Emilio Aguinaldo (1899 – 1901)

Local Economic Policies

 The Malolos Congress continued its sessions and accomplished certain positive tasks.
The Spanish fiscal system was provisionally retained.
 The same was done with the existing taxes, save those upon cockfighting and other
amusements.
 War taxes were levied, and voluntary contributions were solicited.
 Customs duties were established.
 A national loan was launched.
The economy is at its lowest state during the Fil-am war. Famine hits Filipino people. Even
before the said war, the country is already experiencing a great mishap in economy because of
Spaniards. Resources that belongs to the Philippines are continuously being taken, many
landless Filipinos specially farmers and others willing to be treated as slaves just to earn for living.
Foreign Economic Policies
 Benevolent Assimilation Proclamation
On Dec. 21, 1898, President McKinley issued the BENEVOLENT ASSIMILATION
PROCLAMATION, announced in the Philippines on Jan. 4, 1899, which stated the U.S.'
"altruistic" mission in acquiring the Philippines.
The U.S. have "come, not as invaders or conquerors, but as friends, to protect the natives
in their homes, in their employment, and in their personal and religious rights."
Moreover, the U.S. wanted to "win the confidence, respect, and affection of the inhabitants
of the Philippines by assuring them in every possible way that full measure of individual
rights and liberties which is the heritage of free peoples, and by proving to them that the
mission of the United States is one of benevolent assimilation substituting the mild sway
of justice and right for arbitrary rule."

Manuel L. Quezon (1935 – 1944)

Local Economic Policies

 Manuel L. Quezon made several institutions and programs to attend to the needs of the
economy on his term. Healthy economy is hard to establish back then because we became
independent on U.S. His effort to fix the economy was see on the Commonwealth Act
No. 2 which established the National Economic Council, this act helps solve social
imbalance, land maldistribution, provide land to the landless and farmers, provide housing
and create an employment to the unemployed.

 Court of Industrial Relations was established for the creation of Agricultural and Industrial
Bank, National Land Settlement Administration and National Housing Commission to
provide housing, National Relief Administration for calamities and for finding employment
to the unemployed.
 Jose P. Laurel, (1943 – 1945)
Local Economic Policies

 During Laurel’s tenure as President, hunger was the main worry. Prices of essential commodities
rose to unprecedented heights. The government exerted every effort to increase production and
bring consumers’ goods under control. However, Japanese rapacity had the better of it all.
 Laurel saw the need for a balanced and self-sufficient economy. His creation of the Ministry of
Economic Affairs showed the importance he attached to sound economic development. He
organized scientists and gave them incentives to develop local medicines, food and other local
substitutes for imported items. Under his guidance, the National Assembly passed an act creating
the Central Bank, and concrete steps were taken to print Philippine money, so the next-to-useless
“Mickey Mouse” money could be replaced, and the Republic could enjoy financial independence.
Actual test samples of bills for the Second Republic—in Tagalog—were printed, but technical
problems delayed their circulation.

Sergio Suico Osmeña, Sr. (1944 – 1946)

Local Economic Policy
 Restoration of the Commonwealth
 With the city of manila already liberated, General of the Army, Douglas MacArthur, on
behalf of the United States, turned over the reins of the government of the Philippines
to Commonwealth President, Sergio Osmena, on 27 February 1945, amidst brief, but
impressive, ceremonies held at the Malacanang Palace. President Osmena, after
thanking the United States through General MacArthur, announced the restoration of
the Government of the Commonwealth of the Philippines and work out the salvation
of the Philippines from the ravages of war.
 Government reorganization
 President Osmena proceeded with the immediate reorganization of the government
and its dependencies.
 On 8 April 1945, he formed his Cabinet, administering the oath of office to its
component members. Later, the president received the Council of State to help him
resolve the major problems confronting the nation. The government offices and
bureaus were gradually reestablishing. A number of new ones were created to meet
needs the current. Also restored were the Supreme Court of the Philippines and the
inferior courts. The Court of Appeals was abolished, and its appellate jurisdiction was
transferred to the Supreme Court, the members of which were increased to eleven –
one Chief Justice and ten Associate Justice – in order to attend to the new
responsibilities. Slowly but steadily, as the liberating forces freed the other portions of
the country, provincial and municipal governments were established but the
commonwealth to take over from the military authorities.
 Rehabilitation of the Philippine National Bank
 Following the restoration of the Commonwealth Government, the Congress was
reorganized. Manuel Roxas and Elpidio Quirino were elected Senate President and
Senate President pro tempore respectively. At the house of Representatives, Jose
Zulueta of Iloilo was elected Speaker and Prospero Sanidad as Speaker pro tempore.
 The opening session of the Congress was personally addressed by the President, who
reported on the Commonwealth Government in exile and proposed vital pieces of
legislation.
 The first commonwealth congress earnestly took up the various pending assignments
to solve the pressing matters affecting the Philippines, especially regarding relief,
rehabilitation, and reconstruction. The first bill enacted was Commonwealth Acto No.
672 – Rehabilitating the Philippine National Bank.
 Peoples Court
 Yiealding to American pressure, on 25 September 1945, the Congress enacted C.A.
No. 682 creating the People’s Court and the Office of Special Prosecutors to deal with
the pending cases of “collaboration”
Foreign Economic Policy
 United Nations Charter
 The president sent the Philippine delegation, which was headed by Carlos P. Romulo
to the San Francisco gathering for the promulgation of the Charter of the United
Nations on 26 June 1945.
 Other members of the delegation were Maximo Kalaw, Carlos P. Garcia, Pedro Lopez,
Francisco Delegado, Urbano Zafra, Alejandro Melchor and Vicenter Sinco
 The 28th signatory nation of United Nations, the Philippines was one of the fifty-one
nations tht drafted the UN Charter. Once approved by the Philippine Delegation. The
UN Charter was ratified by the Congress of the Philippines and deposited with the US
State Department on 11 October 1945.
 Foreign Relations Office
 To prepare for the forthcoming independent status of the Philippine, he created the
Office of Foreign Relations.
 In this connection. He also entered into an agreement with the United Stated
Government to send five Filipino trainees to the US State Department to prepare
themselves for diplomatic service.
 International banking
 On 5 December 1945, the president appointed Resident Commisioner calos P.
Romulo as his representative to accept Philippine membership in the International
Monetary Fund and in the International Bank for Reconstruction and Development,
which bodies had been conceived in the Bretton Woods Agreement, in which the
Philippine had also taken part. Romulo signed said membership on 27 December 1945
on behalf of the Philippines
 Bell Trade Act
 On 30 April 1946, the United Stated Congress, at last approved the Bell Act, which as
early as 20 January had been reported to the Ways and Means Committee of the lower
house, having been already passed by the Senate. The president and Resident
Commissioner Ramulo had urged the passage of this bill, with United States High
Commissioner, Paul V. Mcnutt. Exerting similar pressure.
 The Act gave the Philippines eight years of free trade with the United States, then
twenty years during which tarrifs would be upped gradually until they were in line with
the rest of American tarrif policy. The law also fixed some quotas for certain products:
sugar – 850,000 long tons; cordage – 6,000,000 pounds; coconut oil – 200,000 long
tonsl; cigars – 200,000,000 pounds.
Manuel Roxas (1946-1948)
Local Economic Policy

 Among the main remedies proposed was the establishment of the Philippine Rehabilitation
Finance Corporation. This entity would be responsible for the construction of twelve
thousand houses and for the grant of easy-term loans in the amount of 177,000,000
pesos. Another proposal was the creation of the Central Bank of the Philippines to help
stabilize the Philippine dollar reserves and coordinate and the nation’s banking activities
gearing them to the economic progress.

 Concentrating on the sugar industry, President Roxas would exert such efforts as to
succeed in increasing production from 13,000 tons at the time of the Philippine liberation
to an all-high of one million tons.

 Agrarian reform
 In 1946, shortly after his induction to Presidency, Manuel Roxas proclaimed the Rice
Share Tenancy Act of 1933 effective throughout the country. However, problems of
land tenure continued. In fact, these became worse in certain areas. Among the
remedial measures enacted was Republic Act No. 1946 likewise known as the Tenant
Act which provided for a 70–30 sharing arrangements and regulated share-tenancy
contracts. It was passed to resolve the ongoing peasant unrest in Central Luzon.

Foreign Economic Policy

 Treaty of General Relations

 On August 5, 1946, the Congress of the Philippines ratified the Treaty of General
Relations that had been entered into by and between the Republic of the Philippines
and the United States on July 4, 1946. Aside from withdrawing her sovereignty from
the Philippines and recognizing her independence, the Treaty reserved for the United
States some bases for the mutual protection of both countries; consented that the
United States represent the Philippines in countries where the latter had not yet
established diplomatic representation; made the Philippines assume all debts and
obligations of the former government in the Philippines; and provided for the settlement
of property rights of the citizens of both countries.
 United States Military Bases
 Although Roxas was successful in getting rehabilitation funds from the United States
after independence, he was forced to concede military bases (23 of which were leased
for 99 years), trade restriction for the Philippine citizens, and special privileges for U.S.
property owner and investor.
 Parity Rights Amendment
 On March 11, 1947, the Filipino people, heeding Roxas persuasive harangue, ratified
in a nationwide plebiscite the "parity amendment" to the 1935 Constitution, granting
United States citizens the right to dispose and utilize of Philippine natural resources,
or through parity rights. ▪ The night before the plebiscite day, Roxas narrowly escaped
an assassination by a disgruntled Tondo barber, Julio Guillen, who hurled a grenade
 on the platform at Plaza Miranda immediately after the President addressed the rally
of citizens.

