EU-PH Free Trade Agreement negotiations: a priority for both partners

At their bilateral summit last July, Von der Leyen and Marcos expressed their intention to conclude a trade agreement 'as soon as possible'. Manila intends to achieve the goal by 2028. The agreement would unlock the still untapped economic potential between the two partners.

Article by Sophia Ordoña (European Chamber of Commerce of the Philippines – ECCP) and Pierfrancesco Mattiolo 

The President of the European Commission, Ursula von der Leyen, expressed the intention to resume negotiations for a free trade agreement (FTA) between the EU and the Philippines during her recent and significant visit to the Asian nation at the end of July. The Philippine President, Ferdinand Marcos Jr., in turn, voiced his support for a swift conclusion of the treaty before the end of his term in 2028. Marcos's economic agenda is geared towards a decisive opening of the domestic market: following the liberalization of telecommunications, transportation, and renewable energies, the conclusion of the FTA would mark another significant step in this direction. The Philippines is a strategic partner for Europe and Italy. The economic relations between Rome and Manila are strong; in 2022, they were worth 1.24 billion euros, and the FTA would enhance opportunities in key sectors such as agricultural machinery, infrastructure, and textiles. As a signal of the amicable atmosphere of collaboration between the two countries, the Italian and Filipino Ministries of Tourism started working on a tourism cooperation agreement last year.

The FTA represents an opportunity for both Brussels and Manila. The EU recognizes the Philippines as a like-minded partner in terms of democratic values and sustainable development, situated in a region, the Indo-Pacific, particularly sensitive to the economic and strategic interests of the Union. Deepening ties with the Philippines – and all other ASEAN partners – falls within the de-risking strategy adopted by the EU, meaning cultivating relationships with new trading partners and mitigating the political and economic risks associated with overdependence on countries like China. On the other hand, for the Marcos administration, concluding the treaty by 2028 is a priority not only politically but also economically. Currently, the country benefits from the Generalized Scheme of Preferences Plus (GSP+), which grants many Filipino products tariff-free access to the European market. This favourable regime is set to expire at the end of 2023. Although the Commission has proposed extending it until 2027, the Philippines is close to become a middle-high income economy around 2025. Such ‘graduation’ would initiate a three-year transition period, after which Manila would lose its GSP+ benefits, as the scheme is aimed at supporting low income countries. If concluded before 2028, the FTA would replace the GSP+, thus allow Filipino companies to maintain tariff-free access to the European market for the products under the FTA scope.

From the Philippine perspective, many sectors would benefit from the agreement, such as agriculture and energy. Specifically, the garments sector would see an increase in employment of between 120,000 and 250,000 and exports worth $600 million in the first two years following the implementation of the agreement. The archipelago is also rich in essential raw materials (such as nickel, copper, and chromite) crucial for green technologies. Service exchange could also increase. The Filipino IT-BPM sector is valued at $50 billion and is highly dynamic, making it possible to expand its market share in Europe. For European companies, having greater access to a country that is growing in every aspect – economically (GDP grew by 7.6% in 2022), demographically, and socially, with a young and increasing middle class – would be advantageous. The agreement could finally unlock untapped economic potential: bilateral trade between the EU and the Philippines is relatively low compared to that between Europe and other ASEAN countries, and only 4% of European investments in ASEAN economies are directed towards the Philippines.

Negotiations for the FTA will also have to overcome certain obstacles. The protection of intellectual property rights (IPRs) was one of the most sensitive issues in previous negotiation rounds between the two partners, but now it might be easier to find common ground, as the Philippines has been removed from the European Commission's IPR watch list since 2019. The chapter on IPRs in the future FTA would likely include stronger rules for protecting geographical indications of European and Italian food products. Finally, von der Leyen indicated the need for deeper alignment between the two partners on environmental and labour protection matters. The President of the Commission also acknowledged the progress made by the country in terms of human rights, and the ongoing bilateral dialogue aims to address the remaining open issues. These obstacles can become opportunities if the FTA manages to include effective rules in these areas. An agreement would represent an opportunity for growth not only in the economic sense but also politically and socially for both partners.

EU and Philippines towards free trade

Important visit to Manila by European Commission President Ursula Von Der Leyen. Moving toward a free trade agreement

Article by Tommaso Magrini

An important visit to the Philippines by Ursula Von der Leyen took place in recent days. She met with President Ferdinand Marcos Junior at the presidential palace in Malacañang. Here Von der Leyen expressed her intention to give "a new impetus to bilateral relations between the European Union and the Philippines." At the top of the agenda: trade, ecological transition, digital innovation and security. On the first item, the two leaders announced their intention to pursue the relaunch of negotiations for an "ambitious, modern and balanced free trade agreement focused on sustainability." An ambitious plan, which follows the free trade agreements concluded by the European Union with Singapore and Vietnam in past years. A testament to the fact that Brussels has its sights set on Southeast Asia, a high-growth area that also allows for a diversification of trade and diplomatic relations in the Asian region from China. "The Philippines is a key partner for us in the Indo-Pacific region, and with the launch of this assessment process we are paving the way to take our partnership to the next level," von der Leyen said. "Together, we will realize the full potential of our relationship, creating new opportunities for our businesses and consumers, while also supporting the green transition and promoting a just economy." For her, the future free trade agreement will include ambitious commitments on market access, fast and effective sanitary and phytosanitary procedures, and the protection of intellectual property rights, including geographical indications." Also at the center, however, is the issue of sustainability, a dossier on which an announcement has already come during the visit. Indeed, Von der Leyen and Marcos launched the Team Europe initiative on the green economy, which includes an EU contribution of 466 million euros for "green" waste management. All under the Global Gateway program launched by the European Commission. Also planned is the transfer of skills, training and technology aimed at building an alternative plastic waste management model. "The Philippines and the EU are kindred partners because of our shared values of democracy, sustainable and inclusive prosperity, rule of law, peace and stability, and human rights," Marcos said instead. "The ongoing exchanges between President von der Leyen and myself, which began in Brussels last year, testify to our common desire to take our bilateral relations to higher levels," he added.

