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July 17, 2013

Philippine Economy Grows but Wealth Slow to Trickle Down

by Simone Orendain

The Philippines' economic wealth is evident with growth surpassing that of China, new investment grade credit ratings and a surging stock market. But how many people are sharing in the country's new wealth?
 
Aris Bonifacio’s financial situation appears to be going from good to even better. The 32-year-old computer programmer has worked with the same insurance company for nine years. Business has been growing and so has his salary.
 
He said, after years of saving, he was finally able to buy a brand new car in April. Now he is ready to buy a condo from a high-end developer.  
 
Philippine Socioeconomic Planning Secretary Arsenio Balisacan said while the economy has been solid for several years, local businesses only started to increase spending about a year ago.
 
“People initially were taking a wait and see attitude, you know, one year or two years of wait and see," he said. "And you can’t really blame that.”
 
Balisacan said the country’s economy in the last four decades has had a “boom and bust” pattern mainly because of political instability, which has created a wary investment climate.
 
In recent years, the administration under President Benigno Aquino has tried to improve the country’s financial reputation by cleaning up corruption and prosecuting tax cheats and officials accused of graft.
 
Balisacan said the government also boosted infrastructure spending, which has helped push economic growth beyond seven percent for the past three quarters.  
 
“What exactly have been the major constraints to investments, whether it’s domestic or foreign? Number one that comes out is infrastructure, the quality of infrastructure,” he said.
 
Balisacan said traffic bottlenecks in the capital region and bad rural roads have eaten significantly into the cost of doing business, while rundown airports need upgrading to support tourism. He said investing in fixes will help attract businesses and bring other jobs to an economy heavily dependent on consumer spending and the service sector.
 
The country’s unemployment rate was 7.5 percent in the first quarter. Twenty percent of its workforce remains “underemployed,” working for far less than 40 hours a week. About one-third of the 97 million people in the Philippines lives in poverty and the Aquino administration says it is now focused on including the marginalized in its growth picture.  
 
At a park across the street from a luxury hotel in Manila’s business district, Junjer Catbagan said he has gone from job to job earning the same minimum wage of about $10 a day. The 23-year-old high school graduate works at the fish counter of a supermarket.
 
Catbagan laughed and said if there was anything new in his financial situation he would be at a better paying job. But reality is, his budget for raising a young family still falls short.
 
Other minimum-wage earners complain that the growing economy has meant higher costs of goods. And those in the so-called “informal sector” such as street vendors and garbage pickers say there is no difference at all in their earnings.
 
Even so, Jose Morales, who heads the Urban Poor Alliance, said the Aquino administration’s focus on cleaning up corruption is making a big impact on poor people’s lives.
 
Morales said ordinary people are empowered under this administration, and he feels it listens to his group’s proposed solutions.
 
The government has ambitious plans to cut the proportion of people living in poverty from 28 percent to 16 percent by 2016," he said. "To help with that effort, a new “sin tax” has gone into effect to raise additional revenue for healthcare and education for the poor.