Its major environmental issues include:
- uncontrolled deforestation especially in watershed areas;
- soil erosion;
- air and water pollution in major urban centers;
- coral reef degradation; and,
- increasing pollution of coastal mangrove swamps that are important fish breeding grounds
The Philippines is astride the typhoon belt, and is usually affected by 15 and struck by five to six cyclonic storms per year. It is also suscpetible to landslides, active volcanoes, destructive earthquakes, and tsunamis.
The Philippines experience significant volcanic activity. Taal (elev. 311 m), which has shown recent unrest and may erupt in the near future, has been deemed a "Decade Volcano" by the International Association of Volcanology and Chemistry of the Earth's Interior, worthy of study due to its explosive history and close proximity to human populations. Mayon (elev. 2,462 m), the country's most active volcano, erupted in 2009 forcing over 33,000 to be evacuated; other historically active volcanoes include Biliran, Babuyan Claro, Bulusan, Camiguin, Camiguin de Babuyanes, Didicas, Iraya, Jolo, Kanlaon, Makaturing, Musuan, Parker, Pinatubo and Ragang
In 1935 the Philippines became a self-governing commonwealth. Manuel Quezon was elected president and was tasked with preparing the country for independence after a 10-year transition.
In 1942 the islands fell under Japanese occupation during World War II, and US forces and Filipinos fought together during 1944-45 to regain control.
On 4 July 1946 the Republic of the Philippines attained its independence. A 20-year rule by Ferdinand Marco ended in 1986, when a "people power" movement in Manila ("EDSA 1") forced him into exile and installed Corazon Aquino as president. Her presidency was hampered by several coup attempts that prevented a return to full political stability and economic development.
Fidel Ramos was elected president in 1992. His administration was marked by increased stability and by progress on economic reforms.
In 1992, the US closed its last military bases on the islands.
Joseph Estrada was elected president in 1998. He was succeeded by his vice-president, Gloria Macapagal-Arroyo, in January 2001 after Estrada's stormy impeachment trial on corruption charges broke down and another "people power" movement ("EDSA 2") demanded his resignation.
Gloria Macapagal-Arroyo was elected to a six-year term as president in May 2004. Her presidency was marred by several corruption allegations but the Philippine economy was one of the few to avoid contraction following the 2008 global financial crisis, expanding each year of her administration.
Benigno Aquino III was elected to a six-year term as president in May 2010.
The Philippine Government faces threats from several groups on the US Government's Foreign Terrorist Organization list. Manila has waged a decades-long struggle against ethnic Moro insurgencies in the southern Philippines, which has led to a peace accord with the Moro National Liberation Front and on-again/off-again peace talks with the Moro Islamic Liberation Front. The decades-long Maoist-inspired New People's Army insurgency also operates through much of the country.
The Philippines faces increased tension with China over disputed terriorial claims in the South China Sea.
Location: Southeastern Asia, archipelago between the Philippine Sea and the South China Sea, east of Vietnam
Geographic Coordinates: 13 00 N, 122 00 E
Area: 300,000 sq km (land: 298,170 sq km; water: 1,830 sq km)
Coastline: 36,289 km
Natural Hazards: astride typhoon belt, usually affected by 15 and struck by five to six cyclonic storms per year; landslides; active volcanoes; destructive earthquakes; tsunamis
Terrain: mostly mountains with narrow to extensive coastal lowlands. The highest point is Mount Apo (2,954 m)
Climate: tropical marine; northeast monsoon (November to April); southwest monsoon (May to October)
Ecology and Biodiversity
1. Luzon rain forests
People and Society
Population: 103,775,002 (July 2012 est.)
Source: World Wildlife Fund
Popular belief holds that the majority of Philippine people are descendants of migrants from Indonesia and Malaysia who came to the islands in successive waves over many centuries and largely displaced the aboriginal inhabitants. Modern archeological, linguistic, and genetic evidence, however, strongly suggests that those migrants originated in Taiwan and went on from the Philippines to settle Indonesia and Malaysia. The largest ethnic minority now is the mainland Asians (called Chinese), who have played an important role in commerce for many centuries since they first came to the islands to trade. Arabs and Indians also traveled and traded in the Philippines in the first and early second millennium. As a result of intermarriage, many Filipinos have some Asian mainland, Spanish, American, Arab, or Indian ancestry. After the mainland Asians, Americans and Spaniards constitute the next largest minorities in the country.