Philippines, record growth

Manila recorded the fastest GDP growth in decades in 2022. And the trend could continue in 2023

Article by Geraldine Ramilo

Having just recorded the fastest growth in 40 years (+7.6%), Philippine President Ferdinand Marcos Jr. believes the country's economy will record the fastest growth in Asia in 2023, with estimates of around 7%. This expansion is due, as the President himself says, to solid fundamentals present throughout the country. In fact, the Philippine economy has been stable all of last year, with continued GDP expansion heading into the final months of 2022, and unemployment steadily declining. The economy grew at a fast and unexpected pace last year, with the main source of growth on the demand side being household consumption spending. Nothing makes Manila's statistical authorities rule out that this trend will continue in 2023. The rapid growth seen in recent months is even more remarkable when placed in the weak global environment of uncertainty that most countries face. But despite these positive forecasts, the Philippines' growth has not been without obstacles. For example, in his first six months at the helm of the country, Marcos faced numerous economic challenges, including tight public finances and rising borrowing. In addition, soaring commodity prices have driven inflation to its highest in 14 years. Adding to the economic challenges are challenges in the political and diplomatic arenas. Indeed, like so many others in Southeast Asia, Marcos has been trying to balance the country's interests between the United States and China by cooperating with the latter economically, starting with the agriculture and infrastructure sectors. He also met with Chinese President Xi Jinping earlier this month, agreeing to continue talks on South China Sea energy exploration. Despite some issues, including food inflation to which Marcos plans to respond with increased imports, however, Manila looks set to significantly accelerate its growth.

Water privatization: the different experiences of Jakarta and Manila

To remedy the problems with the water systems in the two capitals, municipalities chose to grant management to private companies in the 1990s. Despite similar premises, however, the two cities' experiment did not play out in the same way.

The privatization of public water service in the two Southeast Asian megacities dates back to the 1990s. At that time, heavyweight institutions such as the World Bank and many economists had pinned high hopes on the role that the free market could play in developing countries, and in strategic sectors such as water there was a prevailing view that privatization was the way to go. And so it was that many utilities were fully or partially privatized, often with the support of the United States or multilateral development institutions. 

Until that time, the water systems in Jakarta and Manila were entrusted to their respective municipalities and were in a very poor condition, with a very low user rate among the population. Jakarta's aqueduct system had originally been built by the Dutch at the time of their rule in the country, and obviously has not kept pace with the rapid growth of the metropolitan area, which now has a population of 11 million. Manila's water and sewage system is even older than Jakarta's, which was created in 1878 by the Spanish colonialists and designed for a city of 300,000 inhabitants, but now has more than 14 million.

The two cities' water system privatization schemes were initially very similar. In fact, in both cities, the metropolitan area had been divided into two sectors assigned to different companies, and in both cases the concession had an initial term of 25 years. The largest international water companies were brought in to provide technical assistance and financing schemes to Indonesian and Philippine government agencies in support of privatization programs, while service provision was assigned to large international conglomerates along with prominent and politically well-connected local groups, an essential element in obtaining privatization contracts. 

Water privatization in Manila began when then-President of the Philippines Fidel Ramos, in order to combat the water crisis that was affecting the capital city, issued a tender that was won by two companies-Maynilad Water Services in West Manila and Manila Water in East Manila. Despite some initial difficulties, exacerbated by the financial crisis that had hit Asia in those years, the two companies have to date achieved more than 94 percent service coverage in the city compared to 58 percent before privatization, and water leakages have been brought down to 27 percent compared to about 67 percent pre-privatization. For these reasons, water privatization in the Philippines is considered by many to be one of the most successful public-private partnerships in the world.

Differently was it, alas, for the Indonesian capital. Here, then-President Suharto, seeking to remedy the inefficiency of the public water delivery system in Jakarta, which did not allow equitable access to water for all citizens, granted the management of the water network to two foreign companies without any competitive bidding. These were the French Suez Environment, which together with the Salim Group (owned by a tycoon loyal to the president), had formed PT PAM Lyonnaise Jaya (Palyja). The other company, however, PT Aetra Air Jakarta, was formed by Britain's Thames Water together with Suharto's son. In the 25 years of the concession, the two companies have undergone numerous corporate changes and share divestments, and have made little progress in expanding service coverage, as well as in increasing efficiency but especially equity in terms of access to water among different strata of the population. According to the Jakarta Post, after nearly two decades, coverage has only reached 59 percent of the city's residents, despite average water rates being quite similar to those in Manila. In 2017 then, the two water companies were sued for failing to meet their contractual obligations, and the court ruled against them, threatening the end of the water privatization experiment in Jakarta, although the system will likely persist but in different ways. 

It remains to be seen, however, whether the Indonesian capital will be able, albeit with some delay, to replicate the successful example of its Philippine counterpart.

