Politics stifles Philippine
reforms By David L Llorito
MANILA - Philippine President Gloria Macapagal-Arroyo
on Thursday easily survived the latest bid to
impeach her on charges of corruption, vote-rigging
and human-rights abuses.
Yet it's unlikely
Arroyo's unpopular government will be able to
parlay that victory into political support for
controversial proposed charter changes, an
ambitious political and economic reform
program known locally as
cha-cha.
Arroyo's reform drive has
met with popular indifference and stiff resistance
among opposition politicians in the 24-member
Senate, who contend the reforms are a cynical ploy
by Arroyo and her allies in the House of
Representatives to cling to power while they
oversee the proposed program's three-or-four-year
implementation. The political bickering
overshadows the significant impact the reform
package could have on the underperforming
Philippine economy. A politically protected
oligarchy owns a disproportionate amount of the
means of production, leading to massive
distortions in the economy.
The fall of
the authoritarian Ferdinand Marcos regime in 1986
saw the dismantlement of a number of the national
monopolies he supported, including in
telecommunications, aviation, and sugar and
coconut trading.
At the same time,
nationalist politicians and special-interest
groups involved in drafting the 1987 constitution
cornered off many other sections of the economy
from foreign involvement, including banking and
retail, which are still the preserve of
influential business families and behave more like
cartels than supply-and-demand-driven markets.
The same goes for the transport sector,
which is locked down by a monopolistic
one-port-one-operator rule that inflates costs and
inhibits exports.
Poultry and livestock
producers habitually complain about high freight
rates, contending that it's cheaper to purchase
corn from Argentina than ship it from the southern
island of Mindanao. The Philippines also suffers
from comparatively high power costs, owing largely
to restricted ownership of power generation and
distribution assets.
Those distortions,
economists say, contribute largely to the
country's stubbornly high unemployment and
underemployment rates, which for years have been
stuck at around 8% and 25% respectively. Nearly 10
million Filipinos have fled moribund domestic job
prospects for higher-paying work overseas - and
the human outflow is now starting to hit the
professional ranks of the economy.
Enter
the cha cha reforms, which apart from
aiming to change the country from a presidential
to a parliamentary system also include substantial
market-liberalizing reforms that Arroyo's economic
advisers contend would break up monopolies,
diffuse national wealth, improve national economic
performance and create badly needed jobs.
Lito Monico Lorenzana, chairperson of the
Charter Change Advocacy Commission (AdCom), which
was created by Arroyo to spearhead the reform
campaign, says the cha-cha reforms aim
mainly to remove the various nationalist
provisions embedded in the 1987 constitution and
to open wide the economy to greater foreign
participation.
"The main cause of the
[continuing] joblessness is the lack of
investments," said Lorenzana, noting that over the
past five years inflows of foreign direct
investment have been stuck around US$1 billion per
year, substantially less than in neighboring
Malaysia, Singapore and Thailand. "The reason for
this is the hostility of our constitution towards
foreigners."
He said that if implemented,
the cha-cha reforms would open many
currently protected industries, including mining,
oil, roads, ports, electricity, water,
transportation, media, education and advertising,
to foreigners.
Although the politically
protected oligarchs, including members of Arroyo's
family, would stand to lose from the reforms, the
more outward-looking business community favors
cha-cha-driven liberalization.
"We
in the business sector do feel that economic
reform is needed, that the constitution is
outdated," said Sergio Ortiz-Luis, president of
the Philippine Exporters Confederation
(Philexport), the country's biggest organization
of exporters. "The constitution is static and that
has been keeping us from competing. If it is not
done now, it will never happen in the next 20
years."
Change now or
never Arroyo's scandal-plagued government
has lost much, if not all, of its popular mandate
to implement political and economic reforms. The
Social Weather Stations (SWS), a private polling
agency, showed in July that 67% of Filipino adults
planned to reject "the new constitution that
President Arroyo wants" - up significantly from
56% in March.
Based on SWS surveys,
Arroyo's so-called "satisfaction rating" has
consistently been negative since a 2004
vote-rigging controversy, and in June her rating
plumbed negative 13%. "There's no groundswell for
support for charter change," said Ana Maria
Tabunda, executive director of Pulse Asia, another
polling agency.
Economist Bernardo
Villegas, vice president of the University of Asia
and the Pacific and a drafter of the 1987
constitution, says failure to change the charter
soon would represent a big "missed opportunity"
and would cause the Philippines to fall even
further behind its faster-growing regional
neighbors, including China, India and Vietnam.
"I think these so-called nationalists who
oppose charter change don't understand what they
are saying," said Villegas. "Nationalism in this
country has been completely in favor of the elite
... and preserved the monopoly of the few who have
capital."
Arroyo, who still stands widely
accused of rigging the 2004 elections, pilfering
billions of pesos from a fertilizer fund, and
human-rights abuses related to a military campaign
against leftist groups, is increasingly seen as a
lame duck.
Many Manila-based political
analysts believe that Arroyo's successful defense
against the recent impeachment charges has sapped
her spirit to revive the reform drive against a
resistant Senate, even though half the upper
house's members' terms expire early next year. "If
we fail to achieve cha-cha this year, that
means we have missed the real opportunity to
achieve real change," said AdCom's Lorenzana.
The window of opportunity for Arroyo's
version of cha-cha reforms is closing fast,
and it's highly likely that opposition candidates
in next year's mid-term elections will campaign in
direct opposition to many of her proposed reforms,
including economic-liberalization measures.
Arroyo's last gasp, it appears, is a
"people's initiative", which aims to gather 10
million signatures in support of a national
referendum on the cha cha reforms in
December - even as independent opinion polls show
that the majority of Filipinos largely reject
Arroyo's reform vision.
David
Llorito is a researcher at the BusinessMirror,
a Manila-based daily newspaper. He has more than a
decade of experience in socioeconomic research,
policy analysis and business-economy journalism in
the Philippines and recently won the Jaime V
Ongpin Award for Excellence in Journalism
(Explanatory Category) as well as the Australian
Ambassador's Choice Award 2006.
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