BENCHMARKING THE PERFORMANCE OF THE AQUINO

ADMINISTRATION, YEAR 5

MOVEMENT FOR GOOD GOVERNANCE1 The mantra of the Aquino administration is tuwid na daan. It has promised to

govern with integrity, efficiency, transparency, and citizens participation. Such a promise has buoyed hopes and given inspiration to the country. Have our hopes been fulfilled? Has the Aquino administration delivered its promises? The Movement for Good Governance (MGG), a coalition of individuals and organizations that was organized in 2008 contributes to the effort of assessing how the administration has remained faithful to its contract with the Filipino people. MGG believes in empowering the citizens through an objective assessment of the performance of elected public officials based on their platforms. MGG started benchmarking the performance of the Aquino administration in 2010 using a scorecard system. Results of programs are assessed based on data and not on perceptions, impressions, and anecdotes. The extent to which the Presidents promises have been delivered is measured using a scorecard. Score Assessment

0 The President has broken his promise. 2.5 There has been very slow or little progress on his promise. 5 Something has been accomplished but is lower than

expected. 7.5 The administration is on track and is expected to achieve the target as scheduled. 10 The target has been achieved as scheduled.

MGG looks at the performance of government in 2014 and in the first months of 2015 with referrals to how it performed in the past years since 2010. The areas where performance was assessed are economics, public finance, health, agriculture, and governance. MGG is encouraged by the promise of the administration to be accountable to the people. Accountability is only possible if performance is measured objectively. The scorecard is a tool that can track program implementation. It can direct attention to strengths as well as gaps that need reinforcement. The assessment study is meant not to be a critique but a tool for identifying successes and alerting government on areas that need strengthening and improvement. 1 The Chairman of the Movement for Good Governance is Prof. Solita Monsod, former Secretary of Planning. The scorecards of the MGG are found in mggphilippines.org.

The MGG notes with favor the success of the Aquino administration in employment generation, in maintaining macroeconomic stability, the rapid expansion of the National Health Insurance Program , reduction in the incidence of mortality rates for malaria and tuberculosis, and increasing subsidies to the poor to obtain health care. The initiatives to increase transparency through the mandatory disclosure of budget information by national government agencies, the continuation of the performance incentive scheme for local governments under the Seal of Good Local Governance, and the significant strides in the fight against corruption are commended. The benefits of the Pantawid Pampamilyang Pilipno Program (4Ps) to the poorest households were noted in terms of their increased per capita consumption of food, clothing, and education. The MGG acknowledges the qualitifed success of the administration in providing universal pre-schooling for all Filipino children, the expansion of government assistance to private education through increasing budgetary support to Government Assistance to Students and Teachers in Private Education (GATSPE), the construction of more schools, and the Mother Tongue-Based Multilingual Education.

Lower scores were given in the governments performance in the economy due to the drop in growth rates, inability to increase exports relative to the target ( export/GDP ratio was 45.9 9 in 2014and target is 64.3% in 2016), increase in poverty incidence from 24.7% in 2013 to 26.8% in 2014.

MGG notes that deficit management was brought largely through underspending

which contributed to the inability of government to meet growth targets and inadequate service delivery in health and support services to farmers. The tax effort barely inched up to 13.6 percent of GDP in 2014 compared to 13.5 percent in 2013. Revenue collection in 2014 reached P1.91 trillion but was below the targeted collection of P2.28 trillion. While BIR collection kept pace with the increase in income and prices, the growth of BOC collection did not even match the 8.0 percent increase in imports. MGG notes the empowering potential of the Bottom-up Budgeting but notes the need for greater transparency in how the projects proposed by communities get to be approved.

Lower score was given to the provision of health due to the unequal distribution of

health care personnel with a ratio of about 3 health personnel for every 10,000 of the population. The 587 percent increase in the incidence of HIV cases is alarming, as well as the inability of government to meet its Millennium Development Goals (MDG) Health targets. There are still regions where under-five mortality rate is at 30 deaths per 1,000 livebirths compared to the national average of 22 deaths per 1,000 livebirths. Lack of affordable services, lack of transportation, unavailability of facilities, as well as the lack of information on the benefits of health insurance coverage, were cited as the reasons why Filipino mothers do not seek consultation in health care facilities.

Very little progress, if at all, is noted in the agriculture sector with growth slowing

down to 2.1 percent annually compared to 2.8 percent during the Arroyo administration. The yield from coconut declined by 1.5 percent annually and livestock production grew at a snail pace of 1.5 percent annually. The focus on rice sufficiency has deprived other products with better market and income prospects with needed support and resources. The Philippines is noted as the worst performer in productivity in coconut and sugarcane in the ASEAN. The Philippines continues to have the lowest level of agriculture exports in the ASEAN at US6.1 billion compared with US$47 billion in Thailand. The inability of the administration to provide agriculture with the needed and strategic support largely affects the very limited success of government to reduce poverty in the rural areas.

The gains in the fight against corruption are notable resulting to a marked improvement in the Philippine ranking in the Transparency International Corruption Index. The Philippines ranked 85 out of 175 countries in 2014 up from 105 in 2012 and 94 in 2013. The score of the Philippines in the Economic Freedom Index moved up to 62.2 in 2015 up by 2.1 points compared to 2015. However, corruption issues continue to be a serious cause for concern especially in the bureaucracy and the judiciary.

MGG raises the issue of timing in the adoption of the twelve-year basic education

cycle. The full roll-out of the additional two years will only be realized in full by school year 2017-18 or well after the administration has stepped down from office. The huge volume of enrolment for grades 11 and 12 may not be met by DEpED and a clustering strategy may be adopted. This implies that not all public high schools will be able to open their own senior high school departments and students who wish to go on to senior high school will have to go further to a catchment senior high school. This will add additional burden and cost to students. These catchment senior high schools are urban based which will disadvantage rural students. Additionally, the additional two years of senior high school will mean that universities and colleges will have no freshman intake for two successive school years and will have a major impact on the financial viability of these schools and will have a direct effect on the employment of faculty members.

MGG identifies the very large shortage of early childhood teachers, the limited

support for madaris education, the continuing problems in the quality and prompt delivery of instructional materials, the strengthening of math and science programs in regular high schools, as well as the need to build new schools instead of just building classrooms in already overcrowded schools.

In environmental management, the remaining months of the Aquino administration

can be focused on protecting what remains of the forest cover in the country. EO 23 which imposed a comprehensive restriction on logging all over the country has been criticized for loopholes in the sense that it has not revoked or categorically banned commercial logging. Lobbies have been successful in labeling natural and residual forests as plantation forests to secure an exemption from the ban. A plan to stop the continuous desecration of marine resources amidst the geopolitical standoff at the Panatag shoal and West Philippine sea needs to be implemented. Decisions need to be made on the legislation of the amendments to the Mining Act as well as the efficient enforcement of the National Renewable Energy Program.

The overall score of the Aquino administration in 2014 is 5.81 which is lower than

its rating in 2013.

Scorecard of the Aquino Administration, 2010-2014 2010 2011 2012 2013 2014 Economy 4.4 5.66 6.0 6.58 5.96 Public Finance 4.93 6.88 5.7 6.03 5.87 Health 3.0 3.17 5.5 6.33 5.67 Agriculture 5.5 5.5 5.0 Environment 4.7 5.2 5.3 5.1 5.0 Governance 4.5 6.5 6.62 7.0 7.0 Education 5.68 6.10 5.79 5.5 6.19 Total 4.69 5.59 5.77 6.00 5.81

A. The Economic Scorecard

Introduction. It bears repeating what we have been saying for the past two years: it is to the credit of the Aquino Administration, that its Philippine Development Plan (PDP) 2011-2016 is accompanied by the so-called Results Matrices (RM), which provides measureable targets that will allow monitoring and evaluation of the progress of the Plan. At the same time, the National Statistical Coordination Boards StatDev 2014 provides a comparison of actual accomplishments with the corresponding targets. Moreover, NEDAs Socioeconomic Report 2014: Assessment and Implications for 2015-2016 also provides much more target-accomplishment data which complement and sometimes contradict, the StatDev. This total transparency makes it much easier for the Movement for Good Governance and all other interested parties to judge the governments progress in fulfilling the Social Contract of the President with the Filipino people, on which the PDP is based. The contribution of the MGG scorecard is to the conversation is that wherever possible, the most current data are used. We are, after all, judging the performance of Year V of the Aquino administration, which covers the period July 1, 2014 June 30, 2015.

The original Plan has been updated. Last year, the NEDA released the PDP 2011-2016 Midterm Update, a document which it had been working on for a year, together with its accompanying RM. The updated plans major structural change was the recognition that the Divide-by-N mentality was not responsive to development challenges, and that taking spatial in addition to sectoral considerations into account was necessary.

As a result of the updating, at least 41 targeted values in the original RM were changed, 23 of which were increased and 19 were decreased. Additionally, yearly targets, instead of only end-of-period targets, were assigned to several indicators.