Philippines: new Marcos, old diplomacy

The son of Manila's former dictator has declared his support for an "independent foreign policy," using an expression coined by Duterte that can be translated into strategic ambiguity with pro-Chinese overtones

By Lucia Gragnani

Rodrigo Duterte's era as president of the Philippines has come to an end. After six years marked by the fight against drugs domestically and an ambiguous policy internationally, the former president officially retired from political life. With the May 2022 elections, he was succeeded by Ferdinand Marcos Jr. known as Bongbong. Despite the Marcos family's grim history, marked by 14 years of military dictatorship led by his father Ferdinand Marcos, Bongbong managed to bring home an unprecedented victory since the end of the dictatorship. 

The 90-day campaign, marked by an Orwellian-style effort to rehabilitate the image of the Marcos family, paid off. With Sara Duterte in the vice presidency, the 2022 elections proved to be a victory for Philippine political dynasties and an own goal for Manila's democracy.

During his campaign, Duterte had declared South China Sea issues a priority, putting them to dictate relations with China. In fact, Philippine-China relations have developed relatively positively, with Manila turning its strategic gaze more toward Beijing and less toward Washington in the early years of his presidency.

The foreign policy of the newly elected Marcos is of the same matrix. Indeed, he too has declared his support for an "independent foreign policy," using an expression coined by Duterte, which can be translated into a strategic ambiguity with pro-Beijing overtones. On the campaign trail, Bongbong announced he wanted to intensify bilateral relations with China, and to negotiate an agreement to overcome disputes in the South China Sea, stalled since arbitration in 2016. 

The tribunal, addressed in 2013 by the Philippines against China at the United Nations Convention on the Law of the Sea (UNCLOS) tribunal, had declared Beijing's historical claims as unlawful, and denounced China's belligerent behavior in the South China Sea. The outcome, seen by the Philippines as a victory, had been promptly rejected by the other side.

Disputes regarding sovereignty over South China Sea formations remain the main obstacle in relations between Manila and Beijing, and have helped make Duterte friendlier toward Washington during his last years as president. Among the Association of Southeast Asian Nations (ASEAN) countries that claim waters and islands in this maritime basin, the Philippines and Vietnam are the most exposed to confrontation with China.

In April, Manila and Washington conducted the most massive military exercise in seven years. The Balikatan, in Tagalog "shoulder to shoulder," mobilized about 9,000 Philippine and U.S. military personnel in the Luzon area. Besides the United States, another strategic partner is India, a rival country to Beijing, with which the Philippines held naval exercises in the South China Sea in 2021.

To ease tensions between ASEAN and Beijing, 2022 should see the signing of the long-awaited Code of Conduct for the South China Sea. The document aims to reduce the likelihood of conflict between the parties by creating a guideline for the behavior of states in disputed waters. Among its consequences would be to facilitate the exclusion of third countries from the debate, mainly the United States and India.

Washington's engagement in the Indo-Pacific, which has intensified in recent months, casts doubt on meeting the 2022 deadline. The presence of the Philippines (and other ASEAN countries) within the Indo-Pacific Economic Framework (IPEF) reduces the likelihood that the code of conduct will be made legally binding, and contributes to the further ambivalence of Marcos' foreign policy. 

Philippines, Marcos Jr. wins: what prospects for Manila?

The son of the former dictator wins an overwhelming majority. What does his rise to power mean for the Southeast Asian country?

On May 9, 2022, the Philippines put a Marcos back in charge of the country. And with unequivocal results: a few hours after the closing of the polls, Ferdinand Marcos Jr. had already obtained a clear lead over the other leading candidate, Leni Robredo. To dictate the success of "Bongbong" also the choice of Sara Duterte as his candidate for the vice-presidency. This is the largest electoral success ever recorded by a candidate since 1989, when Corazon Aquino obtained office on the push of the revolts against Marcos' father.

Ferdinand "Bongbong" Marcos Jr.: who is he?

Born in 1957, Ferdinand Marcos Jr. is the only male son of the former Philippine dictator. Exiled with his family in Honolulu after the collapse of the regime, he returned to the Philippines in 1991, two years after the death of his father. Only a few months passed from his return to his homeland to his entry into politics: President Aquino had in fact granted both his return to the Philippines and the possibility to re-enter politics. Ferdinand "Bongbong" Marcos Jr. was first deputy, then governor of Ilocos Norte (historical fiefdom of the Marcos dynasty), and finally congressman and senator between 2010 and 2016. In Ilocos Norte, nevertheless, some remember him as an absentee governor: he had enrolled in Oxford and was often in the States, but he never finished his academic career beyond graduation.

In 2016, he ran for vice president, but lost to candidate Leni Robredo - known later for her opposition to Duterte's policies. It is therefore no coincidence that Marcos Jr. soon inherited Duterte's electoral pool (despite some rifts between the two). His victory was predicted by the polls, where he exceeded 55% of the preferences. Campaign promises were described by observers as "vague," but that did not stop Bongbong from bringing home an unexpected success, the most striking since the election of Aquino.

Disillusionment and social media

Disillusionment with the political class has largely contributed to Marcos Jr.'s unchallenged rise. Despite vague promises, the newly elected president has always played up the need to recreate a more just country where corruption and separatism are not rampant (which did not fail to make itself felt even in the 2022 elections). In addition, the "cleaned up" image of the Marcoses on social media has contributed to the narrative of "a golden era" that was realized under the rule of Marcos' father. In fact, according to the new president's supporters, such rampant corruption would not have existed under the Marcos regime, nor would family clans have had so much power vis-à-vis politics.

