The Philippines is an onion


Second of two parts

(We conclude today Reader Hector’s analysis of the Philippines today, “The Philippines is an Onion,” which as I expected has generated much interest and discomfited not a few members of the Philippine establishment. It’s not lost on me that in yielding my space to Hector, I am taking the equivalent of a professor’s sabbatical. I thank him for affording me this break. I will resume my own reflections and analysis of national affairs on Saturday.)
If real growth really was 6%, then income levels would have increased significantly, particularly over the past 5 years, and poverty reduction would have been a natural consequence. Clearly something is out of sync, or someone is not telling the whole truth.

The fact that all other Asean countries have reduced poverty levels by 15% – 40% in the past 5 years, even with lower headline GDP growth figures, only underscores the fact that the Philippines is on the wrong path. No one in government seems prepared to answer the questions; Congress members busy themselves with minutiae; and few in media seem enthusiastic to ask the obvious.

The GDP figures are also inflated by OFW remittances, short-term money flows, hot money, and financial speculators. they add up to a flurry of activity, but one which has little basis in sustainable growth, in benefits to the manufacturing and agricultural sectors, which account for 70% of jobs, or in benefits to the general population.

It is also important to differentiate between short-term speculators and long-term investors. The Philippines has speculators who are happy to talk up the market and take profit. Investors on the other hand look to the underlying fundamentals and are not convinced, as highlighted by the poor flow of Foreign Direct Investments (FDI).

Stock-market activity alone is meaningless to the Philippines, particularly in a small, and sometimes questionable, exchange. The country does not want profit takers; it needs innovators and investors committed to the long haul.

For PNoy Aquino to simply trumpet headline GDP growth in isolation is like a basketball coach proudly saying that his team had twice the number of goal attempts as the opposition, but conveniently avoiding the fact that the team lost.

A few families vacuum up all the gains
The reason for no change in poverty levels is relatively simple. The consolidation of economic power in the past 5 years in a handful of people/families, vacuums up all the gains, and at the same time stifles any potential benefits for the wider economy, thwarts innovation, reduces tax collection, and impedes national competitiveness.

Income inequality is the inevitable outcome, and the wealth gap has now become a chasm. While the oligarchs enjoy excess profits through their monopoly positions, there is a wage freeze for the vast majority, made worse by rising commodity prices.

The elusive goal of poverty reduction is directly linked to income inequality — the higher the income inequality, the less impact any growth will have on poverty reduction. It is known as the Growth Elasticity of Poverty (GEP). Not surprisingly, The Philippines has the worst GEP in Asia, and one of the worst in the world.

The combination of high income inequality, wealth concentration, overseas remittances, personal borrowing, and jobless growth is a perfect storm for a poverty tsunami.

Snapshot of incompetent administration
We get a snapshot of how the Philippines is failing by reviewing a few figures.

Wealth of top 10 oligarchs
2009 – $11.1 Billion
2014 – $50.6 Billion
Increase = $39.5 Billion

National GDP
2009 – $168.3 Billion
2014 – $284.5
Increase = $116.2 Billion

Tax of top 10 oligarchs
2009 – 2014 = only $2 Billion

Only 25 of top 50 oligarchs in top 500 taxpayers!

Wealth of top 10 individuals as % of national GDP in selected countries
(All have the same number of billionaires)

Saudi Arabia – 6.9% of national GDP
Norway – 4.9% of GDP
Australia – 3.0% of GDP
S. Korea – 3.0% of GDP
Philippines – 17.0% of GDP
(increased from 15% in 2012)

The figures speak for themselves, and are damning evidence of failed strategies and an incompetent administration. They also represent a situation which has no parallel anywhere else in the world. It is not the personal wealth per se but the fact that a small group has dominant control of all key industries/sectors, and therefore control of the system itself. They decide the pace and direction, and just as easily could hold the country to ransom.

No vision, just opportunists
I think the Philippines is not “a flawed democracy” but “a constitutional oligarchy.”

