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% 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 open, 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.
Before President Aquino was elected in 2010, former president Gloria Macagapal-Arroyo successfully installed some of her closest allies in key government positions such as the judiciary, military and police forces and the executive branch. This had been rather challenging to the new administration as these actors had the power to block decisions of the present government, until the successful impeachment of the Arroyo-appointed Chief Justice Renato Corona in May 2012.
Nevertheless, the overall situation can be judged as relatively stable as for now, hence positioning the Philippines at mid-range within this section.
The constitution of the Philippines protects the freedom of the press, but the Philippine state has repeatedly failed to provide safety for those who exercise this freedom. The Committee to Protect Journalists, a non-profit organisation, ranks the Philippines third (behind Iraq and Somalia) in its 2012 Impunity Index. Seventy journalists have been killed in the past two decades, 32 of them in the infamous 2009 Maguindanao massacre. After his election, President Aquino pledged to put an end to the killings, and met with press freedom groups in order to discuss measures to strengthen capacities of law enforcement bodies and witness protection programmes. It is uncertain to what extend his policies will be able to deal with legal constraints and a deeply-rooted culture of
impunity. However, the appointment of former Human Rights Commissioner Leila de Lima as Justice Secretary signals an end to the practices of the past. The signing of the Law against Enforced Disappearances in 2012 is a credible attempt by the administration to make good on its promise to end the culture of impunity.
The 2011 Global Competitiveness Report by the World Economic Forum lists the Philippine judiciary as the least independent among asean countries. Corruption in court is also rampant due to low pay. The Philippine judiciary is therefore highly vulnerable to external pressure and influence. The newly appointed Chief Justice Maria Lourdes Sereno has embarked on an ambitious programme to address failings in the system.
The Philippines have been plagued by corruption and cronyism in both business and government. Although official anti-corruption agencies have been established, namely the Office of the Ombudsman and the Presidential Anti-Graft Commission (PAGC), they have mixed records. According to some, the former was compromised under the Arroyo administration due to a decline in the number of convictions, while the PAGC lacks enforcement capabilities. The country has seen a number of high-profile cases in recent years. In October 2012, former President Gloria Macapagal-Arroyo was arrested on corruption charges and accused of fraudulently transferring money from a Philippine charity - her third indictment since she stepped down three years earlier. The Philippines was ranked 129 out of 183
countries surveyed in Transparency International’s 2011 Corruption Perceptions Index. However, it should be noted that the Philippines has improved slightly from ranking 134 in 2010. There were also other examples of positive developments. In a survey published in September 2012 by Social Weather Stations (SWS), a survey institute, corruption in the Philippines is down dramatically. When company executives compare the present administration to the past one, 71% see less corruption now, and only 2% see more. When the general public compared the two administrations in an SWS national survey in May 2012, 64% saw less, and only 5% saw more corruption now. The most radical change is in the Office of the President, which improved in net sincerity in fighting corruption to an Excellent +81 in 2012, from a Bad -37 in 2009. There remains much to be done though, with corruption cases progressing "too slowly" and honest business practices remaining "unsatisfactory".
The Philippines is home to a thriving civil society sector and a vibrant media. Religious and academic freedom are generally respected. Freedom of assembly is observed and demonstrations are common, although rallies require permits. Its gender equality has also improved as women have made many social and economic gains in recent years. However, human rights are severely restricted in a number of aspects. To start with, abuses against civilians committed by armed opposition forces, including the communist New People’s Army (NPA) and various Islamist Moro groups, are still reported. Moreover, socioeconomic deprivation and political disenfranchisement, and resentment toward Christian settlement felt by the Muslim minorities have played a central role in the Muslim
separatist movement, causing severe hardship for many of the 15 million inhabitants of Mindanao and nearby islands, and claiming more than 120,000 deaths since it erupted in 1972. President Aquino staked his personal reputation on reaching an agreement with the main muslim group, the Moro Islamic Liberation Front, followed by negotiations which resulted in a framework peace agreement signed in October 2012. Internal divisions in the NPA have made it impossible for them to reach an agreement with the Aquino government, although the pressure on them to do so is mounting.
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. But slow courts and, in some cases, disregard for contracts raise concerns. 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), have risen to 18.5% of the GDP.
Taxes are rather high. The top income tax rate is 32%, whereas the top corporate tax rate is set at 30%. Additionally, Philippine citizens have to pay vat, real estate tax and an inheritance tax. Overall tax revenue is about 13% 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 35 days and 15 procedures. A business license can be obtained in as much as 30 procedures and 85 days. A new insolvency law regulates the liquidation and reorganisation of bankrupt companies. Non-salary costs of an employee are low, but inflexible labour regulations
make firing an employee a complicated procedure.
The weighted average tariff rate is 4.8%. Recognising 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 obstacles 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.
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