Philippines 2014

The Republic of the Philippines is an electoral democracy with a presidential system of government. Presidential elections take place every six years and the presidency is limited to a single term. The legislative system is bicameral with upper house MPs serving 6 years and lower house representatives serving 3-year terms. The last presidential election in 2010 was won by Benigno “Noynoy” Aquino - the son of Corazon Aquino, a former president - from the reformist Liberal Party (LP), which won a majority in the lower house and only 3 out of 24 seats in the upper chamber. In May 2013, 12 upper chamber seats were up for election, of which the Liberal Party won 9. The mid-term elections in May 2013 were generally judged to have been the cleanest in recent times although there were

There are certain groups without a constitutional mandate influencing the political process in the Philippines. During her presidency, Gloria Macagapal-Arroyo was able to install many close allies in key positions of judiciary, police and military forces and also in the executive branch. A strong culture of impunity allows the police and armed groups to act brutally at times. But the role of the army has improved markedly since 2010 and it has been publicly loyal to the Aquino administration. The island of Mindanao, one of the poorest regions of the Philippines, saw repeated violent clashed between Islamic separatists and security forces during the past decades. Cease-fire and peace agreements had usually lasted only for short time. But a new peace agreement was signed between the

The country has a wide variety of private newspapers and (mostly state-owned) TV stations. Although critical topics are addressed, journalistic ethics are often low and news coverage tends to be sensationalistic. The internet is widely accessible and not censored. A Supreme Court ruling from early 2014 paved the way for the implementation of the controversial Cybercrime Prevention Act. Critics fear that it could be used to limit free speech on the internet. Violations are punishable with heavy fines and imprisonment. There is a dire need for a freedom of information law. President and congress have announced its implementation for 2015. During the past years the Philippines had the dubious distinction of being one of the most lethal work places for journalists. Especially those who

The independence of the Philippine judiciary is weak. External influence and pressure often play a considerable role when it comes to decision-making. Corruption among lawyers and judges is not uncommon due to the fact that they are not properly paid. Things reached a low point with the impeachment in May 2012 of Chief Justice Renato Corona who was found guilty of betrayal of public trust and culpable violation of the constitution. (He failed to declare several millions of dollars in foreign currency accounts.) In September 2014 Justice Gregory Ong of the Sandiganbayan (the national court that deals with corruption cases against public officials) was dismissed by the Supreme Court for “gross misconduct, dishonesty and impropriety”. His was the most high-profile case since the

Corruption in the Philippines is a serious issue. But under President Aquino the situation has steadily improved. Transparency International has documented the positive trend over the last few years. In 2013 the Transparency International’s Corruption Perception Index ranked the Philippines at rank 94 of 177 surveyed countries (from 104th in 2012, and 129th in 2011). In 2013 a case of tax payer’s fraud by elite figures from business and politics also known as “pork-barrel scandal” came to light. The case involved the misuse of huge amounts of money earmarked for infrastructure development through the Priority Development Assistance Fund. The Filipino public did not take kindly to the scandal. About 500,000 protesters gathered in Manila demanding a proper

Media and civil society in the Philippines continue to grow and flourish without too much government interference. In 2012 the government passed legislation that improved reproductive health and the rights of domestic workers. Enforced disappearances are an issue of concern but the Aquino administration has taken steps to deal with the issue, resulting in a decline in reported cases. Insurgent groups Abu Sayyaf, New People’s Army and the Moro Islamic Liberation Front have been accused of using child soldiers, both as combatants and in auxiliary roles as guides and cooks. But the situation is improving as the Liberation Front is one of the main players in the negotiations with the government regarding the Mindanao peace process. Child rights, in particular the child sex trade,

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 corruption, weakness of the state in rural areas, and insurgent activities in some regions mean that in praxis property rights are not always protected. Slow courts and, in some cases, disregard for contracts raise additional concerns. The protection of intellectual property rights remains troublesome.

Government expenditures (which include consumption and transfer payments) stand at 18.1% of 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 12% of GDP.

Banking dominates the comparatively stable 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. Credit is generally allocated at market terms. Access to credit information has been improved by making available both positive and negative credit information. A newly introduced data privacy act guarantees borrower’s right to access their data. To start, run, and close a business is fairly well regulated, but can be time consuming. Starting a business takes about 35 days and 15 procedures (according to World Bank data; down from 36 days and 16 procedures in 2013). A business license can be obtained in as much as 25 procedures and

The weighted average tariff rate is 4.8%. Among the obstacles to international trade are high tariffs (they provide about 20% of government revenue), import and export restrictions, access barriers to the Philippine service market, opaque customs valuations, corruption and a weak intellectual property rights regime.

With the ASEAN Economic Community (AEC) a single regional market of more than 600 million people will be created by the end of 2015. The AEC will provide for a free flow of goods, services, investment capital and skilled labour.