The election of Marcos Jr. attracts, as happened also with Duterte, deep reflections around the role of social networks. The Philippines is considered one of the most "social" countries in Asia, with 80 million online users. According to a survey by Rappler, the turning point in this trend was 2016, when Duterte's election reminded many of the populism of US Donald Trump. At least one million people were exposed to fake or misleading news through the spread of viral content. The Philippines passed a law against fake news in 2017 but, as Marcos Jr. himself says, "it is very difficult for governments to manage these dynamics."

The impact of the presidential election on ASEAN

From an ASEAN perspective, a potentially weak Philippine government could be another issue with internal and external repercussions. The dossier on disputed territories in the South China Sea is still unresolved and the promised Code of Conduct to manage Chinese assertiveness is still unrealized. If with Duterte the decision to distance himself from the United States had the appearance of a strategy, with Marcos Jr. it could be a choice forced by events. On the scale of challenges for ASEAN Manila plays a crucial role. Midway between Washington and Beijing, Marcos Jr.'s Philippines could put the group's priorities back on the map. But Bongbong's coy attitude, which has avoided many opportunities for public debate, does not help understand his diplomatic strategy.

According to analysts, the presence of a Marcos in the presidency is not conducive to rebuilding relations with Washington: a Hawaii court in 2011 ordered the Marcoses to pay a $353.6 million fine for failing to declare their assets. The sum has never been paid, and for this reason Marcos is theoretically a wanted man who could face a criminal case if he sets foot in the U.S.. This is a major problem both in the context of presidential visits and multilateral summits with ASEAN. Driven by events, Bongbong could find himself on the path opened up by Rodrigo Duterte to China (and its capital): a path that, depending on how the new president moves, could find space thanks to the push of Vice President Sara Duterte.

Elections in the Philippines: candidates, main challenges and context

On Monday 9 May, the Southeast Asian archipelago chooses its new president. Some information to read the electoral challenge and the challenges that await the incoming leadership.

Election day in the Philippines is just around the corner. On May 9, citizens vote for the presidential elections, as well as expressing their preference for the legislature and the executive both at the national and provincial levels. Whoever will be elected, there will be many challenges ahead: six years of Duterte's administration marked by the uncompromising fight against crime, the Covid-19 emergency, the slowdown in the economy and growing geopolitical instability in the Pacific. How these issues are dealt with today, what measures the new government takes, will be decisive for the future of its citizens and ASEAN. The outgoing president himself, Rodrigo Duterte, will not participate in the US-ASEAN summit on May 12-13 in Washington for "not to take positions that could be unacceptable to the new administration".

Challenges and opportunities 

The new president has only one mandate available to act towards the voters and pave the way to foster continuity of reforms. Among these, the immobility of the political class remains the major concerns for the health of Philippine democracy: any important career has roots in the network of acquaintances (up to nepotism and the existence of real political dynasties) and corruption. Hence a certain frustration and disillusionment with the political class, since the general perception is that those who have money and contacts already have great power over local and national politics. According to the 2021 Corruption Perception Index, 81% of Filipinos think corruption is a serious problem, while 19% of public officials are reported to have received bribes at least once a year.

Therefore, there is the disinformation problem, which is increasingly affecting the country. For instance, the family of former dictator Marcos and current candidate Ferdinand 'Bongbong' Marcos Jr., for example, have worked diligently to "clean up" their image. Today, social media offers a wide variety of propaganda content about Marcos Jr. or praises a glorious past through the anthems and symbols of the 1965 regime. Almost the entire population is exposed to the information on Facebook, YouTube and TikTok and most of these users are young people born in the years following the fall of the autocrat (1986). The same young people who, today, make up a third of the electorate.

Publicus Asia reports that 51% of the target audience consider the vaccination campaign and the post-Covid economic crisis to be the two main problems in the Philippines. According to the latest data on the pandemic, cases are stable, and vaccinations appear to be proceeding well (74.3% of the vaccinable population has received at least two doses). As for the economy, Asia Development Bank (ADB) estimates predict a positive growth trend of 6% for 2022, but the war in Ukraine and slowdowns along supply chains (mainly due to the Chinese lockdown) could change the cards on the table.

But the 2022 elections could also be decisive for the future of Philippine foreign policy. Located in an increasingly tense geographical context between China and the United States, the Philippines have long been torn between the advantages of the commercial partnership with Beijing and the assertiveness of its ships in the South China Sea. If Marcos Jr. wins the elections, many believe an alignment towards the People's Republic can be expected. From the point of view of the values ​​behind his electoral campaign, however, Leni Robredo would get greater support from the US in his fight for the survival of democratic institutions in Southeast Asia.

Who are the candidates?

There are five candidates in the presidential elections in the Philippines, but according to the polls the decisive head-to-head will be between Ferdinand 'Bongbong' Marcos Jr. and Maria Leonor "Leni" Gerona Robredo. The two find themselves once again rivals in front of the electorate, which had seen them run for the vice-presidency in 2016, when Robredo won with just 0.34% advantage against Marcos.

