Conditions in Philippines look set to improve while elections results are still being finalized

Updated On: Jun 05, 2007

Under President Arroyo, the Philippines economy seems to have picked up.

Exports have grown and foreign direct investments have increased. This week, the government announced that the economy grew 6.9 per cent in the first quarter, its highest rate of growth in 17 years. This strong confidence in the Philippines economy has also pushed up the Philippines peso, which has caused anxiety among some of the Filipino working overseas.

“The strong peso has been very bad. Our remittances are costing more,” said Mrs Gayaman, a Filipino who had worked in Hong Kong and has returned to thePhilippines. The hardest hit overseas Filipino workers are those working in the Middle East who are paid in United States dollars (which has weakened against the peso).

The Philippines’ attractiveness to foreign investors is likely to increase once the Japan- Philippines Economic Partnership Agreement (JPEPA) comes into effect. However, the JPEPA will also mark the first test between the new Senate and the Arroyo administration. The new Senate is expected to be dominated by the opposition members. Currently, Arroyo’s allies have only won 2 Senate seats compared to 8 by the opposition coalition and 2 by independents.

Although the JPEPA has been signed by both President Arroyo and former Prime Minister Koizumi in September 2006, it has yet to be ratified by the Senate. The JPEPA has come under fire from civil society groups and others for opening the door to allow the dumping of Japanese waste in the Philippines. Nonetheless, Arroyo is confident of pushing the deal through the Senate.

Arroyo has also been active in the security front. She signed the Status of Forces Agreement (SOFA) at a state visit to Canberra. The agreement marks the entry ofAustralia in the Philippines security arrangements, breaking the previous monopoly of the United States as the guarantor of the Philippines’ external security. The SOFA allows Australian troops to train with Filipino soldiers and provides the framework for bilateral military cooperation.

President Arroyo said the defence arrangement with Australia would allow elite Australian commandos to train local troops, “help[ing] us fight terrorists lurking in swamps and shadows of remote southern islands…  By working together on a regional basis, we hope to make our country and the entire region safer and more secure for our God-fearing people.”

Unlike the Visiting Forces Agreement (VFA) between the Philippines and United States, the SOFA would require Filipino and Australian soldiers to honour the criminal jurisdiction of both countries. This jurisdiction clause is likely to allay the fears of Filipinos who fear that there might be a repeat of the circumstances where the Philippines government is unable to bring to justice American servicemen who break Filipino law.

While the Arroyo administration can now lean on the Australians for help with the Jemaah Islamiah threat, it is also leaning on the Malaysian and Japanese governments to help in the problems of Southern Philippines. Both Malaysia and Japan are involved in the International Monitoring Committee (IMT) which is helping to lead the peace talks between MILF and the Philippines government ‘to a successful conclusion.’

The Malaysian Ambassador to the Philippines Ahmad Rasidi bin Hazizi recently assured the MILF that the Malaysian government would continue to give full support to the Philippines government- MILF peace talks. The IMT was formed 4 years ago and has seen the significant reduction of ceasefire violation between thePhilippines state government and the MILF from 600 to 30 incidents a year.

The Philippines Press Secretary and Presidential Spokesman Ignacio R Bunye also thanked the Japanese government for its role in the IMT, saying that whileMalaysia has been facilitating the peace talks, Japan has been making significant economic investments there. 

However, while there is progress in the peace talks with MILF, the Southern Philippines continue to be a target of Islamic militants from Jemaah Islamiah, the Abu Sayyaf and groups that broke away from MILF. Hopefully, the increased military cooperation with Australia would also help to tackle the continued challenges posed by these militants. (4 June 2007).


Australia now major player in RP security (Philippine Daily Inquirer, 4 June 2007)

Filippinos Abroad the Pinch of Strong Peso (Straits Times, 2 June 2007)

RP-Japan pact to test Palace ties with Senate(Philippine Daily Inquirer, 2 June 2007)

Arroyo Says Asian Region Safe with Security Pact (Straits Times [from Reuters], 1 June 2007

Malaysian envoy assures MILF of full support to Mindanao peace process (Philippine News Agency, 31 May 2007)

PGMA hails JapanMalaysia role in search for lasting peace in Mindanao (Philippine News Agency, 28 May 2007)