the party list system: marginalizing peoples representation. Diliman,
Quezon City, Philippines: CenPEG Books, 3.
37 Convert this into a note which had been passed midway through the Ramos presidency due to the efforts of
groups like the Consortium on Electoral Reforms and the Kilusang Mamamayan para sa Repormang Elektoral
provided that up to 20% (52 in absolute terms) of the total seats of the House of Representatives could be
made available for elected party-list representatives from labour, farmers, urban poor, indigenous peoples,
women, and other under-represented sectors, as subject to a voting scheme of proportional representation.
Quimpo, N.G. (2008). Contested democracy and the left in the Philippines after Marcos. New Haven, CT: Yale
38 Wurfel, J. (2008). Cited in N.G. Quimpo. Contested democracy and the left in the Philippines after Marcos.
New Haven, CT: Yale University Southeast Asia Studies, 142.
39 Abinales, P. (2008).Notes on the disappearing middle in post-authoritarian Philippine politics, Kyoto Area
Studies on Asia, Conference Paper, 184.
Quezon City, Philippines: CenPEG Books, 37-38.
42 Navarro, A. and Elumbre, A. (2011, January-June). Labindalawang taon ng makakaliwang grupong party-list sa
Kongresong Pilipino. Philippine Social Science Review, 63(1), 73-74.
43 Bello, W. (2013, February 11). The 15th Congress surprising output: a bumper crop of reform measures.
Philippine Daily Inquirer. Retrieved 17 July 2013, from http://opinion.inquirer.net/46663/the-15th-congresssurprising-output-a-bumper-crop-of-reform-measures
45 Mydans, S. (2001, February 5). People Power II doesnt give Filipinos the same glow. The New York Times.
Retrieved 17 September 2012, from http://www.nytimes.com/2001/02/05/world/people-power-ii-doesn-tgive-filipinos-the-same-glow.html
46 Bello, W. (2010, April 25). Is congress worth running for? Philippine Daily Inquirer, Retrieved 17 September
2012, from http://opinion.inquirer.net/viewpoints/columns/view/20100425-266394/Is-Congress-WorthRunning-for
47 Abao, C. V. (2011). Mapping and analyzing Philippine civil society organizations. In L. N. Yu-Jose, Civil society
organizations in the Philippines: a mapping and strategic assessment. Quezon City: Civil Society Resource
Institute, 5-8.
272
Chapter 8
conclusi on
Nearly 30 years after the EDSA Revolution that was supposed to herald not
only democratic change but economic prosperity, the Philippines is now
experiencing a spurt of growth that has made it the economy to watch for
according to the World Bank, the Asian Development Bank, and the ratings
agencies.
The presidents clean personal record and his commitment to root out
corruption has provided the administration with an aura of good governance
that gives positive signals to investors, although in 2013, a few members of his
team were tarred by the pork barrel scandal. But that the country is on the
verge of sustained development is a feeling that is not widely shared, except
perhaps in business circles
In the second decade of the 20th century, it might be said that the country
underwent crony capitalism cum World Bank-promoted export oriented
industrialization under Marcos; structural adjustment and debt-service-focused
economics under Corazon Aquino; doctrinal neoliberalism under Fidel Ramos;
and continuing commitment to neoliberal policies, though with less ideological
rhetoric, on through the 21st century under the presidencies of Joseph Estrada
and Gloria Macapagal-Arroyo.
By 2010, when Aquino ascended to the presidency, neoliberal policies in the
Philippines had been solidly entrenched, yet 25 years of neoliberal adjustment
delivered precious little benefits to the Philippines, institutionalizing instead a
low-growth economy. With the growth in GDP per capita averaging 1.6 per
273
cent per annum in the period 1990 to 2005, the Philippines economic growth
record was the worst in Southeast Asia, with even all the so-called lower-tier
ASEAN countriesVietnam (5.9 per cent), Laos (3.8 per cent), Cambodia (5.5
per cent), and Myanmar (6.6 per cent)significantly outstripping it.
The Corruption Question

Neoliberalism still has few active defenders, but the popular explanation for the
Philippines failure to launch is corruption. Corruption discourse is simple. It has
villains that are all too obviously guilty, such as Gloria Macapagal Arroyo and
Joseph Estrada. Corruption did divert cash from development to politicians
pockets. And the key to sustained development is, especially for the middle
class, obvious: eliminate corruption.
Since corruption has become the most influential explanation for the
Philippines underdevelopment, it might be worthwhile to devote some space
to discussing it.
Now, there is no doubt that corruption erodes governance, subverts democracy,
and is morally corrosive. However, it is another thing to say that corruption
and cronyism are mainly responsible for the Philippines failure to get out of the
stagnation in which it is mired. The reason why one must be skeptical of this
explanation is that in many other societies, periods of rapid growth have also
been periods of endemic corruption in politics, and this observation includes
England in the 18th century, the US in the 19th and early 20th centuries, and
Korea in the late `60s to the `80s.
Closer to home, corruption pervaded the politics of our Southeast Asian
neighbors, such as Thailand, Malaysia, and Indonesia during their period of rapid
industrialization from the mid-`80s to the mid-`90s, when they experienced six
to 10 percent growth rates. Indonesia under Suharto, for instance, occupied
the position the Philippines is now in, being regularly rated as the most corrupt
government in Asia. Double-entry book-keeping, tax evasion, bribing of
politicians and bureaucrats, and massive fraud were legendary in Thailand in its
boom decade.
274
Conclusion
Observations casting doubt on the correlation between stagnation and

