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Philippines
Area: 300,000 sq km (117,187 sq mi)
Population: 89 million (2006 estimate)
Capital City: Metro Manila (10.4m)
People: Christian Malay (91.5%), Muslim Malay (4%), Chinese (1.5%); Other (3%)
Languages: Filipino, based on Tagalog, is the national language; English is an official language for education and communication.
Religion(s): Roman Catholic (83%); Protestant (9%); Muslim (5%); and other (3%).
Currency: Peso
Major political organisations: Main political parties are: the Lakas- Christian Muslim Democrats (Lakas-CMD) founded by former President Fidel Ramos and headed by President Gloria Macapagal-Arroyo, the Nationalist People's Coalition (NPC) headed by Eduardo 'Danding' Cojuangco Jr. and the Liberal Party (LP) headed by Senator Franklin Drilon.
Government: Republic
Head of State and Head of Government: President Gloria Macapagal-Arroyo
Vice President:Noli De Castro
Foreign Minister: Alberto Romulo
Membership of international groupings/organisations: United Nations (UN), Association of Southeast Asian Nations (ASEAN), Asia Pacific Economic Co-operation (APEC), Asian Development Bank (ADB), Colombo Plan, Economic and Social Commission for Asia and the Pacific (ESCAP), Food and Agriculture Organisation of the United Nations (FAO), G24, Group of 77 at the United Nations (G77), International Atomic Energy Agency (IAEA), International Civil Aviation Organisation (ICAO), International Labour Organisation (ILO), International Monetary Fund (IMF), Inter- Parliamentary Union (IPU), Non Aligned Movement (NAM), United Nations Educational, Scientific and Cultural Organisation (UNESCO), World Federation of Trade Unions (WFTU), World Health Organisation (WHO), World Trade Organisation (WTO), World Bank, Cairns Group.
GEOGRAPHY
The Philippines consists of over 7,100 islands covering 300,000 square kilometres (just less than the British Isles) divided into 3 main areas: Luzon (which includes Manila) in the north, the Visayas together with Palawan and Mindoro in the central area, and Mindanao and the Sulu Archipelago to the south. The archipelago is 65% mountainous, 35% coastal lowlands. The country has a tropical climate with a typhoon season.
POLITICS
Recent Political Developments
Gloria Macapagal Arroyo was elected the 14th President of the Republic in the May 2004 national elections after first assuming power in a military-backed civilian uprising in January 2001 known as 'People Power II' or 'Edsa Dos' (see ''Longer Historical Perspective' below). She was elected by a margin of over a million votes. Fernando Poe Jr., the main opposition candidate, disputed the election results but died before the case could be resolved by the Supreme Court.
On February 24, 2006, President Arroyo declared a state of national emergency due to an alleged conspiracy to bring down the government. A newspaper office was raided and some high profile arrests of opposition figures made. The proclamation and these actions drew widespread criticism and the President lifted the declaration on March 3, 2006. The political opposition filed two impeachment complaints against the President, one in July 2005 and the other in July 2006. The House of Representatives have dismissed both complaints.
Elections for seats in half the Senate and the House of Representatives were held in May 2007. The Opposition won the majority of the Senate seats available, but the President's support in the lower House was strengthened.
President Macapagal Arroyo's main policy priorities include (a) economic reform (see 'Economy' below), (b) poverty reduction (c) infrastructure development and (d) the fight against terrorism (see 'Recent Internal Developments' below).
System of Government / Elections
The Philippines' system is currently modelled on that of the US. There is an executive Presidency, and a bicameral legislature (Congress), comprising the Senate and the House of Representatives. The Presidential term of office is 6 years (Presidents are normally limited to one term).
The Senate has 24 members and Senators are elected for six-year terms. The House of Representatives has 208 directly elected members, and up to 52 selected by party list. Representatives are elected for three-year terms. Elections for half the Senate seats and all lower-house seats were held on 10 May 2004.
There are currently ongoing discussions and initiatives for constitutional change, which propose to shift from the current form of government to a parliamentary system.
Recent Internal Developments
Following a period of intense clashes between Moro Islamic Liberation Front (MILF), a Muslim separatist group in Mindanao, and the Armed Forces of the Philippines (AFP) in early 2003 peace talks resumed in 2005. While both sides have reported that progress is being made, the key issue of ancestral domain remains a sticking point. The MILF peace talks have strengthened regional relations, with Malaysia acting as mediator and (along with Brunei) stationing troops in Mindanao to monitor the cease-fire. Al Haj Murad Ebrahim succeeded the late Salamat Hashim as MILF Chairman in August 2003.
Peace negotiations between the National Democratic Front (NDF), the front organisation of the communist insurgents who have been fighting against the Philippine government for the last 35 years, and the Philippine government were suspended in June 2001, following the assassination of a Congressman. But they resumed in February 2004, when Norway hosted a new round of peace negotiations. The NDF pulled out of the talks in August 2004 to protest the government's failure to have the Communist Party of the Philippines and the New People's Army removed from the United States' and European Union's terror listings. The President has since made a commitment to use more force and social solutions to tackle the NPA, which has come against a backdrop of rising tensions between the administration and the legal parliamentary left, as well as a large number of reported extra-judicial killings of left leaning activists.