More than 90% of the people are Christian as a result of the nearly 400 years of Spanish and American rule. The major non-Hispanicized groups are the Muslim population, concentrated in the Sulu Archipelago and in central and western Mindanao, and the mountain aboriginal groups of northern Luzon. Small forest tribes still live in the more remote areas of Mindanao.
About 87 languages and dialects are spoken, most belonging to the Malay-Polynesian linguistic sub-family. Of these, eight are the first languages of more than 85% of the population. The four principal indigenous languages are Cebuano, spoken in the Visayas; Tagalog, predominant in the area around Manila; Ilocano, spoken in northern Luzon, and Maranao and related languages spoken in Mindanao. Since 1939, in an effort to develop national unity, the government has promoted the use of the national language, Filipino, which is based on Tagalog. Filipino is taught in all schools and is widely used across the archipelago. Many use English as a second language. Most professionals, academics, and government workers are conversant or fluent in English. In January 2003, President Gloria Macapagal-Arroyo ordered the Department of Education to restore English as the medium of instruction in all schools and universities. The Philippines has one of the highest literacy rates in the developing world. Approximately 93% of the population 10 years of age and older are literate.
Ethnic Groups: Tagalog 28.1%, Cebuano 13.1%, Ilocano 9%, Bisaya/Binisaya 7.6%, Hiligaynon Ilonggo 7.5%, Bikol 6%, Waray 3.4%, other 25.3% (2000 census)
|Trilobed Laguna de Bay, the largest lake in the Philippines, is visible near the upper center of this east-looking, photograph of central Luzon, Philippines. The lake is more than 51 km (32 mi) long and covers 891 sq km (344 sq mi). Its outlet, the Pasig River, exits at the northwest corner of the lake, flows westward through Manila, and empties into Manila Bay. South of Laguna de Bay are the dark blue waters of Taal Lake, a filled caldera that surrounds Volcano Island. The island is home to Taal Volcano (300 m; 984 ft high) with a crater more than 2 km (1 mi) wide. The island of Corregidor, which served as the focal point in the defense of the city of Manila during World War II, is the tiny tadpole-shaped island at the entrance to Manila Bay in the center left. Photo courtesy of NASA.|
|The unusual geological formation known as the Chocolate Hills in Bohol. Almost 1,300 perfectly cone-shaped hills, all about the same size, spread over some 50 square kilometers. The grass covering the hills turns brown during the dry season, giving the hills their name.|
|Philippine Tarsier (Tarsius syrichta) (Bohol, Phillipines). Source: Wikimedia Commons.|
|The Critically Endangered Geat Philippine Eagle is the world's largest eagle, and one of the most threatened raptors.|
0-14 years: 34.6% (male 17,999,279/female 17,285,040)
15-64 years: 61.1% (male 31,103,967/female 31,097,203)
65 years and over: 4.3% (male 1,876,805/female 2,471,644) (2011 est.)
Population Growth Rate: 1.873% (2012 est.)
Birthrate: 24.98 births/1,000 population (2012 est.)
Death Rate: 4.98 deaths/1,000 population (July 2012 est.)
Net Migration Rate: -1.27 migrant(s)/1,000 population (2012 est.)
Life Expectancy at Birth: 71.94 years
male: 68.99 years
female: 75.03 years (2012 est.)
Total Fertility Rate: 3.15 children born/woman (2012 est.)
Languages: Filipino (official; based on Tagalog) and English (official); eight major dialects - Tagalog, Cebuano, Ilocano, Hiligaynon or Ilonggo, Bicol, Waray, Pampango, and Pangasinan
Literacy (age 15 and over can read and write): 92.6% (2000 census)
Urbanization: 49% of total population (2010) growing at an annual rate of change of 2.3% (2010-15 est.)
The history of the Philippines can be divided into four distinct phases: the pre-Spanish period (before 1521); the Spanish period (1521-1898); the American period (1898-1946); and the post-independence period (1946-present).
