Business World, 8 December 2015


The first Millennium Development Goal (MDG) is to halve poverty incidence by 2015. Despite the above normal economic growth during the last four years, the Philippines will miss this goal. By contrast, the same goal has been reached globally in 2000, five years ahead of schedule.

Philippines authorities pledged to halve poverty incidence by 2015 — from 34.4% in 1991 to 17.2% in 2015. In 2012, the last year the Family Income and Expenditure Survey (FIES) was done the poverty incidence was 25.2%. It was 26.6% in 2006 and 26.3% in 2009, statistically not significantly different.

During the last decade, nothing much has changed: more than one in four Filipinos are poor.

Realistically, the poverty picture may be worse than what the official statistics suggest. In 2012, the poverty threshold was P18,935 per year, P1,578 per month, or P52.60 per day. That’s the height of absurdity! I challenge any public official to survive on P57.60 per day for even a week.

I think the Social Weather Stations is more accurate when its survey results show that more than half of Filipinos perceive that they are poor, and not one in four as suggested by official poverty numbers.

Based on a recently released Annual Poverty Indicators Survey (APIS), poverty incidence among Filipinos rose to 25.8% in the first half of 2014 from 24.6% in the first half of 2013. Although not exactly comparable with the triennial FIES survey, these numbers maybe seen as leading indicators for the 2015 FIES will results.

The Aquino administration has reset its poverty target from 20% to 23% by 2015, higher than the 17.2% committed under the MDG. But even this revised target is too optimistic.

Since the proportion of poor people has barely changed from 2006 to 2012, with rising population, the absolute number of poor Filipinos has been increasing rather than decreasing.

Considering the rise in poverty incidence as shown by the recently released APIS numbers, it is reasonable to assume that poverty incidence would be around 25.0% in 2015 rather than the revised 20 to 23%. If so, then there would be roughly 25.4 million poor people in 2015, or 1.2 million more than in 2012. (See Table 1)

What happened to the hundreds of billion pesos of cash transfers distributed by the government? On the President’s request, Congress has approved a total of P229.8 billion from 2011 to 2015. (See Table 2)

The counterfactual argument, of course, is that the poverty picture could have been worse had the Conditional Cash Transfer (CCT) program not exist. But could the P229.8 billion have been better targeted? And could the cost of administering the CCT program have been minimized? The next administration should review the program with the view of making it more cost-effective.

Strong, sustained growth is a necessary condition for poverty reduction, but it is not a sufficient one. It matters where growth is coming from, and whether it is inclusive. (See Table 3)

In a recent study by Oliver Paddison for the United Nation’s Economic and Social Commission for Asia and the Pacific, he found that among 16 Asia-Pacific economies, the Philippines has one of the worst performance in reducing poverty, and the poorest among its ASEAN peers.

The following observations and conclusions appear warranted. First, from 1990 to 2013, or over a period of 23 years, absolute poverty was reduced by 100% in Malaysia, by 96.7% in Thailand, by 70.1% in Indonesia, and by 58.2% in Cambodia. Absolute poverty improved the least in the Philippines with only 40% cut during the period under review.

Second, the Philippines’ sluggish reduction in absolute poverty is largely due to the slow-moving improvement in per capita income. Over a period of 23 years, per capita income grew by only 58%. Other ASEAN countries in the study had triple-digit growth in per capita income, with war-ravaged Cambodia registering the highest increase at 193%.

Third, income inequality, measured by the Gini-coefficient, hardly improved in the case of the Philippines (-0.8). Except for Indonesia, other ASEAN economies in the study had a sharper improvement in their Gini-coefficients.

Fourth, all ASEAN economies in the study improved their social, economic and environmental inclusiveness scores from the 1990s to 2000-2012 period. However, in terms of rank of inclusiveness, out of 16 Asia-Pacific economies, the rank of three economies (Thailand, Malaysia, and Indonesia) were unchanged, while two economies (Cambodia and the Philippines) dropped in ranking — Cambodia regressed from rank 14 to 15 while the Philippines fell from rank 7 to 10.

Remarkably, in terms of inclusiveness, the Philippines has not moved forward.