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Asia and Oceania

Philippines
Last reviewed: 12 October 2009

Country information

Area: 300,000 sq km (115, 830 sq miles), 7107 islands
Population: 92.23 million (2009 estimate)
Capital city: Manila, part of the Metro Manila conurbation (total population 11.55 million – 2007 census)
People: Filipinos are predominantly of Malay descent, although many have mixed ancestry, with Chinese and Spanish the largest influences.
Languages: Filipino, based on Tagalog, is the national language. English is also an official language. Over 150 native languages and dialects are spoken.
Religion(s): Roman Catholic (83%), Protestant (8%), Muslim (4.6%), Iglesia ni Cristo (2.3%) (National Statistical Co-ordination Board, 2008)
Currency: Peso
Major political parties:
- Lakas - Christian Muslim Democrats (Lakas-CMD) founded by former President Fidel Ramos and headed by President Gloria Macapagal-Arroyo
- Nationalist People's Coalition (NPC) headed by Eduardo 'Danding' Cojuangco Jr.
- Liberal Party (LP) headed by Senator Manuel Roxas II.  
Party allegiances are fluid and elections are more about personalities than party manifestos.  A large number of sectoral and cause-orientated groups compete for the 20% of Congressional seats reserved for ‘party-list’ groups.
Government: Republic
Head of State and Head of Government: President Gloria Macapagal-Arroyo
Vice President: Noli De Castro
Foreign Minister: Alberto Romulo
Membership of international groupings/organisations: United Nations (UN), Association of Southeast Asian Nations (ASEAN), Asia Pacific Economic Co-operation (APEC), Asian Development Bank (ADB), Group of 77 at the United Nations (G77), International Atomic Energy Agency (IAEA),  International Labour Organisation (ILO), International Monetary Fund (IMF), Inter- Parliamentary Union (IPU), Non Aligned Movement (NAM),  World Health Organisation (WHO), World Trade Organisation (WTO), World Bank.

Economy

Basic economic facts (2008)

GDP: $ 168.6 billion
GDP Per Capita: $1,871
GNP per capita: $ 2,069
GDP per capita (adjusted for PPP):  $3,546.2
Annual growth: GDP 4.6%, GNP 6.1%
Average rate of inflation: 9.3%
Major industries: Electronic components, Services (including call centres and business process outsourcing), Garments
Major trading partners: United States, Japan, European Union, China, Singapore, Taiwan, Hong Kong
Major investors: United States, Japan, Hong Kong, Singapore, European Union (particularly UK, Germany and Netherlands)
Exchange Rate: £1 = approx. PhP 79.8 (Aug 2009 – rates vary)

After growing at a 31-year high of 7.3% in 2007, the Philippine economy slowed in 2008 due to high oil and food prices in the first semester and the global financial crisis in the second semester. In 2008, annual GDP growth was 4.6%. For 2009, the government projected a 4.2% growth in GDP while independent forecasts predicted a more cautious 2.0 to 2.5% growth in 2009. Actual growth for the first semester is 1 percent.

The Philippines was relatively untouched by the initial financial crisis but has felt the impact of the resulting economic downturn. Exports fell 37% in the first quarter of 2009, primarily due to falling demand for electrical components, which make up 60% of exports.  However trade is a relatively small component of overall GDP because of low value-added in electronics trade.

As a consumption-driven economy, the main concern in 2009 is a slowdown in remittances from Filipinos working overseas. Almost a quarter of the country’s labour force works abroad and remittances (about 11% of GDP) prop up the balance of payments and support consumption and investment growth, particularly in the booming real estate sector.  Following several years of double digit growth for remittances, best-case scenario at the beginning of  2009 was zero-growth. However, first half data surprised at 2.9%. Main sources of remittances are US, Saudi Arabia, Canada, UK, Italy and UAE.