The first people in the Philippines, the Negritos, are believed to have come to the islands 30,000 years ago from Borneo and Sumatra, making their way across then-existing land bridges. According to popular belief, Malays subsequently came from the south in successive waves, the earliest by land bridges and later in boats by sea. In contrast, modern archeological, linguistic, and genetic evidence strongly suggests that those successive waves of migrants came from Taiwan as the Austronesian sub-group, Malayo-Polynesians. From Taiwan, the Austronesians first spread southward across the Philippines, then on to Indonesia, Malaysia, and as far away as Polynesia and Madagascar. The migrants settled in scattered communities, named barangays after the large outrigger boats in which they arrived, and ruled by chieftains known often as datus. Mainland Chinese merchants and traders arrived and settled in the ninth century, sometimes traveling on the ships of Arab traders, who introduced Islam in the south and extended some influence even into Luzon. The Malayo-Polynesians, however, remained the dominant group until the Spanish arrived in the 16th century.
Portuguese explorer Ferdinand Magellan reached the Philippines and claimed the archipelago for Spain in 1521, but was killed shortly after arriving when he intervened in a dispute between rival tribes. Christianity was established in the Philippines only after the arrival of the succeeding Spanish expeditionary forces (the first led by Legazpi in the early 16th century) and the Spanish Jesuits, and in the 17th and 18th centuries by the conquistadores.
Until Mexico proclaimed independence from Spain in 1810, the islands were under the administrative control of Spanish North America, and there was significant migration between North America and the Philippines. This period was the era of conversion to Roman Catholicism. A Spanish colonial social system was developed with a local government centered in Manila and with considerable clerical influence. Spanish influence was strongest in Luzon and the central Philippines but less so in Mindanao, save for certain coastal cities.
The long period of Spanish rule was marked by numerous uprisings. Towards the latter half of the 19th century, European-educated Filipinos or ilustrados (such as the Chinese Filipino national hero Jose Rizal) began to criticize the excesses of Spanish rule and instilled a new sense of national identity. This movement gave inspiration to the final revolt against Spain that began in 1896 under the leadership of Emilio Aguinaldo (another Chinese Filipino) and continued until the Americans defeated the Spanish fleet in Manila Bay on May 1, 1898, during the Spanish-American War. Aguinaldo declared independence from Spain on June 12, 1898.
Following Admiral George Dewey's defeat of the Spanish fleet in Manila Bay, the U.S. occupied the Philippines. Spain ceded the islands to the United States under the terms of the Treaty of Paris (December 10, 1898) that ended the Spanish-American war.
A war of resistance against U.S. rule, led by revolutionary General Aguinaldo, broke out in 1899. During this conflict fighting and disease claimed the lives of tens of thousands of Filipinos and thousands of Americans. Filipinos and an increasing number of American historians refer to these hostilities as the Philippine-American War (1899-1902), and in 1999, the U.S. Library of Congress reclassified its references to use this term. In 1901, Aguinaldo was captured and swore allegiance to the United States, and resistance gradually died out until the conflict ended with a Peace Proclamation on July 4, 1902. Armed resistance continued sporadically until 1913, however, especially among the Muslims in Mindanao and Sulu.
U.S. administration of the Philippines was always declared to be temporary and aimed to develop institutions that would permit and encourage the eventual establishment of a free and democratic government. Therefore, U.S. officials concentrated on the creation of such practical supports for democratic government as public education, public infrastructure, and a sound legal system. The legacy of the “Thomasites”--American teachers who came to the Philippines starting in 1901 and created the tradition of a strong public education system--continues to resonate today.
The first legislative assembly was elected in 1907, and a bicameral legislature, largely under Filipino control, was established. A civil service was formed and was gradually taken over by the Filipinos, who had effectively gained control by the end of World War I. The Catholic Church was disestablished, and a considerable amount of church land was purchased and redistributed.
In 1935, under the terms of the Tydings-McDuffie Act, the Philippines became a self-governing commonwealth. Manuel Quezon was elected president of the new government, which was designed to prepare the country for independence after a 10-year transition period. Japan attacked the Philippines in December 1941, however, and in May 1942, Corregidor, the last American/Filipino stronghold, fell. U.S. forces in the Philippines surrendered to the Japanese, placing the islands under Japanese control. During the occupation, thousands of Filipinos fought a running guerrilla campaign against Japanese forces.
The full-scale war to regain the Philippines began when General Douglas MacArthur landed on Leyte on October 20, 1944. Filipinos and Americans fought together until the Japanese surrendered in September 1945. Much of Manila was destroyed during the final months of the fighting. In total, an estimated one million Filipinos lost their lives in the war.
