KATIPUNAN PHOTO — TOBY ROCAMORA

World

Aquino’s populism gives way to busi

The following article is reprinted from the
December, 1987 edition of Katipunan, the
monthly newsmagazine of the U.S. Filipino
community, which is distributed in this
country by the Committee to Advance the
Movement for Democracy and Independ-
ence (CAMDI). It appears here slightly
abridged.

By OFELIA O. VILLERO

Buoyed by a tangible turnaround in the
economy after only a little more than a
year in power, Philippine President
Corazon Aquino has set a more ambitious
goal for her government this time around.
But her political image runs the risk of
getting snagged in the shoals of her chosen
economic strategy.

Reflecting the administration’s think-
ing, Bernardo M. Villegas, senior vice-
president of the Centre for Research and
Communication which is an influential
private think-tank in Manila, said that
under the present leadership, the Philip-
pines “can still realistically hope to join the
ranks of the newly-industrializing coun-
tries (NICs) before the end of the decade.”

The NICs are countries like Singapore,
South Korea and Taiwan whose export-
led economies currently are undergoing a
spurt of growth, enabling them to shed off
classification as Third World nations.

If the economy maintains a growth rate
of close to 6 per cent, the steep decline in
per capita income would be reversed, Vil-
legas added. “The Philippine economy
will not be at the top of the list of rapidly
growing NICs in the next five to six years.
But neither will it be known as the ‘sick
man’ of the Asia-Pacific region.”

It is difficult to imagine the Philippines
with a healthy economy in a span of five
years, or even ten. But Villegas and the
administration pin their hopes on the con-
tinuation of the economic recovery evi-
dent in the first half of 1987, when the
country posted a 5.1 percent growth from
a dismal showing of -3.8 per cent under the
Marcos dictatorship.

What accounted for the growth, econ~
omists believe, were Aquino’s medium~
term economy strategy in her first 19
months in office and the gains she scored
in the area of political stability prior to the
Aug. 28 coup attempt.

The administration dismantled tbe

“monopolies in sugar, -coconut and grains,

resulting in significantly higher farm gate
prices. The breakup of the monopolies
controlled by Marcos’ cronies spurred
other entrepreneurial activities.

To ease unemployment, the govern~

ment launched the Community Employ-
ment and Development Program, consist-
ing primarily of very labour-intensive
projects for infrastructure like feeder
roads, communal irrigation systems, local
waterworks, and ports. The government
also set aside four billion pesos for low-
cost housing.

Added to this strategy were monetary
and fiscal policies that stabilized prices and
the foreign exchange rate. Inflation de-
creased from a high of 50 per cent in 1984
to .86 percent in 1986. By June, 1987, gross
international reserves rose to $2.4 billion
from $1.1 billion a year earlier.

Aquino’s political victories were also
conducive to initial economic successes.
The people overwhelmingly ratified the
new Philippine Constitution and swept the
president’s candidates into Congress last
May.

With the administration’s first-aid

moves and initial political gains, the coma-
tose economy did show new signs of life.
The industrial sector expanded by 10 per-
cent in the first quarter, accounting for
more than half of the total increment in
domestic production. '

The private sector chipped in, arresting
the decline of investments since 1982. Net
investment rose by 57 per cent from 1.6
billion pesos in 1986 to 2.6 billion pesos
this year.

The upswing was also reflected in con-
sumer spending. Expenditures from the
May congressional elections, estimated to
have run as high as 10 billion pesos, tem-
porarily boosted household incomes.
Household expenditures increased by four
per cent during the first quarter of 1987,
which contributed to half of the growth in
total output.

The impressive figures, however, do not
tell the whole story. The economic per-
formance actually fell short of the
government target of 6.45 per cent. To
meet this target, the economy would have
to grow even faster for the rest of the year.
But the National Economic and Devel-
opment Authority already revised its
growth target for all of 1987. The Gross
National Product is now projected to rise
by only 5.8 per cent. According to Eco-
nomic Planning Secretary Solita Monsod,
the 6.5 per cent target is “no longer realiz-
able.”

The most critical blow to the adminis-
tration’s fragile economic advances was
delivered by the neo-fascists in the armed
forces by Colonel Gringo Honasan in
their Aug. 28 coup attempt. The bloody
attempt to unseat Aquino shook the busi-
ness sector which immediately raised the

peso-dollar exchange rate. To appease the
business sector, president Aquino deli-
vered a broad policy speech to business-
men at the Manila Hotel on Oct. 20.

It was a speech that left no doubt as to
whose music Aquino is dancing to.

Admitting that her initial economic
reforms were not enough, she enumerated
more changes: deregulation of all eco-
nomic activities so that the businessman is
not “hostage to the bureaucrats and the
politicians” the elimination of licenses and
permits to the extent permitted by public
health and safety; and the sale of Philip-
pine Airlines and government-controlled
hotels to private bidders.

