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The studies are by Kimberly Escario, Lemon L. Calulut, both Philippine natives who currently [December 2017] live in San Francisco; the studies present the Philippine government's economic policies as compared to the MIEPA list of policies as outlined above. The ratings herein are based on the following rating scale:
5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 2018. Used herein with permission]
To read a disclaimer about the analysis in this file, scroll to the bottom of the file.
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PHILIPPINES - LEMON L. CALULUT
Comparison of the Philippine's economic policies to MIEPA criteria as prepared by a native student of the Philippines Lemon L. Calulut studying in the US in December 2017. To read the study by Kimberly Escario, scroll through the first study.
RATING SUMMARY POLICY NUMBER RAW SCORE ADJUSTED SCORE POSSIBLE PERCENTAGE 1 5.0 15.0 15.0 100 % 2 4.0 12.0 15.0 80 3 1.0 3.0 15.0 20 4 2.0 6.0 15.0 40 5 4.0 12.0 15.0 80 6 4.0 12.0 15.0 80 7 3.0 9.0 15.0 60 8 4.0 12.0 15.0 80 9 1.0 3.0 15.0 20 10 4.0 12.0 15.0 80 11 4.5 13.5 15.0 90 12 5.0 10.0 10.0 100 13 1.0 2.0 10.0 20 14 5.0 10.0 10.0 100 15 4.0 8.0 10.0 80 16 1.0 2.0 10.0 20 17 3.5 7.0 10.0 70 18 1.0 2.0 10.0 20 19 1.0 2.0 10.0 20 20 4.3 8.6 10.0 86 21 3.0 6.0 10.0 60 22 3.8 7.6 10.0 76 23 2.5 5.0 10.0 50 24 1.0 2.0 10.0 20 25 1.0 2.0 10.0 20 26 1.0 2.0 10.0 20 27 2.0 4.0 10.0 40 28 2.0 4.0 10.0 40 29 2.0 2.0 5.0 40 30 2.0 2.0 5.0 40 31 4.3 4.3 5.0 43 32 4.5 4.5 5.0 90 33 3.5 3.5 5.0 70 34 3.0 3.0 5.0 60 TOTAL 97.9 206.0 365.0 56.4% ===== ====== ===== =====Return to MIEPA's Home Page
POLICY ANALYSIS BY LEMON L. CALULUT
1. Freedom from Internal Control: 5.0
The cultural and architectural affinity of the Philippines with the Western civilization defines its uniqueness from its neighboring countries as the only country with a distinct past of Spanish influence and spirit of American entrepreneurship. As a capitalist country, entrepreneurship is pursued and developed in the Philippines. The entrepreneurial motivation to innovate and improve their lives is what construes the Filipino citizens their effort to achieve and maintain autonomy. There may be a dearth of supply of money for the majority of the country, where status and wealth are controlled by a very limited number of families, but ingenuity, resourcefulness, and determination for entrepreneurial ventures give them hope to further their own economic development. There is no absence of entrepreneurial dynamism despite the challenging economic journey ahead in the Philippines. And there is no hurdle from political and legal institution preventing the Filipinos their access of movement.
2. Freedom of Speech: 4.0
Freedom of speech is enshrined in the 1987 Constitution of the Republic of the Philippines. The bastion of democracy is at the core of the Philippine Constitution as a response to the years of suppression and censorship under Marcos’ dictatorship from 1972 to 1986. The media, as an institution, utilizes the freedom of speech to become a vehicle of information much needed in the Philippines. Yet, the legal, political, and economic environment of the media have not been favorable but not as detrimental as to be silenced. The greatest threat to the freedom of speech is acquiescence and complacency. Fortunately, enough, the Philippines with its 100 million voices is a society of vigorous debate and contingent to criticism despite the adverse environment of which Philippine journalists are subject to harassments, threats, stalking, illegal arrest, and the incalculable harm of murder.
3. Effective Fair Police Force: 1.0
The anti-drug operations highly enforced by the Duterte administration generated a culture of impunity in the Philippines. On August 16, 2017, a 17-year old Kian Loyd Delos Santos was fatally shot by a police officer. This and many more incidences of police killings in an effort to curb drugs and street crime resulted, as of December 2017, to more than 4,000 killings since President Rodrigo Duterte assumed office in June 2016. Regarded as one of the most corrupt institutions in the Philippines, the Philippine National Police has abdicated its responsibility to protect and to defend the society against any perceived crimes ensuring a safer place to live, work, and do business. Its misguided war on drugs constituted a license to kill in the context of public safety and flagrantly violated human rights.
4. Private Property: 2.0
Article III of the 1987 Constitution of the Republic of the Philippines reserves the right of the citizens and residents of the Philippines for the protection of their real, personal, and intellectual property. However, while the provisions serve as a rule of law, the implementation of it and regulation of a unified system of laws are weak and ineffectual if not tepid. Inefficiency, low pay, intimidation, and complex procedures are pervasive in the overlapping and multiple agencies handling the administration of real, personal, and intellectual property. Although, the government has the right of eminent domain, which means that a real property can be acquired by the government essential to the infrastructure policy, the government must pay the owner a just compensation. The challenge, though, of the appropriation of just compensation is pronounced in the disagreement of computation by market value.
5. Commercial Banks: 4.0
The commercial banks and universal banks account for 49.6% share of the banking system in the Philippines. The inflow of deposits, from domestic savings and income outside the country through remittances, funded the lending activities as credit expansion increased in 2016. Remittances, accounting for 9.8% of the country’s GDP, also remained to be a big factor in the stability of cooperative and rural banks providing adequate credit facilities to farmers and merchants in the rural communities.
In the Philippines, universal bank has the same powers as a commercial bank; however, universal bank differs from its ability to be also an investment bank and the power to invest in non-allied enterprises. And together with thrift banks, cooperative and rural banks, the banking system in the Philippines continued to sustain a remarkable performance. The banking system in the Philippines has always been conservative. This was one of the reasons during the global recession of 2007 to 2009 emanating from the housing bubble in the US and Europe that the Philippine banking system was not highly exposed compared with the other developing and industrialized countries in Asia.
6. Communication Systems: 4.0
The private and business sectors are the forefront of digital and cloud computing in the Philippines, but the current Duterte administration with the aid of Department of Science Technology has continued the previous Aquino administration’s improvement of the country’s Information and Communications Technology (ICT) infrastructure focusing on internet for all, moving to cloud services, and egovernment. The government action to roll out new infrastructure both in the ground through laying new cables and in the airwaves to increase bandwidth also created more opportunities for consumers in the country. With 87.2% mobile phone penetration, the Philippines has been the fastest growing smartphone market in the Southeast Asian countries. There is a plethora of smartphone devices offered in the Philippines to meet the appetite of the growing demand for smartphone devices (Apple, Samsung, Huawei, Vivo, Oppo, and Cherry Mobile). More than the private and business sectors, specifically the telecom industry, the consumers stand to benefit as the citizens of the Philippines venture into the fusion of technologies that is blurring the lines between the digital and biological spheres.
Driven by economic aspirations of countries around the world, globalization is the interdependence and the deepening integration of the flow of financial and transactional markets. Underlying the globalization is the imperative of interconnection of communication systems. No other form of communication has been so prevalent and influencing as to the embedment of internet in the society. Communication systems such as the tv, print and radio were what formed in the Third Industrial Revolution. But like any other capitalist countries, the Philippines has waded into the digital revolution of the Fourth Industrial Revolution. Its effort may be pale in comparison to Japan and the US, however, a 43.5% internet penetration rate as of 2016 in the Philippines is integral to the vibrancy of its economic growth.