Due to the Japanese occupation, the guerrilla warfare that followed, and the battles leading to liberation, the country suffered great damage and a complete organizational breakdown. Despite the shaken state of the country, the United States and the Philippines decided to move forward with plans for independence. On July 4, 1946, the Philippine Islands became the independent Republic of the Philippines, in accordance with the terms of the Tydings-McDuffie Act. In 1962, the official Philippine Independence Day was changed from July 4 to June 12, commemorating the date independence from Spain was declared by Emilio Aguinaldo in 1898.
The early years of independence were dominated by U.S.-assisted postwar reconstruction. The communist-inspired Huk Rebellion (1945-53) complicated recovery efforts before its successful suppression under the leadership of President Ramon Magsaysay. The succeeding administrations of Presidents Carlos P. Garcia (1957-61) and Diosdado Macapagal (1961-65) sought to expand Philippine ties to its Asian neighbors, implement domestic reform programs, and develop and diversify the economy.
In 1972, President Ferdinand E. Marcos (1965-86) declared martial law, citing growing lawlessness and open rebellion by the communist rebels as his justification. Marcos governed from 1973 until mid-1981 in accordance with the transitory provisions of a new constitution that replaced the commonwealth constitution of 1935. He suppressed democratic institutions and restricted civil liberties during the martial law period, ruling largely by decree and popular referenda. The government began a process of political normalization during 1978-81, culminating in the reelection of President Marcos to a 6-year term that would have ended in 1987. The Marcos government's respect for human rights remained low despite the end of martial law on January 17, 1981. His government retained its wide arrest and detention powers, and corruption and cronyism contributed to a serious decline in economic growth and development.
The assassination of opposition leader Benigno (Ninoy) Aquino, Jr. upon his return to the Philippines in 1983 after a long period of exile coalesced popular dissatisfaction with Marcos and set in motion a succession of events that culminated in a snap presidential election in February 1986. The opposition united under Aquino's widow, Corazon Aquino, and Salvador Laurel, head of the United Nationalist Democratic Organization (UNIDO). The election was marred by widespread electoral fraud on the part of Marcos and his supporters. International observers, including a U.S. delegation led by Senator Richard Lugar (R-Indiana), denounced the official results. Marcos fled the Philippines in the face of a peaceful civilian-military uprising that ousted him and installed Corazon Aquino as president on February 25, 1986.
Under Aquino's presidency, progress was made in revitalizing democratic institutions and civil liberties. However, the administration was also viewed by many as weak and fractious, and a return to full political stability and economic development was hampered by several attempted coups staged by disaffected members of the Philippine military.
Fidel Ramos was elected president in 1992. Early in his administration, Ramos declared "national reconciliation" his highest priority. He legalized the Communist Party and created the National Unification Commission (NUC) to lay the groundwork for talks with communist insurgents, Muslim separatists, and military rebels. In June 1994, President Ramos signed into law a general conditional amnesty covering all rebel groups, as well as Philippine military and police personnel accused of crimes committed while fighting the insurgents. In October 1995, the government signed an agreement bringing the military insurgency to an end. A peace agreement with one major Muslim insurgent group, the Moro National Liberation Front (MNLF), was signed in 1996, using the existing Autonomous Region in Muslim Mindanao (ARMM) as a vehicle for self-government.
Popular movie actor Joseph Ejercito Estrada's election as president in May 1998 marked the Philippines' third democratic succession since the ouster of Marcos. Estrada was elected with overwhelming mass support on a platform promising poverty alleviation and an anti-crime crackdown. During his first 2 years in office, President Estrada was plagued with allegations of corruption, resulting in impeachment proceedings. Estrada vacated his office in 2001. In 2007, an anti-graft court convicted Estrada of plunder charges. He received a presidential pardon soon after the conviction.
Gloria Macapagal-Arroyo, elected vice president in 1998, assumed the presidency in January 2001 after widespread demonstrations that followed the breakdown of Estrada's impeachment trial. The Philippine Supreme Court subsequently endorsed unanimously the constitutionality of the transfer of power. National and local elections took place in May 2004. Under the constitution, Arroyo was eligible for another term as president for a full 6 years, and she won a hard-fought campaign against her primary challenger, movie actor Fernando Poe, Jr., in elections held May 10, 2004. Noli De Castro was elected vice president.
Impeachment charges were brought against Arroyo in June 2005 for allegedly tampering with the results of the 2004 elections, but Congress rejected the charges in September 2005. In November 2011, Arroyo was arrested and charged for her role in alleged electoral fraud in connection with the 2007 congressional election.