Also the fact that many of the 1st generation still cling on to power past their sell-by date and into their 70’s makes evolutionary progress painfully slow, particularly in a system where the baton is passed on to an indolent relative, rather than to the best runner. The “system” does not cultivate good future leaders, but consciously freezes them out.

Without new blood and new thinking to raise the bar and develop political maturity it will be a struggle to move to the next stage in development, and one step up the inclusivity ladder, but it is inevitable, one way or another.

The oligarchs are not only playing the corruption game, they are the main facilitators and perpetuators of the system, as long as it benefits them.

When oligarchs combine with the 75% of lawmakers coming from dynastic families, together they have a stranglehold to keep themselves in power and the nation in poverty.

Instead of moving towards an innovation economy, revitalizing agriculture, and investing in manufacturing, the country becomes asphyxiated by the death grip of the oligarchs.

The oligarchs are only on the second course of an “all you can eat” banquet, and are relying on a number of factors to keep the table constantly replenished, and their plates stacked high.

One of these factors is the election in 2016 of LP candidates for President and Congress, or “more of the same’.

Mar Roxas will incarnate Aquino 3.0 (after Cory and BS Aquino); Congress will remain a rubber stamp and block constitutional reform.

Distorted economics, perverted politics
Only oligarchs like to win fixed races, or ones where they are the only competitor. True businessmen, like genuine sportsmen, relish fair competition. Oligarchs breed corruption, they make it their primary modus operandi, and embed it within the system to their advantage. No oligarchs, no corruption.

But the new normal is a distorted model of economics, and a perverted approach to politics.

It is also reflected in the abomination of selective injustice, the sheer volume of political prisoners quietly incarcerated without trial, and a judiciary without integrity.

The Philippines, as I’ve said, is not at all “a flawed democracy” but a “constitutional oligarchy.”

30 years ago, in 1986, the Philippines was given an opportunity to build a new society, but the greed of the few squandered an opportunity for the many, and now the country trails the rest of Asean. That is an indictment of all the politicians who put self-interest before national interest, and bribes before integrity. They have been the architects of the country’s downward path.

While the older generation of leaders hold on with the frailty of old age to the past, a new generation needs to seize the moment.

Six more years of widening inequality and a greater accumulation of wealth by the top 10 oligarchs and power by the top 10 dynasties will create an untouchable and unassailable dictatorship. The tipping point will be passed, if it has not been already.

The “system” does not cultivate good future leaders, but consciously freezes them out.

Without new blood and new thinking to raise the bar and develop political maturity, it will be a struggle to move to the next stage in development, and one step up the inclusivity ladder, but it is inevitable, one way or another.

The Philippines needs strong, new leadership that will break the system, and not pander to, or be obligated to, the oligarchs.

God help The Philippines. 2016 will be a bumpy ride.


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  1. As one reader noted, the action part is missing.

    Doing a root cause analysis, one can deduce that the banking system is complicit with the oligarch’s stranglehold of the Philippine wealth. The big banks are owned by the oligarchs which should not be because they already own their own business. So the banks now became tools for the oligarchs to further launder their skyrocketing wealth. In most other countries, the banks are majority owned by the public.

    In order for the Philippine government to implement a true policy of redistribution of wealth, the banks should be separated from the oligarchs. And the CEO of these banks should come from the masa and not from another oligarch family.

  2. charles englund on

    Hector, I agree with many of the things you have said. Can you send me a pm on facebook? Would like to find out more and exchange views.

