Corruption, weak gov’t undermine RP — USAID

Security problems, corruption, weak government institutions and uneven application of the law continue to undermine the Philippines development potentials, the United States government aid agency’s Philippine strategy report for 2009 to 2013 stated.

While President Arroyo’s government had demonstrated willingness to improve its national and local governance and rule of law record, the US Agency for International Development (AID) said it still faces challenges in the implementation of many of its reforms.

“Corruption remains a significant problem,” it said. “Transparency International ranked the Philippines 131 out of 180 countries on its 2007 Corruption Perceptions Index, a ranking that has changed little since 2001. In its 2008 report, Freedom House rated the Philippines as only “partly free” and highlighted concerns about the state of political rights and civil liberties.

Other critical national development challenges the USAID cited were inadequate social services and infrastructure; environmental degradation; frequent natural disasters; its fast growing population; and the armed conflict in Mindanao.

It also noted that with national elections scheduled next year, US government assistance approaches will need to remain flexible in terms of governance and rule of law programming.

“The run-up to elections will have some impact on the US (government’s) ability to engage policymakers on a range of issues and may slow implementation of certain assistance program activities,” it said.

Economic growth rates, on the other hand, have not been sustained at a level sufficient to raise real incomes and reduce poverty, the USAID said.

“It is estimated that 40 percent of the Philippines population, approximately 36 million people, live on less than $2 a day. The poorest areas of the country are concentrated in conflict-affected areas of Mindanao, where up to 70 percent of the population lives in poverty,” it said.

USAID said historically, the Philippines has had “a relatively weak investment climate and has failed to attract a significant share of foreign direct investment,” averaging only 14 percent of gross domestic product (GDP) since 2000, one of the lowest rates in the region.

Domestic investment had likewise remained stubbornly below potential, and scarce government resources had prevented adequate public sector investment in critical sectors like health, education, and infrastructure.

“Despite moderately strong growth of the GDP and an improved fiscal balance in recent years, the Philippines has been overtaken by Malaysia, Thailand, and China on a GDP per capita-basis,” it said.

USAID said global competi-tiveness rankings and other investment climate diagnostics confirm that the major constraints to Philippine growth are “inadequate infrastructure, cumbersome business procedures, poor tax and customs administration, barriers to market entry, weak property rights, high energy costs, and lack of equitable and effective regulation and enforcement.”

“These conditions persist despite repeated efforts at reform. The key economic growth development challenge remains addressing competitiveness and governance-related issues,” it said. “One critical assumption is that this level of concern and attention to these weak areas will continue into the future, especially with presidential elections scheduled for 2010.”

Although remittances from overseas Filipino workers are the largest source of the country’s foreign exchange earnings, which represent 10 percent of the Gross Domestic Product (GDP), USAID warned that “any significant drop in these remittances would have a major negative impact on the economy.”

Retail consumption fueled by remittances drives the domestic economy, but consumers, especially the poor, are under increasing pressure from rising energy and food costs, it said.

Along with the long-running communist insurgency that affects the entire country, armed conflict, violent crime, and clan-based feuds in Mindanao pose significant threats to peace and security, USAID said.

Serious political challenges, meanwhile, remain in achieving a negotiated peace settlement between the Moro Islamic Liberation Front (MILF) and the Philippine government.

“Complicating the internal security landscape in Mindanao are the possible links between domestic Islamic insurgents and international terrorist networks. Addressing these threats requires international and regional cooperation and improved police and military capabilities to better monitor and control the movement of people, goods, and funds,” it said.

Amid these problems facing the Philippines, USAID said the US government remains committed in providing assistance to country to improve governance, address security problems and get rid of corruption.

“The overall strategic vision of US foreign assistance in the Philippines is a more prosperous, well-governed and stable democracy that is able to meet the needs of its people, especially the poor,” it said. “The US government will seek opportunities to advance our governance and rule of law objectives, across the full range of our programs, with a particular emphasis on human rights, reduced corruption, effective administration of justice, and provision of services by the national and local governments.”

It stressed that the central US foreign policy goal is for the Philippines to become “a more stable, prosperous and well-governed nation that is no longer a haven for terrorists.”

As a major non-NATO ally of the United States, it said the Philippines plays an important role in regional and global initiatives aimed at building a more peaceful, prosperous, and secure world.

Within the Association of Southeast Asian Nations (Asean), it said the Philippines plays a positive role on a range of issues important to the US, including trade and investment, Myanmar policy, democracy and human rights, and regional security threats from terrorism to weapons of mass destruction.

“Our assistance partnership with the Philippines directly supports US foreign policy interests by promoting and deepening cooperation on security, trade and investment, and global environmental and health issues,” USAID said.  –Michaela P. del Callar, Daily Tribune