In 2010 elections, Liberal Party Senator Benigno S. Aquino III (son of Ninoy and Corazon Aquino) won the presidency, campaigning against corruption and on a platform including job creation, provision of health care and education, and other domestic issues. Makati City Mayor Jejomar Binay, a member of the PDP-Laban party, won the vice presidency. The election was the first in the Philippines to feature nationwide use of automated ballot-scanners, and, despite uncertainty about the technical reliability of the machines in the run-up to the election, most opinion-shapers lauded the election process as among the best in the Philippines’ history, quickly producing results that were widely accepted as legitimate.
Terrorism and Internal Conflict
The government continues to face threats from terrorist groups, including groups on the U.S. Government's Foreign Terrorist Organization list. The terrorist Abu Sayyaf Group (ASG), which gained international notoriety with its kidnappings of foreign tourists in the southern islands, remains a major problem for the government, along with members of the Indonesian-based Jemaah Islamiyah (JI). Efforts to track down and interdict ASG and JI members have met with some success, especially in Basilan and Jolo, where U.S. troops provide counterterrorism assistance and training to Philippine soldiers, along with conducting humanitarian activities. In August 2006, the Armed Forces of the Philippines began a major offensive against ASG and JI on the island of Jolo. This offensive was successful and resulted in the deaths of Abu Sayyaf leader Khadafy Janjalani and his deputy, Abu Solaiman. In 2010, Philippine forces killed ASG leaders Albader Parad and Dulmatin. The U.S. Government provided rewards to Philippine citizens whose information led to these deaths in the military operations, as well as to many other operations against terrorist leaders. The broad-based efforts to weaken terrorist organizations resulted in the death or capture of more than 200 terrorists since 2007.
An international monitoring team continues to watch over a cease-fire agreement between the government and the separatist Moro Islamic Liberation Front (MILF). In June 2003, the MILF issued a formal renunciation of terrorism. In August 2008, during peace talks facilitated by the Government of Malaysia, the Philippine Government and the MILF reached agreement in principle on a territorial agreement. Intervention by the Philippine Supreme Court, however, and its subsequent October 14, 2008 ruling that the draft agreement was unconstitutional, forced both parties to seek new ways to reach a peace agreement. Fighting flared up after the agreement was struck down in court and continued sporadically in central Mindanao until both sides agreed to a cease-fire on July 29, 2009 and formally resumed the peace talks in December 2009. Following a hiatus in talks during the first months of the Aquino administration, the parties again pursued peace negotiations beginning in February 2011. In August 2011, Aquino met for the first time with MILF chairman Murad Ebrahim in Tokyo. The parties most recently met in Kuala Lumpur in January 2012.
Government Type: Republic
The Philippines has a representative democracy modeled on the U.S. system. The 1987 constitution, adopted during the Corazon Aquino administration, reestablished a presidential system of government with a bicameral legislature and an independent judiciary. The president is limited to one 6-year term. Provision also was made in the constitution for autonomous regions in Muslim areas of Mindanao and in the Cordillera region of northern Luzon, where many aboriginal tribes still live.
The 24-member Philippine Senate is elected at large, and all senators serve 6-year terms. Half are elected every 3 years. There are currently 285 members in the House of Representatives, 229 of whom represent single-member districts. The remaining House seats are occupied by sectoral party representatives elected at large, called party list representatives. The Supreme Court approved the introduction of 31 additional party list seats in April 2009, in time for May 2010 national elections. All representatives serve 3-year terms, with a maximum of three consecutive terms.
Capital: Manila - 11.449 million (2009)
Other Major Cities: Davao 1.48 million; Cebu City 845,000; Zamboanga 827,000 (2009)
Administrative divisions: 80 provinces and 120 chartered cities
Source: Wikimedia Commons.
Independence Date: 12 June 1898 (independence proclaimed from Spain); 4 July 1946 (from the US)
Legal System: The Philippines accepts compulsory International Court of Justice (ICJ) jurisdiction; and accepts International criminal court (ICCt) jurisdiction
International Environmental Agreements
The Philippines is party to international agreements on: Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Hazardous Wastes, Law of the Sea, Marine Dumping, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94, Wetlands, and Whaling. It has signed, but not ratified an international agreement on Air Pollution-Persistent Organic Pollutants.