  3. Please note the 10 oligarch families and company who is the root of corruption from the government. These 10 oligarch businessman is trying to controlled the economy as well the minds of filipino people. They want the filipino to suffer as per Corykong Aquino and Abnoy agenda. These are the motives of this oligarch families businessmen who controlled Aquino family and Liberal Party , Look at these Mr. Henry Sy, he almost owned all private schools in our country. right? and all malls.. But Private schools with poor teaching and educational system… pera pera lang ang labanan.. kahit bobo ang mga student without learning new technology and information. Kaya dumami ang tanga ng dahil sa inyo. Pathetic… Huwag ninyong gawing tanga lahat ang mga filipino mga oligarchy, dahil alam naming lahat na Filipino ang gusto ninyong aming bansa at mamayan . Sana karmahin kayo para hindi na kayo pamarisan ng ibang ganid na hell with you oligarch. GOD SAVE THE PHILIPPINES FROM THIS GREEDY BUSINESSMAN …and their Companies..

  4. The country is not a flawed democracy but a constitutional oligarchy? Does that mean that Smartmatic is okay with you? By your own definition, an oligarchy cannot be a democracy. The solution, in a nutshell, is revolution.

    • Smartmatic has little to do with democracy. Read about their history.

      And ask why the votes are being routed via a ‘second/secret’ server before they go to the main central server.
      The transmissiom contract should have gone to another company, but someone was keen to put all the eggs in Smartmatics basket. Illogical, or illegal. Next year will tell.
      And why is the receipt function not being implemented.
      Technology only makes it quicker to cheat. Now you see your vote, now another candidate steals it – the power of technology and the computer is quicker than the eye. Magic.

      Modern democracies keep it simple, open, and do not need an army of lawyers, or suffer from years of court cases.
      I would not trust Smartmatic as far as i could throw a PCOS machine.

  5. Kaya nag di na uso ngayong ang puro salita. Dapat ay action. We all know that it was his war against the oligarchs that prompted Andy to declare martial law. Sya ay umaksyon. Sa panahon ngayon, kailangan na ang tunay at nakabuluhang pagbabago ng sistema. Hindi nation kailangan ng eleksyon that will only perpetuate the hold of the oligarchs on the economy. Who are funding those presidential candidates? Do you think they will not ask for the markers after their pet has won the derby? Maybe, the electorate can ask those known presidential candidates who are funding their campaign because in their personal capacity, no one among them has the kind of money to splurge in their present pursuits. Then, we will know who they will be obligated to once they are in their throne.

    What we need now is a quick surgical operation to accelerate the appointment with Satan of all incompetent, corrupt and criminal elements of society and the establishment of a civic-military-religious junta that shall put a constitutional convention within 30 days and an election within 60 days. There should be a timeline for the operation. There is no more time for pencil pushing.

  6. Leodegardo Pruna on

    Not only is the Philippines a “FLAWED DEMOCRACY” and “CONSTITUTIONAL OLIGARCHY” which began in l986 when Cory took the reigns of government but also a “DAMAGED CULTURE” with the oligarchy consisting of mixed colors and race. Imagine, the mestizos (Ayalas, Port owner/operator, etc.), Chinoys (Sy, Tan, etc.), who make a lot from the Philippines and invest it outside of the Philippines (Spain, China, etc) where the gains as welll as security are solid. The TRUE FILIPINOS spend their brains and hard work in the country. But, is there an end to the Filipino misery? God bless the Philippines.

  7. Constitutional amendments of the “nationalistic economic and industry provisions” allowing foreign capitals to invest 100% ownership in agricultural/real estate developments, communications, mining, fishing tourism industries, manufacturing and high technology industry, etc must be the priority of the national leadership and Congress to amend and change the Constitutional restrictive provisions. With foreign investors allowed 100% ownership of these ” nationalized industries” the oligarchies business playing field will be leveled that will provide fair and secured local employment in a steady and more or less permanency that will alleviate or reduce poverty. The local oligarchs will face a different business playing field of competition put up by the foreign investors. This way the oligarchs will lessen its political influence on the leadership of the government as they are being watched by the foreign investors who can complaint of unfair competition via corruption of the leadership. The moral values of the foreign management will be a check-point where local oligarchs can be checked and denounced. As the moral business standards are leveled up the local workers can benefit from these sanitazation of the workers benefits. With foreign investors providing the business catalyst to the country’s business moral standards that will,substantially reduce corruption by the oligarchs that will redound to the economic benefit of the nation and consequently the reduction of poverty via higher and security of employment!