The first, as anticipated, is the son of the dictator who led the country for over twenty years (1965-1986) - eleven of which by imposing martial law. The specter of Marcos the father does not obscure the fame of the son: for many, on the contrary, the Marcos represent an institution. He could be favored by the north (the region of Ilocos Norte is historically considered the "fiefdom" of the former presidential family, and right there the political career of Marcos Jr. was consolidated), which in 2016 had preferred the coalition of opposition from Jejomar Binay. At the moment he appears to be the favorite in the polls. Her candidate for vice president is none other than Sara Duterte, daughter of the outgoing president who gave up the race for her father's place (despite the analysis and popular sentiment having put her in first place among the very favorites for the presidency).

Maria Leonor "Leni" Gerona Robredo, of the Liberals, made the defense of democracy and the fight against nepotism her weapons in the electoral campaign. A human rights advocate, she soon detached herself from President Duterte during his vice-presidency, aided by the bloody anti-drug campaign that has led to the deaths of over six thousand people since the beginning of her term. She is the second-favorite candidate in the polls, reaching around 24% and getting a decent recovery on Marcos Jr. She is having success with some of the electorate for her attitudes of "humility" in a country where access to politics is often obtained with money and knowledge: among these, having taken off high heels in public and using public transport to get around. Some recent analyzes also seem to see it as an advantage among investors, who are wary of Marcos Jr.'s ability to pursue effective economic and fiscal policies. If elected, she would be the country's third female president after Corazon Aquino and Gloria Macapagal Arroyo.

Other presidential candidates are Manila mayor and actor Isko Moreno, former boxing champion and senator Manny "PacMan" Pacquiao and former Philippine National Police executive Panfilo Lacson.

The elections and ASEAN

The election of a new head of state is always crucial in the context of regional relations. In the case of the Philippines, the problem becomes even more urgent in the face of a changing geopolitical landscape. An environment, that of today, which due to its complexity would require maximum cohesion within the ASEAN group. In one of the latest debates of the current election campaign, Leni Robredo stressed the need for Manila to lead the ASEAN dialogue on Chinese assertiveness in the common stretch of sea. For Robredo, the Code of Conduct for the South China Sea cannot be postponed any further. And the Philippines "must push the other member countries" to approve it in order to consolidate its position in the face of Chinese territorial claims. The Association is carefully observing what will happen in the Philippine ballot boxes also for its own internal balance, which is more fundamental than ever in such a delicate global moment between pandemic tail and war in Ukraine.

The effect of the climate crisis on the Philippine elections

It is clear to all that the country is particularly vulnerable to climate change and therefore needs to rely on renewable energy.

When Typhoon Rai devastated the central region of the Philippines in December 2021, leaving nearly 400 cities without power for weeks, what angered the population most was the government's inability to foresee the consequences of the natural disaster.

The Philippines is an archipelago in the middle of the Pacific and are hit by at least 20 storms each year, which seem to get exponentially worse. Typhoon Rai was more destructive than Haiyan (2013) and the damage it caused across the country is estimated to amount to USD800 million.

It is clear to everybody that the country is particularly vulnerable to climate change and therefore needs to rely on renewable energy. However, it appears that Manila does not have the same view. Since the beginning of February, the capital has been caught up in the "election fever" and politicians seem to believe that the climate issue is something that only bigger nations can address. For the Philippine political class, the main goal is survival, and they have no concern about dealing with the tragic consequences of the natural disasters that have scourged the country for years. 

Ahead of the May 9 elections, which will be a measure of Filipinos' drive for change, Ferdinand Marcos Jr, son of the late dictator, is the favorite to win the presidency, while Davao Mayor Sara Duterte, daughter of the current leader, is leading the race for vice president. All eyes are on the race to succeed President Rodrigo Duterte, who cannot be reelected in accordance with to the Constitution and has not publicly expressed a preference for the choice of his successor.

Ten presidential candidates and nine vice presidential candidates can be chosen on the ballot. What people expect are not only concrete responses to the pandemic and strong economic recovery programs, but also each candidate's point of view on Duterte policies, the bloody war against drugs, the foreign policy toward China and its debt-backed infrastructure push.

In sum, the climate issue and the shift to a higher use of renewable energy sources are not the priorities of the Philippine political class.

According to Professor Antonio La Vina, former executive director of the Manila Observatory, a non-profit research institute based at the Ateneo de Manila University: "Typhoons that have the same magnitude as Haiyan and Rai will continue to occur more and more frequently; without a plan to forecast these events, we will reach a critical point where we will not have the time needed to rebuild." 

If the government promoted a higher use of renewable energy, thus replacing fossil fuels that contribute to worsening climate change, the dramatic consequences of annual storms would be avoided.

Why then did the Philippines agree only partially to the gradual reduction of the use of coal at COP26 in Glasgow last year? Because big energy production companies have invested so much in coal that they do not want their money to go to waste. Manila has recently imposed a ban on new coal-fired power plants, but existing ones are allowed to continue production for decades.

According to the latest statistics, 42% of Philippine electricity still derives from coal, while renewable energy accounts for only 29%. In the hope to avoid the dramatic consequences caused by environmental disasters, the Philippines will have to increase the use of renewable energy by 35% by 2030 and over 50% by 2040. 

In 2016, the construction of infrastructures to accommodate renewable energy production (especially solar) reached its peak, but since then production declined and nobody mentions this subject anymore. Although every household has a small fee added to their bill each month to help fund new infrastructures, renewable energy still remains an unfamiliar topic for the inhabitants of the archipelago. 