Among the increased targets were GDP growth rates, from 7% to 8% to 7.5% to

8.5%; poverty incidence of the population, from 16.6% (the MDG target) to 18% to 20%. A new target is also introduced: a national savings rate which is targeted at more than 30%. It is noteworthy that the increase in GDP growth rates is expected to come from industry and services, as shown by the increase in the growth rate targets for gross value added in these sectors.

Among the major target values which decreased in the update are the following: 1) the unemployment rate, which was originally targeted 6.8 %to 7.2% and now is amended to 6.5% to 6.7%; 2) the number of employment generated, which was initially at 1,000,000 a year, but reduced to 664,000 to 753,000; and, 3) the inflation rate, targeted at 3% to 5% in the original Results Matrix, and amended to a lower 2% to 4%. A new employment target is introduced: underemployment, which is targeted at 17% from the current 19% to 20%. Also reduced were the targets for agriculture and fishery gross value added (at constant 2000 Prices), the targeted yield of palay (from 4.89 to 4.53 metric tons per hectare) and sugar, and the volume of fisheries production, both commercial and inland municipal. From these amended targets, unfortunately, an anomaly becomes immediately obvious. The PDP 2011-2016 overall aim is inclusive growth which is defined as high growth that is sustained, that massively creates jobs and reduces poverty. The updated Plan has higher growth, but it also allows for higher poverty incidence and lower employment

generated than the original. And this is not just an oversight, because other updated plan targets are consistent with those outcomes: for example, the target for agriculture and fishery gross value added has been reduced, which is consistent with the target of higher population poverty incidence. The higher targeted poverty incidence of at least 1.4 percentage points to 3.4 percentage points translates to 1.4 to 3.4 million additional poor. Thus, instead of inclusive growth, the updated plan seems to allow for jobless growth and increased poverty. 1. GDP Growth for the first three quarters of President Aquinos 5th Year in office July 2014 to March 2015 (Year V). Real GDP grew at 5.3% in the third quarter of 2014; 6.9% in the fourth quarter and 5.2% in the first quarter of 2015, with an average growth rate of 5.8 % for the period. The updated target for GDP growth would be about 7.25% for this period. Also, compare this with the performance of the economy for the corresponding periods in his first (6.4%), second (4.46%), third (7.4%) and fourth (6.3%) year in office. In our 2013 Economic Scorecard, MGG assumed that the economys performance followed the typical J-shaped learning curve, with the PDP growth target of 7-8% being achieved in the third year. And therefore, the MGG expected that it would be sustained, and even overtaken, following the J-shaped curve, on his fourth year. This did not happen, obviously. And the fifth year growth performance was even lower than last years. The growth rate fell from7.4% in the third year to 6.3% in the fourth year, to 5.8% in Aquinos fifth year. It is clear that sustained high growth has not occurred. GDP by industrial origin. There are sectoral growth rate targets listed in the PDP RM, and targets for the industry and service sector were increased in the updated version. They are now, respectively, 9.3% to 10.3% (from 8.1% to 9.0%) and 7.2% to 8.1% (from 7.0% to 7.9%), to be achieved by 2016. Agriculture growth targets, however, have been reduced and are now 2.5% to 3.5% (from 4.6% to 5.7%). What has the performance been? The Industry sector turned in a growth rate averaging 7.5 %, lower than the targeted minimum of 9.8% for 2014 and 8.6% for 2015. The good news is that it is better than last years 6.1% growth performance. The Services sector grew by 5.6%, much lower than either the original or the updated targets, and lower than the 6.9% growth rate turned in last year (for the comparable period). It is also below the lower end of the 2014 annual target of (6.0-6.9%), and the 2015 target of 6.8-7.8% Agricultures growth rate for the period was 1.4% -- still lower compared to the original and updated targets. But wait: it is below the 2015 target of 2-3% and above the 2014 target of -0.9-0.1. This means that the administration targets for agriculture allowed for a contraction of up to 0.9% to an almost no growth (0.1%) last year It must be emphasized that such low targets for agriculture, impacts on poverty because most of our poor come from farmers and fisherfolk. Agriculture accounts for about 30% of total employment. Score: 5.0 2. Investment Ratio. The real investment (Real Fixed Capital Formation/GDP) ratio for the three quarters of Year V of the Aquinos administration averaged 22.9 percent (Q3

2014 at 22.1%, Q4 2014 at 23.2%, and Q1 2015 at 23.3%). The target is unchanged at 22.0% by 2016. Thus the target seems to have been achieved. The past performance is as follows: Year I, 22.9; Year II, 20.9; Year III, 20.8; Year IV, 22.3%. Score: 10 3. Export/GDP Ratio. This is targeted to reach 64.3% by 2016. What this means is roughly increasing exports by $9.8 billion a year, or $3.3 billion a quarter (see MGGs assessment in 2013). The actual value for the first three quarters of Year V of the administration was an average of 46.8%. The comparable figure for the administrations fourth year (first three quarters) was 45.9%, 44.5% in the third year and 46.7%, for the second year of his administration. Thus, the country is as far from the target as it was three years ago. There doesnt seem to be any hope for achieving the target. Score: 2.0 4. Employment Generation. One would have expected that with the increased targeted growth rates in the Updated plan, the targets for employment generation would increase commensurately, or at the very least, remain the same. Instead, as mentioned in the Introduction, employment generation targets decreased from 1.0 million a year to a minimum of 664 thousand, and a maximum of 753 thousand. However, at the same time as mentioned above, the targeted unemployment rate was reduced (the targeted employment rate was increased) by 0.3 to 0.5%. It is going to be difficult to reconcile these seemingly inconsistent figures. The reduction in the employment generation target makes it easier to achieve. Thus, with 910 thousand new jobs created in Year V of the Aquino administration (average of July, Oct., January and April LFS), the updated targets have been more than met. which would not have been the case had the original plan target of 1,000,000 new jobs a year been kept. Additionally, the unemployment rate for Year V of 6.3% is below the target unemployment rates for either 2014 or 2015, which are lower than the original unemployment rate targets. The new targets for underemployment, set at 18.7% and 18.0% for 2014 and 2015 respectively, are also achieved, with an average of 18.1% for Year V of the Aquino administration. And addressing the quality of employment issue, wage and salary workers comprised 57.9% of the employed labor force. Although it is not an explicit target, the quality of workers as measured by this indicator has increased during PNoys term (April 2011 55.0%; April 2015, 57.8%). Score: 10.0 5. Income Poverty Reduction: The poverty incidence reduction targets for the population in the Midterm Update are set at 23.0-25.0% for 2014 and 20.0 to 23.0 % for 2015. Poverty incidence was at 26.6% in 2006, 26.3% in 2009, and 25.2% in 2012 a snails pace. Since our official poverty estimates are gathered triennially, using the FIES, what the Aquino administration has done is used the Annual Poverty Indicators Survey to fill in the blanks. The results were that poverty in the first semester of 2013 fell to 24.7%, as compared to poverty in the first semester of 2012, which was 27.9%. That seemed much

better, and the government made much of the 3 percentage point decline in poverty. It seemed there was a breakthrough. Unfortunately, the poverty figures for the first semester of 2014 showed an increase in poverty to 25.8%, so the breakthrough was illusory. Given the targets for 2014 and 2015, which average to 22.5%, it seems unlikely that they will be met. It would require that the poverty figures for the first semester of 2015 would be 19.2%. There is nothing that would lead us to believe that would be the case. The Midterm Update also presents a new poverty measure: Multidimensional poverty. It was estimated to be 28.2% in 2008 and 27.5% in 2011. The target for 2014 is 20-22 %, and for 2015 it is 18-20%. Unfortunately, no one seems to be estimating the actual figures, but given the trajectory of the previous estimates, they are unlikely to meet the target. What is also interesting in the updated plan is the admission that the Philippines will not meet the 16.6% poverty incidence target of the Millennium Development Goals, which is to halve poverty from its 1990 level by 2015. It has increased the targeted poverty levels for 2015 to 18-20%. The Aquino administration is willing to accept anywhere from 1.4 million to 3.4 million more poor than it originally intended. And that increase in poverty will likely be in the agriculture and fisheries sector. The increase in poverty targets is consistent with the decrease in the agriculture and fishery targets. Agriculture seems to be the victim of neglect or incompetent leadership, or both. The Plan and its Update, for example, bemoan the idiotic target of rice self-sufficiency and the extent to which trying to achieve that target has distorted the whole agricultural picture (from the grotesque amount of the agricultural budget that goes to rice to the detriment of other crops.) And still the goal is not met. Then the results matrices show that so many of the AF targets, even the reduced ones, will also never be met on increasing yields, on production targets for livestock and poultry and fish on decreasing postharvest losses (which dont even have data for any of the Aquino years, on industrial crop production to name a few. Another example of how agriculture is neglected: the dismal performance of the distribution under the CARP. The Socioeconomic Report 2014 notes that the acquisition and distribution target for 2014 found DAR wanting by 173,539 hectares (target was 240,707 hectares). It also needs to subdivide CLOAs covering 203,042 hectares to meet the 2014 target of 215,020 hectares, not to mention the 203, 331 hectare target for 2015. The StatDev 2014 reports that as of the first quarter of 2015, 341,562 hectares remain to be distributed. How farmers and fisherfolk who comprise most of the poor are treated by an administration that talks about inclusive growth as its overall goal, is beyond comprehension. Score: 3.0 6. Infrastructure. The updated plan shows the importance of infrastructure development by the amounts that are being devoted to infrastructure. From a very shaky start in 2011 (where only 52% of infrastructure outlays were spent while DPWH was tightening its controls to reduce corruption), 2012 saw an increase in infrastructure budget