Total Renewable Water Resources: 479 cu km (1999)
Freshwater Withdrawal: 28.52 cu km/yr (17% domestic, 9% industrial, 74% agricultural)
Per Capita Freshwater Withdrawal: 343 cu m/yr (2000)
Access to improved sources of drinking water: 91% of population
Access to improved sanitation facilities: 76% of population
Arable farmland comprises more than 40% of the total land area. Although the Philippines is rich in agricultural potential, inadequate infrastructure, lack of financing, and government policies have limited productivity gains. Philippine farms produce food crops for domestic consumption and cash crops for export. The agricultural sector employs about one-third of the work force but contributes less than a fifth of GDP.
Decades of uncontrolled logging and slash-and-burn agriculture in marginal upland areas have stripped forests, with critical implications for the ecological balance. Although the government has instituted conservation programs, deforestation remains a severe problem.
With its 7,107 islands, the Philippines owns a diverse range of fishing areas. Notwithstanding good prospects for marine fisheries, the industry continues to face a difficult future due to destructive fishing methods, a lack of funds, and inadequate government support.
Agriculture generally suffers from low productivity, low economies of scale, and inadequate infrastructure support. The sector barely grew in real terms during 2009, dragged down by the adverse effects of successive strong typhoons on the crops sector (which contributes over 45% of total agricultural production). Agricultural output declined by 0.5% during 2010 due to the adverse effects of drought during the first 9 months of the year, but grew by 4.5% during the first nine months of 2011.
Agricultural products: sugarcane, coconuts, rice, corn, bananas, cassavas, pineapples, mangoes; pork, eggs, beef; fish
Irrigated Land: 152,500 sq km (2008)
The Philippines is one of the world's most highly mineralized countries, with untapped mineral wealth estimated at more than $840 billion. Philippine copper, gold, and chromate deposits are among the largest in the world. Other important minerals include nickel, silver, coal, gypsum, and sulfur. The Philippines also has significant deposits of clay, limestone, marble, silica, and phosphate. Natural gas reserves discovered off Palawan have been brought on-line to generate electricity.
Despite its rich mineral deposits, the Philippine mining industry is just a fraction of what it was in the 1970s and 1980s when the country ranked among the 10 leading gold and copper producers worldwide. Low metal prices, high production costs, and lack of investment in infrastructure contributed to the industry's overall decline. A December 2004 Supreme Court decision upheld the constitutionality of the 1995 Mining Act, thereby allowing up to 100% foreign-owned companies to invest in large-scale exploration, development, and utilization of minerals, oil, and gas. Some local government units have enacted mining bans in their territories, citing concerns over environmental degradation, unequal distribution of tax revenue, unemployment caused by displacement of small-scale miners, and marginalization of Indigenous People.
Natural Resources: timber, petroleum, nickel, cobalt, silver, gold, salt, copper
After reconstruction followingf World War II, the Philippines was one of the richest countries in Asia. Growth slowed however, as years of economic mismanagement and political volatility during the Marcos regime contributed to economic stagnation. Political instability during the Corazon Aquino administration further dampened economic activity.
During the 1990s, the Philippine Government introduced a broad range of reforms designed to spur growth and attract foreign investment. As a result, the Philippines saw a period of economic expansion, although the Asian financial crisis in 1997 slowed growth once again.
Despite challenges to her presidency and resistance to reforms by vested interests, the Arroyo administration made considerable progress in restoring macroeconomic stability. The Benigno S. Aquino administration has assembled a strong economic team and has focused on combating corruption and focused spending on education, health and other social services. It is addressing the country’s infrastructure shortcomings through a Public-Private Partnership infrastructure initiative. Nonetheless, long-term economic growth remains threatened by by these shortcomings, as well as by barriers to trade and investment.
The service sector contributes more than half of overall Philippine economic output, followed by industry (about a third), and agriculture (less than 20%). Important industries include food processing; textiles and garments; electronics and automobile parts; and business process outsourcing. Most industries are concentrated in areas around metropolitan Manila. Mining has great potential in the Philippines, which possesses significant reserves of chromate, nickel, and copper. Significant offshore hydrocarbon finds have added to the country's substantial geothermal, hydro, and coal energy reserves.
The Philippine economy proved comparatively well-equipped to weather the recent global financial crisis, partly as a result of the efforts to control the fiscal deficit, bring down debt ratios, and adopt internationally-accepted banking sector capital adequacy standards. The Philippine banking sector--which makes up 80% of total financial system resources--had limited direct exposure to distressed financial institutions overseas, while conservative regulatory policies, including the prohibition of investments in structured products, shielded the insurance sector.