corruption have received confirmation from more systematic studies. Focusing
on Southeast Asia, Mustaq Khan and Jomo K.S. found no simple correlation
between the extent of rent-seeking and long-running economic performance,
and found the thesis that crony capitalism caused the Asian financial crisis of
1997 a rather dubious one.1 Working with a bigger global sample, I.A. Brunetti,
G. Kisunku, and B.Weders research found that, if at all, the impact of corruption
on GDP growth is not significant.2 Other studies have found that, as in the case
with population growth and poverty, the direction of causation is more likely to
be from poverty to corruption rather than the other way around.
Summing up the conclusion of a slew of studies on growth and corruption,
Herbert Docena says, Too many empirical anomalies undermine the conclusion
that corruption is a significant explanation for economic backwardness.3
What research has done is simply to confirm the intuitive sense that the customs
agent that builds a house with ill-gotten wealth stimulates the economy as
much as the middle manager who builds one with her legitimate savings. The
difference between them lies not in their economic effects but in what their
ethical and legal destinies should be: the former deserves to go to jail while the
other deserves to enjoy the fruits of his/her labor.
There is an added problem with the corruption explanation for stagnation,
Docena argues.4 The popular discourse that attributes economic backwardness
to corruption and cronyism plays into the dynamics of elite politics and that of
multilateral institutions like the World Bank. Corruption discourse is the preferred
weapon in the political competition among the different factions of the elite. It is
discourse that performs the function of allowing elites to compete and succeed one
another in office without fatally destabilizing a social structure that is shot through
with inequity or taking on the massive task of reversing the unequal integration of
the Philippines to the global capitalist economy through neoliberal policies.
All this is not to say that corruption must be tolerated. Indeed, it is to be
condemned. But let us be clear as to the reason why: it is because it erodes
and eventually destroys the democratic social contract between the people
and those they place in public office.
Conclusion
275
An Alternative Paradigm
In the following section, we sketch out an alternative economic paradigm with
the following key elements:
Development through equity
Reversing neoliberal policies
Ending debt-service economics
Employment-oriented fiscal and monetary policy
Agriculture First strategy
Industrial invigoration
Developing sustainability
Activist government
Development through Equity

Dealing decisively with inequity and poverty is not just a question of justice.
Creating consumers with purchasing power that would be the engine of
economic growth is a critical element, especially as the countrys export
markets are facing a long period of stagnation as consequence of the global
recession. That economic growth is not enough to reduce inequity and poverty
is shown by the fact that as of 2012, the level of poverty in the Philippines was
practically the same as in 2006. The figures show that while the CCT program
may play an important role in breaking the intergenerational cycle of poverty,
it is limited in its impact in the short and medium term. There is no going
around the fact that asset reforms that would entail a redistribution of wealth
are indispensable to a sustainable development path, and agrarian reform is the
most important of these measures.
Reversing Neoliberal Policies

Asset reform is one conditio sine qua non for the launch into sustainable
development. Another is reversal of the destructive neoliberal policies of
indiscriminate trade liberalization, deregulation, and privatization. In the energy
sector, this would mean radical amendment of the 2001 EPIRA Act, which
276
Conclusion
would pave the way for government to once more have a direct role in energy
generation and transmission. In trade, this would entail not only not entering into
new free trade agreements with big powers like the US and European Union,
but reinstituting quotas and pushing for exemptions from bad commitments.
Among other things, this would mean freezing commitments to comply with
the World Trade Organizations Agreement on Agriculture and the ASEAN
Economic Communitys reduction of tariffs within the region to zero by 2015.
Ending Debt Service Economics

A third thrust must be to put an end to debt service economics, and key to this
is repealing the Automatic Appropriations Law, which institutionalized servicing
the foreign debt as the top priority of the annual government budget. With
debt servicing now taking up from 20 to25 per cent of the national budget,
this law gives the government relatively little resources for investment and little
room for fiscal maneuver. It also has a depressing effect on consumption, since
it is passed on to consumers in the form of the expanded value-added tax.
Employment-oriented Fiscal and Monetary Policy

Fiscal and monetary policy is another critical area of reform. Right now, the
paradigm in this area is the usual, obsolete IMF formula: inflation is the enemy.
In the Philippines, where some 20 per cent of the work force is employed or
underemployed, lack of decent jobs is the key problem. It is what drives the
most dynamic of our workers overseas. A more flexible Keynesian manipulation
of fiscal and monetary instruments, with bias towards low unemployment, is
what is required at this point.
Agriculture First Strategy