to 2.2% of GDP. The plan targets increases in this percentage where its aim is to hit 5.1% of GDP in 2016. As far as appropriations are concerned, there is no problem. In 2014, target public infrastructure spending was 3.5% of GDP, and about 3.4% was appropriated. In 2015, the target is 4.0% of GDP, and the appropriations are forthcoming. The problem is that the funds have not been spent. Part of the blame can be placed on the problems with the Disbursement Acceleration Program, and the slowness of government bureaucracy to accept/understand reforms. The Public-Private-Partnership (PPP) was supposed to supplement this amount. Starting from a very slow pace 1 project out of a list of 22 was implemented in Year I of the Aquino administration and two more were implemented in Year II. As of Year V, the full pipeline has 37 projects, of which 10 have been awarded, 13 are in various stages of procurement, 3 for rollout, 6 projects for government approval, and 5 projects under study. Five years for 10 projects to go on stream? Score 6 7. Macroeconomic Stability. Two indicators are key here. The fiscal deficit (ratio to GDP) and inflation. The fiscal deficit/GDP ratio is envisioned to be 2.0% of GDP by 2016. Since it was already 2.0% of GDP in 2011 (from 3.5% in 2010), there doesnt seem to be too much effort required. In any case, the ratio for year 2 was 2.3 percent and 1.4 percent in years 3. Year 4 showed a 0.6 deficit, there. The projected deficit for 2015 is estimated to be 0.9, and that is also what is projected for 2016. So the budget deficit targets have been more than met. Since the deficit is the difference between government revenues and expenditures, care should be taken that the administration does not achieve its deficit targets by expenditure constriction, or by underspending. It should ensure that revenue targets are met. The original plan target was to increase tax effort to reach 15.6% in 2016, from 12.1% in 2010, or an annual average increase in tax effort of 0.6% of GDP a year. These annual targets were never met in the first half of the plan, but the updated plan raised it to 16.1% another half a percent of GDP, for 2016. This, according to the plan, will be met by plugging leakages from individual income tax collections, particularly from the self-employed. Leakages from VAT, corporate income tax and estate tax hopefully will also be plugged. In 2014, the updated target is 14.5%., and the SER gives the actual as 14.1.2 Unfortunately, the Department of Finance website, which I usually rely on, has not kept its data base current. The latest data it present is for 2013. Wake up, DOF! Score 6 Inflation. The original inflation target was 3-5%, and this has been met. But the updated plan has changed the target to 2-4% for 2015 and 2016, with annual target of 3.0 -5.0% for 2014. Headline inflation for the period July 2014 to June 2015 was 3.1, well within the annual targets. In fact the actual inflation rate for 2015, Jan-June, was 2.05. 2 Using data from the Bureau of Treasury, the tax effort for 2014 was estimated at 13.61. Tax revenues in 2014 amounted to P1, 720.12 billion while GDP at current prices was at P12, 634.06 billion.

Score: 10 Overall Macro-stability Score: 8.0 8. Governance: The Philippines Compared With Other Countries. The updated, as well as the original Plan, includes targets of either improving the rank of the Philippines in a world list, or improving its scores as evaluated by international agencies. Doing Business. The Plans goal is for the Philippines to rank among the top third of the countries. That means that by 2016, the country should be ranked as 63rd out of 189 countries, from being 148 out of 183 in 2010-2011. Progress here has been phenomenal. The 2013-2014 data show the Philippines ranking 108 out of 189. While the latest data shows that we are now 95 out of 189. We are almost in the top half, but to get to the top third? That may be difficult.

Score: 7.0 Global Competitiveness Index. The Plans goal for this index is by 2016 the Philippines will be ranked 49th out of 148 countries. The country started out at 85 out of 139 in 2010-2011, and it has reached 59 out of 148 in 2013-2014 and 52 out of 144 in 2014-2015. We have not quite achieved the target, but it looks like we will. Score: 7.5 Worldwide Governance Indicators. The updated plan raised the bar on Philippine performance on three of the six indicators, and lowered it on one. From a target of a 30% improvement from the baseline rank for all six, the updated target is that the country will be in the 60th percentile or above in control of corruption and rule of law; in at least the 70th percentile with regard to regulatory quality and government effectiveness; in the 74th percentile with regard to political stability; and at least the 50th percentile as regards voice and democracy. The latest data for the WGI are for 2013. The baseline used in the RM is 2012. Here are the figures, with the first figure for the baseline, the second figure for 2013, and the third figure for the target: Control of corruption: 33.12 43.5 > 60 Rule of Law 36.5 41.7 60 Regulatory Quality 51.7 51.7 70 Govt Effectiveness 57.9 56.9 70 Political Stability and

Absence of violence 14.2 16.6 70 Voice and Accountability 46.9 47.9 50 It looks like the only target we may be able to achieve is Voice and Accountability Score: 2 Millennium Challenge Scorecard. The Plans target for 2016 is to score above the median score of the countries being evaluatedthe reason being that for a country to be eligible for a compact (aid grant) with the Millennium Development Corporation, it must perform above the median or absolute threshold on at least half of the 20 indicators it lists

(Pass Half Overall). It must also score above the median on the Control of Corruption Indicator, and above the threshold on either the Civil Liberties or Political Rights indicators (Democratic Rights). The requirements have been fulfilled.

Score: 10 World Justice Project Rule of Law Index. The Plans target for 2016 is to move from the bottom- half to the top- half of the regional (East Asia and the Pacific) country rankings. There are now 8 factors: constraints on government powers, absence of corruption, order and security, fundamental rights, open government, regulatory enforcement, access to civil justice, and effective `criminal justice. Since the base period in 2010, there has been hardly any movement. The country is still ensconced in the bottom- half in all factors. As of 2015, we are 14 out of 15 countries in order and security, 12 out of 15 in effective criminal justice, and 11 out of 15 in access to civil justice. We are close to being in the top half in constraints on government powers and open government. The average score for all factors was 0.549 in 2011, 0.495 in 2012, 5.0 in 2014, and 0.53 in 2015. Score: 4.0 One cannot fail to see the poor performance of the country in overall governance and combating corruption (the first two indicators more properly belong to business) at least in the eyes of the international community. And yet, these are the overarching themes of the Aquino administration Overall Governance Score: 6.1 9. Others. Among the campaign promises of the President are the following: 1) the DBM Review and Plan to Reduce Overhead Costs; 2) Department of Agriculture Review of All Programs; 3) Modernize the Agriculture Sector. They are still awaiting implementation. Score: 2. The Peace Agreement (Comprehensive Agreement on the Bangsamoro) is a giant step forward, with potential positive effects on the economy. Score: 10. Private armies (PAGs and other threat groups) are still very much alive: 83 in 2010; 81 in 2013, and back 84 in 2014; the target number is 43 for 2016. Score: 2

Overall Score for Others 3.6

Summary of Economic Scorecard V, 2015

INDICATORS SCORE Real GDP growth rate 5.0 Investment Ratio 10.0 Export/GDP 2.0 Employment Generation 10.0 Poverty Reduction (Income) 3.0 Infrastructure 6.0

Macro-stability 8.0 Governance 6.1

Others 3.6 .

Average score: 53.7/9 = 5.96

B. The Public Finance Scorecard

Is the Program Effective? The Aquino administration broke its promise of not imposing new taxes. But a broken promise turned out to be good for the country. Increased taxation of cigarettes, fermented liquor and distilled spirits contributed significantly to the campaign against smoking. At the same time, consumers of these products are made to pay for the harm that they have caused to themselves and society. The MGG lauds the President and looks forward to greater benefits resulting from the indexation of the excise tax rates and the adoption of a uniform tax rate. The restructuring of the excise tax rates has strengthened the revenue collection of government. The BIR hit the one trillion mark and collected P1.33 trillion in tax revenues while the BOC brought in P369.3 billion to government coffers. Compared to 2013, both agencies increased their revenue collection, BIR by 9.7 percent and BOC by 5.3 percent. The dedication, time, and expertise that went into the increased revenue collection are recognized and appreciated. But their collection results fell short of targets. Government aimed to raise P1.9 trillion to finance development requirements. BIR had a P1.7 revenue-goal and BOC, a P437 billion target. BIRs actual collection was P1.33 trillion and BOC collected P369 billion. The good news is that BIRs collection runs parallel with the increase in income and prices. Its collection grew by 9.7 percent which is proportional to the 9.53 percent GDP growth in current prices. The 5.3 percent increase in BOC collection is lower than the 8.6 percent growth of imports. The inability of the BOC to fully tax imports is blamed on smuggling problems and corruption which remain to be controlled. Since there were no groundbreaking improvements in collection efficiency, the tax effort ratio increased minimally. From 13.5 percent in 2013, the tax effort in 2014 barely inched up to 13.61 percent of GDP.3 The reasons why the tax effort remains rigid is not dumbfounding. There has been little effort to rationalize tax incentives so that the tax base can be broadened. Tax 3 There are problems with consistency in government data. The NEDA Socioeconomic report cites a 14.1 percent tax effort while using data from the Bureau of Treasury will result to a lower estimate .