In light of the global financial crisis, the Philippine government has expressed initial commitments to stimulate the economy with an additional 1% of GDP deficit spending in 2008-2010. Monetary policy is expansionary, through a reduction in reserve requirement, and is expected to loosen further in 2009 as inflationary pressures ease. An initial benchmark rate cut was made on 29 January. By end of August, monetary authorities declared that the worst is over, and began to consider monetary expansion anew.

Beyond the immediate crisis, the challenge for the government is to encourage foreign and domestic investment, which have remained stubbornly low, and translate growth into poverty reduction. Despite a sustained period of strong growth since 2004, poverty has actually increased in the Philippines. Unfortunately, the initial success of VAT and corporate tax reforms has not translated into a sustained growth in government revenues.

Potential growth drivers

Infrastructure development
Power sector privatisation
Mining
Booming sectors e.g. BPO/IT outsourcing, tourism, finance

Potential growth challenges

Tax revenue leakage
Slow infrastructure development
Opposition to mining investments
Slow privatisation
High birth rate
Political instability
World fuel and food prices

History

Recent history

Following World War II the Philippines gained independence from the United States of America in 1946. It retained close ties with the former colonial power, including a Mutual Defence treaty and, until 1992, the presence of US military bases in the Philippines.  Philippine political, administrative and legislative structures are closely based on their American counterparts. However politicians are drawn almost exclusively from the wealthy elite, many of them descended from Spanish settlers, and beneath the democratic veneer many aspects of the Spanish-era feudal structure remain.

In 1972 President Marcos, then nearing the end of his second elected term, declared Martial Law. The pretext was a series of bombings in Manila, some of which were later alleged to have been staged. During the next 14 years cronyism, corruption and patronage - never far from the surface in Philippine politics – became blatant. Marcos remained in power until 1986, when he was overthrown by the non-violent People Power Revolution – also known as the EDSA Revolution after the highway where protestors gathered. Marcos fled to Hawaii, where he died in 1989.

Marcos was succeeded by President Corazon Aquino, whose husband and vocal opponent of Marcos, Senator Benigno “Ninoy” Aquino, was assassinated in 1983. President Aquino supervised the introduction of a new constitution and the restoration of democratic politics, but she failed to tackle the vested interests of the political elite. Her Presidency was characterised by repeated coup attempts. The long running communist insurgency continued, as did the armed struggle for an independent Moro nation on the southern island of Mindanao. However Aquino’s term did see agreement reached with the US to withdraw from their military bases in the Philippines.  

President Aquino’s successor, Fidel V. Ramos, was an ex-General whose switch of allegiance played a key role in the People Power Revolution. His Presidency (1992-1998) was characterised by relative peace and prosperity until the 1997 Asian Financial Crisis, which affected the Philippines along with neighbours including Thailand and Indonesia. Ramos reoriented the Philippines towards Asia in general and ASEAN in particular. He initiated successful peace talks with the Moro National Liberation Front (although splinter group the Moro Islamic Liberation Front (MILF) vowed to continue the armed struggle) and began talks with the communists.

Joseph Estrada, an ex-movie star with a populist pro-poor manifesto, was elected President in 1998. He quickly gained a reputation for corruption and incompetence. Impeachment proceedings brought against him by the House of Representatives were blocked by the Senate, leading to massive street protests (EDSA II). Estrada was deposed in January 2001 and was later charged with plunder. His conviction in 2007 was followed swiftly by a pardon.

In line with the Constitution, Vice-President Gloria Macapagal Arroyo was sworn in as President. She initially promised not to stand for re-election but later changed her mind and was elected for a full term in the 2004 Presidential Elections. Allegations that these elections were rigged have persisted.

Longer historical perspective

The earliest inhabitants of the Philippines arrived from the Asian mainland around 30,000 years ago. They settled in scattered communities, developing distinctive languages, customs and traditions. Although displaced and discriminated against by later waves of settlers, many of these communities survive, with over 100 ethnolinguistic groups recognised by the Philippine National Commission on Indigenous Peoples.