The country is in real need of a macroeconomic development strategy. PublicPrivate-Partnerships are not a strategy. They are an instrument for implementing
a strategy, and one with a not very good record. As for Inclusive Growth, it
Conclusion
277
simply is a convenient, vacuous World Bank mantra. The key challenge is the
hard decisions one must take to achieve inclusive growth, and those are the
ones government tries to avoid, which is why a six to seven percent GDP growth
rate does not translate into significant reduction of poverty and inequality.
A strategy for development means making the hard decision of choosing the
leading sector of the economy, based on a calculation that developing that
sector would result in the maximum social and economic gains for the country
as a whole compared to other strategies. It means pouring a significant amount
of scarce resources into developing that sector. It does not mean though that
other sectors will be neglected. In fact, another sector might also be accorded
a strong emphasis and significant resources, but it must be subordinated to and
integrated into the dynamics of the leading sector.
In the last four decades, three sectors have been prioritized, though government
technocrats were often not clear or were deliberately unclear they were
prioritizing these: export-oriented industrialization under Marcos; labor export,
which became very marked during the nine-year-reign of Gloria Macapagal
Arroyo; and Business Processes Outsourcing (BPOs), which, along with labor
export, has dominated over the last decade, including in the first three years of
the current Aquino presidency.
Export-oriented industrialization has failed to develop backward linkages to
create industrial suppliers to finished goods assemblers. Labor export has
resulted in massive outflow of workers, including skilled workers, contributing to
the failure to significantly develop high-value-added manufacturing industries;
while the ability of BPO firms to get contracts has been notoriously dependent
on global wage differentials.
For a country like the Philippines, where the largest portion of the work force
remains in agriculture and which has a large fund of agricultural knowledge in
both its work force and its scientists, agriculture is well positioned to become
the lead industry in a development strategy. At the same time, one of the
key lessons of the last three decades is that deindustrialization via trade
liberalization imposes severe costs in terms of job creation, skills transmission,
and the integration of the economy. Thus, an appropriate strategy could be an
278
Conclusion
agriculture-led strategy with a secondary though strong emphasis on industrial

reinvigoration.
The agricultural thrust of such a strategy would consist of the following
elements:5
Completion of the agrarian reform program, with a strong complement of
support services;
Substantially increasing public investments in the sector to ensure the

delivery of essential support services. Priority must be accorded to the
expansion of irrigation facilities so that these cover, at the very least, 80
percent of total irrigable areas.
Engaging in agricultural trade policy to safeguard the economic viability

of key sectors. The government must review free trade agreements with
the end in view of reversing commitments that have negative impacts on
local producers and declaring a moratorium on the implementation of
liberalization schedules pending the results of the review.

Government must also explore all existing trade mechanisms to support

small men and women farmers. These include: (1) pushing for maximum
flexibility, such as exemption from tariff reduction, in the treatment of
special products in agriculture in the WTO negotiations; (2) negotiating for
special safeguard mechanisms that will enable the country to go beyond its
current tariff bindings, also in the WTO and in other free trade agreements;
(3) increasing governments capability to use Sanitary and Phytosanitary
Measures (SPS) in regulating agricultural imports.
Systematically tapping the countrys huge domestic market for processed

and unprocessed agricultural products by improving competitiveness in key
commodity sectors while reducing dependence on agricultural imports. A
task force can be created with the authority to draw up and implement
a plan aimed at providing the necessary support and incentives, including
for the creation of important forward and backward linkages, to produce,
process, and manufacture agricultural commodities for the local market.
Conclusion
279
Provision of social protection for small farmers and fishers in the form of
pension for seniors and educational scholarship for their children. Providing
pension to men and women farmers aged 65 years old and above will not
only help improve poverty conditions among the most vulnerable segment
of farmers and fishers, this will also create incentives for others to engage in
agricultural production.
Strengthening of the regulatory framework for private sector agricultural

investments to incorporate safeguards for small men and women farmers,
food security, and environmental sustainability. Private investors can indeed
help channel capital and other resources into the agricultural sector.
However, government must ensure that these investments arrangements
and partnership agreements are structured in a way that safeguards the
welfare and livelihood of small farmers while ensuring that important socioeconomic goals such as food security and environmental sustainability are
not compromised.
Re-orienting other sectors to support agricultural development. Putting

agriculture at the front and center of the countrys development agenda
and strategy requires re-orienting key aspects of governments development
program so that these support agricultural development.

In education, for instance, more scholarships can be provided for short
and long term courses on agricultural production and agro-processing,
and primary, secondary, and tertiary curricula can be recast to create
appreciation for sustainable agriculture and agriculture related activities.
In the energy sector, public and private investments can be leveraged to
support the establishment of renewable sources of energysuch as smallscale hydro dams, windmills, and solar panels among others to support
agricultural production, storage, and processing, especially in remote areas.
In line with the complementary emphasis of industrial invigoration,

developing a development of an agro-industrial sector that will specialize in
providing inputs to agriculture, such as locally produced farm machinery and
in the processing of primary products such as virgin oil.
280
Conclusion
Implementation of sustainable fisheries policies. The government must