exemptions continue to proliferate and the taxpayers who are caught in the tax net continue to bear the costs of development. As a result, the pillars of the tax system have been weakening. The income tax which used to account for 12.7 percent of GDP in 1997 only raised revenues that were equivalent to 6.8 percent of GDP. The VAT to GDP ratio has weakened from 5.2 percent in 1997 to only 2.9 percent in 2014. A major challenge of the administration and those who would like to be at the helm of government is how to increase the revenue productivity of the tax system. Although it may not be deliberate, the under-spending of government has enabled it to manage the budgetary deficit. It reached a record low of P73.1 billion in 2014 representing 0.58 percent of GDP. Even the balance sheet of the total public sector i.e. national government, local governments, government corporations, and the BSP looked better in 2014. The consolidated public sector deficit was at only 0.80 percent of GDP. Smaller deficits reduce the need of government to incur debts and ease the pressure on interest rates and inflation. The public sector borrowing requirement was down at 1.9 percent of GDP in 2013 and 2014 compared to 2.3 percent in 2011. The downside is lost opportunities to provide more and better public services that could promote public welfare through better health care, adequate education, more infrastructure, and support services. Government has to overcome red tape, complicated procedures, and the prevailing culture of control instead of facilitation. Poverty and income inequality threaten to dwarf the economic gains of government. The benefits of growth continue to be enjoyed by a small minority and 25.8 percent of the population wallow in poverty. Government invested heavily on the Pantawid Pamilya program to lift families from the poverty trap. The budget for the program is estimated to reach P65 billion in 2015 which could benefit 14.4 million households. Initial studies on the 4Ps showed that the program has helped the poorest households and increased their per capita monthly consumption, particularly on food, education and clothing.4 Another study found that mothers who are participating in the program have better access to maternal care. Child beneficiaries were found to have greater access to basic health services such as the provision of vitamin A and mineral supplement.5 Contrary to perceptions that the 4Ps would predispose the participants to rely on governments assistance, Orbeta and Pacqueo found no evidence of work disincentives among adult workers. Instead, the study noted that 4PS encouraged greater drive for work among participating-household heads and their spouses. However, these studies observed no significant effect on preventing child labor, a major cause why children drop out of school. It was inferred that the cash transfer is not large enough for families to give up income that children can earn from working. Leakage problems were observed resulting to inefficiency costs. It was likewise noted that the cash transfers do not cover full program participation costs and households are left to bear the indirect costs. Another major thrust of the Aquino administration is the pursuit of is public-private sector partnership (PPP) in the delivery of services and provision of infrastructure. The PPPs has had birthing pains that resulted to a snail pace in project implementation. The bottlenecks included lengthy processes in packaging and approval of proposals; delays in project implementation due to changes in designs; problems in the acquisition of right of 4 Melba Tutor, Evaluating the Impact of Pantawid Pamilya Program on Consumption a paper Presented to Philippine Economic Society, November 15, 2013. 5 Aniceto Orbeta, PIDS, November 2014.

way; political intervention; rigorous processes in the adjustment of toll rates and charges, among others.6 To its credit, the government has confronted the problems and adopted reforms to make the PPP achieve its goals. The Philippines was considered as the most improved country in Asia-Pacific for PPP readiness. The Philippines was noted to have instituted the improved regulatory and institutional framework resulting from significant regulatory reforms, new bidding and selection procedures, and better dispute resolution mechanism. The Philippines ranked 7th among 21 countries that were included in the study.7 As of 2013, government reported 32 PPP projects that were concluded with project costs of US$3.6 billion. The big ticket items are the Mindanao Diesel Power barges, Malaya Thermal Power plant, the Leyte-Cebu Geothermal Power plant, and the Leyte-Luzon Geothermal Power plant. Thirty-five projects were reported to be operational with project costs amounting to US$15.9 billion. These include the South Luzon Tollway Extension, Casecnan Multi-Purpose Irrigation and Power Plant, Pabahay sa Riles, Pagbilao Coal-Powered Plant, the Metro Manila Skyway, and the MWSS privatization.8 Is it Empowering? The MGG has continually noted with favor the empowering results from the Bottom-up-budgeting (BUB) initiative of government. The BUB was initiated in 2013 and involved 1,233 LGUs that were identified as the poorest. The program was scaled up and in 2015 and P9.02 billion was earmarked from the budget to finance programs and projects that are identified by local communities in partnership with civil society. The BUB system has to be more transparent particularly on how project proposals are approved. Reports have been made that the approval process has ample provision for the exercise of discretion of higher authorities. The MGG commends the efforts of fiscal agencies such as the DBM and the Bureau of Treasury to empower the public through greater openness to data and information. Their websites provide basic information that would provide the public with greater familiarity with the fiscal operations of government. It is hoped that such service to the public would be demonstrated by the DOF, the BIR, and the BOC. The MGG notes with disfavor the disposition of BIR to go beyond its powers in enforcing the law. With its proclivity to amend the rules and regulations to beef up collection, the BIR has introduced uncertainty in tax administration, widened the discretionary powers of tax officials, and significantly increased the compliance costs of taxpayers. Fortunately, the Courts have ruled against many of the BIR rulings, including the withdrawal of the tax exemption of Peace bonds, the imposition of the documentary stamp tax on mergers, the requirement for schools to apply for tax exemption, application for a tax treaty relief, requirement for the self-employed to submit a list of their billings including the issuance of receipts to pro-bono cases, requirement for financial institutions to disclose list of income payments to investors, among others. The MGG looks forward to the day when both BIR and its parent agency, the DOF can be more empowering by becoming more consultative, open, and treat the taxpayers as shareholders. Average score: 5.87 Revenue Generation: 5.4 BIR: 6 (80 %weight) BOC: 3 (20% weight) 6 Ma. Catalina Cabral, Lessons from PPP Projects January 21, 2015. 7 Economist Intelligence Unit, Evaluating the Environment for PPP, the 2014 Infrascope 8 Budget of Exepnditures and Sources of Financing, DBM, 2014

Expenditure Management: 6.33 BUB: 7 Expenditures on Poverty Reduction: 7 Efficiency in disbursement: 5

C. Scorecard in Health

In the last five years, the health care sector has made significant strides towards implementing the Kalusugan Pangkalahatan (KP) program as part of the Aquino Universal Health Care Agenda. Successful implementation of the program will ensure that every person will be provided health care services without any financial difficulty. Providing quality, affordable, accessible, and available products and essential services is a hallmark of an effective and efficient system. The success of the KP program is largely dependent on how a country achieves its three primary goals of attaining better health outcomes, building a more responsive health system, and establishing a more equitable health care financing that reduces out-of-pocket spending and expands financial risk protection. But despite the year-to-year gains in the health care sector, the Philippines still lags behind most health outcome measures. A recent report from the World Health Organization (WHO) describes the state of health affairs as stagnant.1 Very few managers, health care leaders, and decision makers employ a proactive approach to finding solutions to prevailing inequities. This is the fifth and final installment in a series of annual health care sector evaluations conducted by members of the Movement for Good Governance (MGG) during the President Benigno Aquino IIIs administration. We attempt to provide an honest, objective, and extensive assessment of the accomplishments of the Aquino government based on his electoral promise to his bosses, the Filipino people.

1. Rapid expansion in National Health Insurance Program (NHIP) enrollment and benefit delivery using national subsidies for the poorest families

With a mixed public-private health system, the Philippines is in a unique position to effectively implement policies on the provision, regulation, and financing of health care services. The National Health Insurance Act of 2013 mandates the Philippine Health Insurance Corporation (PHIC) to provide coverage to all Filipinos and their families, emphasizing enrolment of those in the poorest quintiles as well as expanding benefit packages and limiting out-of-pocket payments.

Since assuming office in 2010, President Aquino has shown a commitment to increasing public health spending in order to achieve universal health care. In 2015, the Department of Healths (DOH) budget increased from P 83.72 billion in the previous year to P 86.97 billion.2 Passing Republic Act 10351 into law, also known as the Sin Tax Law of 2012, has proven to be a boon to the successful implementation of government health programs. Earlier this year, the Philippines was even recognized as a recipient of the Bloomberg Award for Global Tobacco Control.

Revenues generated from the second year of implementation of the Sin Tax Law, which gives the government the ability to fully subsidize the premium coverage of 14.7 million poor Filipino families or more than 45 million Filipinos, has already amounted to P38 billion for 2015 and has provided an increase of more than P 16-billion to the current DOH budget. The sin tax revenues has also allowed government to continue with its initial efforts of renovating and upgrading government health facilities, expanding promotive and preventive health services programs, and hiring health workers to support widespread delivery of health services. In particular, PHIC has been able to continue the implementation of its Tamang Serbisyo para sa Kalusugan ng Pamilya (TSeKaP) program which provides Filipinos access to basic services such as blood chemistry exams, urine analyses, antibiotics for common infections, medicines for chronic conditions such as hypertension, diabetes and high cholesterol, breast and cervical cancer screening services, and digital rectal exams. This program also gives poor children full immunization coverage against measles, German measles, mumps, polio, hepatitis, pneumonia, rabies, and diarrhea.