The majority of Filipinos trace their ancestry from Malays who began arriving in the islands around 3000 BC. By the 14th century the Philippines engaged in extensive trade with China, India, Indonesia and Japan. Islam was introduced by Arab traders from Indonesia and became the dominant religion in the south.

In 1521 Ferdinand Magellan and his expedition became the first Europeans to visit the Philippines. Involvement in a conflict between two local leaders led to Magellan’s death, but members of the expedition went on to complete the first circumnavigation of the world.

The first permanent Spanish settlement in the Philippines was established in 1565. Spanish rule continued for over 300 years, apart from a brief period during the Seven Years War when the British occupied Manila and assumed sovereignty from 1762 - 1764. The Spanish integrated the Philippines into their global trading routes, created a nation-wide administrative system of provinces, municipalities and villages that survives largely unchanged and introduced Western-style education. They also introduced Catholicism, which was widely adopted.  

Throughout the period of Spanish rule there were sporadic localised attempts to overthrow the colonial government. A nationalist movement developed in the late nineteenth century, led mainly by educated Filipinos who had spent time in Europe including national hero Jose Rizal. The Philippine Revolution began in 1896. In 1898 the Spanish-American War initially led the Americans to ally themselves with the Philippine revolutionaries but the US later excluded them from the capture of Manila. At the end of the war Spain ceded the Philippines to the United States of America in return for $20 million, leading to a new round of hostilities between the US and the revolutionaries.  

By 1901 the US had defeated the rebels and begun a series of reforms aimed at preparing the Philippines for eventual independence. These included a switch to English as the official language, disestablishment of the Catholic Church and the introduction of a civil government, as well as an elective political system. In 1935 the Commonwealth of the Philippines was established, with a plan for transition to full independence after 10 years.

World War II interrupted these plans. The Japanese invasion of the Philippines began 10 hours after the attack on Pearl Harbour in December 1941. By May 1942 US and Filipino troops were defeated, although resistance by guerrilla groups continued throughout the war. US troops returned to retake the islands in October 1944 and the Japanese formally surrendered on 2 September 1945. An estimated 1 million Filipinos were killed during the war and the historic Walled City of Manila (Intramuros) was devastated by aerial bombardment.

Elections were held in April 1946 and Manuel Roxas became the first President of the independent Republic of the Philippines on 4 July 1946.  

BBC News Country Timeline: Philippines

International relations

Relations with the United States remain of major importance to the Philippines. The US is the largest trading partner and biggest source of foreign investment. Although the US no longer has a permanent military presence in the Philippines, there are annual joint exercises and the US has provided advice and training to support Philippine counter-terrorism efforts.  

China is also increasingly important as both a trading partner and a source of development assistance. There is an established Chinese-Filipino community in the Philippines and Chinese interest is welcomed as a counterbalance to US influence. Tensions remain however over the Spratly Islands, where the two countries have competing territorial claims.

The Philippines was a founder member of the Association of South East Asian Nations (ASEAN) in 1967. It remains actively engaged with this and other international organisations such as the UN, where it is a member of the G77 group of developing nations. Current international negotiations of particular concern include the WTO Doha Development round and the UNFCCC climate change negotiations.

Ensuring the safety and wellbeing of Overseas Filipino Workers (OFWs) is a key foreign policy concern. Over 1 million Filipinos leave the country each year for short-term contracts abroad, primarily in the Middle East.

Philippine relations with the UK

The UK and the Philippines enjoy a close and substantive bilateral relationship. Areas of common concern include climate change, human rights, economic reform, good governance, counter terrorism, conflict prevention and peace building. Trade and investment links are strong.  

The UK does not have a development assistance programme in the Philippines, but the country is a priority for the Foreign Office’s Strategic Programme Fund for Low Carbon High Growth. Projects funded under this programme include support for transparency and accountability in local government and improved private sector participation in trade policy negotiations. Other Foreign Office funding programmes are supporting projects in the areas of counter-terrorism, conflict resolution, climate change, human rights and democracy, including a voter education project ahead of General and Presidential elections in 2010.