7. Transportation: 3.0
The archipelagic geography of the Philippines brings about a unique challenge to the efficiency and effectivity of the interconnectedness of transportation. The predominant mode of transportation by both the logistics industry and the public in the Philippines is the road transport. However, the bulk of inter-island transports of freights are by sea. Public transportation is also available by sea. Rail services are only available in the biggest island of Luzon. And the air transport is utilized to connect the islands of Luzon, Visayas, and Mindanao.
Public transportation by road may be readily accessible with jeepneys, motorized tricycle, habal-habal, pedicab, and calesa, but the Philippine road infrastructure is detrimental to the speed of movement. Infrastructure by rail and water has also been dismal. However, the infrastructure by air has significantly been modernized as the country touted its tourism sector. Recently, the current administration has approved $7.6 billion to overhaul its infrastructure in the hope of accelerating and boosting the transportation and logistics industries involving the movement of not only the public but also goods and services.
8. Education: 4.0
Education is considered crucial to the economic mobility in the Philippines. The strong disposition in all household to attain education is a meritorious achievement in the life of the Filipinos. This is evident with the literacy rate of 96.6% compared to its neighboring Southeast Asian countries (Indonesia-95.4%, Malaysia-94.6%, Thailand-94%, and Vietnam-94.5% to name a few). However, the quality of education varies depending on whether one has attended in public schools or in private schools. The education system assisted and supported by the government offers free education from kindergarten to high school. It is only very recent that the current administration has offered free education to all state universities and colleges. While, the private sectors offer an intensive and higher quality of education from K-12 to universities and colleges depending on one’s ability to pay.
In 2012, the Philippines has embarked on reforming its education from the basic education system of just 10 years to the school system of K-12. Both the past Aquino administration and the current Duterte administration have increased spending in education underlining the central tenet of economic development in the Philippines eventuate from investing in higher education. The quality of education received may vary on the basis of social hierarchy. Overall, it may not exceed the quality of education received from industrialized country like Japan but a few of private sectors can match a competitive quality of education.
9. Social Mobility: 1.0
For all its robust economic growth for the past five years, there is a relative paucity of relevant data of empirical evidences to portray a justification for social mobility in the Philippines. However, there are discernible variables that are apparent and latent determining the snail-paced degree of socioeconomic mobility in the Philippines. The government’s penchant to nepotism and political patronage is an apparent variable that has been entrenched in the society making it as an acceptable norm vis-à-vis an acceptable degree of corruption. Rather than disincentivizing the perpetrators of nepotism and political patronage, some of the general public are accustomed to constant political rallies but not utilize their most important tool to defeat the culture of nepotism and political patronage: their votes.
There is a strong incentive to be educated in the Philippines, however the unmistakable social stratification exclusively centered among but a few who has wealth, influence, and status is a latent variable affecting the direction of social mobility. The middle class and the lower class remain in their social hierarchy. Although, household income increased in all of the social hierarchy in the past five years, only the upper class has continued to amass wealth; social mobility and percentage of wealth among the middle class and the lower class have been negligible. The culture of nepotism, political patronage, and biased meritocracy are significant barriers to social mobility in the Philippines in spite of poverty reduction from 25.2% in 2012 to 21.6% in 2015.
10. Freedom from Outside Control: 4.0
The 1987 Constitution of the Republic of the Philippines is the fundamental law of the land and it is vested with protecting its citizens and residents. Conversely, the citizens and residents are subject to the country’s rule of law. There are no outside control affecting the daily routine of the country’s citizens and residents; no foreign country, nation, or state can affect and impose on the citizens and residents of the Philippines. Recently, however, there is elevated activity of terrorism, not excluding the threat of kidnappings, in the Southern part of the Philippines arising from the global terrorist acts of ISIS and ISIL. The Philippine government responded by increasing its national level of security and heightened its alert advisory.
11. Protection of Domestic Enterprises: 4.5
In the last decade, the Philippines emerged as a top-rated destination of Information Technology and Business Process Outsourcing industry (IT-BPO). Although India is at present the leading country in IT-BPO industry globally, the Philippines has significantly moved up the rank and has continually progressed driven by tax incentives, low-cost labor, and young educated Filipino workforce that has specialized skills, English language skills, and cultural affinity with the U.S. Financial services, back office services, and voice-based customer support are the dominant sectors of IT-BPO industry that are surfacing as a major source of employment in terms of contribution to Philippine economic growth.
The prior administration, led by President Benigno Aquino III, provisioned the blueprint for future BPO developments with the considerable support from Department of Trade and Industry, Department of Science and Technology, and Department of Information and Communications Technology. The current administration of President Rodrigo Duterte further provided increased Government support to IT-BPO industry highlighting its growth as a priority in the Philippine Development Plan 2017-2022 (medium-term economic blueprint from the Duterte administration’s 10-point socioeconomic agenda). Despite the Philippines incurring a trade deficit in 2016, the business process outsourcing industry accounted for 9% of the country’s GDP.
12. Foreign Currency Transactions: 5.0
The Philippine peso or piso is the only government mandated currency accepted in all and any business operations. It is advisable to exchange any foreign currency to the local currency for transactions. Although a number of establishments accept U.S. dollar and Euro, nearly all business establishments deal only in Philippine peso. Foreign credit cards are accepted in most business transactions in Metro Manila and all major Philippine cities.
13. Border Control: 1.0
The border control for immigration and customs in the Philippines is ineffective and inefficient. Primarily, the archipelagic nature of its geography makes it difficult for the Philippines to control its border. The porous borders provide criminals, smugglers, and terrorists to constantly undermine the rule of law. The Marawi siege that recently happened earlier this year was a glaring example of the ineffectiveness of the Philippine border control and its Bureau of Immigration.
Lack of funds, burdensome customs procedures, and corruption render the inefficiency of the Bureau of Customs. It is the agency widely known to be the most corrupt in the Philippines. Unfortunately, it raises costs and risks of doing business in the Philippines. The systemic corruption in the Bureau of Customs also deters international investments and stifles economic growth and development.
14. Currency: 5.0
The official currency of the Philippines is the Philippine peso or piso (currency code: PHP). The colorful banknotes come in denomination of 20, 50, 100, 200, 500, and 1,000. Coins come in 1 cent, 5 cents, 10 cents, 25 cents, 1, 5, and 10. While U.S. Dollars and Euros are accepted in some tourist areas, hotels, and airport, the exchange rate applied is likely unfavorable.
15. Cultural, Language Homogeneity: 4.0
On May 23, 2017, the Philippine government forces clashed with militants affiliated with ISIL (Islamic State of Iraq and the Levant) in Marawi City situated on the southern island of Mindanao. The urban battle in Marawi officially ended on October 23, 2017 after the deaths of the militant leaders, Omar Maute and Isnilon Hapilon. This conflict is a culmination of the frustration of the Muslim minority from the Philippine government’s failure to pass the Bangsomoro Basic Law that would have provided a structure of Muslim identity in a predominantly Christian nation. Despite this unfortunate event, the Philippines is a blend of diversity and homogeneity resulting from (1) the early descent of the Malays (like Indonesian and Malaysian), Chinese, and Arabs; (2) three centuries of Spanish influence; and (3) nearly fifty years of American rule. The Spanish influence of Catholic churches centered in family and American rule establishment of education system, however, left an indelible imprint on the Philippines contributing to the assimilation of more than 50 ethnic groups with 175 linguistic differences. This created a unique cultural milieu emblematic of socioeconomic progress and the eventual emergence of the sense of Filipino character and personality in the political and cultural unity.