The past year has also seen Republic Act 10645 or the Expanded Senior Citizens Act of 2010 being signed into law on November 5, 2014. With only about 3.94 million senior citizens currently having PHIC coverage, the passage of this new law guarantees that the 6.1 million senior citizens in the country will now be able to avail of the health benefits enjoyed by PHIC members without the need to be declared as an indigent. All these accomplishments indicate that the Aquino government has striven to be responsive to the health needs of the people. However, challenges still remain towards achieving universal health care.

Results from the most recently National Demographic and Health Survey (NDHS)

conducted by the Philippine Statistics Authority found that only 63% of Filipinos are covered by health insurance with those in the rural areas having a slightly higher coverage rate (64%) than those living in urban locales (62%). In addition, the highest wealth quintile has been found to have a higher coverage rate (76%) compared to those in the other lower quintiles (between 55% to 63%). As of April 2014, PHIC has covered 82% of the population with 2016 projections showing a 95% coverage rate. However, this seems to be a rather unrealistic estimation considering that a large number of hospitals still experience major delays when receiving PHIC reimbursements. As of late, PHIC has even temporarily suspended reimbursements to facilities with alleged questionable claims pending the results of their investigations.

2. Improved access to quality hospitals and healthcare facilities through accelerated upgrading of public health facilities

According to the 2013 NDHS results, only one in every 9 Filipinos visit or seek

consultation in a health facility every 30 days. Of these, only 7 percent go to public medical facilities and government health care providers . These may support currently prevailing notions that public primary health facilities are perceived to be of lower quality. Less than 45% of the more than 42,000 barangays in the Philippines have functional health centers. All these factors contribute to secondary and tertiary facilities being inundated with patients whose conditions can easily be treated by a primary care physician. Additionally, the NDHS results also showed that the average travel cost for individuals to go to a health facility or private provider is P 69.0 while the average cost of treatment is P 1,044. These costs may be too prohibitive for those seeking medical treatment especially in private medical facilities.

The government has tried to address these problems by improving the availability of health facilities nationwide. With P 43.0 billion at its disposal in 2014, the government was able to either construct or upgrade 8,175 health facilities across the country. Last February 2015, Health Secretary Janette Garin also signed a Memorandum of Agreement with the National Housing Authority that formally transferred land ownership to the Philippine Childrens Medical Center.

But even though the government has tried to address the need for improvements in

health facilities and upgrade medical equipment to deliver affordable services, health human resource management is still a critical area that the government must drastically address. Resource-constrained areas such as Ifugao, Iloilo, Palawan, Saranggani, South Cotabato and Surigao still do not have dedicated health care professionals assigned to each barangay. It has been recommended that at least one nurse or midwife should be deployed per barangay, but an unequal distribution of health care personnel continues to persist especially in the provinces. Conservative estimates peg the problem of available health human resource at less than three workers taking care of a population of 10,000. Improvements in health human resource management must be implemented to address the problem of nearly 50 percent of dying Filipinos not even having been seen by a healthcare provider.

In addition, medicine prices in the Philippines remain one of the highest in Asia. The fluctuating nature and variability of prices of medicines have been considered as the main factor that contributes to the lack of access of most health facilities in the country to medicines. With this in mind, the DOH launched the Philippine Drug Price Reference Index (DPRI) last September 2014 with the goal of increasing transparency and efficiency of the government procurement process of essential medicines. Establishing a drug index will promote fair pricing in medicines, which will help improve access and availability of medicines for all. The Philippine DPRI includes all the medicines in the Philippine National Formulary (PNF) with data on prices from the DOH Central Office and its 72 retained hospitals.

3. Attainment of the health-related Millennium Development Goals (MDGs) by applying additional effort and resources in localities with high concentration of families who are unable to receive critical public health services

Unfortunately, the Philippines will not meet all of its Millennium Development Goals (MDG) health targets. Infant and under-five mortality rates have been significantly reduced. However, there has only been a slight decrease in neonatal mortality, most likely due to the low rate of delivery in facilities. According to the 5th Progress Report on the Millennium Development Goals for the Philippines,3 six regions were found to have registered infant mortality rates below the national level of about 22 deaths per 1,000 live births, while there were seven regions below the national under-five mortality rate of approximately 30 deaths per 1,000 livebirths. The following regions were found in both lists: NCR, Cagayan Valley, Central Luzon, CaLaBaRzon, and the SOCCSKSARGEN. At the other end of the spectrum, the Eastern Visayas, MiMaRoPa and Caraga regions were found to have the highest incidence for both infant and under-five mortalities. With only 58% of pregnant mothers having their first prenatal visit in the first trimester, the government must intensify efforts to emphasize the importance of prenatal visits in the first trimester to be able to identify high risk pregnancies and complicated deliveries earlier. By doing this, management plans will developed and implemented at an earlier point in the pregnancy which will help improve maternal

outcomes and reduce neonatal deaths. Furthermore, essential newborn care protocol must be scaled up in all health facilities in the country. For MDG 5, the Philippines will not meet its target of reducing the maternal mortality ratio by 75% or 52 deaths per 100,000 live births. Aside from the low rate of deliveries in health care facilities, total fertility rate has been decreasing, with an upward trend in teenage pregnancies being observed. According to the same report,3 lack of affordable services, lack of transportation, lack of information on the benefits of PHIC coverage, and unavailability or inaccessibility of facilities have been cited as the primary reasons on why Filipino mothers do not seek consultation in health care facilities. For MDG 6, the incidence, prevalence and mortality rates for malaria and tuberculosis (TB) cases have gone down considerably. But in the past five years, the number of new HIV cases has steadily increased. During that time, the Philippines has exhibited a 587% increase in the incidence of HIV cases. This has made the Philippines the country with the fastest growing HIV epidemic in the world. Comparing the milestones reached and the progress made in the health sector vis--vis the existing gaps in implementation, here are our scores:

PLATFORM SCORE 1. Universal Health Care Roadmap through a refocused PhilHealth program

6

2. Improved access to quality hospitals and health care facilities

6

3. Attainment of health-related MDGs 4,5,6 5 Total Score 17 Average Score 5.67

The current rating indicates a stagnation on the progress made from previous years. The

progress has been slow in the past year compared to previous years. The challenge now is to develop new strategies that will advance the needed reforms in health financing, governance, health infrastructure, and health human resource management as President Aquino nears the completion of his term. A more strengthened approach is needed in order to attain universal health care by addressing the inequities found especially in geographically isolated and disadvantaged areas (GIDA). Hopefully, the succeeding administration will build upon the initiatives and gains achieved by the Aquino administration.

D. Scorecard in Agriculture

The Aquino administration had bright hopes for the agricultural sector. The Presidents social contract with the people stated that government will treat the rural economy not as source of problems but it will recognize farms and rural enterprises as vital to achieving food security, more equitable economic growth, and worthy of re-investment for sustained productivity

How the government has performed relative to this promise is assessed purely based

on statistical evidences. The evaluation will follow the following criteria:

(a) Agriculture growth versus ASEAN peers (b) Agriculture productivity level and growth among ASEAN peers

(c) Agriculture exports (level and growth) among ASEAN peers (d) Industry roadmaps (e) Rural poverty, a key outcome of agriculture performance

Agriculture Growth During the Aquino period (2011-2014), agriculture grew at an average growth rate of 2.1 percent a year, the lowest among ASEAN comparators. It is nearly 20 percent below Thailands (2.6 percent) and 45 percent slower than Indonesias (3.8 percent). Interestingly, the Philippine agriculture growth slowed down to 2.1 percent a year as compared to 2.8 percent a year during Arroyos term (2001-2010).

Table 1. Agriculture Growth in the ASEAN: Aquino and Arroyo Periods

Country

GMA Years

2001-2010

Aquino Years

2011-2014 Cambodia 5.2 2.7 Indonesia 3.5 3.8 Malaysia 3.0 2.9 Philippines 2.8 2.1 Thailand 2.2 2.6 Vietnam 3.7 3.2 Memo Phil Development Plan Targets

- 3.5-4.5

Source: ADB While the production of palay and corn grew at 4.7 percent per year and 5.1 percent per year respectively, coconut production declined by -1.5 percent annually. Incidentally, the coconut sector along with small fishers hosts the largest number of the rural poor. The production of poultry advanced by 3.5 percent a year, but livestock production grew at only 1.5 percent a year. Fishery, a subsector that hosts a large number of rural poor declined at -0.9 percent a year. The table below compares the growth of agriculture during the Aquino and Arroyo administration. Table 2. Agriculture Growth: Aquino Year vs. Arroyo Years Average Annual Growth Rate (AAGR), Percent

Subsector

Arroyo 2001-2010

Aquino 2010-2014

Comparison Aquino vs. Arroyo

CROPS Palay 2.2 4.7 Up Corn 5.3 5.1 Down Coconut 1.2 -1.5 Down Sugarcane -0.5 11.7 Up Banana 7.2 -0.6 Down Mango 0.9 1.9 Up Pineapple 3.6 3.8 Up Coffee -1.5 -5.6 Down

Cassava 3.3 4.8 Up Rubber 5.2 3.6 Down Other Crops 1.0 -0.2 Down

LIVESTOCK 1.4 1.5 Slight Up POULTRY 2.1 3.5 Up FISHING 5.6 -0.9 Down TOTAL AGRI 2.8 2.1 Down

Source: PSA-BAS

Pres. Aquinos declaration of rice self-sufficiency at 100 percent by 2013 (from 80 percent in 2010) cannot not be achieved in 2015 and at the end of his term in 2016. This was an impossible target at the very start, and has used up a significant amount of resources which could have been devoted to commodities with better market and income prospects such as cacao, coffee, oil palm and aquaculture.