Elpidio Quirino (1948-1953)

Local Economic Policy

Goal: Solve trade deficit to achieve balance of trade (there is trade deficit when the expenses
from import exceed the export income)

 Upon assuming the reins of government, Quirino announced two main objectives of his
administration: first, the economic reconstruction of the nation and second, the restoration
of the faith and confidence of the people in the government.
 In connection to the first agenda, he created the President's Action Committee on
Social Amelioration or PACSA to mitigate the sufferings of indigent families, the Labor
Management Advisory Board to advise him on labor matters, the Agricultural Credit
Cooperatives Financing Administration or ACCFA to help the farmers market their
crops and save them from loan sharks, and the Rural Banks of the Philippines to
facilitate credit utilities in rural areas.

 Agrarian Reform
 As part of his Agrarian Reform agenda, President Quirino issued on October 23, 1950
Executive Order No. 355 which replaced the National Land Settlement Administration
with Land Settlement Development Corporation (LASEDECO) which takes over the
responsibilities of the Agricultural Machinery Equipment Corporation and the Rice and
Corn Production Administration.

Foreign Economic Policy

 Quirinos administration excelled in diplomacy, impressing foreign heads of states

and world statesmen by his intelligence and culture. In his official travels to the
United States, European countries, and Southeast Asia, he represented the
Philippines with flying colors. During his six years of administration, he was able to
negotiate treaties and agreements with other nations of the Free World. Two Asian
heads of state visited Philippines–President Chiang Kai- shek of the Republic of
China in July 1949 and President Achmed Sukarno of Indonesia in January 1951.
 In 1950, at the onset of the Korean War, Quirino authorized the deployment of over
7,450 Filipino soldiers to Korea, under the designation of the Philippine
Expeditionary Forces to Korea or PEFTOK.
 Korean War
 On June 25, 1950, the world was astonished to hear the North Korean
aggression against the independent South Korea. The United Nations
immediately took up this challenge to the security of this part of the world.
Carlos P. Romulo soon stood out as the most effective spokesman for the
South Korean cause.
  On behalf of our government, Romulo offered to send a Philippine military
contingent to be under the overall command of General Douglas MacArthur,
who had been named United Nations Supreme Commander for the punitive
expedition. The Philippines, thus, became the first country to join the United
States in the offer of military assistance to beleaguered South Korea.
 President Quirino took the necessary steps to make the Philippine offer. On a
purely voluntary basis, the first contingent – the tenth Combat Battalion Team
– was formed under Col. Azurin, and dispatched to Korea, where its members
quickly won much renown for their military skill and bravery. The name of
Captain Jose Artiaga, Jr., heroically killed in action, stands out as a symbol of
our countrys contribution to the cause of freedom outside native shores. Other
Philippine Combat Teams successively replaced the first contingent sent, and
they all built a name for discipline, tenacity, and courage, until the truce that
brought the conflict to a halt.
 Quirino-Foster Agreement
 By the time of the creation of the integrity board, moreover, the Bell Mission,
led by Daniel W. Bell, an American banker, and composed of five members,
with a staff of twenty workers, following their period of stay in the Philippines,
beginning in July 1950, finally submitted its report on October of the same year.
 he Report made several proposals, most noteworthy, of which were that the
United States should give the Philippines 250,000,000 dollars over a period of
five years, but the Philippines, in return, ought to reform its tax structure, enact
a minimum wage law for agricultural and industrial labor, initiate social and land
reforms, as well as a sound planning for economic development, For all the
strong language of the Report, which, in some quarters merited bitter
opposition, President Quirino gamely and patriotically, took in the
recommendations and sought to implement them
 Thus in November 1950, President Quirino and William Foster, representing
the United States Government, signed an agreement by virtue of which the
former pledged to obtain the necessary Philippine legislation, in keeping with
the Bell Mission Report, while envoy Foster promised the necessary by the
same.
 However, much as he tried to become a good president, Quirino failed to win the
peoples affection. Several factors caused the unpopularity of his administration,
namely:
 Economic distress of the times, aggravated by rising unemployment rate,
soaring prices of commodities, and unfavorable balance of trade. Quirinos
vaunted "Total Economic Mobilization Policy" failed to give economic relief to
the suffering nation.
 Frauds and terrorism committed by the Liberal Party moguls in the 1947, 1949
and 1951 elections.
Ramon Magsaysay (1954-1957)

Local Economic Policy

 Started to solve problems on Land Redistribution

 Also established the FACOMA (Farmers' Cooperative and Marketing Association) to

organize the farmers.

 Agrarian Reform
 President Ramón Magsaysay enacted the following laws as part of his Agrarian
Reform Program:
 Republic Act No. 1160 of 1954—Abolished the LASEDECO and established the
National Resettlement and Rehabilitation Administration (NARRA) to resettle
dissidents and landless farmers. It was particularly aimed at rebel returnees
providing home lots and farmlands in Palawan and Mindanao.
 Republic Act No. 1199 (Agricultural Tenancy Act of 1954) – governed the
relationship between landowners and tenant farmers by organizing share-tenancy
and leasehold system. The law provided the security of tenure of tenants. It also
created the Court of Agrarian Relations.
 Republic Act No. 1400 (Land Reform Act of 1955) –Created the Land Tenure
Administration (LTA) which was responsible for the acquisition and distribution of
large tenanted rice and corn lands over 200 hectares for individuals and 600
hectares for corporations.
 Republic Act No. 821 (Creation of Agricultural Credit Cooperative Financing
Administration) –Provided small farmers and share tenants’ loans with low interest
rates of six to eight percent.

Foreign Economic Policy

 SEATO
 The administration of President Magsaysay was active in the fight against the
expansion of communism in the Asian region. He made the Philippines a member of
the Southeast Asia Treaty Organization (SEATO), which was established in Manila on
September 8, 1954 during the "Manila Conference". Members of SEATO were
alarmed at the possible victory of North Vietnam over South Vietnam, which could
spread communist ideology to other countries in the region. The possibility that a
communist state can influence or cause other countries to adopt the same system of
government is called the domino theory.

The active coordination of the Magsaysay administration with the Japanese

government led to the Reparation Agreement. This was an agreement between
the two countries, obligating the Japanese government to pay $550 million as
reparation for war damages in the Philippines.

 Defense Council
 Taking the advantage of the presence of U.S. Secretary John Foster Dulles in Manila
to attend the SEATO Conference, the Philippine government took steps to broach with
him the establishment of a Joint Defense Council. Vice-President and Secretary of
Foreign Affairs Carlos P. Garcia held the opportune conversations with Secretary
 Dulles for this purpose. Agreement was reached thereon and the first meeting of the
Joint United States–Philippines Defense Council was held in Manila following the end
of the Manila Conference. Thus were the terms of the Mutual Defense Pact between
the Philippines and the United States duly implemented.

 Laurel-Langley Agreement

 The Magsaysay administration negotiated the Laurel-Langley Agreement which was

a trade agreement between the Philippines and the United States which was signed
in 1955 and expired in 1974. Although it proved deficient, the final agreement satisfied
nearly all of the diverse Filipino economic interests. While some have seen the Laurel-
Langley agreement as a continuation of the 1946 trade act, Jose P. Laurel and other
Philippine leaders recognized that the agreement substantially gave the country
greater freedom to industrialize while continuing to receive privileged access to US
markets.

The agreement replaced the unpopular Bell Trade Act, which tied the economy of
the Philippines to that of United States economy.

 Bandung Conference
 Billed as an all-Oriental meet to promote Afro-Asian economic and cultural cooperation
and to oppose colonialism or neocolonialism by either the United States or the Soviet
Union in the Cold War, or any other imperialistic nations, the Asian–African
Conference was held in Bandung (Java) in April 1955, upon invitation extended by the
Prime Ministers of India, Pakistan, Burma, Ceylon, and Indonesia. The conference is
commonly known as the Bandung Conference. Although, at first, the Magsaysay
Government seemed reluctant to send any delegation. Later, however, upon advice of
Ambassador Carlos P. Rómulo, it was decided to have the Philippines participate in
the conference. Rómulo was asked to head the Philippine delegation. At the very
outset indications were to the effect that the conference would promote the cause of
neutralism as a third position in the current cold war between the capitalist bloc and
the communist group. John Kotelawala, Prime Minister of Ceylon, however, broke the
ice against neutralism. He was immediately joined by Rómulo, who categorically
stated that his delegation believed that "a puppet is a puppet", no matter whether under
a Western Power or an Oriental state.

At one time in the course of the conference, Indian Prime Minister Jawaharlal Nehru
acidly spoke against the SEATO. Quick to draw, Ambassador Rómulo delivered a
stinging, eloquent retort that prompted Prime Minister Nehru to publicly apologize to
the Philippine delegation.

Records had it that the Philippine delegation ably represented the interests of the
Philippines and, in the ultimate analysis, succeeded in turning the Bandung
Conference into a victory against the plans of its socialist and neutralist delegates.