16. Political Effectiveness: 1.0
The vibrancy of democracy in the Philippines is imperiled by three problematic factors that are entrenched in the political realm of today. The first factor is political dynasty that should have been curtailed by the introduction of term limits in the 1987 Philippine Constitution. Yet, the term limits set by the constitution has a loophole allowing the relatives and family members to replace the incumbent and in turn run for a different office. Political patronage is another factor that allocates rewards to donors and clients in return for a provision of money during electoral campaigning. Last and the most recent factor is the culture of impunity. The election of Rodrigo Duterte to the highest office in the Philippines gave vigilantes the license to act against lawful process, knowing a degree of exemption from punishment, in pursuit of a compliant society. This is an obscene assault to civility and blind justice. Political dynasty, political patronage, and culture of impunity are tangible constraints to the development of and expansion of the Philippine economy creating ineffectiveness to solve even the basic problems in times of natural disasters like typhoons, which more often than not happen on seasonal basis. These three factors are barriers to the passage of inclusive economic reforms and the strengthening of social reforms that are intensely needed in the rural areas of the Philippines.
17. Institutional Stability: 3.5
The Philippines adopted a democratic form of government, with a system of checks and balances of the executive, the legislative, and the judiciary, after achieving independence from the United States in 1946. Since then, there have been 12 presidencies punctuated by martial law in 1970s, the first People Power in 1980s, and the second People Power in early 2000s. Democracy is fairly young in the Philippines making it difficult to quantitatively assess the economic performance of the country in the face of intermittent political stability. However, in the last 15 years, the prevailing design of political institution in the Philippines has been relatively stable providing an opportunity for economic institutions to thrive.
It is noteworthy, though, as a result of the Spanish colonial ambition to spread and to introduce Catholicism in the Philippines during the 300-years of Spanish era, the majority of the academic institutions in the Philippines are religiously affiliated that weathered political upheavals, war, and economic difficulty.
18. Honest Government: 1.0
The executive and legislative branch of the Philippine government abound in graft and corruption. Although the Duterte administration ran its campaign in May 2016 general elections to fight against the culture of graft and corruption that has been pervasive and has been the longstanding problems in the country, his administration presently allocates their efforts instead to fight drug problem in the Philippines. Irregularities, inconsistent implementation of legislation, lack of transparency, bribery, and favoritism foster the culture of graft and corruption that characterizes the Philippine government and society at all levels. The effect of culture of graft and corruption severely restricts the efficiency of business operations in the Philippines; dropping the Philippines six notches in the 2016 Corruption Perceptions Index published by the Transparency International. This is a regress from the previous administration where President Aquino combated the culture of graft and corruption as critical to his platform on good governance to engender inclusive economic growth and poverty reduction.
19. Common Laws: 1.0
As it is in any developing countries, the Philippines have judicial system that risks and affects business behavior despite the strides of economic growth. Corruption involving irregular payments for favorable judicial decisions, unmitigated frequency of the rich and powerful influencing proceedings in civil and criminal cases, nepotism undermining procedural fairness, longevity of settling disputes, and slow litigation process marks uncertainty and inefficiency in the Philippine judicial system creating disincentives for foreign investments. Furthermore, the perceived corruption festers due to the lack of funds in the judiciary and low salaries for judicial officials. These realities make it necessary for the judicial system in the Philippines to implement JUSTICE (Judicial Strengthening to Improve Court Effectiveness) Project in coordination with USAID (US Agency for International Development). It will, however, take time for any determinable results to identify any contributing economic growth.
20. Central Bank: 4.3
In June 1993, the New Central Bank Act (Republic Act 7653) was signed into law and created to what is now the Bangko Sentral ng Pilipinas (BSP)—Central Bank of the Philippines. BSP was conceived to be independent central bank that maintains monetary policy in the areas of money, banking, and credit; and, that supervises over commercial banks and quasi-banking institutions (bank related financial services, i.e. investment, risk pooling, contractual savings, and market brokering). The Philippine banking system under the BSP have a strong capitalization and have been capable of handling unexpected shocks to the economy in more than a decade, which is an indication of its independence from political intervention. BSP, moreover, has continually stayed away from partisan politics, charging rather its direct impact on the value of money and on the availability of affordable goods as well as ensuring the health of financial system in the Philippines. The absence of the perception for any conflict of interest by any of the seven members of the monetary board (which exercises the functions and powers of the BSP), though, does not preclude any willful interference of the Philippine government.
21. Domestic Budget Management: 3.0
In the past five years according to the International Monetary Fund, the Philippine expenditure (2012-$34 billion; 2013-$36 billion; 2014-$38 billion; 2015-$43 billion; 2016-49 billion) has well exceeded its total revenue (2012-$30 billion; 2013-$33 billion; 2014-$37 billion; 2015 $40 billion; 2016-$43 billion). The national budget in the Philippines has averaged at – 1.52 % of GDP with an inflation rate average of 2.7% from 2012 to 2016 (2012-3.2%; 2013-2.9%; 2014-4.2%; 2015-1.4%; 2016-1.8%). The Philippine government budget deficit for the last couple of years have been attributed to a weak revenue collection due to tax evasion, loopholes in tax laws, and liberal granting of tax incentives to foreign investors. However, the government’s fiscal conservative management has contributed to a focus in controlling the budget deficit and high growth rates resulting to a lower ratio of government debt to GDP. A caveat, though, to the definitive total expenditure and total revenue figures for 2015 and 2016 in lieu of existing and continuing economic research and study.
22. Government Debt: 3.8
The downward trend of the Philippine debt-to-GDP ratio in the last five years is indicative of sustainable debt management reflecting lower deficit and steady economic growth. Its most recent recorded (2016) debt-to-GDP ratio was at 42.1% to the country’s GDP of $304.90 billion; in 2012, debt-to-GDP ratio stood at 51.5% to a GDP of $250.10 billion. A progression of lower ratio is perceived as more favorable from credit rating agencies (Fitch Group, Moody’s, and Standard & Poor’s). It measures the payment capacity of the Philippine government as the country generates more resources than debts. As of June 2017, the Philippine external debt stands at $44 billion and the Philippine internal debt is at $81 billion.
23. Economic Statistics: 2.5
There is no independent organization that serves as a nexus of information whereby business can quantify the reliability and authenticity of statistics readily available in determining business opportunities. There is, however, an agency created in 2013 that merged agencies in the Philippine government: the (1) National Statistic Office; (2) National Statistical Coordination Board; (3) Bureau of Agricultural Statistics; and, (4) Bureau of Labor and Employment Statistics. The Philippine Statistics Authority (PSA) is the agency responsible “for the implementation of the objectives and provisions of Republic Act 10625” (Philippine Statistical Act of 2013). Its function covers the economic, social, multi-sectoral administrative system in conducting surveys and censuses. Since its creation, the PSA coordinates with the United Nations, World Health Organization, Asian Development Bank, EUROSTAT, and the ASEAN in an effort to continually improve censuses and surveys that provide accurate quality as well as verifiable quantity of statistics. This is the considerable factor that enables businesses and firms to rely and use statistics provided by PSA. Nevertheless, there is a prevailing concern regarding the tendency to receive skewed statistics due to the agency being under the auspices of the Philippine government. The statistical information from the Philippine Statistics Authority, then, must be taken with a sliver of doubt and must be validated from extensive research.