Agriculture Productivity

The Philippine Development Plan (PDP) 2010-2016 targets raising crop yields by 2016. The targets appear ambitious and most likely cannot be achieved by 2016. Table 3. PDP Targets: 2016 vs. 2014 Actual

Item

2010

2016

Target

2014

Actual

2014 Actual vs. 2016 Target, %

Remarks Target Achievable

by 2016? Yield (tons/hectare)

Palay 3.6 4.9 4.0 82 Unlikely Corn-Yellow 3.6 4.6 4.2 91 Probably Corn-White 1.6 2.0 1.8 90 Unlikely Coconut (copra) 0.8 1.00 0.7 70 Unlikely Sugarcane 49.8 75.0 57.9 77 Unlikely Banana 20.2 24.6 20.1 82 Unlikely Mango 4.1 5.1 4.7 92 Unlikely Coffee, dried cherry

0.8 0.9 0.6 73 Unlikely

Eggplant 9.5 11.6 10.6 91 Maybe? Tomato 11.3 13.8 12.8 93 Maybe? Cabbage 14.7 17.9

Production (000 tons)

Hog 1,898 2,159 2,032 94 Maybe? Chicken 1,353 1,765 1,572 89 Unlikely Commercial fisheries

1,248 1,447 n.a. - -

Municipal fisheries 1,371 1,636 n.a - - Aquaculture 2,544 3,541 n.a. - - Total Fisheries 5,163 6,597 4,701 71 No Agri Exports (US$ million)

3,181 (a)

5,534 (b)

6,097 - Probable

(a) 2004-2010 average (b) 2011-2016 average Source: PDP, 2010-2016; PSA-BAS; UN Trademap

Based on an analysis of farm productivity levels and average annual growth rates, the Philippines lags behind its ASEAN peers in actual productivity levels and growth, except in rice.

Rice. It had the second lowest average yield in 2013. But it had the highest average annual growth during 2010-2013. This accelerated during the Aquino years as compared to Arroyo years.

Corn. It had the lowest yield in 2013 but ranked second in growth rate during the period 2010-2013. According to private sector sources, most of the gains were in yellow corn areas, most of which are not planted to Bt corn.

Coconut. The Philippines is the worst performer in terms of yields and second worst in yield growth.

Sugarcane. Productivity is among the lowest in the ASEAN. The industry players attribute such poor performance to land reform which led to many small holdings.

Table 4. Agriculture Productivity Growth Comparison, ASEAN, 2001-2013

Item

Farm Yield (tons/hectare) Growth Rate, % per year 2010 2013 2001-2010 2010-21013

Palay Philippines 3.6 3.9 1.3 2.7 Vietnam 5.3 5.6 2.4 1.9 Indonesia 5.0 5.2 1.4 1.3 Malaysia 3.6 3.8 1.7 1.8 Thailand 2.9 2.9 0.4 0 Corn Philippines 2.6 2.9 4.2 3.7 Vietnam 4.1 4.4 3.5 2.4 Indonesia 4.4 4.8 5.1 2.9 Malaysia 5.5 9.0 7.0 17.8 Thailand 4.2 4.4 1.4 1.6 Coconut Philippines 4.3 4.3 0.3 0 Vietnam 8.3 9.6 2.8 5.0 Indonesia 6.0 6.1 0.8 0.6 Malaysia 5.2 6.6 3.0 8.3 Thailand 5.6 4.8 -1.5 -5.0 Sugarcane Philippines 67.4 (a) 58.7 n.a. -4.5 Vietnam 60 65 2.1 2.7 Indonesia 61 75 -0.7 7.1 Malaysia 44 47 -0.7 2.2 Thailand 70 76 1.9 2.8 Banana Philippines 20.3 19,4 5.0 -1.5 Vietnam 15 16.8 3.2 3.9 Indonesia 57 56 0.2 -0.6

Malaysia 13.8 9.9 -5.7 -10.5 Thailand 11.9 11.3 -1.3 -1.7 Coffee Philippines (b) 0.389 0.336 -0.7 -4.8 Vietnam 2.160 2.667 8.0 2.8 Indonesia 0.511 0.563 2.5 1.5 Malaysia 0.786 2.925 0.5 55 Thailand 0.851 0.980 -4.1 4.8 Rubber, dry Philippines 0.940 0.601 -1.9 -13.9 Vietnam 1,714 1.731 3.1 0.3 Indonesia 0.794 0.874 2.8 3.3 Malaysia 0.925 0.782 3.1 -5.4 Thailand 1.581 1.596 -0.7 -0.7

(a) SRA data used: CY 2010-2011 and CY2013-2014

(b) Dried cherries divided by 2.

Source: FAO Agriculture Exports: Levels and Growth The Philippines continues to have the lowest level of agriculture exports in the ASEAN at US$6.1 billion (B) in 2014. Compare this with Thailands US$47B, Indonesias US$41B, Malaysias US$32B, and Viet Nams US$23B. Nonetheless, exports during the Aquino period posted higher growth (12.8 percent p.a.) than the Arroyo period (7.7 percent p.a.). The higher growth was driven by fresh fruits (banana and pineapple) and food preparations. Exports also managed to post the highest growth rate in the ASEAN in 2010-2014. Table 5. ASEAN Agriculture Exports, selected years,(US$ million)

Country

2001

2010

2014

Ave. Growth Rate, %

2001-2010

Ave. Growth Rate < %

2010-2014 Philippines 1,942 3,772 6,097 7.7 12.8 Indonesia 6,269 34,684 41,187 12.8 4.4 Malaysia 6,805 30,517 31,810 18.1 1.0 Thailand 12,759 40,670 46,734 13.8 3.5 Vietnam 4,462 17,280 23,239 (a) 16.2 10.4 Memo item: Phil. Banana 297 319 1,137 0.8 37.4 Pineapple 27 42 148 5.0 37.0 Seaweeds/Cara 40 117 215 12.7 16.4 Veg Oil 420 1274 1490 13.1 4.0 Misc food prep 50 96 242 7.5 26.0 Fish, crustacean 287 338 567 1.8 13.8 Fish/Seafood prep 87 310 445 15.2 9.5

Source: UN Trademap Table 6. Number of Exports earning US$1B or over At two digit level category Year Gains

Country 2001 2010 2014 2001-2010 2010-2014 Philippines 0 1 2 +1 +1 Indonesia 3 5 7 +2 +2 Malaysia 2 3 5 +1 +2 Thailand 4 9 13 +5 +4 Vietnam 1 5 6 (a) +4 +1 (a) 2013 Source: UN Trademap Commodity Roadmaps The Department of Agriculture has reportedly prepared several commodity roadmaps but the publication of these has been delayed pending completion of the rice roadmap. The roadmaps are vital milestones in annual budgeting. PERFORMANCE RATINGS The Aquino administration has made notable strides in growing the economy and managing the economic parameters such as inflation, managing deficits and balance of payments. It has accelerated investments in infrastructure, education and conditional cash transfers (the 4Ps). However, its record in agriculture is way below targets and lags behind peers. Crop yield targets have not been achieved, and they remain low. Exports grew faster in 2010-21014 but still lag severely compared to high levels achieved by ASEAN peers. This, in turn, severely affected rural poverty reduction. Table 7. Rural Poverty headcount at National Poverty Lines

Country 2010 2011 2012 2013 2014 Philippines ~40 (a) ~40 (b) Indonesia 16.6 15.7 15.1 14.3 14.2 Malaysia 3.4 Thailand 23.1 16.7 - - - Vietnam 26.9 22.1 Cambodia 25.3 23.6 20.8 (a) Poverty headcounts in 2009: fishers 38.9%, farmers 35.3% None for landless rural workers (b) Poverty headcounts in 2012: fishers 39.2%, farmers 38.3% None for landless rural workers Source: World Bank for ASEAN, except the Philippines. Philippine figures are estimates which include landless workers.