institute and implement policies to regulate aquaculture development
in order to prevent unsustainable and ecologically harmful aquaculture
practices, such as overstocking and overfeeding, which lead to overcapacity,
fish kills, and marine pollution. Government must also take the lead in
developing and adopting clear and comprehensive criteria to promote good
aquaculture practices. These criteria should consider the short and long
term, social, economic and environmental impacts of aquaculture projects
on coastal communities. Additionally, government must increase its efforts
to promote sustainable community-based coastal resources management
as a sustainable way of supporting the livelihood of small fishers in coastal
communities.
Industrial Invigoration
The structural adjustment of the 1980s and 1990s devastated our industrial
sector and savaged the ranks of the urban working class. The list of industrial
casualties included paper products, textiles, ceramics, rubber products, furniture
and fixtures, petrochemicals, beverage, wood, shoes, petroleum oils, clothing
accessories, and leather goods. The textile industry shrank from 200 firms in
the late `70s to less than 10 today. The shoe industry centered in Marikina is
struggling for its life owing to the surge of Chinese-made shoes resulting from
trade liberalization and smuggling.
The key elements of industrial invigoration will be 1) an inventory of the status
of the different sectors of industry, which will seek to determine which sectors
can be salvaged and which should be let go; 2) a capital subsidy and trade
protection program for selected industries which are deemed to be viable
and can relatively easily regain competitiveness; 3) an increase in tariff rates in
selected industries making use of the space afforded by the difference between
applied and bound rates in the World Trade Organization agreements; 4) as
mentioned above, development of an agro-industrial sector that will specialize
in providing inputs to agriculture such as locally produced farm machinery and
in the processing of primary products such as virgin oil; and 5) industrial policy.
A smart industrial policy would aim at providing state support for pioneer
Conclusion
281
industries and services or industrial and service subsectors where the country
is deemed to have initial advantages, especially in green technologies and
information technology, e.g., web design and animation. Industrial policy need
not focus solely on innovating in labor-intensive industries. As UN expert
Manuel Montes explains, industrial policy is all about technology that can be
scaled up with selective government support. Articulating linkages among
the sectors of the economy will also be a key feature of the new industrial
policy. As Montes puts it, good policies in health and education, while they
cannot strictly be considered industrial policy, could be relevant ingredients of
industrial policy. For instance, government can put more support to science and
technology research in the universities, and harness the countrys substantial
healthcare work force towards the adoption of higher technology.6
Developing Sustainability
Any economic strategy must build in sustainability as an integral element. The
lack of this has been a central feature of all development strategies that have
been adopted till now.
In agriculture, this means using local knowledge and local scientific expertise,
promoting organic agricultural methods in place of both chemical-intensive
agriculture, with its high environmental costs, and GMO technology, with the
still unknown dangers it poses.
When it comes to energy policy, moving away from a future dependent
on greenhouse-gas-intensive coal-fired plants, which is the current policy, is
essential. This means seriously implementing the Renewable Energy Act by
developing solar, wind, geothermal, and other renewable energy sources.
This will mean not only adapting to local use technologies developed abroad
but also harnessing and cultivating local technical talent to set up a renewable
energy production network that could become one of the pillars of an industrial
renaissance.
Climate proofing our communities is an urgent task that we have been taught
by Yolanda, Pablo, and Sendong. This will be financed both with local
282
Conclusion
appropriations and with funds the country will be entitled to from the Green
Climate Fund established through the climate negotiations. Climate proofing
can also serve as a stimulus for economic activity, not only for construction
but also the manufacture of materials especially suited for extreme weather
events.
Activist Government
In his assessment of the failure of neoliberal economics, Justin Lin, former chief
economist of the World Bank, asserts that the greatest flaw of the paradigm
was its inability to recognize the role of the state as a strategic facilitator of
development. [I]t is important for a country to have a committed, credible,
and capable government to perform the information, coordination, and
externality compensation functionsBy playing such a role, the state can
overcome market failures and facilitate industrial upgrading and structural
transformation.7 Import substitution, says Lin, is a natural phenomenon
for a developing country climbing the industrial ladder, one that must be
supported by the state.8
Articulating his conception of the role of the state in what he calls the New
Structural Economics, Lin says it must aim at actively promoting a countrys
comparative advantage and push industrial diversification. In many ways, his
vision of the states role is breathtaking, including providing information about
new industries, coordinating related investments across different firms in the
same industries, compensating for information externalities of the pioneer firms,
and nurturing new industries through incubation, attracting foreign investment,
and encouraging clustering. The state also needs to lead in improving hard and
soft infrastructure to reduce transaction costs for individual firms and facilitate
the economys industrial development process.9
One may not agree with some aspects of Lins proposed paradigm, such as
placing the focus on gaining comparative advantage for export markets, but
his renewed emphasis on the strategic role of the state resonates at a time that
market-driven corporate globalization has failed to deliver sustained growth
and sustainable development.
Conclusion
283
More than ever, development in the Philippines demands an activist government.