24. Protection Public Health and Safety: 1.0
The information gathered to demonstrate the response of the Philippines in their ability to provide the necessary public health, indicative of how far they have progressed in the past five years, is constrained to the most recent verifiable statistics from World Health Organization. Accordingly, the life expectancy at birth in the Philippines has progressed incrementally to 69 years in 2015, 10 years below that of the United States, which has a life expectancy of 79 years. While the infant mortality rate hovered at 25 per 1,000 live births five years ago, the Philippines has improved to 22 cases per 1,000 live births in 2016. This is not comparable to the United states 6 cases per 1,000 live births in 2016. The Philippines have a long way to go in augmenting their ability to provide public health essential to the country’s growth in wealth. This is true to their dismal failure to advance the preventive incidence of tuberculosis. The Philippines have stagnated to 322 cases per 100,000 people for nearly a decade. As oppose to the United States 3 incidences of tuberculosis per 100,000 people.
25. High Wage Policies: 1.0
Wages in the Philippines vary from Philippine Peso 243.00 per day to Philippine Peso 512.00 per day, depending on the sector and the location. The quality of life, due to the diminishing capacity of wage to buy goods and services that has decelerated since 2008, has significant and adverse impact on the labor force and their families’ struggle to afford basic necessities as the value of their daily pay tumbled to a paltry 67 centavos in 2016 (2008 – 90 centavos, 2009 – 86 centavos, 2010 – 83 centavos, 2011 – 79 centavos, 2012 – 77 centavos, 2013 – 75 centavos, 2014 – 72 centavos, and 2015 – 71 centavos). Economic growth has indeed accelerated in the past 5 years and the unemployment rate has moderately been reduced to 5.5% in 2016; but, poverty continues to afflict more than a fifth of the population. Furthermore, the severity of poverty affects 60% of the poor in the rural farm and non-farm incomes.
26. Environmental Protection: 1.0
In 2015, 195 countries signed on the Paris Climate Accord; the Philippines is a signatory of the agreement to hold the global temperature from rising above 1.5 degrees Celsius. Global warming, as it affects the entire world, has a tremendous impact on the natural living and economic growth of the Philippines. The environmental issues ranging from air pollution, waste disposal, and the depletion of natural resources are at the top of the long list wreaking havoc in the ecological balance of the country. These hurdles are slowing down the progress and economic advancement that has touted the Philippines with 6.9% GDP growth. Unfortunately, in the last 15 years, there have been pushbacks from self-vested interests resulting to the inaction of government regulations and/or absence of political will to enforce laws and to enact laws in protecting the environment. There are, however, non-profit organizations that have kept environmental protection afloat in the Philippines; Save the Philippine Seas, Greenpeace Philippines, Marine Wildlife Watch Philippines, Earth Island Institute, Haribon Foundation, among others.
27. Strong Army: 2.0
The anemic investment of military spending in the Philippines has dramatically changed in the last five years. Although, it still lags behind the Southeast Asian average of over 2 percent of the GDP, the Philippines 1.28% military expenditure of its GDP articulates the vigorous spending, relative to the past, in the modernization of the Armed Forces of the Philippines. This covers the national security ranging from the challenges of insurgencies in Mindanao, natural disasters, and the brewing unresolved territorial and sovereignty issues with neighboring states. The latter being the challenge to the freedom of movement in the international waters affecting $5.3 trillion worth of goods in the South China Sea (West Philippine Sea), which is about 30% of global maritime trade. The extent, however, to which the long-term goal of the Philippines can be affected in the pursuit of national security is limited only to the short-term goal of minimum credible deterrence.
28. Foreign Trade Impact: 2.0
The foreign trade deficit stands at 46.7% of the GDP as of 2016. Its trade deficit is due to the high demand in imports of raw materials and intermediate goods; evident in the semiconductor and computer industries with electronics, machinery, fuel, and vehicles as the top four product category imported. On the other hand, the Philippine export trade in goods ranged from electronics, machinery, wood, and medical apparatus. In addition to that, the Philippines have a distinctive feature of export services in the rapid expansion of outsourcing industry and increase in tourism sector. And despite the foreign trade deficit, it inversely adds up to the economic growth of the Philippines. This, unfortunately, does not help achieve the country to be more inclusive in its economic growth; the overall skilled human capital still exceeds the available domestic jobs.
29. Management of Foreign Currency Budget: 2.0
In the past five years, the Philippines has steady annual GDP growth ranging from 6% to 7%. Driven by broad-based expansion in domestic demand, the Philippines GDP grew from 6.1% (2015) to 6.9% (2016); reaching an all-time high of $304.90 billion in GDP. This echoes a sound macroeconomic environment relative to the GDP growth of other Southeast Asian countries. The Philippines imported $85.9 billion worth of goods and services, up by 22.5% from 2015 ($70.2 billion); while, the country exported $56.3 billion worth of goods and services, down by 4% from 2015 ($58.6 billion). A trend that is largely due to the import of capital equipment and intermediate goods of production resulting in the increase of trade deficit from its 2015 statistics. As of 2016, the Philippine trade deficit of $29.6 billion in net import of goods and services accounts for 9.7% of the GDP.
30. Layers of Collective Action: 4.3
The inefficiency of governance and persistence of corruption intensifies the call for political, fiscal, and institutional regionalization or decentralization in the Philippines. The archipelagic composition of the Philippines ferments the imperative of decentralizing the perception of a centralized Metro Manila, where the problems besetting in the regions outside of it become secondary to nation’s priority. Nonetheless, the gradual and slow movement in enforcing the Philippine’s Local Government Code of 1991 (RA 7160) has a positive effect on the political, economic, social, and cultural aspect in the country for the past 10 years. One example of the visible changes in the institutional decentralization is the streamlined process to acquire passports in the Department of Foreign Affairs; no longer does a person required to go to Manila to get a passport, but, she or he can locate the nearest office in their region. More than creating efficiency in the bureaucracy, the positive byproduct articulates an increased participation of the community and incentivizes local development that creates a national accountability.
31. Pro-business Climate: 4.5
The progressive shift of the Philippines from agricultural-based economy to service-based economy is palpable to the country’s consumption behavior that hinges on the growing demand for domestic production. The steady and increasing demand of household consumption is a result of vibrant sources of income: remittances ($26.9 billion) and business process outsourcing ($25 billion), accounting for 9.8% and 9% of country’s GDP respectively. It entails an investment climate that is attractive for business. It should also be noted that, though it is not the ultimate contributing factor for continued economic growth and overall investment climate, the upgrade of the Philippines’ sovereign ratings from Fitch Group, Moody’s, and Standard & Poor’s four years ago helped influenced the business environment thriving in the country.
32. Government Enterprises: 2.5
Government-Owned and Controlled Corporation is the agency which serves as a “central advisory, monitoring and oversight body, with authority to formulate, implement and coordinate policies.” It oversees over 200 government-owned enterprises that handles different sectors (social services, support services, and land & water resources) and various industries (housing, power, infrastructure, transport, communication, and banking). Although, GOCCs are required to remit 50% of their annual earnings back to the government, which in turn contributes to the country’s national development funding the military modernization as well as the socio-economic programs particularly on health, education, agriculture and infrastructure, the government-owned enterprises are still subject to political interference resulting to poor financial performance, weak governance structures, and unauthorized allowances.