  8. Amazing Analysis, It’s a crying shame that Aquino trumpets the 6 % growth like that’s all that matters and the congressional thieves clap like wind up toy monkeys.

    Personally i think it’s too late for the Philippines, The citizens seem to care more about celebrities than themselves or whats on Eat Bulaga rather than what the government is doing or not doing.

    No matter how many scandals the government or government officials get caught in all they have to do is say it wasn’t me and /or send out the paid liars to give a statement to the media (problem solved) the people go back to their celebrity worship.

  9. Hector himself proves he is an onion too by the points he makes in this second part of his analysis reproduced by Yen Makabenta in his column. Hector centers his canons on the Oligarchs of the Philippines, some of the names I have mentioned in my reaction tothe first part such as Ayala, Aboitiz, Lopez, et al, yet Hector prescribes the elination of hte 60/40 provision of the Constitution on economic ownership of businesses in favor of opening to foreigners – foreigners who will invariably be the global oligarchs teaming p with the local Oligarchs too – and this is what makes us cry : Hector misses the crucial prescription which his admired economies such as Vietnam or other Asean states maintains – strong State owned or controlled enterprises to provide the basic factors of production cost low if not cheap so human development and economic development can proceed… read more of this at

    • I’ve been living in Vietnam for more than 16 years as an expat, and although I admire this country, its people, and the way they have been moving forward especially with regards to poverty alleviation (BMWs, Ducatis, Mercedes Benzes are a common sight nowadays, side by side with motorbikes), I would not exchange my freedom for an authoritarian police state.
      My two cents.

    • I agree with you. If the 60/40% suggestion is passed, the local oligarchs will just be replaced by foreign oligarchs and the country will remain unchanged and mired in the usual cycle of poverty, misery, graft, corruption, prostitution, crime, etc. (name the “evil”, the Philippines has it). I remember Rep Belmonte (Speaker of the House) suggesting the same in the House of Representatives (supposedly to increase the investment of foreigners in the country), but he couldn’t assemble a quorum to approve the law, and so it failed (PNoy was against it). It was revealed that one of his main reasons for the proposed law was “self-interest”. He would have benefited personally had it passed because he owns lots of land that he could sell and was planning to sell to the foreign investors. No doubt, anyone who suggests such 60/40% motion should be looked at with suspicion.

      What the country needs is a leader who’s brave, beholden to no one, capable of financing his own campaign, who would travel around the country and inspire the creation of a movement or revolution of “hope and change”. One who speaks Pilipino for the Pilipinos. Who knows?
      Maybe one of these days, Heaven will smile on the Philippines and bring forth such a man. “Hope springs eternal”, after all.

  10. catalino generillo on

    Incisive diagnosis and apt prescription for transformation.
    This obscure citizen only suggests restatement of the author’s observation that “the Philippines is not ‘a flawed democracy’ but ‘a constitutional oligarchy’” to “constitutional oligarchy because of flawed democracy”.

  11. There seems also to be no national and concerted plan on the part of the national government. If ever there’s one, the next government or administration usually ‘abandons it, simply because it was started by the former administration whether it’s working or not. That’s the case of the current administration. What’s also obvious is the fact that infra-structures are being renamed, by usually the new administration which, in every sense, is preposterous.Waste of billions of the people’s money and the unscrupulous so called leaders don’t care. Time will come when we will all wake up saying: “Why, how come, here we go again; it’s too much already?!

    Generally, in the Philippines, the so called ‘leaders’ and government officials have the tendency to enrich and aggrandize themselves. The deterioration of respect of government officials and the lack of development in the country, compared to other Asian countries, are plain proofs of neglect.

    In modern politics, the Philippine has yet to see more statesmen/women than self-centered politicians. Pathetic!