 Reparation agreement
 Following the reservations made by Ambassador Romulo, on the Philippines behalf,
upon signing the Japanese Peace Treaty in San Francisco on September 8, 1951, for
several years of series of negotiations were conducted by the Philippine government
and that of Japan. In the face of adamant claims of the Japanese government that it
 found impossible to meet the demand for the payment of eight billion dollars by the
way of reparations, president Magsaysay, during a so-called "cooling off" period, sent
a Philippine Reparations Survey Committee, headed by Finance Secretary Jaime
Hernandez, to Japan for an "on the spot" study of that country's possibilities.

When the Committee reported that Japan was able to pay, Ambassador Felino Neri,
appointed chief negotiator, went to Tokyo. On May 31, 1955, Ambassador Neri
reached a compromise agreement with Japanese Minister Takazaki, the main terms
of which consisted in the following: The Japanese government would pay eight
hundred million dollars as reparations. Payment was to be made in this wise: Twenty
million dollars would be paid in cash in Philippine currency; thirty million dollars, in
services; five million dollars, in capital goods; and two hundred and fifty million dollars,
in long-term industrial loans.

On August 12, 1955, President Magsaysay informed the Japanese government,

through Prime Minister Ichiro Hatoyama, that the Philippines accepted the Neri-
Takazaki agreement. In view of political developments in Japan, the Japanese Prime
Minister could only inform the Philippine government of the Japanese acceptance of
said agreement on March 15, 1956. The official Reparations agreement between the
two government was finally signed at Malacañang Palace on May 9, 1956, thus
bringing to a rather satisfactory conclusion this long drawn controversy between the
two countries.

Carlos P. Garcia (1957-1961)

Objective: To free our economy from foreign intervention and control. The control on import,
financial loans, foreign currencies was tightened he gave priority to Filipino industries in the
distribution of resources.

 Filipino First Policy

 President García exercised the Filipino First Policy, for which he was known. This
policy heavily favored Filipino businessmen over foreign investors. He was also
responsible for changes in retail trade which greatly affected the Chinese
businessmen in the country. In a speech during a joint session of the Senate and the
House of Representatives on September 18, 1946, President Garcia said the
following:
 We are called upon to decide on this momentous debate whether or not this land of
ours will remain the cradle and grave, the womb and tomb of our race –the only place
where we can build our homes, our temples, and our altars and where we erect the
castles of our racial hopes, dreams and traditions and where we establish the
warehouse of our happiness and prosperity, of our joys and sorrows.

 Austerity Program
 In the face of the trying conditions of the country, President García initiated what has
been called "The Austerity Program". García's administration was characterized by
its austerity program and its insistence on a comprehensive nationalist policy. On
March 3, 1960, he affirmed the need for complete economic freedom and added that
the government no longer would tolerate the dominance of foreign interests
(especially American) in the national economy. He promised to shake off "the yoke of
 alien domination in business, trade, commerce and industry." García was also
credited with his role in reviving Filipino cultural arts.

 The main points of the Austerity Program were:

 The government would tighten up its controls to prevent abuses in the over
shipment of exports under license and in underpricing as well.
 There would be a more rigid enforcement of the existing regulations on
barter shipments.
 Government imports themselves were to be restricted to essential items.
 The government also would reduce rice imports to a minimum.
 An overhauling of the local transportation system would be attempted to
reduce the importation of gasoline and spare parts.
 The tax system would be revised to attain more equitable distribution of the
payment burden and achieve more effective collection from those with
ability to pay.
 There would be an intensification of food production.

 The program was hailed by the people at large and confidence was expressed that
the measures proposed would help solve the standing problems of the Republic.

Diosdado Macapagal (1961-1965)

Local Economic Policy

 In his inaugural address, Macapagal promised a socio-economic program anchored on "a

return to free and private enterprise", placing economic development in the hands of
private entrepreneurs with minimal government interference.

 Twenty days after the inauguration, exchange controls were lifted, and the Philippine peso
could float on the free currency exchange market. The currency controls were initially
adopted by the administration of Elpidio Quirino as a temporary measure but continued to
be adopted by succeeding administrations. The peso devalued from P2.64 to the US
dollar, and stabilized at P3.80 to the dollar, supported by a $300 million stabilization fund
from the International Monetary Fund.

 Major Legislations Signed

 Republic Act No. 3512 –An Act Creating A Fisheries Commission Defining Its Powers,
Duties and Functions, and Appropriating Funds Therefor.
 Republic Act No. 3518 –An Act Creating the Philippine Veterans' Bank, and For Other
Purposes.
 Republic Act No. 3844 –An Act to Ordain the Agricultural Land Reform Code and to
Institute Land Reforms in The Philippines, Including the Abolition of Tenancy and The
Channeling of Capital into Industry, Provide for The Necessary Implementing
Agencies, Appropriate Funds Therefore and for other Purposes.
 Republic Act No. 4180 –An Act Amending Republic Act Numbered Six Hundred Two,
Otherwise Known as The Minimum Wage Law, By Raising the Minimum Wage for
Certain Workers, And for Other Purposes.
  Socio-economic program
 The removal of controls and the restoration of free enterprise was intended to provide
only the fundamental setting in which Macapagal could work out economic and social
progress. A specific and periodic program for the guidance of both the private sector
and the government was an essential instrument to attain the economic and social
development that constituted the goal of his labors.
 Such a program for his administration was formulated under his authority and direction
by a group of able and reputable economic and business leaders the most active and
effective of which was Sixto Roxas III. From an examination of the planned targets and
requirements of the Five-Year program – formally known as the Five-Year Socio-
Economic Integrated Development Program – it could be seen that it aimed at the
following objectives.
 immediate restoration of economic stability;
 alleviating the plight of the common man; and
 establishing a dynamic basic for future growth.

 Land Reform
 Like Ramon Magsaysay, President Diosdado Macapagal came from the masses. He
savored to call himself the "Poor boy from Lubao".
 Ironically, he had little popularity among the masses. This could be
attributed to an absence of charismatic appeal of his stiff personality.
 But despite this, Macapagal had certain achievements. Foremost of these was the
Agricultural Land Reform Code of 1963 (Republic Act No. 3844) which provided for
the purchase of private farmlands with the intention of distributing them in small lots to
the landless tenants on easy term of payment.

 Anti-corruption Drive
 One of Macapagal's major campaign pledges had been to clean out the government
corruption that had proliferated under former President Garcia.
 The administration also openly feuded with Filipino businessmen Fernando Lopez and
Eugenio Lopez, brothers who had controlling interests in several large businesses.
 The administration alluded to the brothers as "Filipino Stonehill’s who build and
maintain business empires through political power, including the corruption of
politicians and other officials". In the 1965 election, the López’s threw their support
behind Macapagal's rival, Ferdinand Marcos, with Fernando as Marcos' running mate.

Foreign Economic Policy

 North Borneo Claim

 On September 12, 1962, during President Diosdado Macapagal's administration, the
territory of eastern North Borneo (now Sabah), and the full sovereignty, title and
dominion over the territory were ceded by heirs of the Sultanate of Sulu, HM Sultan
Muhammad Esmail E. Kiram I, to the Republic of the Philippines. The cession
effectively gave the Philippine government the full authority to pursue their claim in
international courts. The Philippines broke diplomatic relations with Malaysia after the
federation had included Sabah in 1963. It was revoked in 1989 because succeeding
Philippine administrations have placed the claim in the back burner in the interest of
pursuing cordial economic and security relations with Kuala Lumpur. To date, Malaysia
continues to consistently reject Philippine calls to resolve the matter of Sabah's
 jurisdiction to the International Court of Justice. Sabah sees the claim made by the
Philippines' Moro leader Nur Misuari to take Sabah to International Court of Justice
(ICJ) as a non-issue and thus dismissed the claim.

 Maphilindo
 In July 1963, President Diosdado Macapagal convened a summit meeting in Manila in
which a nonpolitical confederation for Malaysia, the Philippines, and Indonesia,
Maphilindo, was proposed as a realization of José Rizal's dream of bringing together
the Malay peoples, seen as artificially divided by colonial frontiers.

 Maphilindo was described as a regional association that would approach issues of

common concern in the spirit of consensus. However, it was also perceived as a tactic
on the parts of Jakarta and Manila to delay, or even prevent, the formation of the
Federation of Malaysia. Manila had its own claim to Sabah (formerly British North
Borneo), and Jakarta protested the formation of Malaysia as a British imperialist plot.
The plan failed when Sukarno adopted his plan of "konfrontasi" with Malaysia. The
Konfrontasi, or Confrontation basically aimed at preventing Malaysia from attaining
independence. The idea was inspired onto President Sukarno by the Partai Komunis
Indonesia (PKI), or literally the Indonesian Communist Party. The party convinced
President Sukarno that the formation of Malaysia is a form of neo-colonization and
would affect tranquility in Indonesia. The subsequent development of ASEAN almost
certainly excludes any possibility of the project ever being revived.

 Vietnam War
 Before the end of his term in 1965, President Diosdado Macapagal persuaded
Congress to send troops to South Vietnam. However, this proposal was blocked by
the opposition led by Senate President Ferdinand Marcos who deserted Macapagal's
Liberal Party and defected to the Nacionalista Party.

 The U.S. government's active interest in bringing other nations into the war had been
part of U.S. policy discussions as early as 1961. President Lyndon Johnson first
publicly appealed for other countries to come to the aid of South Vietnam on April 23,
1964–in what was called the "More Flags" program.