The key is to educate communities who, in turn, should ask local governors to allocate more budget money to renewable energy. This kind of change starts from the bottom and does not wait for the higher-ups to step in. The way forward could be harnessing the natural resources in each island of the archipelago so as to obviate the need for diesel technology, which is expensive, imported, unreliable, and too often unable to meet daily energy needs on the most far away islands.

Filipino voters must demand more from their next presidential administration and stop depicting this country as a poster child for disaster resilience.

Philippines, back to the future: Marcos Jr after Duterte?

In May are scheduled the presidential elections in the archipelago of Southeast Asia, strategic in the dispute between the United States and China. Manila seeks to give a face to the post-Duterte, although his daughter Sara could occupy a prominent place alongside another son, that of the former dictator who controlled the country between 1972 and 1986. From the China Files mini e-book “In China and Asia 2022”, realized in collaboration with Associazione Italia-ASEAN

Articolo a cura di Luca Sebastiani

Former boxers, sons of dictators and presidents, activists and actors. The race for the presidency of the Philippines to be held on May 9, 2022 is heated. The population of the Southeast Asian country will go to the polls next year to decide who will govern for the next few years, both at the national and local levels. In all, there will be about 67 million eligible voters, for a particularly important electoral round. Expectation is very high for the race to succeed Rodrigo Duterte, president since 2016 to whom the Constitution denies the possibility of running again and who has therefore fallen back on running for a Senate seat.

The contenders

At the moment, more than 90 candidates have filed with the hope of holding the highest office in the Philippines. For now, the favorite in the polls is Ferdinand "Bongbong" Marcos Jr, son of the late dictator of the same name Ferdinand Marcos, who controlled the country between 1972 and 1986. Marcos, senator until 2016, is running with the Pfp party (Partido Federal ng Pilipinas) and, in the event of his victory, analysts believe there could be substantial continuity with Duterte (although the latter does not support him). Among other things, as his vice-president, the eldest daughter of Duterte himself, Sara, should be a candidate. After months of rumors about her coming into the field to succeed her father, she has decided to support Marcos. An understanding that could strengthen the axis between two of the most important political dynasties of the Philippines and exponents of the north and south of the country. The most evident change of pace could occur in international politics, with a greater balance of the Philippines between China and the United States, compared to what happened with Duterte, more inclined towards Beijing, especially in the first part of his mandate.

Marcos Jr's main challenger would seem likely to be current Vice President Leni Robredo, a civil rights activist who is aiming to intercept the vote of those who want strong change after the last few years. This is a figure opposed to that of Duterte and against the violent "war on drugs" conducted by the president, in which thousands of people have been killed by police forces (more or less regular) with extrajudicial killings. Robredo has declared, in a diplomatic way, that in case of victory he will collaborate with China only in areas and dossiers where there are no existing tensions, implying however the importance of trade relations with Beijing. Also running for president are Senator Panfilo Lacson, former police chief of the Philippines, and former Defense Minister Norberto Gonzales.

Among the names of weight present at the starting tapes is that of the mayor of Manila, the former actor Francisco "Isko Moreno" Domagoso, who hopes for the official support of Duterte, but also Manny Pacquiao, one of the greatest boxers of all time and currently a senator, who has decided to run for president after hanging up his gloves in September. In recent months Pacquiao has clashed bitterly with Duterte - despite the fact that they are both exponents of the PDP-Laban (Partido Demokratiko Pilipino-Lakas ng Bayan) - criticizing him for his overly compliant approach with Beijing. His election campaign will be based on the fight against corruption in the country and a more intransigent attitude with China. Along with them are dozens of candidates, some inevitably seeking visibility and notoriety in a country hard hit by the pandemic and with a struggling economy.

The balance between the United States and China

Regardless of the domestic policy priorities on which the different candidates will debate between now and the elections, a pivotal issue of the near future for the Philippines emerges strongly: its own positioning in the contention between China and the United States. Covid-19 accelerated the competitive process between the two powers, highlighting the strategic centrality of the Indo-Pacific region. Since the beginning of Duterte's presidency, economic and political relations between Manila and Beijing have been gradually strengthening, consequently weakening the understanding with the US of then-President Donald Trump. A trend that lasted until last spring's diplomatic clash when the Philippines and China came to blows over the Spratly/Kalayaan islands, a historic territorial dispute between the two countries.

On that occasion Beijing sent more than 200 fishing boats to the waters of Juan Felipe Atoll (or "Whitsun Reef" to use the international name), defined as real "maritime militias" by the Philippines. The Chinese refusal to leave the waters increased the tension. For Manila it was a clear manifestation of the Chinese will to occupy territories in that area, so much so that the Philippine Foreign Minister, Teodoro Locsin Jr. reacted by addressing the Chinese with very harsh words: "Get the fuck out". Despite these statements, Duterte has always tried to keep the level of tension with China low. On the other hand, millions of doses of vaccines essential for the country came from Beijing. Also in November, there was an incident in the South China Sea, with People's Republic ships firing warning shots near Philippine boats.

The United States immediately used the issue to lend full support to Manila, seeking to widen the gap between the Philippines and Beijing. For Washington, the archipelago is fundamental, given the geographical proximity with Taiwan and the historical link that binds the U.S. and Manila. Also for this reason that with Joe Biden at the White House, the American administration has shown itself more attentive towards the country of Southeast Asia, which after repeated statements to the contrary has renewed the Visiting Forces Agreement.