Earlier on, the Administration created
the Omnibus Investments Code on 1987
which is a package of tax incentives for
both foreign and local investors. And
although hailed by her government, it has
been criticized on several grounds even by
some businessmen. First, it forgoes tax
revenues for the government. Second,
incentives attract quick profiteers who pull
out at the slightest change in the invest-
ment climate. Third, it favours big busi-
ness over small firms. Fourth, while tax

Trade union
campaigning in
the Philippines:
the labour
movement is
again becoming
the target as real
wage levels fall
and unemploy-
ment increases.

deduction based on employment genera-
tion promotes labour-intensive industries,
tax-free importation of machineries and
spare parts also favours capital-intensive
industries.

But she directed her government’s fire-
power, not at the initiators of the coup
attempts, but at the insurgency and
labour. She ordered the army to hunt
down and pursue the war against the
insurgents “with absolute vigour.” As for
labour, she authorized the police to
remove all illegal blockades. put up by
striking labourers. She announced that a
special peacekeeping force has been organ-
ized and is being trained to enforce return
to work orders and injunctions issued by
the Department of Labour.

Reacting to her speech, a beaming
Aurelio Periquet, president of the Philip-
pine Chamber of Commerce and Indus-
try, said that she addressed the Chamber’s
two main concerns, law and order and
labour militancy, by rejecting new peace
talks with leftist rebels and vowing to
crack down on illegal strikes and barri-
cades.

While her economic policies endear her
to businessmen, they alienate her from the
poorer sectors of the population who have
expressed their dissatisfaction by striking
for higher wages and better working con-
ditions. And by waging war against the
insurgents, President Aquino has made
peace more elusive than ever before.

The perception that Aquino favours
business more than any other sector has
grown with the results of her economic
plans. By and large, the turnaround has
not benefitted the country’s workers and
the poor.

The latest labour force survey con-
ducted by the National Census and Statis-
tics Office revealed a 14.2 per cent
unemployment rate for April this year,

compared to 12.8 per cent for April, 1986

and 11.2 per cent for January, 1987. This
meant that by April, 1987 there were 3.2
million jobless Filipinos, 458,000 more
than the number of jobless for the same
.month last year.

Booming industries and the new ones
being set up are not creating jobs fast
enough. Overall, only 32,418 new jobs are
expected from the 2.85 billion peso pro-
jects registered with the Board of Invest-
ments during the first half of the year.

The government’s pump-priming instru-
ment, the CEDP, seems to have reached
its limits. As of July 3, the Department of
Public Workers and Highways which
handles about 90 per cent of the 30,570
projects slated for 1987, could only show
3,107 completed projects and 4,376 ongo-
ing projects. Its performance rate of 28 per
cent, therefore, is way off the first half
target of 62 per cent. So far, out of the
605,217 jobs targeted for 1987, only 38,465
jobs have been created — a poor 6 per-
cent accomplishment rate. The program is
also saddled with anomalies ranging from
rigged bidding, substandard materials, to
ghost projects.

The rash of strikes against big compan-

ies in recent months is the result of
employees’ grievances which are political
as much as economic. Labour’s situation
has worsened since 1984, when strikes
began rising as the economy collapsed
under Marcos. From 1984 to July this

. year, industrial workers’ wages inched up

a nominal 1.3 per cent — but fell a real
15.4 per cent. For farmworkers, nominal
wages rose 1.15 per cent but real wages fell
7.13 per cent.

Before the opening of the new congress
in July, Aquino held extraordinary pow-
ers, but she avoided making any decree to
increase the minimum wage, despite wide-
spread pressure from labour which had
backed her rise to power. It was only on
Oct. 3 that she asked Congress to do what
she failed to do, because of pressure from
various quarters than any concern for
workers’ plight. (The rural poor did not
fare any better. The President’s Compre-
hensive Agrarian Reform Program is now
subjected to the whims and caprices of a
landlord-influenced Congress.)

So far, Aquino’s medium-term strategy
already presumes export-led industrializa-
tion as the long-term thrust. Some of her
advisers even entertain visions of becom-
ing competitive with NICs in the export
market. But lower labour costs assured
through repressive laws and measures

have been key to the South Korea, Tai-

wan, Singapore success stories. Liberal
labour laws and policies will be incompat-
ible with the desire of Aquino advisers to
compete. Thus, the identifiable long-term
strategy of the administration sets it on a
collision course with the already restive
labour force. Aquino’s “human rights
politics” is bound to collide with export-
led economics.

With the economic path she is taking,
Aquino is gradually losing her populist
image. And even if the Philippines
emerges as an NIC five years from now,
the question will be: “At what political
cost?” There is no guarantee that she will
have achieved her earlier vision of demo-
cracy and dignity for her people.

8 e Pacific Tribune, February 24, 1988