Philippines: Challenges for the Growing Economy

Nestled in the western Pacific Ocean is a scenic collection of over 7000 islands together known as the Philippines. Named after King Phillip II of Spain, it’s easy to mistake this small country; the 72nd largest by area in the world; as small, insignificant and unimportant in the international spheres of politics and economics. But what a serious mistake that would be.

The Philippines is home to over a 100 million people, making it the 12th most populous country in the world. Its sprawling capital city of Manila has been making headlines, as has the rapid growth of the services and tourism industries. At the same time, certain unconventional problems have been plaguing this small but potent country, and speculation is on about the nature of its fate.

Read on to become completely abreast of the Philippines situation.

Growth Story of the Philippines:

1. Tourism

The Philippines is blessed with the best of the natural wonders of Asia Pacific. A collection of thousands of islands, it has beautiful beaches, mountain ranges, coral reefs as well as tonnes of wildlife and vegetation to marvel at. No wonder that tourism has taken off in the small island nation. In fact, in 2014, the Filipino hub of natural beauty, ‘Palawan’ was certified the best island in the world.

10KeyThings-Palwan-beach-Philippines Philippines: Challenges for the Growing Economy

2. English Language Proficiency

The Philippines has a tremendously large English speaking population. And most importantly, Filipinos are able to communicate in English with a near neutral accent, unlike people from many other parts of Asia and Africa. “Accent is a big part of the story,” said Gillian Virata, senior executive director of the IBPAP. “We have a ‘neutral’ accent and we don’t speak fast. However, some people disagree and claim that it is hard to understand the Filipino accent.

3. Service Oriented

A natural consequence of near neutral accent is that the BPO or call centre industry has seen a huge trend of growth, providing a huge boost to the allied services industries as well. In fact, recent trends have seen the island nation siphon off large amounts of business from previously established call center giants in India for mainly two reasons: English language proficiency and cheaper resources.

The IT and Business Process Association of the Philippines (IBPAP) peg industry revenue to reach $20 billion in revenue for 2016.

Current Obstacles and Growth Ahead of the Philippines:

4. Poor infrastructure

Filipino infrastructure is not coping with the surge in entrepreneurship and influx of cheap laborers. Even in Manila, the capital city, it has been seen that expressways going out of Manila are struggling to manage the traffic on a daily basis.

5. Lack of professional qualifications

Even with its impressive literacy rate, the educational level here is not very high, and the number of graduates with professional educational qualifications is relatively low, with the exception of a huge number of nurses. Additionally, the number of technically skilled graduates is even lower, with commerce and science being far less preferred than the arts as a general trend. The conventional system of 11, 12th (K12 model) system is not widely implemented and accepted. As a result, after Class 10, most kids go straight to college. Further, many facilities are found to be disparately available in urban and rural areas, so only city students receive proper education.

Due to the large population of relatively unskilled labor, labor is cheaper here than in most other countries. So while urban areas see an influx to the growth of call center jobs, most rural areas are dominated by daily wage laborers, thus providing a stark contrast in the picture of progress.

The Philippines have only recently begun to develop their industries and services, such as in the case of the growth of the call center culture. Consequently, a large chunk of the income comes from remittances received from workers in the USA or Canada, as well as Europe. This unsustainable model of functioning demands rapid attention.

But now, due to the lack of qualified professionals, there is a dearth of entrepreneurs and engineers to add to the skill pool. So unfortunately the Filipino population currently lacks technical and problem solving skills in the field of science and commerce, as explained.

6. Religion

Another major challenge facing the Philippines is that of the extra-powerful Christian Church. With over 80% Christian population, the officially secular state sees a large influence from the Catholic Church, and coupled with the low educational levels, a lot of blind faith.

For example, religious bodies like Iglesia Ni Cristo (INC) (Church of Christ) have a huge hold on politics. In fact, several ultimatums are often imposed on locals in accordance with Christian behavior – such as tithing (surrendering 10% of income to the church), compulsory attendance of Sunday mass and the ban on contraceptives, though INC disagrees. They also prohibit marriages outside the Church, gambling and drinking. The Church of Christ is another orthodox group that has grown to 2.25 million followers from only a dozen when it was born in the Philippines in 1914.

Even as early as 2015, the Catholic Church has advocated a strong campaign against the use of contraceptives in the Philippines, a campaign that has seen huge acceptance amongst both rural and urban folk. The Pope, in his 2015 visit to the nation, defended this move, and was again widely supported. The inevitable problem with this situation is already manifesting in an unsustainably large population, particularly one that is close to or below the poverty line. The general trend in the Philippines is that of a small number of rich, affluent, and ‘cultured’ folk in the cities, alongside heavy slum settlement, large families of numerous ragged infants, and working class member struggling to make ends meet.

7. Communal tensions

Despite a moderate 11% of Islamic population, the Philippines is also prey to a relatively high degree of extremist thought. It has been postulated that this could be a reactionary mechanism to the very strong Christian indoctrination otherwise seen in daily life. Highly problematically, recently, headline grabbing Syrian terror outfit ISIS announced plans to set up roots in the country.

Furthering complicating the goal of communal harmony is the constant tension between Christians and Muslims in areas like Mindanao. The situations in these areas frequently become explosive, with large amounts of violence and suffering breaking out, and a sort of barbarian culture that the authorities have great trouble dealing with. The Moro Muslim rebel group and their insurgency activities keep the Filipino government constantly occupied in tasks other than improvement of public life.

8. Politics

The Filipino elections are coming up in 2016. The political environment here is highly complex, and the leading Presidential candidate in the upcoming race has been making some very unconventional promises.

It is very important to note that corruption dominates governance in the Philippines. The problem of corruption is so severe here that GlobalNation has speculated that it may be the most corrupt Asian nation. Further, an element of dynasticism has entered Filipino politics, with mainly different families and their members being repeatedly elected to power. Thus, many question the way democracy is working in this promising nation.

9. Natural disasters

To add a personalised insult from Mother Nature herself, the islands that form the country are located precisely on the dreaded Pacific Ring of Fire. This fact, coupled with the equatorial location, makes the Philippines very prone to earthquakes and typhoons. In fact, nearly 20 earthquakes are measured every day on various islands. Thankfully, the last earthquake causing widespread destruction was the Luzon quake of 1990, over 25 years ago.

Thus, the problems facing the Philippines need to be addressed with a combination of good leadership, stronger basis in education and a general attitude shift towards open mindedness and rational thinking.

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