The recent tensions with China have warmed the spirits of the population of the Philippines, who may remember this when they go to the polls. Although there are no candidates among the main pretenders who are direct expressions of Beijing or Washington, it is certain that in these months of electoral campaign will be devoted ample space to the relations of the Asian country with the two superpowers. And in the meantime, China and the United States are watching.


Philippines presidential elections: here are the candidates

In Manila people wonder what the post-Rodrigo Duterte will be like. There are many candidates who have chosen to compete for the highest office of the State, the Presidency of the Republic.

Rodrigo Duterte cannot run for president again and has renounced to run for vice-presidency. The Philippine Constitution provides for a single six-year term for the President who is elected in a single turn, regardless of the difference in votes with rivals.

The top candidates for the 2022 Philippine presidential election are Panfilo Lacson, senator and former police chief, Ferdinand Marcos Jr, son of dictator Marcos, Manny Pacquiao, a senator and former boxer, Ronald dela Rosa, the former police chief who leads Duterte's war on drugs, and Leni Robredo, the current Vice President. For now, the candidates do not include Sara Duterte-Carpio, the president's daughter. However, as a candidate for a third term as mayor of Davao, where her father was, she has until November 15 to change her mind and run for president. This same escamotage was used by his father in 2016.

To date, no one seems sharply favored to become the future tenant of Malacañang Palace, the presidential domicile. The race is about to begin: the electoral campaign will officially begin on February 8th 2022 ending on May 7 and the polls will be open on May 9.

Regarding the various competitors, some have elements of continuity and others of discontinuity with the outgoing administration.

Ferdinand "Bongbong" Marcos Jr, 64, would like to lead the country out of the pandemic crisis by seeking the collaboration of other political groups. This intention seems difficult to accomplish as human rights activists, mindful of his father's past, hope he will not become president. Protests in the street demand that Marcos return the wealth accumulated during the dictatorship (estimated at more than 10 billion dollars) and that they pay a prison sentence. In addition to the funds, another important asset of Marcos Jr. is the link with Duterte: the electoral base of the President in the south together with that of the Marcos in the north has the potential to gather a large and widespread number of votes in the country. It competes under the Partido Federal Ng Pilipinas, founded in 2018 in support of Duterte.

Senator Ronald "Bato” dela Rosa, 59, is the closest to Duterte's policy, who put him at the head of the controversial war on drugs that since 2016 has resulted in more than 6100 casualties. His candidacy in extremis wanted by the PDP-Laban, the ruling party of which Duterte is also a member, has the declared purpose of keeping on with the legacy of the current administration.

Manny Pacquiao and Francisco "Isko Moreno" Domagoso follow a different line. Both share a past of extreme poverty and a present of economic redemption, as well as fame.

Pacquiao, 42 and proudly Christian, has been a senator since 2016 and his agenda includes helping the poor. He criticized the disparity with which Duterte distributed economic and health aid to cope with the pandemic. According to the journalist Maria Ressa, Pacquiao would be politically immature for lack of experience and for having been mostly absent and not very proactive in parliamentary sessions. He participates under the banner of PROMDI, based in Cebu, and not of the PDP-Laban of which he has been president since December 2020. According to Rappler, Pacquiao chose to run with this party after the clash with the Cusi faction of the PDP-Laban who contested the legitimacy of this change after the official candidacy. This has made the Electoral Commission investigate the illegitimacy of the candidacy and conflict of interest.

Domagoso, the on the rise forty-six-year-old mayor of Manila, is a well-known actor of the 90s who has been in politics since '98. He is considered a populist like Duterte but more moderate, he says he intends to be a “healing president” and wants to continue the fight against drugs but without allowing "legal murders". He competes with Aksyon Demokratiko, a party established in 1998.

Panfilo Lacson,74, a long-time senator and former police chief, also ran in 2004. Probably at the last stride of his political life, he declared the will to combat corruption, drug trafficking and crime by running with the Partido Reporma.

Finally, Leni Robredo,56, is the candidate most at odds with the current presidency. The Vice President is a human rights lawyer who has always been critical of Duterte's campaigns. In the Philippine system, the vice-presidency is voted separately and can be on the opposite side to that of the President. Robredo says she has applied to "ensure a future of equal opportunities" for Filipinos. His electoral base is very large thanks to the work during her mandate, and she is an independent candidate despite being leader of the Liberal Party.

Last September, a study by Pulse Asia analyzed the chances of winning and the factors that determine the voting projections for each candidate. To have a good chance of winning is fundamental to possessing large funds and a widespread national organization that provides visibility. Marcos owns the family wealth but does not have an organization behind him; Lacson, Moreno and Robredo do not possess any of these requirements but rely mainly on their image and fame; dela Rosa is backed by the PDP-Laban but his sudden and last-minute candidacy can be a malus. Who could have great chances, if she were to apply, is Sara Duterte-Carpio. Her father's economic resources and alliances could give her an important advantage to obtain the necessary votes to take office in Malacañang Palace. But the game is still on.

The Philippines, Far East of Far West?

By easing the strict rules in foreign direct investments, the Philippine market opens up to foreign investors

The Philippines represents a very special case in the ASEAN landscape. The archipelago, located in the center of the China Sea, is geographically referred to as "part of the Far East". However, due to its history and origins, it would be more appropriate to call it the "Far West". In fact, the Philippines, in addition to being one of the strongholds against Chinese expansionism in the area and one of the barrier bases set by the US in the Pacific, continue to be one of the most important pawns of Western economic policy in Southeast Asia. 