Ferdinand E. Marcos (1965-1986)

Local Economic Policy

 Economic Policies
 Certain habits/behaviors of the people contribute to the obstacles to modernization
 Ethic of “utang na loob”
 Colonial mentality
 In-group harmony and coherence
A spirit of self-sacrifice for the progress of the nation was needed.
 “Sa ikauunlad ng bayan, disiplina ang kailangan”

 Land Reforms
 Exploitation of the poor and landless peasants by their landlords.
 Presidential Decree No. 2 – proclaiming the “whole country as a reform area”.
 Presidential Decree No. 27 – abolishes tenancy.
  By the end of martial law in 1981, 532,153 tenant-farmers had become owners of rice
and corn lands in 45 provinces.

 Labor Reforms
 Presidential Decree No. 99 – minimum wages for household helpers.
 Presidential Decree No. 148 – eliminates anti-employment provisions of the Woman
and Child Labor Law.
 Presidential Decree No. 197 – More effective apprenticeship program.

 Economic Reforms
 Presidential Decree No. 3 – appropriating funds for public works involving
rehabilitation and capital development.

Foreign Economic Policy

A. The Vietnam War and the Nixon Doctrine: Decline of American Prestige in the Asia-Pacific
Region

Vietnam in mainland Southeast Asia became an ideological battleground between the US and USSR in the
1960s. Once under the French colonial rule, an earnest desire for independence reverberated throughout
Vietnam with the birth of a communist movement in Paris, France under Ho Chi Minh in 1920.

The formation of the Indo-Chinese Communist Party in 1930 would set the stage for the anti-French and
later anti-Japanese crusade. The Viet Minh was organized by Ho Chi Minh in 1936 to arouse anti French
sentiment. When the Japanese took over Vietnam during World War II, Ho Chi Minh became the prime
target for arrest. When the French rule was restored in Vietnam at the end of World War II, Ho declared the
formation of a Democratic Republic of Vietnam (D.R.V.) on September 2, 1945. The French defeat at Dien
Bien Phu on May 8, 1954 resulted in the Geneva Conference where France signed the agreement on the
cessation of hostilities in Vietnam on July 20, 1954.

The assassination of President Diem on November 2, 1963 triggered instability in South Vietnam. Following
Diem’s demise, the government of the Republic of Vietnam passed into the hands of the military, as
American participation in the war escalated.

B. Communism in Cambodia: The Surging Tide of Maoism in Mainland Southeast Asia

In 1953, France granted Cambodia its independence after the tedious campaign of King Norodom
Sihanouk. When he abdicated the throne to become head of state, he kept Cambodia neutral in the
escalating war between Vietnam and Laos. However, on November 25, 1965, King Sihanouk instructed
General Lon Nol, Chief of Staff of the Royal Khmer Armed Forces to sign a military treaty with the People’s
Republic of China. Most notably, it stipulated the following terms: 1) Cambodia would permit the passage
and the refuge of Vietnamese combatants in the border regions, granting them protection if necessary and
permitting them to establish command posts; and 2) Cambodia would permit the passage of materials
coming from China and intended for Vietnam.

While King Sihanouk was visiting the Soviet Union in 1970, he was removed from power by General Lon
Nol. The coup d’etat placed the country in political and economic turmoil. The consequences were severe
economic disruption, corruption stimulated by massive American aid to the Lon Nol government, and an
increase in popular support for the antigovernment communist insurgent Khmer Rouge, backed by China.
On October 9, 1970, Premier Lon Nol established the Khmer Republic with himself as the new leader. Civil
war ensued in Cambodia because the new republic was pro-US and the communist Khmer aided by the
USSR and the People’s Republic of China wanted the return of King Sihanouk.
Premier Lon Nol lost the bitter fight for Cambodia and was forced into exile on April 1, 1975. The Lon Nol
government surrendered on April 17, 1975, just five days after the US mission evacuated Cambodia. In
1975, the communist Khmer Rouge took over Phnom Penh and changed the country’s name to Democratic
Kampuchea. More than one million people died to begin with, including not only the victims of Pol Pot’s
killing fields, where members of the ruling elite were cut down, but also hundreds of thousands of men,
women, and children who died from diseases and starvation directly resulting from the regime’s misguided
and draconian policies.

These massacres were done to create a classless communist society. Urban settlers were forced by the
Khmer Rouge to work in communes patterned after those of the People’s Republic of China. The Pol Pot
regime, whose ideology focused unthinkingly on the importance of national pride and self-sufficiency,
perceived the Angkorean era as a time when an enslaved people, naturally endowed with creative skill,
built hundreds of temples and kilometers of irrigation canals not for themselves as a group as they were in
theory to do after 1975 but for their masters, whose ideology or style the communists made no effort to
explain. With the communist takeover in 1975, the Khmer Rouge wiped out everything that reminded them
of Cambodia’s history.

C. The Fall of Laos: A Communist Domino Effect in Indochina

It was the foundation of the Kingdom of Ayudhya in 1351 (north of modern-day Bangkok) and its military
competition with Sukhothai to its north that provided the space for the formation of the Kingdom of Lan
Xang in Luang Phrabang. In 1353 CE, a Lao Prince named Fa Ngun united all the Lao fiefdoms and formed
the powerful Kingdom of Lan Xang (The Kingdom of a Million Elephants.)

In 1884, Auguste Davie, a French diplomat, saved the life of King Oun Kham of Luang Phrabang from the
dreaded Hos (Chinese bandits from Yunnan). He persuaded Oun Kham to accept French protectorate. It
was in 1893 that the three kingdoms of Luang Phrabang, Vientiane and Champasak united to form Laos
under the French protectorate.

France granted independence to Laos on October 22, 1953. King Sisavang Vong became its monarchial
ruler from 1953 to 1959. On his death in October 1959, he was succeeded by his son Savang Vatthana.

Laos was plunged into civil war when the Royal Lao government under Prime Minister Souvanna Phouma
met destabilization plots from the communist Pathet Lao under Prince Souphanouvong. Attempts in 1957
and 1962 were initiated by Prime Minister Souvanna Phouma for a coalition government, but they failed.
The ceasefire signed in February 1973 and the formulation of another coalition government in April 1974
proved to be futile.

On December 2, 1975, President Souphanouvong and Premier Kaysone Phomvihane declared the
People’s Democratic Republic of Laos. Laos was placed under communist rule and it maintained close ties
with the Soviet Union and Vietnam in 1978. According to Premier Kaysone Phoumvihane:

That great event gloriously ended the national democratic revolution in our country, completely terminated
the yoke of the cruel and depraved rule of the feudalist and colonialists and opened a new era – the era of
independence, freedom and socialism – for our nation.

D. The Spread of Communism in the Middle East: The Case of South Yemen

The ancient Romans called Yemen the Arabian Felix, which means “fertile” or “fortunate” in Arabia. In the
entire Arabian Peninsula, Yemen had the greenest hills and most fertile lands. What is now Yemen was the
Kingdom of Saba from the 10th to the 2nd century BCE. It was on the 7th century that the Arabs in the
north introduced Islam. About 886 CE, the first Zeidi leader seceded from the Abbasid Caliphate and
proclaimed the independence of Yemen.
The Ottoman Turks took over Yemen from the 16th to the 20th centuries. However, the collapse of the
Ottoman Empire after World War I changed the political landscape of Yemen. North Yemen became
independent while its southern counterpart became a British protectorate.

When Imam Muhammad al-Badr was overthrown on September 27, 1962, General Abdullah Sallal
proclaimed the establishment of the Yemen Arab Republic in the north. South Yemen came under the
control of the communists. A strong communist party was installed in 1970. In 1963, civil war ensued
between the Communist National Liberation Front (NLF) and pro-Egyptian Front for the Liberation of Yemen
(FLOSY).

President Qahtan al-Shaabi resigned on June 22, 1969. It is noteworthy to consider that while communist
parties exist in almost all countries, including those in the Middle East; outside South Yemen they have little
success. President Salim Robea Ali was installed as the first Communist President of South Yemen. In
November 1970, the state was renamed the People’s Democratic Republic of Yemen (PDRY).

South Yemen immediately cut off diplomatic ties with the US. All foreign companies were nationalized. The
USSR and China generously gave aid and support to South Yemen, which became the first pro-Communist
Arab republic. The National Liberation Front, which was a Marxist-Leninist party, became its sole legal
political body during the Communist takeover. Many Southern Yemeni dissidents were repressed, forcing
opposition groups into exile.

Although communism became dominant in South Yemen, it was not widely accepted by other Middle East
countries. South Yemen became the only country in the Middle East to accept Communism in the 1970s.
Nationalism and Arab Socialism have also been strong competitors for leftists’ affections in the Middle East,
and as elsewhere communists have been divided into pro-Soviet and pro-Chinese factions, furthering the
splits and weaknesses of Middle Eastern communism.