33. International Security Agreements: 3.0
The geographic location of the Philippines has a tremendous repercussion to the peace and security in the pacific area. This is why more than ever, the Philippine Treaty signed by both the United and States and the Philippines, is needed at a time where there seems to have a transition in the world order specifically the dramatic change in the geopolitical landscape of Asia Pacific. However, the current administration has more than once threatened to pull back the bilateral security agreement for political stance. This ruffles business confidence that may affect the significant gains the Philippines have sustained for the past five years. And, with the relentless assertiveness of China in the South-East Asia, it necessitates to secure defense agreement among members of ASEAN. ASEAN was formed exactly 50 years ago with two driving force: (1) to make economic gains through better trade among member states, and (2) to form an alliance against the advancement of communism in South East Asian region. It is high time to recalibrate strategic issues and economic interests if the Philippines wants to remain competitive.
34. Protection of Domestic Enterprises from Government Mandated Costs: 1.5
Persistent inefficiencies continue to pester Philippine competitiveness in ownership, start-up, and business operations. According to the world economic forum, from its executive opinion survey 2017, inefficient government bureaucracy is the number one problematic factor for doing business in the Philippines. This reflects the massive 16 procedures to navigate the completion of business start-up. It is an average of 36 days for a foreign investor to setup a corporate entity. While local and small entrepreneurs may take four procedures at a minimum to complete registering basic requirements for sole proprietorship, it doesn’t account the tall hurdle of a sufficient capital to cover all pre-operating expenses.
PHILIPPINES - KIMBERLY ESCARIO
Comparison of the Philippine's economic policies to MIEPA criteria as prepared by a native student of the Philippines Kimberly Escario studying in the US in December 2017.
RATING SUMMARY POLICY NUMBER RAW SCORE ADJUSTED SCORE POSSIBLE PERCENTAGE 1 5.0 15.0 15.0 100 % 2 4.5 13.5 15.0 90 3 1.0 3.0 15.0 20 4 1.9 5.7 15.0 38 5 4.3 12.9 15.0 86 6 4.0 12.0 15.0 80 7 3.2 9.6 15.0 64 8 2.6 7.8 15.0 52 9 2.8 8.4 15.0 56 10 4.8 10.8 15.0 96 11 2.1 6.3 15.0 42 12 4.7 9.4 10.0 94 13 1.4 5.2 10.0 52 14 4.6 13.8 10.0 92 15 4.3 12.9 10.0 86 16 2.2 4.4 10.0 44 17 4.7 9.4 10.0 94 18 1.0 2.0 10.0 20 19 1.0 2.0 10.0 20 20 1.8 3.6 10.0 36 21 4.3 8.6 10.0 86 22 3.2 6.4 10.0 64 23 4.7 9.4 10.0 94 24 1.8 3.6 10.0 36 25 1.7 3.4 10.0 34 26 3.5 7.0 10.0 70 27 2.2 4.4 10.0 44 28 1.9 3.8 10.0 38 29 2.4 2.4 5.0 48 30 4.7 4.7 5.0 94 31 5.0 5.0 5.0 100 32 2.3 2.3 5.0 46 33 4.4 4.4 5.0 88 34 4.0 4.0 5.0 80 TOTAL 108.0 237.1 365.0 65.0% ===== ====== ===== =====Return to MIEPA's Home Page
POLICY ANALYSIS BY KIMBERLY ESCARIO
1. Freedom from Internal Control 5.0
The Philippines is a democratic country, where the citizens utilize their power directly or by electing representatives among themselves to form a governing body. Before the official 1987 Constitution, the temporary constitution called “ Freedom Constitution” was intended to ensure the freedom of the people and the return of democratic rule. This then became an essential part of writing the official constitution. In the 1987 Constitution, it states that citizens are protected from the control of the government, giving Filipinos the right and freedom to move freely inside the Philippines. This freedom provides opportunities and maximizes those opportunities to generate enterprises and wealth for the country, which helps create jobs for Filipinos.
2. Freedom of Speech 4.5
According to the 1987 Philippine Constitution Section 4 Article ?, it states that “there are no laws shall be passed that abridges the freedom of speech, press, expression and public assembly”. However there are laws that limit people’s freedom, such as libel or slander to dishonor or discredit another person. Nonetheless, people still have the right to express themselves freely. A survey conducted on March 25-28 2017 showed that 58% of the 1200 adults responded that they can freely express themselves without the fear of the government, while only 21% disagreed.
Compared to previous years, the Philippines net freedom of speech rating has increased and gotten stronger. Citizens can freely express themselves, ideas and their beliefs without having to fear for their life.This then helps create jobs due to the flow of ideas.
3. Effective, Fair Police Force 1.0
The Philippine police force is administered and controlled by the National Police Commission and is part of the Department of the Interior and Local Government. The police force has had a long history of corruption and is considered one of the most corrupt institutions. There are many times where the police force has been under investigation with the most recent event being that two undercover police officers killed a female anti-crime activist in October 2017.
The Philippine National Police or PNP has a reputation of treating Filipinos differently according to their social status. They treat rich people better than they treat poor people. They only do what benefits them instead of enforcing the law and maintaining the peace in the community, they break the law for certain people in exchange for money or favors.
4. Private Property 1.9
When it comes to protection of private property, the Philippine laws are weak and not heavily enforced. Even though under the Philippine Constitution, people are guaranteed property rights, the system is inefficient and inadequate. Multiple agencies are involved in property administration, which creates an overlap. Also, record management lacks funding and well-trained personnel. Corruption is one of the underlying reasons as to why the laws that protect private properties are weak. Corruption is prevalent in the administration and the court system is slow when it comes to resolving these disputes.
The system that protects people's property is inadequate due to enforcement and corruption. Most of the property infringements are not considered major crimes, so courts do not pay much attention and most enforcement actions are often not followed by successful prosecution.
5. Commercial Banks 4.3
The banking system in the Philippines supports business operations by lending but they also limit their transactions in non-business activities. The banking system has various types of banks from large universal banks to cooperative banks. As of 2017, there are 36 universal and commercial banks, 57 thrift banks, 492 rural banks, 40 credit unions and 6,267 non-banks with banking functions. All these banks are licensed with Bangko Sentral ng Pilipinas. Universal, commercial and thrift banks have all the same basic functions, some having more than others but the only kind of bank that is different from most banks are the rural banks. Rural banks try to promote and expand the rural economy. They provide basic financial services and help farmers through the stages of production, from buying and marketing.
6. Communication System 4.0
Telecommunications in the Philippines are well developed. As of 2015, The Department of Science and Technology’s Information and Communications Technology launched the “ Free Wifi Internet Access in Public Places”. It gives internet access to public schools, universities, public libraries. Hospitals, government offices and airports/seaports. The Philippine Long Distance Telephone Company (PLDT) and Globe Telecom are the two leading telecommunication carriers in the country. PLDT holds about 70% of the mobile markets and Globe Telecom holds about 30%. In 2011, there have been 6.8 million telephone lines and in 2012 103 million users. There are about 952 radio stations, 369 AM and 583 FM and over 1500 TV networks. In addition, since rural areas lack broadband infrastructure, TV white space spectrum wireless technology will be used for last-mile connectivity. Also, social media has been gaining popularity with 48 million users.
The Philippine Telecommunication system is always trying to improve and grow the industry. They are trying to make it accessible for everyone to communicate with each other.
7. Transportation 3.2
Transportation in the Philippines is relatively underdeveloped, mostly in rural areas. The main reason why is because the government underinvests in the nation's infrastructure. However, there are many different ways of transportation, especially in the urban areas. There are buses, jeepneys, tricycles, taxis, cars, rideshares and motorcycles- which are common in rural areas. The Philippines has three main railway companies that control the trains; Manila Light Rail Transit System, Manila Metro Rail Transit System, which only operates in Metro Manila and Philippine National Railways which only operates in Luzon, the main island in the Philippines. Philippine National Railways have been trying to expand and link key cities together but has been postponed due to lack of funding. Since the Philippines is made up of islands, travel through air and water is necessary. There are 12 international airports and has more than 20 major and minor domestic airports as well as the entire ferry network that has 17 operational stations that connects all the islands.