Yet distrust of government has never been highest, undoubtedly because of
the pork barrel scandal where key politicians were found to be channeling
their priority development assistance funds to themselves via fake NGOs. The
anti-corruption campaign today, influenced undoubtedly by key neoliberal
institutions like the World Bank, has a message that amounts to throwing out
the baby with the bath water: eliminate corruption by radically reducing the
role of government in the economy.
Nonetheless, there is also no question of returning to the Marcos era practice
of crony capitalism with its incestuous ties between government elites and
private monopolists. The solution to this development dilemma is not easy, but
whatever solution will be eventually arrived at will involve more democracy.
Democratic consultation of civil society on economic issues must be
institutionalized at all levels of government. Indeed, all key economic decisions,
such as which industries to prioritize or how much foreign debt the country
can contract must be subject to direct democratic approval via referenda and
similar mechanisms.
Also essential will be the institutionalization of greater transparency through
the passage of a Freedom of Information Law. A mobilized civil society is not
in contradiction but is actually complementary to a strong, effective, activist
government.
A Final Note
Nineteen years of crony capitalism under a dictatorship followed by nearly thirty
years of neoliberalism cum structural adjustment under an elite democratic
system have left the country in dire straits. The old paradigm has failed. It is
time for the country not only to talk about embarking on a new path but to
actually begin doing so. If this book contributes in some way to this task, it will
have fulfilled its objective.
284
Conclusion
Notes
1
Mushtaq H. Khan and Jomo Kwame Sundaram, eds., Rents, Rent-seeking, and Economic Development:
Theory and Evidence in Asia (Cambridge: Cambridge University Press, 2000), p. 4.
2 A. Brunetti, G. Kisunku, and B. Weder, Credibility of Rules and Economic GrowthEvidence from a
Worldwide Private Sector Survey, background paper for the World Development Report 1997), cited
in Jens Cher Andvig and Odd-Helge Fjelstad, Corruption: A Review of Comparative Research (Bergen,
Norway: Chr. Michelsen Institute, 2001), p. 74.
3 The Anti-Development State: the Political Economy of Permanent Crisis in the Philippines (Manila: Anvil,
2009), p. 281
4 Ibid., pp. 285-286.
5 The following section is largely drawn from Putting Agriculture in the Center of P-Noys Development
Strategy and Agenda, a policy paper for Akbayan (Citizens Action Party) authored by Riza Bernabe and
Walden Bello, Nov 2012
6 Focus on the Global South, Media Release, Aug 2, 2011
7 Justin Yifu Lin, The Quest for Prosperity: How Developing Economies Can Take Off (Princeton: Princeton
University Press, 2012), p. 93.
8 Ibid., p. 119.
9 Ibid., pp. 119-120.
285
AC RONYM S
ADB
- Asian Development Bank
AFMA
- Agriculture and Fisheries Modernization Act of 1997
AFRIM
- Alternative Forum for Research in Mindanao
AFTA
- ASEAN Free Trade Area
AFTA-CEPT
- ASEAN Free Trade Area-Common Effective Preferential Tariff
AICO
- ASEAN Industrial Cooperation Scheme
AMCFP
- Agri-Industry Modernization Credit and Financing Program
APECO
- The Aurora Pacific Economic Zone and Freeport
ARC
- Agrarian Reform Community
ARMM
- Autonomous Region in Muslim Mindanao
ASEAN
- Association of Southeast Asian Nations
AVA
- Alternative Venture Arrangement
BCDA
- Bases Conversion and Development Authority
BGC
- Bonifacio Global City
BOI
- Board of Investments
BPO
- Business Process Outsourcing
CALABARZON - Cavite, Laguna, Batangas, Rizal & Quezon
CARP
- Comprehensive Agrarian Reform Program
CARPER
- CARP Extension with Reform
CCT
- Conditional Cash Transfer
CDM
- Clean Development Mechanisms
CenPEG
- Center for People Empowerment in Governance
CES
- Consumer Expectations Survey
CFO
- Commission for Filipinos Overseas
CIDSS
- Comprehensive and Integrated Delivery of Social Services
287
CISFA
CLOA
COMELEC
CSO
DA
DAR
DCP
DENR
DFA
DOE
DOJ
DOLE
DRTS
DSWD
EPIRA
EPZ
FDI
FGD
FIAS
FINL
FPIC
FTI
GDP
GNI
GOCC
GTZ
IFC
IFI
IFMA
ILP
IMF
IP
IPRA
JPEPA
K-Water
LGC
288
- Comprehensive Shelter Finance Act of 1994

- Certificates of Land Ownership
- Commissions on Elections
- Civil Society Organizations
- Department of Agriculture
- Department of Agrarian Reform
- Directed Credit Program
- Department of the Environment and Natural Resources
- Department of Foreign Affairs
- Department of Energy
- Department of Justice
- Department of Labor and Employment
- Development Roundtable Series
- Department of Social Welfare and Development
- Electric Power Industry Reform Act of 2001
- Export Processing Zone
- Foreign Direct Investments
- Focused Group Discussion
- Foreign Investment Advisory Services
- Foreign Investment Negative List
- Free Prior and Informed Consent
- Food Terminal Incorporated
- Gross Domestic Product
- Gross National Income
- Government-Owned and Controlled Corporation
- German Technical Cooperation
- International Financial Corporation
- International Financial Institutions
- Integrated Forest Management Agreement
- Import Liberalization Program
- International Monetary Fund
- Indigenous people
- Indigenous Peoples Rights Act of 1997
- Japan-Philippines Economic Partnership Agreement
- Korea Water Resources Corporation
- Local Government Code
Ac r o n y m s
LGU
MCBD
MDG
MFN
MMDA
MOLE
MTPDP
MW
MWSS
NAPC
NCR
NEDA
NGO
NHA
NHMFC
NIC
NPC
NPI
NSCB
NSO
O&O
ODA
OECD
OFW
OWWA
PADCC