Administration of Corazon Aquino (1986-1992)

Local Economic Policy

 Comprehensive Agrarian Reform Program (CARP)

 It is the redistribution of public and private agricultural lands to farmers and farmworkers
who are landless, irrespective of tenurial arrangement. CARP’s vision is to have an
equitable land ownership with empowered agrarian reform beneficiaries who can
effectively manage their economic and social development to have a better quality of
life.
 One of the major programs of CARP is Land Tenure Improvement, which seeks to
hasten distribution of lands to landless farmers. Similarly, the Department offers Support
Services to the beneficiaries such as infrastructure facilities, marketing assistance
program, credit assistance program, and technical support programs. Furthermore, the
department seeks to facilitate, resolve cases and deliver Agrarian Justice.
 The legal basis for CARP is the Republic Act No. 6657 otherwise known as
Comprehensive Agrarian Reform Law (CARL) signed by President Corazon C. Aquino
on June 10, 1988. It is an act which aims to promote social justice and industrialization,
providing the mechanism for its implementation, and for other purposes.

 Initiated moral recovery among Filipinos and approved the Value Added Tax (VAT) as a
tax reform measure.
Foreign Economic Policy

 U.S. visit
 In September 1986, Aquino made her first state visit to the United States. She gave a speech
in a joint session of the United States Congress with U.S. lawmakers wearing yellow ribbons
symbolizing support to Aquino.

 United States emergency aid

 Following her speech in the United States Congress in 1986, the U.S. House of
Representatives voted, 203 to 197, in favor of $200 million in emergency aid to her fledgling
government. The vote, admitted Democrat Gerald Kleczka of Wisconsin, amounted to
"legislating with our hearts instead of our heads." Indeed, the measure only added to a foreign-
aid budget that is already likely to be deeply slashed by the Gramm-Rudman budget-balancing
mechanism.

 U.S. Bases Extension Treaty

 On June 15, 1991, Mount Pinatubo, just 20 miles (32 km) from Subic Bay, exploded with a
force 8 times greater than the Mount St. Helens eruption. Day turned to night as volcanic ash
blotted out the sun. Volcanic earthquakes and heavy rain, lightning and thunder from Typhoon
Yunya passing over northern Luzon made Black Saturday a 36-hour nightmare.

 By the morning of June 16, when the volcano's fury subsided, Subic Bay, once one of the most
beautiful and well-maintained Navy bases in the Pacific, lay buried under a foot of rain-soaked,
sandy ash.

 Buildings everywhere collapsed under the weight of the coarse gray ash. Two girls, one a nine-
year-old American and the other a Filipino citizen, died when trapped under a falling roof at
George Dewey High School. In the city of Olongapo, more than 60 volcano-related deaths were
reported, including eight who were crushed when part of Olongapo General Hospital collapsed.

 That night, the threat of continued eruptions combined with the lack of water and electricity led
to the decision to evacuate all dependents. U.S. warships and cargo planes began the
emergency evacuation of thousands of Navy and Air Force dependents. Seven Navy ships
sailed Monday, June 17, with 6,200 dependents. A total of 17 ships, including the aircraft
carriers, USS Abraham Lincoln and USS Midway evacuated all 20,000 dependents over the
next few days. The evacuees were taken by ship to Mactan Air Base and then were airlifted by
U.S. Air Force C-141 Starlifters to Andersen Air Force Base at Guam.

 After the dependents were evacuated, an intense clean-up was begun. All hands, American
service members and Filipino base employees, worked around the clock to restore essential
services.

 Clark Air Base, much closer to Mount Pinatubo, was declared a total loss and plans for a
complete closure were started.

 Japanese relations
 President Corazon Aquino vies for the wrongs committed by Japan during World War II. New
foreign aid agreements also were concluded during this visit. Aquino returned to Japan in 1989
for Hirohito's funeral and in 1990 for the enthronement of Emperor Akihito. A series of talks of
four Prime Ministers from Yasuhiro Nakasone from 1986 to 1987, to Kiichi Miyazawa from 1991
to 1992, the Japanese Government provided economic and trade relations between the two
countries, massive inflow of Japanese investors and tourists, rehabilitation and construction of
schools, hospitals and roads, and guaranteed justice for Filipino Comfort women after World
 War II. Also, in an official state visit, she and Prime Minister Noboru Takeshita received
condolences in the wake of MV Doña Paz tragedy.

 Soviet relations
 Even Aquino meets Soviet General Secretary Mikhail Gorbachev in another state visit in
Moscow for the first time in 1987. She and Gorbachev agreed that the Philippines and the
Soviet Union established the two-nation economic ties and to promote their reforms based on
the perestroika and glasnost systems paved their way to democracy, it also includes a
Philippine-Soviet friendship. She returned between 1991 and 1992 for the state visit with
President Boris Yeltsin since Russia was independent on December 25, 1991.

 Chinese and South Korean relations

 Then in China, a state visit between Aquino and Chinese Premier Deng Xiaoping for the first
time in 1988, the two leaders discussed the economic relations between the Philippines and
China to receive its economic and trading partnership and a Philippine-Chinese friendship
under Xiaoping. Also, in the state visit, she visited Hong Jian village as ancestral homes of the
Conjuangcos where her grandparents and children were born and raised in this village before
they descended into the Philippines. Later, she went to South Korea between 1986 and 1988,
for separate meetings with Presidents Chun Doo-hwan and Roh Tae-woo in relation to
Philippine-South Korean economic, social and cultural ties, she represented in the Asian
Games and the Olympics by supporting the Filipino athletes in the world of sports. She and
Tae-woo, also discussed about Unification talks in which South and North Korea will unify to
end its hostilities since the Korean War in the 1950s.

 ASEAN and U.N. relations

 Aquino made her first state visits in Southeast Asia, she went to Singapore, then to Indonesia
in August 1986, for separate meetings with Singaporean Prime Minister Lee Kuan Yew and
Indonesian President Suharto in order to provide trade and economic ties between the three
countries. She also went to Malaysia in November 1987, to discuss territorial disputes in Sabah
with Prime Minister Mahathir Mohamad, and in Thailand and Brunei, for separate meetings
with Prime Minister Prem Tinsulanonda in April 1988, and Sultan Hassanal Bolkiah in August
1988. She and the member leaders of Association of Southeast Asian Nations made meetings
in various ASEAN summits from 1986 to 1992. Aquino went to the United Nations assembly in
New York in July 1988, made a historic speech during the 45th General Assembly. In her
historic speech, Aquino promised to the International Community in expressing democratic
freedoms in countries since the Philippines received freedom after the revolution in 1986, and
to provide a resolution in the protection for migrant workers and their families. During the July
1988 visit, she met Secretary-General Javier Pérez de Cuéllar for a special meeting to discuss
anti-poverty and anti-insurgency measures in the Philippines.

Fidel Ramos (1992-1998)

Local Economic Policy

 Ramos embarked on an ambitious development plan dubbed "Philippines 2000". Under

the plan, several industries critical to economic development were privatized, such as
electricity, telecommunications, banking, domestic shipping, and oil. The taxation system
was reformed, and external debt was brought to more manageable levels by debt
restructuring and sensible fiscal management. By 1996, the country's GNP and GDP were
growing at a rate of 7.2 percent and 5.2 percent respectively. The annual inflation rate had
dropped to 5.9 percent from its high of 9.1 percent in 1995. By the late 1990s, the
Philippines' economic growth gained favorable comparisons with other Asian countries
such as Taiwan, Thailand, South Korea, and Malaysia.
 The Philippine economy took a sharp downturn during the Asian financial crisis of 1997.
Its fiscal deficit in 1998 reached P49.981 billion from a surplus of P1.564 billion in 1997.
The peso depreciated (fell in value) to P40.89 per U.S. dollar from its previous rate of
P29.47 to a dollar. The annual growth rate of the GNP fell to 0.1 percent in 1998 from 5.3
percent in 1997. Despite these setbacks, the Philippine economy fared better than that of
some of its Asian neighbors, and other nations praised the Ramos administration for its
"good housekeeping”.

 Philippines 2000
 During his administration, Ramos began implementing economic reforms intended to
open the once-closed national economy, encourage private enterprise, invite more
foreign and domestic investment, and reduce widespread corruption. Ramos was also
known as the most-traveled Philippine President compared to his predecessors with
numerous foreign trips abroad, generating about US$20 billion worth of foreign
investments to the Philippines. To ensure a positive financial outlook on the
Philippines, Ramos led the 4th Asia-Pacific Economic Cooperation (APEC) Leaders'
Summit in the Philippines on November 1996. He also instituted reforms in the tax
system which includes a forced increase on VAT (E-VAT law) from 4% to 10%
mandated by World Bank and the International Monetary Fund.

 Under his administration, the Philippines enjoyed economic growth and stability. His
visions of 'Philippines 2000' led the country into a newly industrialized country in the world
and the "Tiger Cub Economy in Asia".

 Philippines 2000 Five-Point Program

 Peace and Stability
 Economic Growth and Sustainable Development
 Energy and Power Generation
 Environmental Protection
 Streamlined Bureaucracy

Foreign Economic Policy

 Spratly Islands
 In early 1995, the Philippines discovered a primitive Chinese military structure on Mischief Reef
in the Spratly Islands, one hundred and thirty nautical miles off the coast of Palawan. The
Philippine government issued a formal protest over China's occupation of the reef and the
Philippine Navy arrested sixty-two Chinese fishermen at Half Moon Shoal, eighty kilometers
from Palawan. A week later, following confirmation from surveillance pictures that the
structures were of military design, President Fidel Ramos had the military forces in the region
strengthened. He ordered the Philippine Air Force to dispatch five F-5 fighters backed by four
jet trainers and two helicopters, while the navy sent two additional ships. The People's Republic
of China had claimed that the structures were shelters for fishermen, but these small incidents
could have triggered a war in the South China Sea.