8. Education 2.6
Department of Education controls public schools and nominally regulates private schools and it also enforces the K-12 curriculum. Commission on Higher Education and Technical Education and Skills Development Authority are in charge of higher education. In the recent years, the Philippine education system has deteriorated. Remote and poverty-stricken regions had been severely affected compared to urban areas. Large cities like Manila, primary school comprehension rate is nearly 100% while in rural areas only have 30% or less. Students in urban areas typically score higher than students in rural areas. The main reason why the education system has deteriorated in recent years is due to lack of funding. The government found it difficult to fully fund the entire educational system and most of the funding goes to schools in urban areas. On average the Philippines spends about 2-3% of its GDP on education, while the US spends about 5-5.5%. The UN recommends that governments should spend about 6% of its GDP towards education. In 2017, 53.5% of students will be attending preschool to junior high, 19% will be going to college and 18.7 million will be attending higher education.
In addition to the deteriorating educational system, a lot of Filipinos are stuck in poverty which leads children to start working at a young age rather than go to school so that they could help provide for the family.
9. Social Mobility 2.8
Inequality in the Philippines is significant because income distribution is skewed. In 2014, about the top 10% owned about 70% of the country’s wealth while 90% only owned 30%. Income distribution is not the only thing that is uneven but also the distribution of opportunities. Rich people have more opportunities available than people that are poor. Being rich gets you jobs and opportunities without having to work hard. Although it is possible for poor Filipinos to improve their lives by studying hard and working hard, it is easier for people that are rich to get to where they want in life. The Philippines ranks low compared to other Asian countries in its employed worker- to- GDP ratio which indicates that the Philippines has productivity issues and suggests that labor and capital are not used efficiently.
The Philippines needs to improve and invest in human development and research and development to give all Filipinos the same opportunities and chances of getting hired no matter their social status. Poor Filipinos have a hard time making their way up the status ladder because they do not get the tools they need to succeed and get a good job.
10. Freedom from Outside Control 4.8
The Philippine independence was declared on June 12, 1898. The Philippine government has jurisdiction over the archipelago, islands and the waters surrounding it. Under the Constitution, citizens in the Philippine jurisdiction are protected and only subjected to the laws of the Philippines. In addition, The Armed Forces of the Philippines was established to protect its people and its land, its goal is to secure the sovereignty of the state. The Philippine pursues an independent foreign policy.In its relations with other countries, they try to maintain national sovereignty, territorial integrity, national interest and the right to self-determination.
The Philippines is a free country and has been for more than a century. They established their own laws and only follow their own. Citizens are only overseen by the laws of the land and are free from the control of any agency of any other country.
11. Protection of Domestic Enterprise 2.1
Ever since 2015, the Philippines has been in a huge trade deficit but recently the trade deficit has been getting smaller. From September of 2016 to September 2017, Exports rose by 4.3%. Exports of gold, coconut oil, machinery, metal components, manufactured goods and electronic products have increased. In addition, imports only increased by 1.7 %. Purchases from its major trading partners, US, China, Japan, ASEAN countries, and Thailand all fell but purchases from Korea has increased.
The Philippines are trying to increase manufacturing productivity by linking and integrating agriculture and manufacturing. Also imported manufactured goods that compete with domestically produced goods receive higher tariffs than goods that do not have a domestic competition. This tries to encourage these industries to grow and expand since they do not get taxed that high. According to the Philippine Tariff Commission, the simple average bound tariff is 23.5% and the simple average applied tariff is 7.1%. Recently the Philippine government decided to lift the restriction and limit of foreign ownership of enterprises. It used to be that only 40% of Philippine businesses could be owned by foreigners and 60% of Philippine businesses should be owned by Filipino citizens but now more than 40% of Philippine businesses are owned by foreigners.
12.Foreign Currency Transactions 4.7
Most business transactions in the Philippine are conducted using the national currency, Peso. Tourists and businessmen would have to convert their money into peso before you enter and conduct business in the Philippines. There are not a lot of money changers, so it is advised to convert other currencies into peso before entering. Business owners in the Philippines do not spend too much time converting currencies, this then creates a single currency and helps the government conduct fiscal and monetary policy.
13. Border Control 1.4
The Bureau of Customs and The Bureau of Immigration controls the Philippine border. The Bureau of Immigration is responsible for regulating the entry, stay and departure of foreign nationals in the country. The Bureau of Customs’ role is to regulate and facilitate trade. They also assess and collect import duties and tax and combat illegal trade and other forms of fraud. Unfortunately, it has been said that The Bureau of Customs is corrupt and previously have taken bribes from drug smugglers.
Since Rodrigo Duterte has been elected president, he has been trying to improve border security and try to clean Bureau of Customs and replace the corrupt officials. Duterte's goal is to reduce and fight against terrorism and illegal drugs. The Philippines has joined Indonesia and Malaysia in a joint border patrol to help monitor the porous coastal areas of the sea. They proposed a stricter inspection in all of the country’s cross-border stations to reduce the number of foreign terrorists and illegal drugs getting in. In which has reduced the number of incidents of kidnapping and piracy. Before these rules were enforced, over 200,000 boat trips from Malaysia, Indonesia and Philippines do not get checked by authority and drugs could easily be smuggled in.
14. Currency 4.6
The Philippine Peso is the official currency of the Philippines. A peso is subdivided into 100 centavos (cents). The Peso was created in 1852 to replace the Spanish dollar. Now the peso, coins, and banknotes are created at the Security Plant Complex of the Bangko Sentral ng Pilipinas. The Philippine peso is the currency widely used, however, in airports and some tourist areas, people may be able to pay for goods and services using the US dollar and Euros. Other than that the Philippines uses the peso for transactions, which then encourages commerce within the country.
15. Cultural, Language Homogeneity 4.3
Filipinos are a homogeneous population with the exception of tribes spread all the islands and Muslim minorities in Mindanao, Sulu and some parts of Palawan. The Philippine culture is strongly Euro-American. The Filipino social view is highly affected and shaped by the educational system established the US. It helped create a sense of unity. Filipinos are also united by the language they speak. They mostly speak Tagalog (Filipino) but the educational system enforces schools to teach students English. About 63.7% of Filipinos know how to speak English. In addition, Filipinos are hugely impacted by their religious beliefs. 86% of the population is Roman-Catholic, 6% belongs to various nationalized Christian cult and 2% belong to more than 100 Protestant denominations.
Filipinos have a sense of uniformity. Most of their beliefs are steered a certain way and the teachings of public and private schools are all based on the same materials. Even though a small percentage of Filipinos have different views from the majority, people still respect their views.
16. Political Effectiveness 2.2
The Philippines have a national government and local government units and they both are separated in executive, legislative and judicial branches. The executive branch for local government units is composed by the governor, vice governor, mayor, vice mayor and barangay chairman. When citizens in a certain region have issues that concern the whole community, they can go up to their local government officials to get their issues resolved. But, in order for the issues to be resolved, the local government has to have funds. Since the majority of the population suffer from poverty and officials are highly corrupt, most issues do not get resolved. Also, the Philippines are prone to natural disasters such as typhoons and tropical storms, so rural areas and some parts of the city are susceptible to flooding, which the government usually tries to fix but evidently leaves them. The Philippines also suffers from threats of kidnapping from an ongoing terrorist activity.