Scorecard on the Agricultural Development under the Aquino Administration

Overall, the rating of the Aquino period is 5.0, meaning: something has been accomplished but is lower than expected. This applies to all criteria, and shown below:

Criteria Rating Remarks Agriculture growth versus ASEAN peers 4.5 Lowest among ASEAN peers Agriculture productivity level and growth among ASEAN 4.5 Way below ASEAN levels Agriculture exports (level and growth) among ASEAN peers 6.0 Growth will be achieved but export level target is low Commodity roadmaps 5.5 A number has been prepared but not published as rice roadmap is delayed Rural poverty reduction, a key outcome of agriculture performance Poor Slowest among ASEAN peers OVERALL RATING 5.0 Much ground to cover to catch up with ASEAN peers

E. Scorecard in Governance From the very beginning, President Aquino sent a strong message that good governance

will be at the core of his administration. The no wang-wang policy was well received by the public including his critics. The policy signaled no special treatment for the highest office in the land. Moreover, the Aquino Administration is probably the only administration that did not imprint the Presidents name or photos a-la- EPAL on a priority program or project borne and upheld by the Administration. There has been no such thing as Ginintuang Masaganang Ani which was the agricultural trademark of the GMA Administration, for example. The simplicity and modesty of the leader come side by side with his platform of anti-corruption and good governance. He demonstrated his serious intent in dealing with spurious governance practices - the impeachment of former Chief Justice Renato Corona, the impeachment attempts against Ombudsman Merceditas Gutierrez, the plunder charges and indictment of three legislators and the alleged scam mastermind Janet Lim Napoles, plus the positive response to the clamor of civil society to abolish the pork barrel system. These were all clarion calls for good governance and a drive against anti-corruption. These pronouncements and practices have given the President high trust ratings during most of his term. Increased transparency, citizen participation and accountability were promoted through specific strategies that include enhancing public access to information, fully engaging and empowering the citizenry, strong performance management and accountability measures, and intensified anti-corruption efforts. Seven (7) key initiatives on good governance were enunciated in the Philippine Development Plan, 2011-2016:

1. Mandatory disclosure of budget information by national government agency under the transparency seal;

2. Full disclosure by local government units of the budget, finances, bids and public offerings which should be uploaded in their websites;

3. Philippine government electronic procurement system (Philgeps); 4. Electronic transparency and accountability initiative;

5. Posting of citizen charters; 6. Access to information initiative; 7. Single portal for government information

That the Aquino administration took these key initiatives is a good sign of its commitment to good governance, although the fourth one, i.e. electronic transparency and accountability initiative, has yet to be operationalized. The transparency seal has been adopted by all national agencies and government corporations. This has been further enhanced with the passage of Republic Act 10149 which created the Governance Commission for Government Owned and Controlled Corporations (GOCC) in 2011. The Governance Commission is mandated to ensure a reduction in corruption and an improvement in service delivery of government corporations. The Aquino administration joined other nations in their commitment to create an Open Government platform. It institutionalized a full disclosure policy for local government units and citizen participation was enhanced through grassroots participatory budgeting across cities and municipalities. Under Aquinos term, there have been attempts to strengthen performance management and accountability measures through the Seal of Good Housekeeping and Seal of Good Local Governance, including the adoption of the Performance Challenge Fund. The results-based performance management system and performance-based bonus help rationalize the budget allocation of agencies. The Revenue Integrity Protection Services (Run after Tax Smugglers and Run after Tax Evaders) has moved not only as a measure to increase revenue collection but also as a step in intensifying anti-corruption efforts. What was probably a blemish on this governance practice was the circle of friends, appointees, and close allies of the Administration, who despite known abuses or allegations of corrupt acts, or involvement in the PDAF scam, did not serve enough as a basis for the Presidents decision to kick them out of public office and anoint more competent people in government. The double-standard in the bureaucracy at the top level made it even more difficult for the rest of the bureaucracy to shed off the long stinking palakasan and untouchables in the system. As a result, the bureaucracy generally remains the same not necessarily corruption-free nor is it better in terms of efficiency in service delivery. The President may be clean, honest, and corruption-free himself but this cannot be said of the entire bureaucracy under his Administration. Take for example, the notorious and embarrassing stories in the Bureau of Corrections, the Bureau of Customs, and the Philippine National Police, to name a few. Certainly, there are gaps in the good governance efforts of the Administration. The Freedom of Information (FOI) Bill has not passed, or at least has not been certified as priority by the Administration itself, despite the President being one of the most enthusiastic supporters of the FOI during his time as a legislator. Advocates hoped that the President make the FOI reform as his legacy on good governance to make his initiatives sustainable. However, as his term comes close to the end, the advocates hope begins to wane. It is not sufficient that the government discloses all information regarding its operation, decisions, and the budget utilization. Disclosure can mean cluttered information which may not be helpful for citizens. It is equally important that when citizens wish to obtain information from any government agency, it latter should be able to provide such

information. Availability of information upon demand by the citizens is a responsive measure on information management and an indicator of transparency. The Administration has caught public scrutiny and institutional controversy through the use of the Disbursement Acceleration Program (DAP), a stimulus to the economy. The Supreme Courts decision over the DAP cases was not a declaration of the DAP unconstitutionality per se. It was qualified that the Constitution allows the President to make re-alignments but only within their respective offices. The Supreme Court declared the following features of the DAP unconstitutional:

The withdrawal of unobligated allotments from the implementing agencies and the declaration of the withdrawn unobligated allotments and unreleased appropriations as savings prior to the end of the fiscal year and without complying with the statutory definition of savings contained in the General Appropriations Act

Cross-border transfers of savings of the executive department to offices outside the executive department

Funding of projects, activities, programs not covered by appropriations in the General Appropriations Act

The Department of Budget and Management (DBM) justifies the DAP and emphasizes the importance of providing stimulus to the economy. However, the bottom line of discretionary funds and re-aligned budget is the accountability on the utilization of such budget. The MGG has strong biases for the respect for the rule of law as well as the need to strengthen institutions not only for ethical reasons, but to promote stability and governance. The Supreme Court decision and the argument of the Executive branch under the Aquino Administration make for an interesting and sharper discourse on accountability and the exercise of discretionary authority on resource utilization. Nothing in previous administrations has had reached a discourse on transparency and accountability except under the Aquino Administration. The anti-corruption efforts of government have resulted to a marked improvement in the Philippine ranking in the Transparency International Corruption Perception Index. The Philippines ranked 85 out of 175 countries in 2014, up from 105 in 2012 and 94 in 2013. The procurement reforms, the serious drive for transparency in budgeting, and greater openness of the administration, contributed to an improvement of public perception in the fight against corruption. However, the score of the Philippines is still below the median and major gaps in the campaign against corruption have to be overcome. The standing of the Philippines in the Economic Freedom Index likewise improved. Its score moved up to 62.2 in 2015 up by 2.1 points compared to 2014. Wide-ranging reforms on improving regulatory efficiency and correcting structural weaknesses were reported. However, the World Economic Freedom observed that corruption continues to be a serious cause for concern jeopardizing prospects for long-term economic development. The judiciary was described as inefficient and susceptible to political interference.and does not provide strong and transparent enforcement of the law. 9 The Global Corruption Barometer in 2012 noted that 56 percent of the households in its study described the judiciary as corrupt. 9 http://www.heritage.org./index/country/Philippines, July 24, 2015

On the participatory aspect of governance, the Budget Partnership Agreement has served as token participation unless civil society organizations have the full technical know-how and capacity for fiscal budgeting, planning, monitoring, and engagement. Local government units should likewise be equipped and prepared for interactive fiscal processes of reporting, planning, and budgeting. Unless citizen groups and local government units are equally equipped and prepared to engage in fiscal processes, the The Budget Partnership Agreement is considered as merely a token measure on governance, transparency and participation rather than a measure of empowerment and participatory governance. Good governance is also about efficiency. It is here where the Aquino Administration faces another huge challenge as service delivery has yet to see greater efficiency and responsiveness. Whilst the government procurement process is meant to be transparent and competitive, its biggest weakness was that it makes the procedures cumbersome thereby slowing down the delivery of services. The challenge sends a message that reforms in the bureaucracy do not only mean a change in leadership, but also an empowerment and professionalism of the rest of bureaucracys human resources. Will Aquinos successor pursue the good governance initiatives and will the successor/s surpass the legacy of transparent, accountable and participatory governance by making governance more inclusive through counting everyone especially the poor? Average Score: 7.0

F. EDUCATION

SONA 2015 marks the fifth and last full year of the Administration of President PNOY. As pointed out in last years assessment, presidential promises made during the 2010 presidential campaign period should have already been introduced as policy. MGG 2014 is therefore about policy implementation. In early 2010, President PNOY introduced a 10-point basic education agenda to be carried out by the Department of Education. This agenda was considered a bold one because it focused on structural reforms rather than on programs only. The total weight per campaign promise remains the same as in previous years reflecting the importance of each promise vis-a-vis the overall agenda. The weights, however, are in favor of implementation. Implement- Total Policy ation Campaign Promise Weight (10%) (90%)

1. Twelve-year Basic education cycle 2.0 0.2 1.8 2. Universal pre-schooling 2.0 0.2 1.8 3. Madaris education for Muslim Filipinos 1.0 0.1 0.9 4. Technical-vocational education as an 0.5 0.05

0.45 alternative stream for high school

5. Every child a reader by grade 3 0.5 0.05 0.45

6. Science and math proficiency 1.0 0.1 0.9 7. Assistance to private schools 0.5 0.05

0.45 8. Medium of instruction 1.0 0.1 0.9 9. Quality textbooks 1.0 0.1 0.9 10. Covenant with LGUs to build more schools 0.5 0.05

0.45 Disclosure:

The MGG Assessment for Education in 2015 was undertaken by a lead assessor who interviewed key respondents and players including basic education school owners and school heads (private schools), DepED division level officers and public school principals, and university academics involved in specific education advocacies (i.e. reading, mother tongue instruction, science and math education). The identity of key informants is kept confidential as requested since all of them deal with the Department of Education on a daily basis. THE PNOY TEN-POINT AGENDA FOR EDUCATION

1. Twelve-year Basic Education Cycle. I will expand the basic education cycle, from a 10-year cycle to a globally-comparable 12 years, for our public school children. At present, those who can afford basic education get into the best universities and the best jobs after graduation.