PAFID
PARC
PBGEA
PDAF
PEZA
PIDS
PKKK
PMCJ
PNOC
- Local Government Unit

- Makati Central Business District
- Millennium Development Goals
- Most Favored Nation
- Metro Manila Development Authority
- Ministry of Labor and Employment
- Medium Term Philippine Development Plan
- Manila Water
- Metropolitan Waterworks and Sewerage System
- National Anti-Poverty Commission
- National Capital Region
- National Economic Development Authority
- Non-governmental Organization
- National Housing Authority
- National Home Mortgage Finance Corporation
- Newly Industrializing Country
- National Power Corporation
- Net Primary Income
- National Statistics Coordination Board
- National Statistics Office
- Off-Shoring & Outsourcing
- Official Development Assistance
- Organisation for Economic Co-operation and Development
- Overseas Filipino Workers
- Overseas Workers Welfare Administration
- Philippine Agricultural Development
and Commercial Corporation
- Philippine Association for Intercultural Development
- Presidential Agrarian Reform Council
- Philippine Banana Growers and Exporters Association
- Priority Development Assistance Fund
- Philippine Economic Zone Authority
- Philippine Institute for Development Studies
- Pambansang Koalisyon ng mga Kababaihan sa Kanayunan
- Philippine Movement for Climate Justice
- Philippine National Oil Company
Ac r o n y m s
289
POEA
POLO
PSE
REDD
SAP
SEZ
SMDC
SME
SMIC
SRA
TESDA
TLA
TRIMS
TRP
UCTEL
UDHA
UNCERD
UNESCO
UPA
UPLB
VLL
WTO
290
- Philippine Overseas Employment Administration

- Philippine Overseas Labor Offices
- Philippine Stock Exchange
- Reduction in Forest Degradation and Deforestation
- Structural Adjustment Program
- Special Economic Zones
- SM Development Corporation
- Small and Medium Enterprises
- SM Investments Corporation
- Social Reform Agenda
- Technical Education and Skills Development Authority
- Timber License Agreement
- Trade-Related Investment Measures
- Tariff Reform Program
- United Tribal Council of Elders
- The Urban Development and Housing Act of 1992
- UN Commission on the Elimination of Racial Discrimination
- United Nations Educational, Scientific and Cultural Organization
- Urban Poor Associates
- University of the Philippines Los Banos
- Vista Land & Lifescapes Inc.
- World Trade Organization
Ac r o n y m s
About the AUTHORS

Walden Bello is a representative of Akbayan (Citizens Action Party) in the
House of Representatives of the Philippines. He was founding Executive
Director of Focus on the Global South and formerly a professor at the
University of the Philippines. He is the author of 18 books, the latest of which
are Capitalisms Last Stand? Deglobalization in an Age of Austerity (London:
Zed Books, 2013) and Food Wars (London: Verso, 2009).
Kenneth Cardenas taught sociology at the University of the Philippines Diliman

from 2008 to 2010, and from 2011 to 2012. He received his MA (distinction)
in Sociology from the University of Manchester and is BA, also in Sociology,
from UP Diliman. He is presently working on a PhD in human geography at
York University, Toronto. He studies the big business of building big new cities
in the global South, the use and abuse of disaster risk management in defining,
controlling, and expelling unwanted urban populations, and ways to create and
claim new urban commons.
291
S t a t e o f Fr a g m e n t a t i o n : T h e P h i l i pp i n e s i n Tr a n s i t i o n
Jerik Cruz has been a researcher at Focus on the Global South since 2010.
He is an advocacy communications specialist focused on issues of poverty
and inequality, land/environmental rights, and democratization. In various
engagements with citizens movements, he has handled media advocacy
campaigns fostering national interest on matters of land rights, land-grabbing,
and tobacco tax reforms. He will be pursuing a Mastersdegree at the Graduate
Institute of International and Development Studies in Geneva, Switzerland,
starting August 2014.
Aya Fabrosis currently pursuing her PhD (Sociology) at the University of

California, Berkeley. Prior to this, she was a research associate and editor
at Focus on the Global South. She holds a Bachelor of Science degree in
Economics and a Masters degree in Sociology, both from the University of the
Philippines Diliman. She was granted fellowship by the Asian Public Intellectuals
Fellowship in 2010 for her study on migration.
Mary Ann Manahan is a program officerat Focus on the Global South,

and works on the natural commons, investments, social and environmental
justice and gender issues. She has a Bachelors degree in Sociology and has
taken core graduate courses on Women and Development Studies at the
University of the Philippines Diliman. She was the first Initiatives in Critical
Agrarian Studies (ICAS) Activist Fellow hosted by the Institute of Social Studies
in The Hague, Netherlands. She contributed to the Anti-Development State:
Political Economy of Permanent Crisis in the Philippines and co-authored the
chapter, Springs of Hope: Alternatives to Privatization and Commercialization
of Water in Asia, in Alternatives to Privatizations: Public Options for Essential
Services in Global South.
Clarissa Militante is currently Head of the Philippines Office of Focus on

