UPDATE: Philippines Goes to the Polls

(UPDATE)

It appears, from early returns, that Philippine President Benigno S. Aquino III has largely prevailed in midterm elections, which even his office described as a referendum on his presidency.

Also, in a political comeback, disgraced former President Joseph "Erap" Estrada,who was driven from office in 2001 by thousands of citizens on the streets backed by business leaders and the military, has defeated the incumbent Alfredo Lim to become mayor of Manila. Asia Sentinel will have a full report on the race and its implications tomorrow.

Monday's story:

At 7 am today, millions of Filipinos began going to the polls in midterm elections that President Benigno S. Aquino III considers a referendum on his three years in office.

Despite the implementation of new electronic voting machines in the 2010 Presidential election, full results aren't expected to be known for about 48 hours. Voting closes at 7 pm. Liquor sales are outlawed on voting day, ostensibly to lessen the incidence of violence in a country where the rattle of gunfire is a common polling day occurrence. It is akin to reversing the tide.

So far, if opinion polls are any gauge, Aquino should do fairly well. The last poll by Social Weather Stations gave Aquino a 72 percent approval rating. He has been campaigning across the country, composed of 7,100 islands - 2,000 of them inhabited - in an effort to bring home a slate of 12 Senatorial candidates and a majority in the House of Representatives that would enable him to continue furthering an ambitious agenda of reform.

He has won voter approval during his first three years by, among other things, concluding a peace treaty with Muslim rebels on the island of Mindanao and pushing so-called sin taxes on liquor and tobacco against the opposition of vested interests, and winning passage of a historic reproductive health act which had been stalled for 14 years by the Catholic Church, earning the church's enmity and a personalized campaign against the members of congress who voted for it. He also faces opposition from two other Christian sects, Iglesia Ni Cristo and El Shaddai, which have declared support for some of the opposition Senate candidates from the United Nationalist Alliance.

Beyond that, he has also made a strong effort to straighten out a corrupt government tender process, reversing several projects put in place by his predecessor, Gloria Macapagal Arroyo, and replacing the process with a transparent one. He has conducted an implacable campaign to put Arroyo in jail, using allies in the Senate to impeach her most influential ally, Chief Justice Renato Corona and to drive Arroyo's ombudsman from office.

He has been aided by a growing economy, with gross domestic product growing at 6.6 percent in 2012, the second-fastest growth rate in ASEAN. The stock market is up by 15 percent for the first quarter of 2012. Unfortunately that growth is built on a slippery base - inward remittances from the estimated 10 million Filipinos working overseas, and a burgeoning business process outsourcing industry that last year surpassed India's to become the world's biggest.

However, both depend on the headwinds of overseas economies. Despite justifiable pride in rising foreign direct investment by percentage, the country still ranks far behind Asean's leaders in dollar amounts at time when foreign investment in manufacturing is desperately needed. Without it, the country must continue to depend on the relatively fluid sources of overseas remittances and outsourcing.

While the World Bank indicated in its investment report last year that the Philippines received US$1.5 billion in foreign direct investment in 2012 - a 15 percent jump over 2011, it still badly trails its Southeast Asian neighbors in volume, compared with US$8.4 billion to Vietnam, US$8.1 billion to Thailand, US$19.2 billion to Indonesia and US$54 billion to Singapore.

The constitution bars more than 40 percent ownership in any listed company, a provision recently revisited by the Supreme Court, which ordered the Securities & Exchange Commission to come up with new guidelines - which the SEC did, and came up against the 40 percent limitation. As a result, it is expected that US15 billion will probably be pulled out of the market by foreign investors.

Aquino has energetically pounded the campaign trail, promising major infrastructure improvements in at least five states through private-public partnerships, a promising program in which the government joint ventures with private companies to build infrastructure projects, so that both resources and risk are shared by contracting partners, increasing the resource base and reducing potential risk.

However, infrastructure is so badly deteriorated last week a widespread power shortage broke out in Metro Manila and many parts of Luzon, disrupting metro rail systems and office services, and leading to disgruntled voters.

Partly because there is no multiplier effect in either outsourcing or inward remittances, as there is from manufacturing jobs, unemployment remains high. Agriculture, which provides only 11.9 percent of GDP but employs 32 percent of the workforce as compared to 15 percent for industry, is inefficient and badly organized. Irrigation infrastructure remains woefully inadequate.

The Trade Union Congress of the Philippines raised the "jobless growth" issue in a meeting with the president, pointing out that nearly 2.9 million remain unemployed and that 7.93 million are underemployed.

Thus, despite economic growth over the past three years, it has not translated into creating jobs for the poor. Outsourcing, which requires English language proficiency, is expected to come up against the country's inadequate education system, eventually limiting the ability of the industry to grow.

The lack of jobs generated by the economic growth has been a potent issue for the opposition, hoping to reduce the edge in the Senate to six. The opposition got a boost after Aquino poured cold water on demands for wage increases and an end to contractual short-term employment, saying the issue needs more study.

Aquino - the entire government, in fact - faces the Philippine problem in which long-standing dynasties such as the Marcos, Estrada and other families have dominated the process for decades, perhaps for centuries. There is also the question of impunity. Rappler, the highly professional new news website, carried a telling story this week pointing out that "Graft-tainted ex-presidents, a dictator's unrepentant wife and politicians charged with crimes such as murder and child rape are among the candidates in the country's mid-term elections on Monday, May 13.

That includes Imelda Marcos, running for a second term in the House of Representatives despite being accused of plundering billions from state coffers when her strongman husband Ferdinand Marcos was n office; Joseph "Erap" Estrada, driven from the presidency on allegations of massive corruption,now running for the Manila Mayoralty; Gloria Macapagal Arroyo, facing multiple charges of corruption, is seeking a second term as congresswoman in her home province of Pampanga while on trial and detained at a military hospital.

Despite the obstacles, Aquino's slate of 12 Senate candidates, at least last week, was favored to come into the upper house wholesale. That would be unprecedented. Most political analysts believe nine of the 12 will be elected, however, giving him a strong hand in attempting to pursue his legislative agenda, which includes opening up more to foreign investment, streamlining the investment process and a variety of other issues.

"This is the time to let your government know how you feel about its officials," a palace spokesperson said in a prepared release. "And as the President says, if you are happy with what you've seen in the past three years, or if you want us to continue, then you vote for Team PNoy."