The new Enhanced Basic Education Law of 2013 (Republic Act 10533) established the legal basis for adding two additional years to the basic education cycle. Grades 11 and 12 will constitute senior high school. The additional 2 Years will place the country at par with the rest of the world in terms of a complete basic education cycle. By passing this into law, the government has laid the legal basis for unexpended Basic education for all Filipinos. That this was done early in the administration as it identified this government as a reform champion in education.

The issue raised in this assessment is one of timing. The full rollout of the additional

two years will only be realized in full by school year 2017-18 or well after this administration has stepped down from office.

The reason for the slow implementation was due to the rollout strategy adopted by

DepED. From the beginning of the reform in 2011, DepED opted to take an incrementalist approach to introducing the new curriculum to schools. Starting school year 201112, DepED introduced two school years of curriculum changes each year with the final two years (i.e. Grades 11 and 12) to be rolled out in 2016 and 2017 respectively.

In August 2014, DepED asked private high schools to submit letters of intent with

reference to opening up senior high schools. The Department is keen on identifying private high schools that might be in a position to help it by offering slots to public school students looking for placement in grades 11 and 12. This strategy is also being considered by the department for state colleges and universities and private universities/colleges, both of whom will have no university freshman intake in the first two years of the senior high school rollout.

To be ahead of the curve, a number of private high schools have began to advertise that they are senior high schoolready. A practice that does not appear to be closely supervised, however, is that of accelerating students in some of the private high school. In these schools, students have had to take acceleration programs so that they can be promoted to a higher level. These programs may take the form of a four-week summer program or additional Saturday sessions during the school year leading to promotion to two levels higher. In this assessment, this is seen as nothing more than a superficial practice of renaming grade levels up to SHS.

The situation in public high schools might be even more serious. The huge volume

of enrollment anticipated for both grades 11 and 12 in public schools will not be met by the Department. DepED will be resorting to a clustering strategy. Not all public high schools will be able to open their own senior high school departments. In the case of public high schools that will end at grade 10, their students who wish to go on to senior high school will have to go further to a catchment senior high school. This will add additional burden and cost to students having to go further to attend a catchment senior high school. A glance at a sample of where these catchment Senior high schools are located show that many are urban-based. This will disadvantage rural students and may have an impact on the ruralurban distribution of students in favor of the urban.

The government has the resources to build the necessary infrastructure for senior high school. The problem is time or the lack of it. Here, the incrementalist approach may have been the wrong strategy to take.

This late in the administration, risk has presented itself in the form of opposition to

the introduction of senior high school. The oppositors led by two senators and a party list group in Congress have filed the case before the Supreme Court for a permanent injunction to hold off the implementation of the law. While this is probably not going to prosper, it is taking up the attention of education advocates and others on something that was already determined back in 2013 but which could surface as an election issue in 2016.

The PNOY Administration has done well to introduce the additional two years in

basic education to make the Philippine cycle equal in length to the rest of the world. The real challenge today is implementation. By having the full implementation of this crucial reform full beyond this administration (i.e. beyond the term of President PNOY) the element of risk has been introduced. The next administration may choose to postpone the reforms (if it were a populist government) or may water down some of its bolder provisions.

Rating: 11.0 [Maximum: 20.0] Policy: 10 rating (x 0.2 weight) Implementation: 5 rating (x 1.8 weight)

Additional Note from the 2014 assessment:

In SYs 2016-17 and 2017-18, the rollout of the additional two years of SHS will mean that universities will have no freshman intake for two successive school years. These two years of no intake will continue for the next five years with less than maximum enrolment for higher education institutions (HEIs, e.g. universities and colleges). With the majority of HEIs being private, this will have a major impact on the financial viability of the sector.

Small private colleges and universities may close due to financial non-sustainability. On the positive side, this should result in a consolidation of enrolment in larger

universities which may not be bad for higher education in the country. Such consolidation should result in better economies of scale and efficiencies that would make the cost of higher education more affordable to the larger segment of the population.

On the negative side, however, closures will have a direct effect on the employment

of faculty, many of whom are unionized. Private universities and colleges which will be forced to close and faculty unions of many of these private and public universities may raise the issue of closures and layoffs as possible election issues in the run-up to the 2016 presidential/national elections. If there is significant clamor, the K-12 reforms which DepED has worked hard on up to this point may be watered down by a new administration.

This would be an unfortunate turn of events at the end of what would be a major

reform in education in the country.

2. Universal pre-schooling (kindergarten) for all. All public school children will have preschool as their introduction to formal schooling by 2016, and we will make this available to all children regardless of income.

Universal preschool has been a qualified success for the Department of Education. The numbers show that almost all Philippines children attend kindergarten. As in the assessment for 2014, there are two main concerns to be addressed.

Are parents bringing the right-age children to kindergarten? DepED data show that

by gross number, the majority of the children in kindergarten are still actually 6 years and 7 years of age. This reflects the same pattern for Grade 1 and the early elementary years. What has happened is that the age level pattern for school entry has just been shifted to kindergarten from Grade 1.10

Unless this pattern is recognized and corrected, it will have an effect on dropout

rates in the higher grades. Higher dropout rates in the later years of formal schooling are closely correlated with over-age students. (Note: The pattern is improving, however, as parents become more knowledgeable about the benefits of bringing children to kindergarten at the right age.) 10 If the school aging pattern were to shift significantly to 5 year olds entering kindergarten and 6 year olds entering Grade 1, there should be a surge in enrolment to reflect the age demographics. There is an increase but the expansion in enrolment is not at the same pace as the age demographics.

On the supply side, there is still a very large shortage of early childhood/preschool

educators. The increase in the number of kindergarten classes is not yet matched by enough qualified early childhood/pre-school education majors or graduates from higher education institutions (HEIs). It will take about 3 to 5 years for DepED to be able to have enough qualified K teachers in the system but this number is moving in the right direction as more and more college-age students respond to the demand for more K teachers.

Rating: 18.2 [Maximum: 20.0] Policy: 10 (x 0.2 weight) Implementation: 9 (x 1.8 weight)

3. Madaris education for Muslim Filipino children as a sub-system in the education system. I want a full basic education for all Muslim Filipino children. This is to give proper respect to their culture while providing a sound curriculum in English, Filipino, science, and math. Madaris education, with subjects in Arabic language and Islamic values education, can be integrated in our public school curriculum as additional subjects. The Department of Education completed a number of baseline studies on Madaris education to determine how it could to be better delivered. (Similar research studies were carried out for indigenous peoples education.)

Funding support for Madaris education has been stable over the years of the administration. Still, today, Madaris education remains predominantly private and mosque-based. Many private Madrasah schools11, particularly those that are mosque-based, do not provide a full education for Muslim Filipino children. In these schools, the focus is on Arabic Language, Islamic Values Education and Religion. This will remain the case until public Madaris is expanded.

DepED could benefit from having a strong champion for Madaris education (as well

as IP education) in the person of a high official, preferably of undersecretary or assistant secretary rank.

Rating: 4.1 [Maximum: 10.0] Policy: 5 (x 0.1 weight) Implementation: 4 (x 0.9 weight)

4. Technical-vocational education as an alternative stream in senior high school. I will reintroduce technical-vocational education in our public high schools to better link schooling to local industry needs and employment. We need to provide an educational alternative to better prepare the students for the world of work.

From informal surveys undertaken preparatory to senior high school level, it appears the technical-vocational education will be a very large, if not the largest, stream. DepED has worked hard with TESDA prepare a ladderized curriculum for SHS. DepED has identified some 35 high schools nationwide to test out an SHS curriculum (Grade 11) that is heavily geared to technical vocational education. 11 Madaris is the plural for Madrasah schools and is the term used to introduce the sector.

This number is very small compared to the total requirement for senior high school. Rating: 2.6 [Maximum: 5.0] Policy: 7 (x 0.05 weight) Implementation: 5 (x 0.45 weight) 5. Every child a reader by Grade 3 (Grade 1 once universal pre-schooling is realized). By the end of the next administration, every child must be a reader by Grade 1.At the core of