 Migrant Workers Protection

 One of the downturns of his administration was his experience in handling migrant workers
protection. On the eve of his 67th birthday on March 17, 1995, Ramos was on a foreign trip
when Flor Contemplación was hanged in Singapore. His last-minute effort to negotiate with
Singapore President Ong Teng Cheong and Prime Minister Goh Chok Tong never succeeded
and he was marred with protests after his return to Manila. The protests also caused the
 resignation of Foreign Affairs Secretary Roberto Romulo and Labor Secretary Nieves Confesor
from the Cabinet. He immediately recalled Philippine ambassador to Singapore Alicia Ramos
and suspended diplomatic relations to Singapore. He created a special commission to look into
the case and to try to rescue his sagging popularity. The commission was led by retired justice
Emilio Gancayco. The Commission recommended the forced resignation of then Overseas
Workers Welfare Administration (OWWA) head David Corpin and 13 other government
officials, including two labor attachés.

 World Trade Organization

 It was during the Presidency of Fidel Ramos that the Philippines became a member of the World
Trade Organization which is an organization that intends to supervise and liberalize international
trade. The organization officially commenced on January 1, 1995 under the Marrakech
Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which commenced
in 1948. The organization deals with regulation of trade between participating countries; it
provides a framework for negotiating and formalizing trade agreements, and a dispute resolution
process aimed at enforcing participants' adherence to WTO agreements which are signed by
representatives of member governments and ratified by their parliaments. Most of the issues
that the WTO focuses on derive from previous trade negotiations, especially from the Uruguay
Round (1986–1994).

 Asian Financial Crisis

 The 1997 Asian Financial Crisis, which started in Thailand, was a major blow to the Ramos
administration. The economy was hit by currency devaluation. The same was true for the Thai
baht, Malaysian ringgit, and Indonesian rupiah. Growth fell to about -0.6% in 1998 from 5.2% in
1997 but recovered to 3.4% by 1999. It also resulted to the shutdown of some businesses, a
decline in importation, a rise in unemployment rate and an unstable financial sector.

Joseph E. Estrada (1998-2001)

Local Economic Policy

“ERAP Para sa Mahirap.”

 Agrarian Reform
 The Estrada administration widened the coverage of the Comprehensive Agrarian
Reform Program (CARP) to the landless peasants in the countryside. The latter's
administration distributed more than 266,000 hectares of land to 175,000 landless
farmers, including land owned by the traditional rural elite. (Total of 523,000 hectares
to 305,000 farmers during his 2nd year as President). On September 1999, he issued
Executive Order (EO) 151, also known as Farmer's Trust Fund, which allows the
voluntary consolidation of small farm operation into medium and large-scale integrated
enterprise that can access long-term capital. President Estrada launched the
“Magkabalikat Para sa Kaunlarang Agraryo” or MAGKASAKA. The DAR forged into
joint ventures with private investors into agrarian sector to make FBs competitive. In
1999 a huge fund was allocated to agricultural programs. One of which is the
"Agrikulturang Maka Masa", through which it achieved an output growth of 6 percent,
a record high at the time, thereby lowering the inflation rate from 11 percent in January
1999 to just a little over 3 percent by November of the same year.

 Economic performance was also hurt by climatic disturbance that caused extremes of dry
and wet weather. Toward the end of Estrada's administration, the fiscal deficit had doubled
 to more than P100 billion from a low of P49 billion in 1998. Despite such setbacks, the
rate of GNP in 1999 increased to 3.6 percent from 0.1 percent in 1998, and the GDP
posted a 3.2 percent growth rate, up from a low of −0.5 percent in 1998. Debt reached
P2.1 trillion in 1999. Domestic debt amounted to P986.7 billion while foreign debt stood at
US$52.2 billion.

Foreign Economic Policy

 RP-US Visiting Forces Agreement

 n 1999 a Visiting Forces Agreement with the United States, which was ratified in the Senate.
The first Visiting Forces Agreement was signed under President Ramos in 1998, and the
second was subsequently signed under President Estrada. The two agreements came to affect
a year later. The primary effect of the Agreement is to require the U.S. government (1) to notify
RP authorities when it becomes aware of the apprehension, arrest or detention of any RP
personnel visiting the U.S. and (2) when so requested by the RP government, to ask the
appropriate authorities to waive jurisdiction in favor of RP, except cases of special interest to
the U.S. departments of State or Defense. (Waiving of jurisdiction in the U.S. is complicated by
United States being a confederation of states in which each individual state has its own judicial
system, and the U.S. Federal Government not being in a position to simply order a State to
waive jurisdiction).

The Agreement contains various procedural safeguards which amongst other things establish
the right to due process and proscribe double jeopardy. The agreement also, among other
provisions, exempts RP personnel from visa formalities and guarantees expedited entry and
exit processing; requires the U.S. to accept RP driving licenses; allows RP personnel to carry
arms at U.S. military installations while on duty; provides personal tax exemptions and
import/export duty exclusions for RP personnel; requires the U.S. to provide health care to RP
personnel; and exempts RP vehicles, vessels, and aircraft from landing or ports fees,
navigation or overflight charges, road tolls or any other charges for the use of U.S. military
installations.

 Third informal ASEAN summit

 President Estrada hosted the third Informal ASEAN summit at the Philippine International
Convention Center (PICC) from November 24–28, 1999. The Chief Executive met with the
leaders of the nine Asean member-countries and three dialogue partners of the regional
grouping, namely China, Japan and the Republic of Korea. The 10 Asean member-countries
are Brunei Darussalam, Indonesia, Malaysia, Singapore, Thailand, the Philippines, Myanmar,
Cambodia, Laos, and Vietnam. The Philippines is the third Asean country to host the Asean
Informal Summit. The first informal summit was held in Jakarta on Nov. 30, 1996 while the
second was held in Kuala Lumpur on December 15–16, 1997. Myanmar, which joined the
Asean only in 1997, was supposed to host the Third Informal Summit but it begged of. Following
the alphabetical order, the Philippines was next in line to host the informal summit.

The leaders of the 10-member Association of Southeast Asian Nations (ASEAN) and their three
dialogue partners concluded their informal summit on Sunday, Nov. 28, vowing to further
broaden East Asia cooperation in the 21st century to improve the quality of life of peoples in
the region.

A joint statement issued after the 3rd Asean Informal Summit and separate top-level meetings
with the leaders of China, Japan and Korea expressed the resolve of the heads of states and
governments of Asean and its dialogue partners to work toward the attainment of peace and
stability in Asia and the Pacific.
Gloria M. Arroyo (2001-2010)

Local Economic Policy

“Pagkain sa Bawat Mesa”

 Tried to stabilize the peso-dollar exchange rate

 Arroyo, a practicing economist, made the economy the focus of her presidency. Based on
official (National Economic and Development Authority) figures, economic growth in terms
of gross domestic product has averaged 5.0% during the Arroyo presidency from 2001 up
to the first quarter of 2008.

This is higher than in the administration of the previous recent presidents: 3.8% average
of Aquino, 3.7% average of Ramos, and 3.7% average of the Joseph Estrada
administration. The Philippine economy grew at its fastest pace in three decades in 2007,
with real GDP growth exceeding 7%.

 A comparative 2008 UN report shows that the Philippines lags its Asian neighbors,
Indonesia, Thailand, Vietnam and China, in terms of poverty amelioration. The study
reveals that from 2003 up to 2006, the number of poor Filipinos increased by 3.8 million,
with poverty incidence being approximately three times higher in agricultural communities.
With regards the problem of hunger, quarterly studies by the social polling research firm
Social Weather Stations show that the number of Filipino households suffering from
hunger has significantly increased during Arroyo's presidency. Her administration first set
the record for hunger levels in March 2001, and beginning June 2004, broke the record
again seven times. December 2008 figures saw the new record high of 23.7%, or
approximately 4.3 million households, of Filipino families experiencing involuntary hunger.

 A controversial expanded value added tax (e-VAT) law, considered the centerpiece of the
Arroyo administration's economic reform agenda, was implemented in November 2005,
aiming to complement revenue-raising efforts that could plug the country's large budget
deficit. The country aims to balance the national budget by 2010. The tax measure
boosted confidence in the government's fiscal capacity and helped to strengthen the
Philippine peso, making it East Asia's best performing currency in 2005-06. The peso
strengthened by nearly 20% in 2007, making it by far Asia's best performing currency for
the year, a fact attributed to a combination of increased remittances from overseas Filipino
workers and a strong domestic economy.

 Early in her presidency, Arroyo implemented a controversial policy of holiday economics,

adjusting holidays to form longer weekends with the purpose of boosting domestic tourism
and allowing Filipinos more time with their families.

Foreign Economic Policy

 Iraq War
 The Arroyo administration has forged a strong relationship with the United States. Arroyo was
one of the first world leaders who expressed support for the US-led coalition against global
terrorism in the aftermath of the September 11, 2001 attacks, and remains one of its closest
allies in the war on terror. Following the US-led invasion of Iraq, in July 2003 the Philippines
sent a small humanitarian contingent which included medics and engineers. These troops were
 recalled in July 2004 in response to the kidnapping of Filipino truck driver Angelo de la Cruz.
With the hostage takers demands met, the hostage was released. The force was previously
due to leave Iraq the following month. The early pullout drew international condemnation, with
the United States protesting the action, saying giving in to terrorist demands should not be an
option.

