Philippines 2011

National elections for the presidency and both houses of congress took place in May 2010. The Liberal Party candidate Benigno "Noynoy" Aquino, son of the late former president Corazon Aquino, was elected president with 42 percent of total votes. The elections were widely regarded as free and fair. Pre- electoral violence was low compared to previous elections. Corruption and electoral fraud allegations against President Aquino could not be verified.

Political participation is comparatively unrestricted, with the government having restricted the rights of assembly only during a brief period between 2005 and 2006. These restrictions were lifted afterward as a result of public pressure. In general, the Philippines have a tradition of freedom and civil liberties.

Unconstitutional veto players are not completely absent in the political system of the Philippines. In 2006, there was an alleged coup attempt. Moreover, over the last few years violent insurgent groups have been threatening the country’s security, mostly in the southern part of Mindanao. All efforts to stop the violence completely have proven, so far, to be unsuccessful. Nevertheless, the overall situation can be judged as relatively stable, hence positioning the Philippines as mid- range within this section.

The constitution of the Philippines protects freedom of the press. In reality, though, the Philippines are among those countries of highest risk for journalists, with numerous deaths occurring within the profession every year. Reporters Without Borders ranked the country as position 156 out of 178 surveyed countries in their 2010 index – with this rating due mainly to the killing of 29 journalists in Maguindanao province. However, compared to the previous year's result, this was still a significant improvement.

The independence of the courts is rather weak; judges are poorly paid (the judiciary gets only one percent of the national budget), and often have to look for additional sources of income to make ends meet. This, in turn, affects impartiality and often leads to compromised judgments. That Supreme Court judges are government appointed does not foster their independence, as well.

Corruption is rampant. Former President Gloria Macapagal- Arroyo herself was involved in several corruption cases, which eventually led to an (unsuccessful) impeachment motion in parliament. Naturally, corruption is not limited to the highest state levels; rather, it is a widespread element of Philippine society. In 2008, for example, a considerable number of banks were closed due to mismanagement and internal corruption. In Transparency International’s ranking of 2010, the Philippines were position 134 out of 178 surveyed countries.

The Philippines abolished the death penalty and are party to all major UN conventions relating to human rights. In spite of this, the situation remains problematic. A number of reports reveal cruel, inhuman, and degrading conditions in jails. In 2008, a new outbreak of violence in Mindanao province led to the displacement of about 600,000 people. The Moro Islamic Liberation Front, a Muslim insurgent group, reportedly trains children as young as 13 as soldiers. Extra-judicial killings, arbitrary detention, and abuse by security forces happen on a frequent basis.

Some progress regarding the effective enforcement of property rights has been made, but the situation is still somewhat problematic. In theory, property rights and laws to protect them are firmly entrenched in the Philippine legal system and this, in turn, draws investment into the economy. Concerns are raised by slow courts and, in some cases, alleged disregard for contracts. A constitutional amendment regarding full ownership of land and businesses aims to lift restrictions for foreigners. Intellectual property rights enforcement remains troublesome.

Government expenditures, (which include consumption and transfer payments), are comparatively low, equalling 17.3 percent of the GDP.

Taxes are rather high. The top income tax rate is 32 percent, whereas the top corporate tax rate is set at 30 percent. Additionally, Philippine citizens have to pay VAT, real estate tax and an inheritance tax. Overall tax revenue is about 14 percent of the GDP.

With 38 commercial banks operating in the Philippines, banking dominates the financial sector. Five big commercial banks - two of them state-owned - control a sizeable share of the total assets. The government runs a small Islamic bank, which caters mostly to Muslim citizens in the South. Although credit is generally allocated at market terms, banks have to lend part of their money to preferred sectors.

To start, run, and close a business is constrained by a multitude of regulations. Starting a business takes about 38 days and 15 procedures. To close a business can be a complicated and lengthy procedure.

Non-salary costs of an employee are low, but inflexible labour regulations make firing an employee a complicated procedure.

Stressing the importance of trade liberalisation, consecutive Philippine governments have taken measures to facilitate this. Several regional and bilateral FTAs led to an ever increasing exchange between the Philippines and other countries in the region.

Among the barriers to international trade are high tariffs, import and export restrictions, access barriers to the Philippine service market, opaque customs valuations, corruption and, (as mentioned above), a weak intellectual property rights regime.