The British Council has an office in Manila. They run an extensive programme of English language examinations. They also work with the Philippine government and others on projects in areas such as education, governance and inter-faith dialogue. Together with the British Embassy they select Filipino candidates for the Foreign Office funded Chevening scholarship schemes.  

There is a small British community in the Philippines of around 15,000. About 70,000 British nationals visit the Philippines annually. The Filipino community in the UK is currently estimated at around 250,000. It is growing rapidly. Many Filipinos work in the health and care-giving sectors but they are also employed in sectors such as finance, law and technology. Filipino students increasingly see the UK as an alternative to the US for higher and further education.

Diplomatic links

The first British Consul arrived in the Philippines in 1844. In July 1946 the UK was one of the first countries to establish diplomatic relations following Philippine independence. A new purpose-built Embassy building in Manila was opened in 2008. There are also Honorary Consulates in Cebu, Olongapo and Angeles. The current Ambassador, Stephen Lillie, took up his post in August 2009.

President Arroyo met Her Majesty the Queen when she visited the UK in December 2007. The most recent UK ministerial visit to the Philippines was by former FCO Minister Meg Munn in May 2008.

Geography

The Philippines consists of over 7,100 islands covering 300,000 square kilometres (just less than the British Isles) divided into three main areas: Luzon (which includes Manila) in the north, the Visayas together with Palawan and Mindoro in the central area, and Mindanao and the Sulu Archipelago to the south. The archipelago is 65% mountainous and 35% coastal lowlands. The islands are volcanic in origin and there are around 20 active volcanoes.  Earthquakes are relatively frequent although most do not cause significant damage. The country has a tropical climate with a rainy season, although showers are possible at all times of the year. Situated on the edge of the South China Sea, the country is prone to typhoons, with around 8 making landfall in an average year. The Philippines is particularly vulnerable to the effects of climate change, given the low-lying nature of many of its islands.

Bilateral trade

UK-Philippine trade relations are good. The balance of trade over the last few years has been in favour of the Philippines.

UK exports to the Philippines in 2008 were valued at £232.7m, about 6% down on 2007. Top UK exports include: electrical apparatus/appliances and spares, medical and pharmaceutical products, manufactured metals, office and data processing machinery, general industrial machinery and power generating machinery.

Opportunities exist particularly in the development of infrastructure projects, including power, transport, water, construction, oil and gas and environmental technology. Opportunities also exist in education and training, financial services, healthcare, IT and electronics and consumer goods.

UK imports from the Philippines in 2008 amounted to £598m, about 17% down on 2007. Top UK imports include: electrical and office equipment and machinery, apparel, miscellaneous manufactured material, road vehicles, fish products, textile fibres, yarn and made up articles.

Bilateral investment

The UK is among the leading foreign investors in the Philippines. Data from the Philippine Central Bank shows that the UK regularly tops lists of portfolio investors, due largely to the pre-eminence of the UK as a global financial centre. Britain also has major direct investments in the Philippines concentrated in power, energy, water and financial services.

There are currently about 200 British companies active in the Philippines, ranging from big multinationals to small one-man shows. Major British companies operating in country include Shell, HSBC, BG, Standard Chartered, Misys, Diageo, GlaxoSmithKline, AstraZeneca, Unilever and Logica. A number of British companies are involved in successful franchising operations, including Debenhams, M & S, Top Shop, Burberry, Body Shop, Wallis, Dorothy Perkins, Clarks shoes and Lush.

UKTI Country Profile Philippines

Politics

Recent political developments

President Macapagal Arroyo's main policy priorities include economic reform, poverty reduction, infrastructure development and the fight against terrorism. She has had some success, particularly in reducing government debt and promoting economic growth. However more ambitious reforms have been hampered by Congressional inertia and her own loss of credibility. Allegations of vote-rigging in the 2004 elections have been followed by a number of corruption scandals, including allegations of involvement by the President or her close family.