 ASEAN Summit
 Arroyo's foreign policy is anchored on building strong ties with the United States, East Asian
and Southeast Asian nations, and countries where overseas Filipino workers work and live. In
2007, the Philippines was host to the 12th ASEAN Summit in Cebu City.

 Philippines-Japan trade deal

 On August 21, 2007, Arroyo's administration asked the Senate of the Philippines to ratify a $4
billion (£2 billion) trade deal with Japan (signed on 2006 with the former Japanese prime
minister Junichiro Koizumi), which would create more than 300,000 jobs (by specifically
increasing local exports such as shrimp to Japan). Japan also promised to hire at least 1,000
Philippine nurses. The opposition-dominated senate objected on the ground that toxic wastes
would be sent to the Philippines; the government denied this due to the diplomatic notes which
stated that it would not be accepting Japanese waste in exchange for economic concessions.

 Council of Women World Leaders

 In keeping with this international mission, President Gloria Macapagal-Arroyo is a member of
the Council of Women World Leaders, an International network of current and former women
presidents and prime ministers whose mission is to mobilize the highest-level women leaders
globally for collective action on issues of critical importance to women and equitable
development.

Benigno Aquino III (2010-2016)

Local Economic Policy

 Zero-based budgeting
 It is an approach to planning decision-making which reverses the working process of
traditional budgeting. In traditional incremental budgeting (Historic Budgeting),
departmental managers justify only variances versus past years, based on assumption
that the “baseline” is automatically approved. By contrast, in zero-based budgeting,
every line item of the budget must be approved, rather than only changes. During the
review process, no reference is made to the previous level of expenditure. Zero-based
budgeting requires the budget request be re-evaluated thoroughly, starting from the
zero-base. This process is independent of whether the total budget or specific line
items are increasing or decreasing.

The introduction Zero-Based Budgeting (ZBB) approach was the first reform that
President Aquino instructed us to use, both in creating fiscal space in the 2010 Budget
that he inherited, as well as in designing the 2011 Budget, the first of his administration.
Through ZBB, we were able to review the relevance of programs and projects; in
terminating or resigning those which have been inefficient and ineffective, such as the
DepEd Food for School program, the NFA rice subsidy program, among others; and
in reallocating funds where these are needed and where this will create impact.

 Macroeconomic Policy
  Growing output and employment are the preconditions for progress in almost all social
and economic aspects of development. Productive employment and rising incomes for
the vast majority over a long period can do more to combat poverty decisively than
any direct assistance government can ever provide.

 Monetary Policy
 Central banks implement monetary policy by controlling the money supply through
several mechanisms. Typically, central banks act by issuing money to buy bonds (or
other assets), which boosts the supply of money and lowers interest rates, or, in the
case of contractionary monetary policy, banks sell bonds and takes money out of
circulation. Usually policy is not implemented by directly targeting the supply of money.
Banks continuously shift the money supply to maintain a fixed interest rate target,
some backs allow the interest rate to fluctuate and focus on targeting inflation rate
instead. Central banks generally try to achieve high output without letting loose
monetary policy creates large amounts of inflation. Conventional monetary policy can
be ineffective in situations such as liquidity trap (A liquidity trap is a situation in which
injections of cash into the private banking system by a central bank fail to lower interest
rates and hence fail to stimulate economic growth).

 Fiscal Policy
 It is the use of government’s revenue and expenditure as instruments to influence the
economy. If the economy is producing less than potential output, government
spending can be used to employ idle resources and boost output. Government
spending does not have to make up for the entire output gap. There is a multiplier
effect that boosts the impact of government spending. For example, when the
government pays for a bridge, the project not only adds the value of the bridge to
output, it also allows the bridge workers to increase their consumption and investment,
which also help close the output gap. The effects of fiscal policy can be limited by
crowding out. When government takes on spending projects, it limits the amount of
resources available for the private sector to use. Crowding out occurs when
government spending simply replaces private sector output instead of adding
additional output to the economy.

Foreign Economic Policy

 First official trip to the United States

 On September 20, 2010, Aquino delivered his departure statement at the Ninoy Aquino
International Airport (NAIA), before leaving for his first official trip to the United States.
Secretary of Foreign Affairs Alberto Romulo, Secretary of Finance Cesar Purisima, Secretary
of Trade & Industry Gregory Domingo, and Secretary of Energy Jose Rene Almendras,
including 34 businessmen and 12 officials and support staff of the Presidential Communications
Operations Office joined Aquino in the trip. On September 28, 2010, Aquino arrived at the Ninoy
Aquino International Airport (NAIA), after his week-long working visit to the United States.
Aquino delivered his arrival statement at NAIA.

 Citibank Economic Conference

 On September 22, 2010, Aquino delivered his speech during the Citibank Economic
Conference in New York City.

 Meeting with the Filipino community in the United States

 On September 23, 2010, Aquino delivered his extemporaneous remarks during a meeting with
the Filipino community at Baruch College in New York City.
  On September 26, 2010, during a visit to the Seasons Market Place in Milpitas, California,
Aquino was greeted by cheering members of the Filipino community of San Jose, California.
Aquino also delivered his speech in front of the Filipino community at the Mission San Francisco
de Asís in San Francisco, California.

 Millennium Challenge Corporation

 On September 23, 2010, Aquino delivered his remarks at the Millennium Challenge
Corporation (MCC) compact agreement signing ceremony at the Waldorf-Astoria Hotel in New
York City. The US$434 million MCC compact agreement will fund the Aquino administration's
various programs on poverty reduction, revenue generation, and infrastructure development.

 Statement before the 65th United Nations General Assembly

 On September 24, 2010, Aquino delivered his statement before the 65th United Nations
General Assembly in New York City.

 Meeting with Obama

 On September 24, 2010, Aquino had a seven-minute one-on-one talk with President of the
United States Barack Obama during the 2nd Association of Southeast Asian Nations (ASEAN)-
US Leaders Meeting at the Waldorf-Astoria Hotel in New York City. During the meeting, Aquino
recognized the United States’ commitment to reinvigorating its relationship with the region and
its individual nations at a time of ever-increasing complexity in global affairs. Obama expressed
his determination to elevate RP-US relations to a higher level, and welcomed the Aquino
administration’s anti-corruption efforts. Aquino and Obama also discussed military matters,
about the possible removal of thousands of tons of war materials that Allied forces had left
behind on Corregidor Island during World War II.

 First official trip to Vietnam

 On October 26, 2010, Aquino met with President of Vietnam Nguyễn Minh Triết at the
Presidential Palace in Hanoi, Vietnam. Aquino and Triết signed four memorandum of
agreement on four areas of cooperation, namely, higher education, defense, oil spill
preparedness and response, and search and rescue at sea. Aquino also met with Prime
Minister of Vietnam Nguyễn Tấn Dũng. Aquino delivered a toast at the State Banquet hosted
by Triết at the Government Guest House.

 Meeting with the Filipino community in Vietnam

 On October 27, 2010, Aquino delivered his extemporaneous remarks during a meeting with the
Filipino community in Vietnam.

Rodrigo Duterte (2016-Present)

Sustainability in this case refers to the efforts of the Duterte administration to overcome long-
standing issues in the Philippine economy and boost economic sustainability. Economic policy is
beginning to produce clear results in the form of comprehensive tax reforms and progress with
infrastructure investment. In terms of social order, setting aside the rights and wrongs of the
administration’s authoritarian methods, many Filipinos are beginning to feel an improvement in
public order. I examine each of these issues below.

 Ten-point agenda
The economics team of then President-elect Rodrigo Duterte presented the following
points of Duterte's socioeconomic policy in a business forum in Davao in June 2016.
DuterteNomics is anchored on these ten principles.
  Continue and maintain current macroeconomic policies, including fiscal, monetary, and
trade policies.
 Institute progressive tax reform and more effective tax collection, indexing taxes to
inflation.
 Increase competitiveness and the ease of doing business.
 Accelerate annual infrastructure spending to account for 5% of GDP, with Public-
Private Partnerships playing a key role.
 Promote rural and value chain development toward increasing agricultural and rural
enterprise productivity and rural tourism.
 Ensure security of land tenure to encourage investments, and address bottlenecks in
land management and titling agencies.
 Invest in human capital development, including health and education systems, and
match skills and training.
 Promote science, technology, and the creative arts to enhance innovation and creative
capacity.
 Improve social protection programs, including the government's Conditional Cash
Transfer program.
 Strengthen implementation of the Responsible Parenthood and Reproductive Health
Law.

 Build! Build! Build! Infrastructure Plan

 The goals of the program are to reduce poverty, encourage economic growth and
reduce congestion in Metro Manila. As of August 2019, only 12% of the flagship projects
have construction underway. This has been attributed to the delayed passage of the
2019 national budget and the election ban on public works.

Foreign Economic Policy

 ASEAN
 Duterte has placed great importance on the Philippines' diplomatic relations with its ASEAN
neighbors. Following tradition, his first trips outside the country were to Indonesia, Myanmar,
Thailand, Vietnam, Cambodia, Laos, Brunei, and Singapore.