The government recognizes these issues when they appear and try to resolve these issues, but there are some issues that government is having a hard time trying to resolve. Some issues can be resolved but it would cost a lot such as better irrigation system in areas that are heavily affected by typhoons and storms.
17. Institutional Stability 4.7
Philippine institutions remained stable for a really long time. Institutions like Bank of the Philippine Island was established in 1851 and is still in business to this day. Well-known educational institutions like University of the Philippines, University of Santo Tomas and Ateneo de Manila University was established more than a century ago. These schools are perceived as an equivalent of an Ivy League, even now students do their best just so they could attend these schools. Also, businesses established years ago such as Meralco, Philippine Airline, and San Miguel Corporation are still stable and had a huge impact on the economy.
18. Honest Government 1.0
According to the Corruption Perception Index of Transparency International, in 2016, the Philippines was ranked 101 out of 176 with a CPI score of 35. A huge improvement from 2014 when the CPI score was 38. The CPI score measures the severity of corruption in the country’s public sector, on a scale from 0-100 where 0 is very corrupt and 100 is very clean. Even though there has been a huge improvement, the Philippines is still highly corrupt and one of the reasons is that there is a huge percentage of inequality. People are easily persuaded with money also the legal anti-corruption framework is not strictly enforced. Officials rarely get prosecuted and convicted of corruption crimes. In addition, the national police force is one of the most corrupt systems in the Philippines. There are reports stating that police and military being involved in corruption and extortion. Most business firms have hired private security because the police are not reliable. Also in 2016, about 50% business executives have reported being asked for a bribe by someone in the government.
Corruption is tremendous in the Philippines. Business cannot rely on the government to be fair, which leads to a business losing money, which then reduces new job creation. A corrupt government hinders the growth of the Philippine economy.
19. Common Laws 1.0
The Philippine Judicial system suffers from corruption and inefficiency because judicial institutions are easily bought.This then reduces and weakens the provision of the process and equal justice. Rich people hire skilled lawyers that can get most of their charges dropped by overflowing the system by documents, motions, and counter-motions, then later file for dismissal of the case because their clients were denied the right for a speedy trial. On the other hand, poor people are represented by a public defender that are extremely overworked. Because of this, unfortunately, these public defenders then advise their clients to plead guilty even if they are innocent, just so they can have a speedy trial. Advising them to plead guilty hoping that their clients get a light sentence.
Since a majority of the population are in poverty, these people cannot afford skilled lawyers to defend them. Most of these people then end up serving time for a crime they did not commit. The Philippine Judicial institutions are weak, slow and corrupt. There is no sense of fairness if people have the ability to pay for their innocence.
20. Central Bank 1.8
The central bank of the Philippines or known as “Bangko Sentral ng Pilipinas” is the country’s central monetary authority. Bangko Sentral ng Pilipinas is a government-owned and controlled corporation. The functions of the central bank are having the ability to issue national currency, implement the monetary policy, and supervising bank. They also have the authority to determine the exchange rate policy and manage the foreign currency reserve. The Monetary Board is responsible for enforcing these functions. Seven members of the Monetary Board is appointed by the President of the Philippines. Under the New Central Bank Act, one of the government sector members of the Monetary Board must also be a member of the cabinet. Although seven members are appointed by the president and one member also works for the president, most members of the Monetary Board are banned from holding certain positions in other government agencies and private institutions due to conflicts of interest. Since Bangko Sentral ng Pilipinas does not work independently and is owned and controlled by the Philippine government.
21. Domestic Budget Management 4.3
In 2013 the Philippine government collected 13.31% off of its total GDP from that year's taxes, totaling at $3.6 billion. In 2014 they collected 13.61%, which comes to $2.2 billion. 2015. The government tax revenues totaled at $3.9 billion and last year they collected 14.4% from its $304.9 billion GDP. The Philippine government consistently has a surplus since they collect more revenue from tax than they spend. Total expenditure for 2013 only took up 10.84% of GDP. In 2014 total expenditure went down by 0.28%. Although in 2015, total expenditure went up by 0.37% it was still less than the tax revenue received for that year and in 2016 expenditure was 11.13%.
Even though Philippine total expenditure keeps increasing every year, their tax revenue also increases; and as of 2010, the GDP of the Philippines has been consistently increasing. The government has steadily been collecting more tax than spending more, which gives businesses the opportunity to expand, which then leads to economic growth.
22.Government Debt 3.2
In the second quarter of 2017, Philippine total GDP was $324.7 billion and the total debt is $124.6 billion, which is just about a third of total GDP. 65% of total debt is debt is owed to the Filipino citizens. Domestic debt has increased by 6.4% from December 2016 due to the depreciation of the peso which increased the value of onshore dollar bond- debt instruments that are transferable and negotiable issued by the Republic of the Philippines, also the increased the net issuance of government securities. On the other hand, debt to foreign countries takes up 35% and has increased by 3.5% due to the impact of peso depreciation against the US dollar.
The Philippine’s debt interest compared to total GDP is 5%, which is near the lending rate of interest published by the International Monetary fund (IMF) and World Bank for the Philippines. This large interest creates a negative effect and adds on to the existing debt.
23. Economic Statistics 4.7
Under Commonwealth Act No. 591, the Bureau of Census and Statistics or as now known as the National Statistics Office was created. It’s government’s major statistical agency who is reliable for collecting, publishing, examining and publicize general-purpose statistics of the Philippines.
All data in news, radio, newspaper about Philippine statistics is cross-checked with the published data from the Philippine Statistics Authority. The Philippine Statistics Authority publishes data it collected from previous years and updates its statistics every quarter of the year. Also, websites such as “GoNegosyo” collect statistical data from government agencies and business. With this company, it hopes that the data they provide could help entrepreneurs move their businesses forward.
24. Protection of Public Health and Safety 1.8
The Philippine health agency, The Department of Health is responsible for granting Filipinos access to basic health care. The healthcare system in the Philippines is a mix of public and private systems, which provides average basic health care. Although the healthcare system provides decent health care, these services tend to be expensive, because health care is taken up mostly by private health providers Since poverty is significant in the Philippines, most citizens do not get the help they need; especially those who live in rural areas.
According to the World Health Organization, Tuberculosis is the sixth leading causes of death and illness in the Philippines. In 2015 TB mortality had a rate of about 13% per hundred thousand, while the US had a rate of 0.18% per hundred thousand. In addition, the Philippine infant mortality rate in 2016 is 21.9 per 1000 live births. While the US has an infant mortality rate of 5.8 per 1000 live births. The Philippines is four times greater in infant mortality rate and 72% greater in TB mortality.
25. High Wage Policies 1.7
Compared to the surrounding countries, the Philippines has one of the higher minimum wages yet the quality of life for most Filipinos has not improved. This is because the Philippine labor policies are not built for an average Filipino. The labor laws are based on a standard of highly developed markets which are not in line with country’s level of development. Also, the labor policies tend to be pro-employed rather than employment-oriented, aggravating the unemployment problem, business is hesitant on hiring people that do not have much job experiences.
The Asian Institute of Management did a study and it showed that a country with a huge surplus of labor, like the Philippines does not respond well to increase the minimum wage. Increased minimum wage leads to a reduction in employment. Since businesses have to pay their workers more they have to reduce their costs somehow so most businesses will terminate some of their workers. The Philippine wage policies do not help the average Filipino, it is meant to help those people that have white collar jobs. The average Filipino still struggle to make ends meet.