While unproven, these allegations have strengthened President Arroyo’s political opponents and led to widespread public dissatisfaction.  She has survived four impeachment complaints, as well as a coup attempt by junior military officers in 2003. However appetite for a third “People Power” revolution seems muted, with opposition groups more focused on securing an electoral victory in 2010.

System of government/elections

The Philippines' political system is modelled on that of the US. There is an executive Presidency and a two-chamber legislature (Congress), comprising the Senate and the House of Representatives. The Presidential term of office is six years, with no possibility of re-election.

The Senate has 24 members, elected for six-year terms on the basis of national voting. The House of Representatives has 220 directly elected members representing Congressional districts, and up to 55 “party list” members whose organisations are voted for alongside district representatives. Representatives are elected for three-year terms.

Elections for seats in half the Senate and the House of Representatives are held every three years.  Provincial and municipal elections are held at the same time. Ballot lists are long and complex and vote counting is slow. Recent elections have been tainted by violence and corruption during the election campaign, election day and post-election counting period. To lower the opportunities for election fraud, the Commission on Elections (Comelec) is currently undertaking voting automation.

The last General elections were held in May 2007. The Opposition won the majority of the Senate seats available, but the President's support in the lower House was strengthened. The next General and Presidential elections will be in May 2010.

There are ongoing discussions and initiatives for constitutional change, including proposals  to shift from the current form of government to a parliamentary system, as well as to remove economic provisions restricting foreign ownership. Constitutional change is a controversial issue and none of these initiatives has yet been implemented.

Internal conflicts

The Philippines is affected by two internal armed conflicts. The Communist Party of the Philippines (CPP) and its armed wing, the New People’s Army (NPA), seek a “national democratic revolution”. NPA units are present in rural areas throughout the Philippines.  

The NPA carries out guerrilla attacks on Philippine military and police forces. Companies and landowners that refuse demands for “revolutionary taxes” have also had their property and equipment attacked. There have been no substantive peace talks between the government and the communists since 2004.

The second conflict is between the government and armed groups seeking an independent Muslim state on the southern island of Mindanao. Mindanao was once predominantly Muslim but migration from other parts of the Philippines has changed the religious and ethnic balance. In 1996 a peace deal was signed with the Moro National Liberation Front (MNLF), creating the Autonomous Region of Muslim Mindanao (ARMM). However a splinter group, the Moro Islamic Liberation Movement (MILF), continued the armed struggle.  

A cease-fire with the MILF was signed in 2003 but peace negotiations broke down in August 2008. An initial outbreak of violence led to large scale displacement of civilians. Around 300,000 remain internally displaced. There are ongoing clashes between elements of the MILF and the armed forces.

Terrorist groups Jemaah Islamiyah and Abu Sayyaf are also present in Mindanao. They are alleged to use MNLF and MILF camps. Although the Armed Forces have had significant successes, particularly against Abu Sayyaf, there is a high threat from terrorism throughout the Philippines. Kidnap-for-ransom is also increasingly common in some areas of Mindanao.  

Please see our Travel Advice for further information.

Human rights

The Philippines is a functioning democracy with a flourishing civil society and a lively independent media. It is one of only a few countries in South-East Asia to have abolished the death penalty and has acceded to all the core UN Human Rights Treaties. It performs particularly strongly in areas such as gender equality and migrants rights.

However implementation of legislation designed to protect human rights is often poor. International concern has been expressed about the numbers of unexplained killings and disappearances in the Philippines, and the government’s apparent inability to address this problem.  Killings with a suspected political motivation have decreased markedly over recent years, but there is still international concern about the lack of prosecutions and continued unexplained killings of suspected criminals.  Other human rights concerns include use of torture and poor detention conditions, recruitment of child soldiers by insurgent groups, child labour, violence against women and sexual abuse of children, including by travelling sex offenders.

Philippine Commission on Human Rights

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Travel Advice

Travel Advice: Philippines   

See Also

Useful Links

• BBC News Country Timeline: Philippines
• UKTI Country Profile Philippines

Contacts

Copyright 2009 Foreign & Commonwealth Office