The Philippines recently has been in the spotlight not for a typhoon or for Manny Pacquiao’s victory against Martinez, but for its recent stellar economic performance. The country’s economic growth of 7.2% in 2013 shows one of the fastest growing Asian economies. Some have predicted the Philippines would even become the world’s sixteenth largest economy by 2050. Besides the Philippines emerging as one of the economic bright spots of Asia, Manila hosted the 2014 World Economic Forum on East Asia, bringing together many businessmen, leaders, policymakers and journalists from around the world. The event formalizes that the Philippines is a new host for global investors and demonstrates the international confidence in the leadership of the Aquino administration. I was listening and reading some of the commentators’ views on the question of is the Philippines’ recent economic grow sustainable and is the Philippines becoming Asia’s next tiger economy? Centuries of colonization have created a narrow elite group that has dominated society while the broad majority has lived in poverty. Power and extractive political and economic institutions benefit a small elite, a condition which leads to weak institutions, weak governance structures, and political dynasties striving to keep small group of elites in power. Therefore, corruption is embedded and institutionalized.
The Philippines has one of the highest income disparities in the region. Without reducing the corruption, the government will continue its misallocation of resources from this corruption making it harder to achieve sustainable growth. The economic growth in the Philippines will continue to benefit only the tiny group of elite. The privileged all talk about growth and about getting richer and richer, but never talk about the 29-30 % of the population who live in poverty as their lives worsen and worsen and as those people strive to find a way to fill their stomachs. The Philippines has hardly reduced its double–digit poverty. With a lack of inclusive development and infrastructures, the Philippines will continue to have a hard time attracting growth and creating well paying job opportunities for the larger section of society.
In the future the large and growing income gap between the rich tiny elite and the rest is the biggest risk to Philippine society. The Philippines is an excellent country with beautiful resources, and despite many entities stealing from it, the country is still standing and still surviving. Good governance does not just mean anticorruption, but also good governance means implementing the most important projects at the right time and on time. For example, a super typhoon hit areas of heavy population and still nothing has been done even though many people are suffering. God forbid if there is another natural calamity, but I wonder what the government will do. Still there are half finished projects as well as an absence of good quality public systems and power supplies; the people are jammed into small areas with no public utilities. This all reflects on weak city planning and ineffective good governance. The Aquino government hopes to improve the spending on infrastructures by 2016, and that is why it has been rushing many road projects in the country. Yet, rushing projects will lead to massive traffic jams and bad construction. Further, smaller projects may be given to big companies, so that small companies may not get anything
Little had been done at the top end to impact the tiny elite’s dominance. This situation then brings the question about real democracy in the Philippines where only a few have control over economic and political power. The tiny elite, such as Ayala and Aboitiz, has dominated since the Spanish colonial era. Government rules continue to allow near monopolies and protection for key players. Something is structurally wrong in the Philippine when the oligarchy has too much control of the country’s resources. For example, Davao City’s real estate is booming and development is rapidly taking place. It is a great time for people to invest in real estate and agriculture, but the problem is that the local people have little money to buy land or to invest in agriculture; instead, the same names and same key players who have ample money are taking advantage of the development. According to Forbes 2012’s annual list of the rich, Chinese magnates Henry Sy and Lucio Tan were worth a combined $13.6 billion, that is to say, worth about 6% of the Philippines’ annual GDP. By contrast, about 30% of the population lives on one dollar a day or less.
I am optimistic about the Philippines if there is strong governance, but without strong governance, the corruption will continue to undermine governance to the extent that it distorts policy decisions and the implementation of those policies. It is true, though, that the Philippine economy is currently enjoying an increase in its growth rate, but only a small percentage of the tiny elite is benefiting from this success. The middle class down to the least unfortunate suffers from the high cost of electricity, unemployment, a low quality of school and facilities, and little state services or resources for their children to get a basic education. Unfortunately, as long as the country dances to the tune of tiny elites, we will not see inclusive economic growth.
Dr. Aland Mizell is President of the MCI and a regular contributor to Mindanao Times. You may email the author at:aland_mizell2@hotmail.com