26% PHL poverty a ‘scandal’ in Asia

Luis Leoncio

One in four Filipinos or roughly 26 percent of the country’s population is poor due to wrong government priorities and policies that have failed to attract foreign investments, according to a top economist.

Prof. Bernardo Villegas, a member of the Constitutional Commission that drafted the Constitution under the administration of President Corazon Aquino, the incumbent’s mother, said that as a result of these wrong priorities and policies, the country has again been left out in the region in relation to foreign investments.

“Scandalous,” was how he described the 26-percent level of poverty in the Philippines, compared to the rest of Asia that mostly has a poverty incidence of less than 10 percent.

Villegas said the more than 6-percent average growth that the economy has achieved during the term of President Aquino is not being felt by the poor

“Unless the economy grows between 8 and 10 percent a year, we will not address the poverty problem,” he said.

That the country has more than 20 percent of its population impoverished is really a scandal, he said, since Indonesia has less than 10 percent and even Sri Lanka, despite a recent civil war, has a poverty incidence of less than 10 percent.

He said the difference between the Philippines and its neighbors is the priority given by the latter to countryside development.

However imperfect the neighboring governments are, they focused on countryside development and that was the key to their solving their poverty problem, Villegas said. “The whole of Asia has solved the poverty problem except the Philippines,” he said, adding: “Unless we focus more on the rural areas, 75 percent of those below the poverty line who are in the rural areas, will not rise from their state of misery.”

He urged the government take advantage of the expiration of the land-reform program and allow the consolidation of farms “using the Malaysia success story of nucleus estate.”

“There, you have a Sime Darby working with thousands of small holders, transferring technology to them and buying their products. You can do this in palm oil, cacao and coffee, cassava and even abaca,” Villegas said.

He said the private sector was picking up from the Malaysian experience even without government support.

“There is a group trying to develop 15,000 hectares of coconut in Nakar, Quezon, that consolidates farmers and then use the nucleus estate concept,” he said.

Banks would be willing to fund these agribusiness projects, he said.

Under the law, a bank must set aside 15 percent of its total loan portfolio for agri-agra lending.

He added that the low rate of foreign investments remains the Achilles heel of the Philippine economy.

On foreign investments, Villegas the country has the lowest rate of in Asia in relation to the gross domestic product (GDP), which is 20 percent.

“The Philippines gets $2 billion a year in foreign investments compared to $8 billion a year in Vietnam. China has $100 billion a year average,” Villegas added.

They say that China does not also allow foreign ownership of land but its infrastructure is 20 times better than in the Philippines, Villegas said on the argument against amending the Constitution to allow more foreign ownership on land and local industries.

“We should have a sweetener,” he said.