Economic Recovery Still Elusive : Hope Turning to Despair for the Philippines’ Poor

There is a housing boom in Manila’s largest garbage dump.

Every day, the clatter of hammers on scrap wood rises out of the stench as the poorest of Manila’s poor add shanty after shanty to one of the largest squatter slums in Asia.

Most of the people who have turned up recently at Dump Site No. 1 are like Patricia San Pedro, a 70-year-old woman who could no longer afford the 200 pesos a month ($10) she had been paying for a tiny apartment in the Quiapo district.

“It is true,” the old woman told a visitor to her little plywood hut in the heart of the dump. “The poor are becoming poorer.”

Three months after Corazon Aquino took office as president of the Philippines, promising “a new Filipino nation,” the hope for change has begun to turn to despair.

When she came to power, Aquino inherited one of Asia’s most deeply troubled economies from deposed President Ferdinand E. Marcos. In campaign speeches, she had called the Philippines “the basket case of Southeast Asia.”

Most of the nation’s top economic analysts blame Marcos for the country’s financial difficulties. He favored friends and relatives with lucrative contracts and pumped billions of dollars in government funds into private enterprises that failed. This, along with his wife’s penchant for personal excess, left the economy mired in problems. And under Marcos, the rich had become richer.

“In 20 years,” Aquino said in a campaign speech, “Mr. Marcos stripped legitimate entrepreneurs of their ability to compete and rewarded his friends with fiefdoms which have enabled them, like vampires, to suck the lifeblood of a once-vigorous economy.”

The problems have not gone away in Aquino’s first 11 weeks in office, and some have even deepened as she and her advisers have strived--without success so far--to draw up a comprehensive economic recovery plan.

Signs of despair are everywhere in Manila these days. Homeless, out-of-work men and women who cannot afford even the scrap material for a shanty are sleeping on the streets of Makati, Manila’s business district. At major intersections in the city, there are crowds of sickly, pockmarked children tugging at passers-by and begging, “Give me peso.”

The number of beggars seems to grow every week, and street crime is on the rise.

Less Meat, More Rice

The poverty is apparent in the rural provinces as well. Farmers are eating less meat and more rice as the cost of seed and fertilizer goes up faster than what the harvest brings. Vegetables go unsold in the market, and many peasants say they are walking the several miles from field to town in order to save a few centavos.

A deliberate and cautious leader, Aquino delegated the job of formulating a recovery plan to her financial advisers, who have been delayed by internal squabbling and ideological differences.

Aquino and her Cabinet debated the issue for more than an hour at a recent meeting, but a proposed economic plan that would redistribute the nation’s wealth and create new industries and new jobs was put aside until today.

Among the major obstacles the economic experts face is the sheer size of the problem.

Below Poverty Line

At least 85% of all Filipinos live below the poverty line--defined here as about $125 a month. The average per capita income is $625 a year, $200 below what it was three years ago. More than half of the work force is either unemployed or underemployed. One Filipino in 10 is undernourished.

Because of massive international borrowing under Marcos, the Philippines owes more than $26 billion abroad. About $5.8 million a day goes to interest payments.

As personal income has fallen, so have government receipts from taxes. The budget deficit for the first quarter is nearly half a billion dollars. And amid the continuing economic and political instability, few foreign or Filipino entrepreneurs have started any new businesses or made new investments, diminishing the prospects for future revenues.

Improving the Philippine economy is seen by Philippine leaders as not only a vital element in the effort to improve the lives of the people but also as the key to ending a 17-year-old rebellion in the countryside.

Question of Priorities

“If your house is on fire, you cannot talk about what you will cook for lunch,” Salvador Laurel, the vice president and foreign minister, said in a recent speech.

Echoing these sentiments, Gen. Fidel V. Ramos, the military chief of staff, who is directing the war against the insurgents, told several mayors in the northern province of Cagayan that there can be no wholly military solution to the problem.

“The solution must be the combined efforts and combined allocation of all our resources, political, economic and military,” Ramos said. “We must develop our villages and towns before we can expect our people to live in them in peace.”

Herminio Herrero, mayor of the northern town of Bagdao, interjected: “There is an old expression, ‘An empty stomach obeys no laws.’ The biggest problem is high prices and the lack of jobs. Let us try to fill the stomachs of our brothers, and I believe our problem is solved.”

Redistributing Wealth

That is the basic thrust of the proposals aimed at dealing with the battered economy. In recent public appearances, Laurel, Trade Minister Jose Concepcion and Economic Planning Minister Solita Monsod have all said that the key to improving the lot of the poor lies in redistributing the nation’s wealth and in encouraging massive new investment that will finance new factories and new jobs and produce new government revenues.

As in many countries of Asia, there is a wide disparity between rich and poor in the Philippines. World Bank studies have found that 10% of the Philippine population controls more than 80% of the nation’s wealth. This is a statistic often cited by recruiters for the Communist New People’s Army, which is waging the war in the countryside.

As a step toward carrying out the Aquino government’s commitment to land reform, the president has unilaterally set aside nearly 20,000 acres of prime farmland, on the central island of Negros, for unemployed sugar farmers and, if they will put down their arms, for Communist insurgents as well.

Another crucial element in the economic plan taking shape under Aquino is the generation of new industries and jobs, and it will rely to a great extent on the level of foreign investment. So far, signs from the international business community have not been encouraging.

Wait-See Attitude

Fred Whiting, president of the American Chamber of Commerce in Manila, said last week that foreign businessmen here have “a great deal of sympathy, support, enthusiasm and optimism” for the economic future. “But there is still a bit of wait-and-see attitude,” he said. “I think you’ll find the foreigners will hang back a bit to see what the Filipinos are going to do.”

As much as it has tried to send positive signals to foreign businessmen, the Aquino government has also sent some negative signals.

In an effort to relieve the crushing debt burden, several of Aquino’s Cabinet ministers have suggested loudly and publicly that the Philippines may refuse to repay some of its foreign debt. Several foreign bankers in Manila said they cringed when they heard this, and Aquino publicly rejected the idea.

As the government haggles over problems of foreign debt and capital formation, the squatters at Dump Site No. 1 try to determine where they will get their next meal.

Few Fish to Feed 8

Ricardo del Rosario cleaned a few four-inch fish he had caught--and hoped they would be enough for his family of eight--as he talked with a reporter about where the economy might be headed.

“In some ways, things are better with Cory,” he said, using the president’s nickname. “Under Marcos, we paid six or seven pesos for a kilo (2.2 pounds) of rice, and the rice was bad. Now we pay five pesos and 10 centavos, and the rice is much better.”

But then Del Rosario, a retired stevedore who moved to the garbage dump a few months ago, looked around at the new shanties going up around him. Every one of them, he said, is owned by a family that had lived in an apartment in the city or in a provincial farmhouse.

“The farmers couldn’t afford to plant, and the city people couldn’t afford to rent,” he said.

He sees a sign of hope, though.

“These people from the provinces--maybe many are coming because they think new jobs are coming soon,” he said. “Yes, there is still some hope, even here.”