26. Environmental Protection 3.5
Most countries have laws to protect and preserve their environment. The Philippine has five major environmental laws- Environmental Impact Statement System, Toxic Substances and Hazardous Waste Control Act, Clean Air Act, Ecological Solid Waste Management and Philippine Clean Water Act. The Environmental Impact Statement System was created to balance environment and the socio-economic development of the country, by using our natural resources for production for economic growth but still protecting the environment and the people. Toxic Substances and Hazardous Waste Control Act, the policy that prohibits the distribute, import, sale, manufacture, dispose, and process chemical substances and mixtures that may harm our environment and health. Clean Air Act was made to help reduce air pollution. Ecological Solid Waste Management is the policy that protects the environment by enforcing proper segregation and disposal of waste. Lastly, the Clean Water Act was made to protect and preserve the quality of our water
For the past few decades, these laws were not heavily enforced. There are plenty of laws passed by the government to protect our health and environment but it is up to the local government units to enforce these laws. Only until in 2006 where the National Anti- Environmental Crimes task force was created to help enforce our environmental laws and further preserve our environment. Slowly but surely under the new presidency, these laws are being heavily enforced.
27. Strong Army 2.2
The Philippine armed forces consist of the army, air force, and the navy. Under the navy, they have the marine corps. As of the beginning of 2017, the armed forces have 172,500 active members and 325,750 reserve members, with a total of 498,250 men and women in the armed forces of the Philippines. Also, the armed forces spent only about $3 billion, taking up only 1.29% of the domestic budget.
The Philippines recently changed their policy and approach on how they would handle an attack on the country. They shifted from an internal territorial defense- participation by civilian and military agencies of a government in any of the action programs taken by another government to protect its society, to an external defense to which the Philippines have been enhancing military budget spending to where they are modernizing their weaponry. This shift has caused uneven distribution of security among territorial, transnational, environmental, humanitarian assistance and disaster response conflicts. To this day the Philippines are still trying to settle in with the new approach.
28. Foreign Trade Impacts 1.9
Trading between countries has its advantages and disadvantages. Trade is valuable when the Philippines’ total GDP is shared equally with foreign markets, household consumption, business investment and government spending. According to the Philippine Statistics Authority, in 2016 the Philippines exported and imported a total of $141.514 billion. Foreign markets take up 46.4% of Philippine economic output.
Almost half of the economic output comes from foreign markets, making the Philippine economy susceptible to outside forces. In addition. it hurts home businesses. Since the Philippines gets most of their goods from trade, home businesses cannot compete with the low prices which then leads to them to exit the market. This then adds to the growing unemployment problem. Furthermore, this makes the Philippine economy dependent on other country’s economy. If the economy of the country that the Philippines takes most of its goods from suddenly crashed, the Philippine economy would be heavily affected. For this policy, the Philippine gets a 1.9
29. Management of Foreign Currency Budget 2.4
In 2016, the Philippines exported about $57.406 billion. This amount is smaller by 2.4% from 2015. However, imports increased by 8.4 %, which is coming up to $84.108 billion. The imbalance in the imports and exports created a -$26.702 billion trade deficit, which accounts for 8.75% of total GDP in the Philippines.
Trade makes a huge impact on a country’s economy and its growth, but for trade to be beneficial, imports and exports must balance each other out; no surplus or deficit. Since the Philippines has a trade deficit, this has a huge negative impact on the Philippines because when a country imports more goods, imports are more in demand and domestic jobs may be lost to those in different countries. Also, trade deficit depreciates the value of the country’s currency indicating if the peso is desired in the world market.
30. Layers of collective action 4.7
The Philippine government is structured with the legislative branch, controlled by the Congress of the Philippines which consists of the Senate and House Representative. The Executive branch is managed by the president and lastly, the Judicial branch is governed by the Supreme Court of the Philippines. Under the local government code of 1991 , local governments were formed which are divided into four branches, autonomous region, provinces, municipalities and barangays (barrios).
The Autonomous region is a self-governing region which led by regional governor and a legislature, Provinces are managed by governors and legislatures, municipalities are governed by mayors and lastly barangays are controlled by barangay’s captains. All of which are elected by the town’s people. The roles of local government include; creating a link between the people and the government and addressing community problems and concerns and enforce policies. With local governments, people have a voice. This makes problems easily solvable. It gets the community and its leaders to work together to achieve their goal and with these the Philippines gets a 4.5.
31. Pro-Business Climate 5.0
Being businessmen/women usually comes with a high social status. People assume that a person who owns a business are wealthy. However, in the Philippines, being a businessmen/women is not just occupation. The title does not just mean high social status and wealth, it also means you have power. They have the power to make a difference and influence people to the point that some businessmen become politicians. Filipino society highly values its businesses. It pushes its people the desire to open their own businesses because they know that having a business is comes with all these desirable things such as money, power and also a better life. Most of Filipino billionaires got their wealth from owning or having a share of a business. According to the Department of Trade and Industry, 99.5% of businesses in the Philippines are small-medium enterprises and these businesses provide about 63.2% of total jobs in the Philippines. The county puts a high value on businesses because most jobs are created from more businesses, which then helps the country prosper. With that this policy gets a 5.0.
32. Government Enterprise 2.3
As of 2016, there were 147 operational state owned enterprises or government owned and controlled corporations (GOCC). Most of these government controlled corporations are built to help those in need to get the basic necessities such as healthcare, housing, transportation and much more. In the second quarter of 2017, GOCC contributed about 9% to the total GDP, which is lower than it was in 2016 with 11%.penis
Over the years, Philippine Government has been making changes with how they operate and systemize these corporations. A large amount of these corporations has been privatized. However, the Philippine government is still trying to build an enterprise sector that can provide high quality services to the public at a reasonable cost and with minimal subsidy. For these reasons the Philippines gets a score of 2.3.
33. International Security Agreements 4.4
The Philippines has always valued its relationships with other countries, especially with the countries around it. The Philippines is a member of ASEAN (Association of Southeast Asian Nations), which is an organization that has the intention of strengthening regional harmony, stability and prosperity between the ten countries that are involved with ASEAN. Similarly, this organization has been trying to strengthen their ties with the Middle East because of the hundred of thousands of filipinos that immigrate to the Middle East for work. Because of this, the Philippines sent 500 soldiers and 100 medical workers to Iraq in 2003 to keep peace.
Another country that has strong ties with the Philippines is the United States of America. They have been allies since WW2. In fact, in 1951 the US and the Philippines signed a treaty stating that they would support each other if either gets attacked by another nation. The Philippines has supported most of the US’s foreign policy. However, the Philippines have recently been distancing themselves due to the active role of the US in the Non-Aligned Movement, a group of countries that are not aligned with a major power bloc or countries that are against a major power bloc, despite this its relations with the US remains strong. Overall this policy gets a 4.4.
34. Protection of domestic enterprises from government mandated cost. 4.6
The fundamentals of building a business is the same everywhere; venturers need a land, workers and machinery. However, running a business drastically changes depending where someone is building a business. Building a business and a running one does not take much a country such as the Philippines. There are rules and regulations but these rules and regulations does not require the business to spend much money.
Once venturers have their land, labor and capital, the next step is to get their business license and mayor clearance in order to be able to work in the city. In addition, like most businesses, a venturer has to register their workers with the Social Security system-social insurance program, a government agency that provides retirement and health benefits for employees in the Philippines. PhilHealth- national health insurance and lastly they have to register them to the Pag-IBIG Fund, a corporation that helps filipinos that are employed with loans and have access with housing programs that helps filipino workers find affordable housing. Other than these requirements, the government does not require anything else, a business has the right to run however they please, giving this policy a 4.6
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