The PH Conundrum - Rich Country Poor Country

If the Philippines continues on its present track, it won't be long before Cambodia, Laos and Myanmar will also pass it by in the near future

The Philippines was one of the most developed colonies in Southeast Asia or the Far East as the region was referred to before World War II. Manila was known as the Pearl of the Orient and the Paris of the Far East and the melting pot of Americans and Europeans doing business in the American colony. A plantation style economy was in place and the wealth of the rich was evident in the grand houses in and around the city and the suburbs. Why is it that the Philippines is the consistent laggard in the region and has been left behind by its neighbors who have transitioned to first and second world countries?

The answer can be found in the socio-cultural and socio-economic structure of the country. Manila was the second most devastated city after Warsaw at the end of World War II. There was also damage to infrastructure outside of the capital during the campaign to liberate the colony from the occupying Japanese forces. Economic activity ground to a halt during the war and the rich suffered heavy losses not only in real property but also in their businesses.

There is also the haphazard manner in which independence was granted by the Americans. Although a commonwealth government was in place, the colony didn't have enough resources to rebuild what was lost in the war. The US decided to focus its efforts on Japan. It controlled the amount of reparations the Philippines received and didn't provide any technical assistance in the reconstruction effort.

The newly elected government also had to contend with a number of serious issues such as the Huk insurgency which began during the Japanese occupation as a resistance movement against the invaders. It didn't help that the elected leaders were from the elite of society and this resulted in a situation where they focused on recovering what they lost during the war first instead of the country altogether.

American hegemony didn't stop with independence. The US ensured security for their nationals by insisting that parity rights be granted to American citizens who still owned most of the major industries in the country at that time. A 99 year agreement was also set in place for US military bases in the country. Even if supposedly independent, the US continued to influence domestic affairs by directing the insurgency campaign and interfering in elections. To be elected President meant needing to obtain the blessings of Washington in a Presidential election cycle.

The Philippines formed part of the defensive perimeter of the US in the Pacific and its base in the region from where it projected its military power which served as a buffer during the cold war against communist China, the USSR and its client states in Southeast Asia.

Imelda Marcos famously once said that the Philippines is a rich country pretending to be poor. Anywhere you go the gap between the rich and the poor is very evident. The towering skyscrapers of Bonifacio Global City is separated by a main avenue from the makeshift condominiums erected by the poor on what is housing for the Philippine military. This is replicated everywhere in the country.

The Philippines has never achieved its full growth potential because of the collusion between politicians and the oligarchs which control the government and the economy. Rent-seeking oligarchs continue to hold the population captive in a consumption driven economy fueled by the remittances of overseas Filipino workers and the nascent business process outsourcing industry. Without these the economy would've long gone into a tailspin.

The election of the populist Rodrigo Duterte to the Presidency in 2016 brought the hope that he can finally break the impasse with his strong political will by making the oligarchs toe the line and minimizing the endemic corruption in the bureaucracy.

Two years into his term, the Duterte administration appears to have lost its way again. The focus on infrastructure development has suffered a hitch because of the delay in the release of official development assistance funds from China and Japan. Filipinos are reeling from the impact of a high inflation rate brought about by a rice supply shortage, higher oil prices and peso depreciation due to a recovering US economy which has seen hot money stock investments moving back to the US as the US Federal Reserve hikes interest rates to prevent a rise in inflation as well.

Political reform in terms of a constitutional amendment to change the form of government to a federal parliamentary system is stalled in its tracks. The administration is without a feasible draft to present to the people on account of the product of the appointed Constitutional Commission being dead on arrival because it was patterned heavily after the US federal system.

Western style democracy is definitely not suited for the Philippines. Its regional neighbors continue with their march to progress even if under harsh or benevolent dictators. Vietnam has passed the Philippines in terms of development benchmarks while remaining a communist state. If the Philippines continues on its present track, it won't be long before Cambodia, Laos and Myanmar will also pass it by in the near future.

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About the Author
RG is a seasoned international trade and sales and marketing professional who also dabbles in writing. He was a contributor to Business World in the mid-90s and is also a tech geek.
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