After slowing to 3.8% growth during 2008, and sputtering to 1.1% during 2009, real year-on-year GDP growth rebounded to 7.6% during 2010, a 34-year high, fueled in part by election-related spending, optimism over the peaceful transition to a new government, and an accommodating monetary policy. Growth slowedin 2011 and is likely to be in the 3.5 to 4% range. Overseas workers’ remittances are on track for an 8% annual growth rate, and, continue to comprise roughly 10% of GDP. Annual GDP growth averaged 4.6% over the past decade, but it will take a higher, sustained economic growth path--at least 7%-8% per year by most estimates--to make progress in poverty alleviation given the Philippines' annual population growth rate of 2.04%, one of the highest in Asia. The portion of the population living below the national poverty line increased from 24.9% to 26.5% between 2003 and 2009, equivalent to an additional 3.3 million poor Filipinos.
The Philippines’ business process outsourcing (BPO) industry currently accounts for about 15% of the global outsourcing market and has been the fastest-growing segment of the Philippine economy. Although industry revenues slowed from 40% growth during 2006 and 2007, the BPO sector exhibited resilience amid the global financial turmoil, generating more than $6 billion in revenues in 2008 (up 26%) and $7.2 billion in 2009. BPO revenues rose 26% to nearly $9 billion in 2010, and will likely surpass 20% growth in 2011. The sector created about 100,000 new jobs in 2011, bringing total BPO employment to about 600,000.
Latest government data shows that the balance of payments surplus is at $10.29 billion as of November 2011, 21% down from $13.08 billion in the same period in 2010. Merchandise exports--which rely heavily on electronics shipments for more than 45% of sales—dropped by 19.4% as of November 2011 year-on-year comparison; electronics industry projects its export revenues to also drop by as much as 25% in 2011 from $1.706 billion record in 2010 due to slow industrial spending of some Western economies. Although there has been some improvement over the years, the local value added of electronics exports remains relatively low.
The Philippine stock market index ended 2011 up 4% after gaining 63% in 2009 and 38% in 2010. The Philippine peso closed 2010 up 5.1% year-on-year. From $44.2 billion as of end-2009, gross international reserves rose to a new record high of nearly $62.4 billion as of end-2010, adequate for nearly 10 months of goods and services imports and equivalent to 5.5 times foreign debts maturing over the next 12 months.
Although still relatively high, the debt of the national government has declined to under 56% of GDP (from a 2004 peak of 78% of GDP); and the consolidated public sector debt has declined to about 75% of GDP (from a 2003 peak of 118% of GDP). The national government worked to reduce its fiscal deficits for 5 consecutive years to 0.2% of GDP in 2007 and had hoped to balance the budget in 2008 but opted instead for measured deficit spending to help stimulate the economy and temper the adverse impact of global external shocks on the already high number of Filipinos struggling with poverty. The national government ended 2008 and 2009 with deficits equivalent to 0.9% and 3.9% of GDP, respectively. The deficit-to-GDP ratio declined to 3.7% of GDP in 2010, with a 1.7% deficit likely for 2011, Further reforms are needed to ease fiscal pressures from large losses being sustained by a number of government-owned firms and to control and manage contingent liabilities. The national government's tax-to-GDP ratio increased from 13% in 2005 to 14.3% in 2006 after new tax measures went into effect; it declined and stagnated at 14% in 2007 and 2008, however, and declined further to 12.8% in 2009 and 2010, low relative to historical performance (i.e., 1997’s 17% peak ratio) and regional standards. The passage of revenue-eroding measures, partly to temper the impact on incomes of the global financial crisis, exacerbated weaknesses in revenue administration. The government has used privatization receipts to reduce shortfalls in targeted tax collections, but this has not been a sustainable revenue source.
The Philippine Congress enacted an anti-money laundering law in September 2001 and followed through with amendments in March 2003 to address legal concerns posed by the Organization for Economic Cooperation and Development (OECD) Financial Action Task Force (FATF). The Egmont Group, the international network of financial intelligence units, admitted the Philippines to its membership in June 2005. The FATF Asia Pacific Group conducted a comprehensive peer review of the Philippines in September 2008. Some of the more important concerns include the exclusion of casinos from the list of covered institutions, the non-criminalization of terrorist financing as a stand-alone crime, and 2008 court rulings that inhibit and complicate investigations of fraud and corruption by prohibiting ex-parte inquiries regarding suspicious accounts. Legislation to address these deficiencies is pending in the Philippine Congress, and has been designated “urgent” by the Aquino administration, which will accelerate its movement through the Congress. The Philippines has taken steps to adopt Internationally Agreed Tax Standards (IATS) and has enacted a law that allows and provides a framework for the exchange of tax-related information. In September 2010, as a result, the OECD upgraded the Philippines to its tax "white list."