There is a high threat from terrorism throughout the Philippines. In March 2006, explosive devices were detonated in Jolo, Mindanao, and on a passenger bus in Digos City. Five people were killed and at least 49 injured. A further device was detonated in June in Maguindanao Province, Western Mindanao. Five people were killed and a further 10 injured. In October 2006, three separate explosions took place in western Mindanao killing six and wounding over 30. International terrorist groups, Abu Sayyaf and Jemaah Islamiyah, are thought to be behind these attacks, some of whose members are alleged to be using MILF training camps. The President continues to pursue a military solution against these groups, and the Armed Forces have had some recent successes against the Abu Sayyaf.
HISTORY
Longer Historical Perspective
Malays settled the pre-colonial Philippines from mainland and island South-East Asia. From about the eleventh century, Chinese, Indonesian and Arab traders arrived, making a significant cultural impact. Islam reached the south in the fourteenth century and gradually spread north.
European discovery of the Philippines dates from 1521 with the arrival of Ferdinand Magellan. The first Spanish settlement was established in 1565 and Spanish rule continued until 1898 with a 2-year break in 1762–1764 when the British occupied Manila during the Seven Years War. The Spanish introduced Catholicism to the Philippines and their system of government helped to produce the Philippine oligarchy. A nationalist movement developed in the late nineteenth century. The Philippine Revolution began in 1896, the year that the national hero, Dr Jose Rizal, was executed.
After the USA declared war on Spain in 1898, Spain ceded the Philippines to the USA for $20 million at the Treaty of Paris. The nationalist leader, Aguinaldo, declared independence in 1898, but the Americans refused to accept this and the Philippine-American war broke out. Fighting continued until 1902.
In 1901, the Americans introduced a civil government and proceeded to disestablish the Catholic Church and introduce an elective political system under American control with the aim of granting eventual independence. The Americans also dominated the Philippine economy. During World War Two the Philippines was occupied by the Japanese.
Full independence was established in 1946. American influence was maintained, however, by a range of treaties and agreements including 'parity' rights enshrined in the constitution, the 1947 Military Bases Agreement and the 1951 Mutual Defence Treaty. For the next 25 years politics were dominated by 2 political parties and power changed hands via regular if corrupt elections.
In 1965 Ferdinand Marcos won the presidential election amid student and rural unrest, and in 1972 declared Martial Law. In Mindanao in the south, a separatist muslim insurgency broke out led by the Moro National Liberation Front (MNLF). Communist insurgency also escalated. Martial Law was partially lifted in 1981 but the shooting of Marcos's opponent, Benigno (Ninoy) Aquino, in 1983 led to a major political crisis. Although Marcos declared himself the winner of the 1986 presidential election, the results were widely held to be fraudulent and Marcos was overthrown by the People's Power Revolution, led by Corazon Aquino and supported by the Catholic Church and parts of the AFP.
President Aquino supervised the introduction of a new constitution in 1987 and the restoration of democratic politics. She survived over 10 attempted military coups. During her presidency, agreement was reached on the withdrawal of the Americans from their Philippine bases at Clarke AB and Subic Bay. Fidel Ramos was elected President in 1992. He reoriented the Philippines towards Asia in general and ASEAN in particular, and generally raised the country's international profile. Ramos initiated successful peace talks with the MNLF and with military rebels, and began talks with the communists.
Joseph Estrada, a populist with a pro-poor manifesto, was elected President in 1998. He failed to produce economic improvements and his government was seen as a reversion to Marcos-style crony capitalism. Peace talks with the communists ground to a halt and there was a rise in Muslim violence in the south, including a spate of kidnappings by the radical and violent Abu Sayyaf group. Estrada pursued a policy of all-out military attack on the Abu Sayyaf as well as the Moro Islamic Liberation Front (MILF), which included the over-running of the MILF's main camp. Muslim unrest grew and there were concerns about human rights abuses. Estrada's popularity plummeted, especially after allegations were made of corruption and involvement in illegal gambling. Impeachment proceedings were brought against him before the Senate. The Senate’s failure to allow the opening of key evidence from the prosecution led to the second 'People Power' revolution, which removed President Estrada from power. When the Supreme Court declared the Presidency vacant, Gloria Macapagal-Arroyo, the then Vice-President, was sworn in. Former president Estrada is now under house arrest and is facing plunder and corruption charges.ECONOMY
GDP Growth: 5.4% (2006)
GNP Growth: 6.2 (2006)
GNP Per Capita: US$ 1,470 (2006)
Unemployment Rate: 7.3% (October 2006)
Average rate of inflation: 6.2% (2006)
Major Industries: Electronic components, Services (including call centres and business process outsourcing), Garments
Major Trading partners: United States, Japan, European Union, China, Singapore, Taiwan, Hong Kong
Major Investors: United States, Japan, Hong Kong, Singapore, European Union
Exports FOB: US$ 44.1 billion
Imports FOB: US$ 51 billion
For several decades the Philippine economy has under-performed in relation to many of its Asian neighbours. However the current government has made economic reform a priority and growth rates, while still low from a regional perspective, are now stable and moving in the right direction. Market sentiment has been bolstered by the government’s success in reforming VAT and corporate taxes and in reducing the fiscal deficit, although a number of challenges remain, including improved revenue collection and a need to reverse years of under-investment in infrastructure and public services.