the Global South, where she also served as Communications and Outreach
Officer in 2010-2011. She has just completed (as scholar) her MFA in Creative
Writing at the De La Salle University Taft, where she also got her AB Literature
292
a b o u t t h e AUTHO R S
S t a t e o f Fr a g m e n t a t i o n : T h e P h i l i pp i n e s i n Tr a n s i t i o n
degree in 1985. Her debut novel Different Countries (Anvil, 2010) was longlisted in the 2009 Man Asia Literary Prize, and was a finalist in the 2011 UPMadrigal Gonzalez Best First Book Award. Her second novel We Who Cannot
Be Daughters (UST Publishing House) is coming out inAugust 2014.
Joseph Purugganan is program officer at Focus on the Global South,

coordinating its trade and investment, and climate justice programs in the
Philippines. He coordinated the Stop the New Round (SNR) Coalition in 20032005. He currently co-coordinates the EU-ASEAN FTA regional campaign
network, and is a member of the Asian Peoples Music collective.
Jenina Joy Chavez was Senior Associate and Coordinator of Focus Philippines
Programme until 2011. She now coordinates the Industrial Policy Team of
Action for Economic Reforms, and volunteers for campaigns on freedom of
information and alternative regionalisms.
a b o u t t h e AUTHO R S
293
ACK NOW LE DGE ME NTS

This book is a work of genuine collaboration. While specific authors (Walden
Bello for the Introduction and Conclusion, Kenneth Cardenas for Chapter 1, and
Aya Fabros for Chapter 4) were mainly responsible for some of the chapters, the
entire book benefitted from many hours of discussion by the team of authors
on structure, content, sources, and even tone. The manuscripts went back and
forth among several members of the team to undergo editing and copyediting.
The arguments presented here were drawn and redrawn over the course of
countless conversations, and the authors owe their heartfelt thanks and to
many minds, and whose kindness the authors hope to return one day. We are
particularly grateful to Dennis Murphy, Gus Cerdea, Omi Royandoyan, Nepo
Malaluan, Judy Pasimio who discussed with us during the inception workshop
for this book. Buenaventura Dargantes, Cheryl Batistel, Jaybee Garganera, Bong
Baltazar, Lirio Cordova, Manuel Aalbers, Cynch Bautista, Alvin Camba, Ging
Gutierrez, Jess Hermosa, Philip Kelly, Hansley Juliano, Erick Javier and Rafaela
David provided intellectual stimulation all throughout.
We also thank friends, colleagues, and kindred spirits from the Urban Poor
Associates, Action for Economic Reforms, Task Force Anti-APECO, and FES
Academy of Political Management, the women of Pambansang Koalisyon ng mga
Kababaihan sa Kanayunan (Rural Womens Coalition) and the Atis of Boracay.
295
Menchie Flores-Obanil and Cess Celestino provided valuable research

assistance for this project. Joy Manahan meticulously checked the endnotes
and proofread the manuscripts. Amy Tejada did the book layout and cover.
Qiqo Simbol did the tough job of rendering tons of data into a cohesive,
comprehensible environmental vulnerability map, and downloaded digital
materials for the team.
This project would not have been possible without the generous book grant
from Friedrich Ebert Stiftung, and we especially thank Berthold Leimbach and
Gus Cerdea for their huge encouragement and support. We also express
gratitude to the staunch supportersof Focus Philippines Programme: Hanneke
van EldikThieme, Frances Lo and the entire 11.11.11 team; Daphne Villanueva
and the Christian Aid Philippine country office; Genevieve Talbot, Jess Agustin
and Aida Vidal of Development and Peace.
Our colleagues in Focus, past and present, provided not only inspiration,
but served us good role models for us. Our deep appreciation to the other
members of the current Focus team: Pablo, Shal, Afsar, Andrew, Megan, Lyn,
Mansi, Soon, Note, Hamdi. Special thanks should also go to former members
of this team: JC, Chanida, Praphai, Benny, Meena, Mary Lou Malig. Marissa
de Guzman, Julie delos Reyes and Herbert Docena deserve special mention
for their invaluable contribution to Focus work in the Philippines that laid the
foundation for this book.
Finally, we thank our partners and childrenour familiesfor their ineffable
presence and inspiration especially when we were going through those grueling
hours of writing, rewriting, editing our work.