A decade after the enactment of legislation to rationalize the electric power sector, the state-owned transmission company (Transco) has been privatized and 92% of total generating assets in Luzon and the Visayas have been sold. This has triggered the opening of access to retail competition in the electric power sector. What remains for privatization is to complete the transfer of contracts of the National Power Corporation’s (NPC) Independent Power Producers (IPPs) to private IPP administrators. NPC has transferred about two-thirds of these contracts to date but has postponed further action indefinitely due to concerns about the potential adverse effect on energy supply. Electricity is still relatively expensive in the Philippines, and the central and southern regions still suffer from inadequate and unreliable generating capacity. A Renewable Energy Act was passed in 2008 and provides additional incentives for investment in this sector as a means of ensuring reliable electricity supply and bringing down the cost of power. No new renewable energy investments have been implemented thus far under the act pending consultations on, and approval of, a Feed-in Tariff System (FITS), a major incentive mechanism that aims to accelerate renewable energy investments, and the results of a grid impact study.
The U.S. Trade Representative retained the Philippines on its Special 301 Watch List for 2011. The report lauded recently passed legislation aimed at illegal video recording in movie theaters and Philippine efforts to enforce bans on pirated and counterfeit goods. It, however, lamented inherent weaknesses within the judiciary system that lead to limited enforcement of IPR laws.
Potential foreign investors, as well as tourists, remain concerned about the rule of law, inadequate infrastructure, policy and regulatory instability, and governance issues. While trade liberalization presents significant opportunities, intensifying competition and the emergence of powerful regional economies also pose challenges. Competition from other economies for investment underlines the need for sustained progress on structural reforms to remove bottlenecks to growth, lower costs of doing business, combat corruption and promote good public and private sector governance.
Industrial production is centered on the processing and assembly operations of the following: food, beverages, tobacco, rubber and plastic products, textiles and textile products, clothing and footwear, leather products, pharmaceuticals, paints, wood and wood products, paper and paper products, printing and publishing, furniture and fixtures, small appliances, and electronics. Heavier industries are dominated by the production of cement, glass and glass products, industrial chemicals, fertilizers, iron and steel, fabricated metal products, mineral products, machinery and equipment, transport equipment, and refined petroleum products. Newer industries, particularly production of semiconductors and other intermediate goods for incorporation into consumer electronics are important components of Philippine exports and are located in special export processing zones.
The industrial sector is concentrated in urban areas, especially in the metropolitan Manila region, and has only weak linkages to the rural economy. Inadequate infrastructure, transportation, and communication have so far inhibited faster industrial growth, although significant strides have been made in addressing the last of these elements.
The economy still faces several long-term challenges, including reliance on energy imports and foreign demand for overseas Filipino workers.
GDP: (Purchasing Power Parity): $389.8 billion (2011 est.)
GDP: (Official Exchange Rate): $216.1 billion (2011 est.)
GDP- per capita (PPP): $4,100 (2011 est.)
GDP- composition by sector:
services: 54.4% (2011 est.)
Industries: electronics assembly, garments, footwear, pharmaceuticals, chemicals, wood products, food processing, petroleum refining, fishing
Currency: Philippine pesos (PHP)
Philippines claims sovereignty over Scarborough Reef (also claimed by China together with Taiwan) and over certain of the Spratly Islands, known locally as the Kalayaan (Freedom) Islands, also claimed by China, Malaysia, Taiwan, and Vietnam.
Tthe 2002 "Declaration on the Conduct of Parties in the South China Sea," has eased tensions in the Spratly Islands but falls short of a legally binding "code of conduct" desired by several of the disputants.
In March 2005, the national oil companies of China, the Philippines, and Vietnam signed a joint accord to conduct marine seismic activities in the Spratly Islands.
The Philippines retains a dormant claim to Malaysia's Sabah State in northern Borneo based on the Sultanate of Sulu's granting the Philippines Government power of attorney to pursue a sovereignty claim on his behalf; maritime delimitation negotiations continue with Palau.