In 2006 GDP growth of 5.4% was combined with a strengthened peso and a reduction in inflation from 7.8% to 6.2%, despite VAT increases and continued high oil prices. The stockmarket also did well, reaching levels not seen since before the 1997 Asian crisis. These trends are expected to continue in 2007, although uncertainty remains about the effect of the upcoming elections in May 2007. Foreign investors, in particular, are likely to await election results before making any major commitments.
GDP growth in 2006 was particularly strong in the services sector at 6.3%. The easy availability of English speakers makes the Philippines an increasingly popular location for call centres and business process outsourcing. Domestic consumption of services is also increasing, fueled by record inflows of remittances from overseas workers. (Remittances account for around 10% of total GNP). Manufacturing grew by 5.4%, in line with the overall economy, but the industrial sector as a whole suffered from a 6% contraction in mining as concerns about the social and environmental impact led to a slow down in government authorisation of new licenses. However a number of new investments have already been approved in 2007 and mining remains an area of enormous potential as the Philippines has some of the richest (and least exploited) mineral deposits in the world.
Potential Growth Drivers
Improving VAT collections/fiscal reforms
Infrastructure development
Power sector privatisation
Mining
Booming sectors e.g. BPO/IT outsourcing, tourism, finance.
Potential Growth Challenges
Tax revenue leakage
Slow infrastructure development
Opposition to mining investments
Slow privatisation
High birth rate
Political instabilityBilateral Trade
UK-Philippines trade relations are good with the balance of trade between the UK and the Philippines historically in the Philippines favour. This remains a continuing trend at a ratio of about 3:1.
In 2006 UK exports to the Philippines were £243.5m.In terms of the UK’s share of world exports to the Philippines the UK remains in 15th position after Japan, USA, Saudi Arabia, Germany and regional neighbours. Top UK exports include: electrical apparatus/appliances and spares, medical and pharmaceutical products, manufactured metals, office and ADP machinery, general industrial machinery and power generating machinery.
Opportunities exist particularly in the development of infrastructure projects, including power, transport, water, construction, oil and gas and environmental technology. Opportunities also exist in education and training, financial services, healthcare, IT and electronics and consumer goods.
UK imports from the from the Philippines in 2006 amounted to £755.5m Top UK imports include: electrical and office equipment and machinery, apparel, miscellaneous manufactured material, road vehicles, fish products, textile fibres, yarn and made up articles.
Bilateral Investment
The UK has over the last ten years been a significant investor in the Philippines. This is largely due to the pre- eminence of the country as a global financial centre, with around 40% of annual portfolio inflows originating there.
Britain has major investments in the Philippines concentrated in power, energy, water and financial services. There are currently about 200 British companies active in the Philippines, ranging from big multinationals to small one- man shows. Major British companies operating in country include Shell, HSBC, BG, Standard Chartered, Misys, and BAT. A number of British companies are involved in successful franchising operations, these include Debenhams, M & S, Top Shop, Burberry, Tower Records and Lush.
INTERNATIONAL RELATIONS
The Philippines was a founder member in 1967 of the Association of South-East Asian Nations (ASEAN) and has enjoyed generally good relations with her neighbours. Malaysia has been helpful to the Philippines in hosting and facilitating negotiations with the MILF.
There have been tensions with China over Philippine links with Taiwan. Chinese action in areas claimed by the Philippines in the Spratly Islands in the South China Sea has also caused tension, though there are hopes this may be reduced now that ASEAN countries and China have signed a Code of Conduct in the South China Sea. Recently, the Philippines, China and Vietnam have reached an agreement on the joint exploration of the area. Philippine relations with the USA have improved since the difficulties over the closure of the US bases in 1991 and the relationship remains one of major importance for the Philippines. Under President Arroyo, relations have improved further. She has given her full support to the campaign against terror and was supportive of the military action in Iraq. The Philippines has sent around 100 army, police and medical personnel to Iraq as part of a humanitarian assistance team, but they have now been withdrawn following the kidnap of a Filipino national.
On a State visit to the US in May 2003, President Arroyo was offered further US financial support for counter terrorism. The US also made a commitment, since fulfilled, to designate the Philippines as a major non-NATO ally. President Bush visited the Philippines on 18 October 2003. Annual military training exercises are conducted between the two armed forces, and US also provides training support in Mindanao.
A US Marine was sentenced to over 20 years of imprisonment in 2006 for the rape of a Filipina in the Subic Bay area. He has been transferred back to the custody of the US Embassy from a local jail, pending his appeal. The case has received substantial publicity and has prompted calls for a change to the Visiting Forces Agreement.
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