In 2017 the Philippines was chair and host to the ASEAN summits, a series of diplomatic
conferences centering on the Association of Southeast Asian Nations (ASEAN). The
culminating event was held in Manila on 10–14 November (31st summit). It was attended by
ten Asean leaders.

 China and Russia

 Following his inauguration as president, Duterte mentioned his willingness to "reorient" his
foreign policy towards China and Russia, particularly in the areas of trade and commerce.
During an interview with Al Jazeera, he expressed his willingness to conduct joint military
exercises with China and Russia. In September, Duterte said that he is considering purchasing
military equipment, particularly weaponries and armaments, from China and Russia to
strengthen the capabilities of the Armed Forces of the Philippines in addressing insurgency
and counter-terrorism, saying that deals between the Philippines and the two countries are
already in discussion and that the Chinese and Russian governments have offered the
Philippines soft loans that would be payable in 2025.
 On October 18–21, 2016, Duterte visited Beijing to meet with Chinese officials, including
President Xi Jinping and Premier Li Keqiang. While announcing his "separation" from the
United States in front of Chinese and Filipino businessmen at the Philippines–China Trade and
Investment Forum in Beijing on October 20, Duterte also said that he would realign himself with
the Chinese ideological flow and that he might also travel to Russia to meet with President
Vladimir Putin to "tell him that there are three of us against the world – China, Philippines, and
Russia".

On November 20, 2016, Duterte met with Putin during the sidelines of the APEC summit in
Lima, Peru. Duterte has praised Putin's leadership skills and called him his "idol". Putin also
invited Duterte to visit Moscow. Duterte said that he would visit Moscow on May 25, 2017,
where a defense cooperation agreement between the Philippines and Russia is expected to
be finalized.

During an interview with RT in November, Duterte said that the Philippines is "not ready" for
military alliances with China and Russia due to the Mutual Defense Treaty signed between the
Philippines and the U.S.; however, he clarified that the Philippines could seek stronger
diplomatic cooperation with China and Russia, as well as other countries, "to make the world
more peaceful". Russian Ambassador to the Philippines Igor Khovaev expounded on Duterte's
statement by saying that the Russian government is offering a strategic partnership with the
Philippines, not a military alliance, and added that Russia does not believe in establishing
military alliances with Asia. However, Khovaev explained that the Russian government is open
to assisting the Philippines in purchasing Russian-made weaponry.

 Territorial dispute
 On July 12, 2016, the Permanent Court of Arbitration tribunal in the Hague announced its ruling
in favor of the Philippines in its case filed under the Benigno Aquino III administration in 2013
against China on issues regarding the South China Sea under the provisions of the United
Nations Convention on the Law of the Sea, including the latter's nine-dash line claim which the
tribunal ruled had no legal basis. Three days after, during a testimonial dinner in San Juan,
Duterte asked former President Fidel Ramos to lead the Philippine envoy to Beijing for bilateral
negotiations with China over the disputes. Ramos accepted the offer on July 23 but resigned
on October 31. During his first State of the Nation Address on July 25, Duterte said that his
administration "strongly affirms and respects" the ruling and would use it as a guide to negotiate
for a resolution on the territorial disputes. Duterte prefers to discuss the issue quietly and
directly with China and has vowed not to raise the issue before the Association of Southeast
Asian Nations. Duterte said "he would not want to antagonize China" and would want to
"maintain good relations with China" to "create an environment where we sit down and talk
directly".

On October 12, Duterte declared his intention to terminate joint US–Philippine naval patrols in
the South China Sea, which he believes could needlessly antagonize China. His reticent
approach with China contrasts with his otherwise "belligerent rhetoric and swaggering
persona"; he has received support for some political ads from an anonymous Chinese donor.

On October 20 in Beijing, Duterte and Chinese President Xi Jinping agreed to resume direct
talks on the dispute.

When then U.S. Secretary of State-designate Rex Tillerson threatened China's positions on
the islands, the Philippines said that Tillerson was speaking for the U.S. only in the U.S.'s
interest and prerogatives. Delfin Lorenzana, Duterte's Defense Secretary, rejected the
possibility of war against China over the islands in the South China Sea.

Duterte and South Korean President Moon Jae-in at the Blue House in Seoul on June 4, 2018.
 On April 6, 2017, Duterte ordered the Armed Forces of the Philippines to occupy and fortify at
least nine uninhabited islands in the South China Sea. He announced plans to visit the
Philippine-administered Thitu (Pag-asa) Island during Independence Day and raise a Philippine
flag there. Duterte also ordered the Philippine Navy to build structures on the Benham Rise in
order to reassure the Philippines' sovereignty over the undersea region, following the sighting
of Chinese survey vessels. He also announced plans to rename the Benham Rise to the
Philippine Rise. On April 12, Duterte canceled his plan to visit the Thitu (Pag-asa) Island, citing
goodwill and friendship with China. On April 21, Defense Secretary Delfin Lorenzana
announced the allocation of ₱1.6 billion to develop the Thitu (Pag-asa) Island, despite rejection
from the Chinese Ministry of Foreign Affairs. The development of the island is expected to
include the construction of a marine research center, beaching facilities, a radio station, an ice
plant, and a power station, as well as the improvement of the Rancudo airstrip runway. On May
16, 2017, Duterte signed an executive order formally renaming the Benham Rise to the
Philippine Rise.

In February 2018, the Philippine Daily Inquirer published aerial surveillance photos of Chinese
military fortifications in the South China Sea which showed runways, hangars, control towers,
helipads, radomes and multi-storey buildings on reefs across the region, described by the
newspaper as "island fortresses". The photos, which were mostly taken in late 2017, were
authenticated by the Center for Strategic and International Studies, which described them as
"the most complete, detailed batch of aerial pics available", and stated that the "photos show
China is nearly done with its militarization of South China Sea". Duterte's spokesman told
reporters: "The region has long been militarized. And the question is, what can we do?" - which
led to accusations of dereliction of his "sacred core duty" of defending Philippine territory.

 United States
 On September 12, 2016, Duterte said that he is "not a fan of the Americans" and that he wants
to "reorient" foreign policy with the United States. He requested that U.S. forces in Mindanao
should leave the Philippines, specifically those who are part of the Operation Enduring
Freedom, saying that it would "inflame the situation with the Abu Sayyaf". Duterte said on
September 13 that he does not plan to cut ties with the United States, but wants to reiterate
the administration's pursuit of an "independent foreign policy" in accordance with the
Constitution; the administration will continue to honor mutual agreements like the Visiting
Forces Agreement and the Enhanced Defense Cooperation Agreement. On September 20,
Duterte said: "I never said get out of the Philippines, for after all, we need them there in the
China Sea. We don't have armaments."

On September 27, Duterte vowed not to allow the U.S. government to interfere with the policies
of his administration. He criticized the U.S. government for "lecturing" his administration on
human rights amidst their campaign on illegal drugs and said that he will "cross the Rubicon
with the U.S." Duterte added that he plans to forge "new alliances" with China and Russia in
trade and commerce. U.S. Department of State deputy spokesperson Mark Toner responded
to Duterte's criticisms by saying that the Philippine–U.S. relations could still remain "strong and
unabated" despite Duterte's criticisms. The following day, while addressing the Filipino
community in Hanoi, Duterte said that the Balikatan military exercises and the joint naval patrols
in the South China Sea between the Philippines and the U.S. in October would be "its last" in
order to avoid provoking conflict with China.

On October 5, Duterte accused the U.S. of refusing to sell armaments to the Philippines and
said that he would rather purchase armaments from China and Russia. In an attempt to repair
relations with the U.S., Duterte's Defense Secretary, Delfin Lorenzana, said Duterte was
"misinformed" about the U.S. alliance: "Maybe, the defense ministry and the armed forces were
remiss in providing him the correct information."
On October 6, Duterte's then-Foreign Secretary Perfecto Yasay Jr. denounced the idea of the
Philippines being regarded as a "little brown brother" by the U.S. Yasay said that the Philippines
had been "failed" by the U.S.

On October 20, while on a trip to Beijing, Duterte declared a "separation" from the United States
which he stated had lost militarily, socially, and economically, and emphasized a realignment
of the Philippines to move closer to China. During a press conference after arriving from Beijing,
Duterte clarified that what he meant by "separation" was a "separation of a foreign policy" and
not a severance of diplomatic ties, saying that it would not be feasible to cut diplomatic ties with
the U.S. due to the large number of Filipino Americans. U.S. Department of State spokesperson
John Kirby responded by saying: "We are going to be seeking an explanation of exactly what
the president meant when he talked about separation from the U.S.; it's not clear what that
means and all its ramifications." On October 23, U.S. Assistant Secretary of State for East
Asian and Pacific Affairs Daniel R. Russel traveled to Manila to seek clarification and
explanation for Duterte's comments with Philippine officials, including Foreign Affairs Secretary
Perfecto Yasay Jr. and Defense Secretary Delfin Lorenzana.

On November 7, Secretary Lorenzana clarified that the joint Balikatan exercises will continue
along with the Enhanced Defense Cooperation Agreement, but the Cooperation Afloat
Readiness and Training amphibious landing exercises between the Philippine Marine Corps
and the U.S. Navy would be discontinued. He specified that bilateral drills on counterterrorism,
humanitarian response, special operations, engineering projects, and civic action will remain,
all of which have been approved by Duterte.