The dichotomy between East and West is also reflected in domestic politics. In recent years, President Rodrigo Duterte has tried to open up the domestic market more and more to Western companies, pushing for a relaxation of the strict rules on foreign direct investment, considered by the OECD, in a 2019 report, among the most restrictive of their kind in all of Southeast Asia.

The obstacles to foreign investment in the archipelago have created, indeed, a market dominated in various sectors by large local conglomerates. That is why the Philippine Senate is now ready to adopt, by the end of May, a legislation amending three laws - the Foreign Investment Law, the Retail Trade Liberalization Law and the Public Services Law - approved by the House of Representatives last year.

Currently, under its Constitution and the laws in place, the Philippines remain a country with a number of restrictions on foreign investments, in addition to a series of restrictions on other areas, such as private property or employment. Depending on the business sector, the restrictions on foreign investments can be very severe, in particular for companies with share capital of less than 200,000 USD. Furthermore, for some professions, the exercise of them by a foreigner is prohibited or is made very difficult. A foreigner or a company with foreign capital cannot own more than 40% of a land. The share of corporations that can be held by foreigners generally ranges from 0% to 40%, depending on the sector in question, with some exceptions if the investment exceeds certain thresholds. Full private ownership is allowed to foreigners only in retail, but heavy restrictions are imposed on paid-up capital and investments, discouraging entry. Foreign companies usually enter the Philippine market through joint ventures with local partners or franchise chains, but system’s inefficiencies often emerge due to the lack of management control and the greater protection usually enjoyed by local competitors, further discouraging the foreign intervention. 

Not surprisingly, according to the Central Bank of the Philippines, net foreign direct investment in the country fell to $ 6.5 billion in 2020, marking the third consecutive year of decline. To counter the trend, in June 2020, the Philippine government announced the approval of 12 new economic zones, which will be managed by the Philippine Economic Zones Authority,, the largest investment agency in the country which has the task of assisting foreign investors and facilitate their business operations in the country, with the power to grant tax and non-tax incentives. However, under the Corporate Recovery and Tax Incentives for Enterprises Act (CREAT), considered the largest fiscal stimulus program in the country's history, the government will immediately reduce the corporate income tax rate from 30% to 25% and the incentives (such as tax breaks, logistical support and facilitated customs procedures) will be decided by the President on the advice of the Fiscal Incentives Review Board (FIRB). Opening the Philippine market to foreign investors and reducing bureaucratic constraints related to business are therefore among the top priorities of the Duterte government. A goal that now appears close, after the failed attempts of the previous administrations and that will move the axis of the Philippines even more towards the West.

L’outsourcing nelle Filippine

Come le Filippine sono diventate un hub del BPO

Il Business Process Outsourcing (BPO) è uno dei settori in più rapida crescita nelle Filippine, al punto da rappresentare uno dei tre pilastri dell’economia del paese, insieme alle rimesse inviate dai lavoratori filippini all’estero ed al turismo.

La crescita del BPO nelle Filippine ha mostrato infatti un tasso di espansione medio annuo del 20% nel corso dello scorso decennio. Secondo i dati dell’Oxford Business Group, il settore rappresentava solo lo 0,075% del PIL nel 2000, dato cresciuto progressivamente fino a raggiungere il 12% nel 2019.

Secondo gli ultimi dati del governo filippino l’industria del BPO impiega 1,35 milioni di lavoratori, la maggior parte dei quali (87,6%) nei call center, mentre quasi il 12% lavora in aziende di computer e servizi informatici. Nell’ultimo anno, è emerso un forte trend di crescita anche del segmento del Data Analytics.

La Roadmap 2016-2022 della IT and Business Process Association of the Philippines (IBPAP) si pone tuttavia obiettivi di crescita ancora maggiori per il settore, puntando a toccare – entro un paio di anni – 1,8 milioni di persone occupate, 40 miliardi di dollari di fatturato complessivo e una quota del 15% nel mercato globale del BPO.

Il settore BPO è fortemente internazionalizzato nelle Filippine: il 55% delle aziende opera a livello globale (il 65% delle quali esporta verso gli Stati Uniti), il 27% a livello regionale e solo il 18% all’interno del Paese. Sono tre le ragioni principali per cui le Filippine sono riuscite a diventare un hub internazionale del BPO.

In primo luogo, il governo filippino si è attivato fin dai primi anni 2000 per incentivare gli investitori ad esternalizzare nel Paese. Ha infatti messo in atto diverse politiche liberali, inclusi benefici fiscali e misure di semplificazione nelle procedure in materia di occupazione.

Il secondo aspetto riguarda il bilinguismo. Oltre al filippino, gli studenti imparano fin da subito l’American English. La padronanza della lingua inglese e l’affinità con la cultura occidentale conferiscono alle Filippine un vantaggio concorrenziale rispetto ai suoi diretti competitors nel BPO, come l’India.

Infine, il salario medio dei lavoratori filippini nel settore è meno della metà di quello delle loro controparti nei paesi occidentali. Gli Stati Uniti ed altre imprese anglofone sfruttano questo fattore per abbassare i loro costi fissi.

Nonostante la crisi legata al COVID-19 abbia avuto un impatto negativo e rallentato la crescita del BPO nelle Filippine, le multinazionali straniere non hanno abbandonato il paese. Se la crisi continuerà a favorire la domanda di servizi telematici è infatti probabile che il settore riprenda presto la propria traiettoria positiva di crescita.

Articolo a cura di Amiel Masarap e Maria Viola.