296
Walden Bello
Kenneth Cardenas
Jerik Cruz
Aya Fabros
Mary Ann Manahan
Clarissa V. Militante
Joseph Purugganan
Jenina Joy Chavez
June 10, 2014
Ac k n ow l e d g e m e n t s
INdEX
A
Agrarian reform10, 16-18, 39, 117
Agribusiness 123-126
Agriculture15-18, 39, 105-111, 124-127, 270-272
Alternative economic paradigm.268-276
Civil Society Organizations (CSO)240-243
Climate change. 18-19, 126, 162-163, 166
Comprehensive Agrarian Reform (CARP). 16, 112-116
Comprehensive Agrarian Reform Extension with Reforms Act (CARPER).17
Conditional Cash Transfer Program (CCTP).9-10
Corruption 266-267
D
Debt service economics. 12-14
Domestic manufacturing39, 79
Automotive.39, 80-81
Textile industry40, 79-80
Ecological crisis 161-166

Forest conversion169-170

Mining165-166, 171, 175
Electricity Power Industry Reform Act (EPIRA)21-22
Employment82-83
E
Environmental activism176-179
297
S t a t e o f Fr a g m e n t a t i o n : T h e P h i l ippin e s in T r a nsiti o n
F
Filipino capitalism37-42, 58
G
Global financial crisis. 7
Globalization. 15, 22, 25, 44

Business Processing Outsource (BPO)23, 45
Electronics23, 45
Growth statistics.. 8
I
Indigenous people 172-174
Inequality228-230
Investment policy 74-75
L
Labor export.24-27, 45, 133-140, 144-152
Human trafficking.27
Labor migration problems140-143
Remittances145-146, 149
M
Model debtor strategy. 12
N
Neoliberal path. 11
Neoliberal restructuring.11
Neoliberalization42, 47, 52-54
P
Party-List system248-250
People power 239-240, 250-251
Philippine Overseas Employment Administration (POEA). 138, 153-154
Philippine politics244
Philippine state30-32
298
INDex
S t a t e o f Fr a g m e n t a t i o n : T h e P h i l ippin e s in T r a nsiti o n
Population control222-223
Pork barrel.9
Poverty alleviation215-221, 230
Aquino, Benigno 220-221
Aquino, Corazon 216
Arroyo, Gloria Macapagal219-220
Estrada, Joseph 218-219
Ramos, Fidel 217-218, 246-247
Priority Development Assistance Fund (PDAF).9
Privatization. 20-22, 42-43, 76-77
Energy privatization21
Water privatization.20, 170
R
Real estate. 48-52, 56-57
Rural migrants119-122, 190
S
State of poverty12
Structural adjustment. 14-15, 227
T
Tariff Reform Program (TRP)70, 73
Trade liberalization.19, 44, 73-75, 78-79, 110
U
Urban development 48-52, 56-58
Urbanization 187-199
Housing195
Slum dwellers188-189, 192, 199-202

Urban underclass191-192, 194, 203
INDex
299

Bello Et. Al - State of Fragmentation

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Bello Et. Al - State of Fragmentation

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State of Fragmentation

Focus on the Global South - Philippines

Friedrich-Ebert-Stiftung (FES) in the Philippines

Jenina Joy Chavez

Mary Joy Manahan

Evading the global financial crisis

Next happened super typhoon Yolanda, aka Haiyan, in November 2013,

No break with the past

Globalization: disintegration and integration

Privatizing government services

Globalizing the economy

The emergence of the Philippines as a major electronic chip exporter had

The Philippines: Failed State, Failed Economy?

The dynamics of the labor export phenomenon, however, cannot be

labor export network includes labor recruiters, government agencies and

Rape is the ever-present specter that haunts Filipino domestic workers

Local capital adjusts to globalization

Among the 20 richest Filipinos in 2012, 13 have significant holdings in diverse

The Philippine state: still an anti-developmental state?

The Philippines: Failed State, Failed Economy?

That such pieces of progressive legislation could be passed stemmed from a

central factor. Globalization of the Philippine economy had two aspects. On

The Philippines: Failed State, Failed Economy?

The Philippines: Failed State, Failed Economy?

Urban Property Development

seen in the rest of middle-income Southeast Asia. But an anemic recovery,

Demise of industries and traditional bases of accumulation

of GDP and employed 14 percent of the Filipino workforce. By 2010, the

Philippine capitalists flourish under new rules

export-oriented industrialization, the services sector dominated the Philippine

Back to the land

Urban Property Development and the Creative Destruction of Filipino Capitalism

Fuelling this spectacular growth were remittances from overseas Filipinos,

Non-residential construction from 2002 to 2010 reached 20.2 million square

parks and economic zones. In 2009, a total of 1,095.5 hectares in 12 economic

Urban property development restores capitalist class power

Megaworlds grew by nearly 45,000 percent from 2004 to 2011. By 2010,

Neoliberalism in the Philippines

none. Notwithstanding the Thatcherist There Is No Alternative mantra, three

Urban Property Development and the Creative Destruction of Filipino Capitalism

to exploit the unclear boundaries between patrimonial and public powers at

The creative destruction of Filipino capitalists

PhP39 billion for a 55% stake in

PhP624 million advanced for

PhP942 million advanced;

PhP3.151 billion; PhP15.6 billion in

NHA contributed the property,

Urban Property Development and the Creative Destruction of Filipino Capitalism

Revenues from retail rental

Henry Sy and family

Lucio Tan and family

Eton Properties Philippines, Inc.

Enrique Razon, Jr.

Bloomberry Resorts and Hotels, Inc.

John Gokongwei, Jr. and family

Robinsons Land Corp.

David Consunji and family

Jaime Zobel de Ayala and family

Ayala Land, Inc.

George Ty and family

Federal Land, Inc.

San Miguel Properties102

Tony Tan Caktiong and family

DoubleDragon Properties Corp.103