Australia gives Philippines low marks in governance, peace, reforms

This is from the Tribune Although much of this analysis is likely correct I think that in some cases economic growth may very well exacerbate income inequality and even produce poverty for some. I get the gut feeling that the Australian commentators want reforms that will open the Philippines to more foreign investment. The main reforms should have to do with corruption but the filipinos also need to curb the power of the leading rich families who manage to control the system. That the Philippines still has controls on foreign ownership of land and investment is not necessarily a bad thing, it is just that it is used to protect the elite rather than to advance the interest of all filipinos.

Australia gives RP low marks in governance, peace, reforms



07/25/2007

Australia has cited lack of good governance, restoring peace and security and slow economic reforms as the greatest challenges currently facing the Philippines.

In its May 2007 bilateral overview, the Australian Department of Foreign Affairs and Trade said the Philippines is gripped by a number of difficult economic and social challenges.

“The Philippines, despite generally favorable human development indicators, has not matched its economic potential. Lack of sustained growth over the past 30 years has seen it lag behind the achievements of many of its East and Southeast Asian neighbors in reducing poverty. Another major challenge has been the ongoing instability in southern Philippines, which has impacted on long-term and broad-based development,” the report added.

Unlike many of its neighbors, Australia said the Philippines has not experienced a recent or sustained period of rapid economic growth.

“As a consequence, there has not been the sharp decline in poverty that has occurred in faster-growing economies,” it added.

It noted that the country has been gradually overtaken by most of its neighbors, first by South Korea and Taiwan, then Thailand, and more recently Indonesia for a period, and China.

“The Philippines continues to juggle extremely limited budgetary resources





while attempting to meet the needs of a rapidly expanding population,” the report said.

It added the situation of the Philippines is “volatile and there are signs of poor performance in a range of areas.”

“The new (Arroyo) administration, elected in May 2004 for a six-year term, faces the challenge of implementing essential policy reforms, particularly in areas affecting globalization and trade liberalization,” the report said.

It added a tenuous peace process in Mindanao, the reemergence of the communist New People’s Army (NPA) as a serious threat to stability in various parts of the country, including Mindanao, and other internal security issues, also threaten to exacerbate this fragility.

Poverty, according to the report, remains a significant problem.

Combined with inequality, Australia said poverty poses a serious threat to stability in the Philippines.

“The number of people living on less than US$1 a day increased from 27 million in 1997 to 31 million, of a total population of 76 million, in 2000. In addition, the Philippines has one of the highest levels of income inequality in Asia, with the poorest 20 per cent of the population accounting for only five per cent of total income or consumption,” the report also noted.

Australia observed that poverty in the Philippines is predominantly rural and, although variable by region, is pervasive in southern Philippines, particularly Mindanao.

“Poor productivity growth in agriculture, under-investment in rural infrastructure, unequal land and income distribution, high population growth and the low quality of social services lie at the root of rural poverty,” it said.

The report said natural disasters, the risks associated with variable markets and the persistence of armed conflict in Mindanao also threaten to deepen existing disparities by disrupting growth and exacerbating poverty. Michaela P. del Callar