Written by Ronald U. Mendoza and Leonardo M. Jaminola III.

Image Credit: Rodrigo Duterte ภาพจาก by  Prachatai/Flickr; Licence: CC BY-NC-ND 2.0.

President Rodrigo R. Duterte recently completed his third year in office, having faced several major challenges during his administration. Notable among these were the Marawi siege, where government troops battled against ISIS-aligned groups, and continued issues of Chinese encroachment in the West Philippine Sea, punctuated very recently by the ramming of a Filipino fishing vessel near Recto Bank. Other challenges to the administration are of its own making, such as the bloody and very divisive anti-drugs campaign and the rocky roll-out of tax reforms.

Analyses of the administration’s mis-steps and gains provide a mixed picture, with the country progressing on a number of economic policy reforms while lagging on social, national security and political reforms. Even so, the President’s approval ratings peaked shortly after the elections – which saw key administration allies win important positions in local and national government. Many see this as a signal of the President’s continued strong political capital with which to push his reform agenda, as well as a validation of his leadership.

The claim that the Senate election result was an ‘overwhelming victory’ for the Duterte administration must be viewed from its historical context in Philippine politics

In this article, we take a different and slightly more calibrated view. All administrations in the post-Marcos era have displayed a strong showing in midterm elections, and the approval ratings also, quite predictably, take a nosedive during the last three years of each administration. If history is any indicator, then President Duterte’s window for reform will soon be constrained by the search for the next President (if it hasn’t already begun).

The Philippine economy is currently generally strong, riding on continued improvements in the country’s credit rating and so far appearing impervious to political and national security related shocks. Duterte’s focus on tax reforms and infrastructure investments actually belies a very conservative economic reform agenda. His economic team successfully passed some difficult legislation on tax reform and rice tariffs. This notwithstanding his populist promises (some delivered but many still waiting to be implemented), including an end to contractualisation and boosting the wages of public sector employees like the police, the military and public school teachers.

Likely due to the country’s growth and public investment momentum, the percentage of poor Filipinos in the population dropped from 27.6  in 2015 to 21.0 in 2018, representing almost 5.7 million Filipinos lifted out of poverty in a mere three years. However, the country’s poverty threshold – the line that defines who is poor and who is not – remains draconian. On average, any income above PHP 10,481 per month for a family of five members is already considered non-poor. The Philippines is reducing its number of poor people slowly but surely – but is it reducing vulnerability among its newly emancipated middle class?

Other indicators are telling here too. According to the Social Weather Stations (SWS) indicators for self-rated poverty, around 40–50 per cent of Filipinos consider themselves to be poor – much higher than the official poverty statistics of around 21 per cent.

Job creation is critical to addressing both poverty and inequality, and a mixed picture is emerging here. As of January 2018, there were around 10 million unemployed or underemployed workers in the country (2.3 million and 7.5 million, respectively.  Meanwhile, foreign direct investments (FDI) hit a near-term high of about USD 10 billion in 2017. This may reflect the growth momentum built up over past years, rather than simply being due to accomplishments under the Duterte administration, but nevertheless, such continuity is reassuring.

The administration’s focus on Chinese investments and loans is also giving cause for concern, since the quality of these investments to date is low  in comparison with the relatively higher quality (i.e. job-creation, technology-transfer and enhancement of industrialisation) linked to other sources of FDI such as that coming from the United States, the European Union, Japan, South Korea or Singapore.

Chinese infrastructure investments typically come in the form of loans, and also appear to be biased towards using Chinese labour. Both these aspects undermine the Philippines’ already strong efforts to build in private-sector financing along with an emphasis on job creation for Filipinos, the bulk of whom are still underemployed, if not completely without work.

Based on recent estimates by the Ateneo Policy Center, net job creation must hit at least around 1.3 million a year for the next decade in order to make a significant dent in the number of unemployed and underemployed people in the Philippines. Close to 1 million young people are expected to join the labour force every year alone, and yet the growing Philippine economy does not have enough jobs for them at home: the rising economic tide is definitely not lifting all boats.

In fact, the Philippines remains one of the most unequal countries in the world. It was in the bottom half in the world in terms of income inequality in the 1980s, but today it is in the top third.

The lack of jobs in the formal economic sector has a knock-on effect for many aspects of society, including a large part of the economy mired in the underground economy. The country’s illegal drugs trade is located in this extensive unregulated sector.

President Duterte’s main campaign slogan in 2016 was ‘No to drugs, yes to federalism’. According to the government website #RealNumbersPH, 4,075 drug personalities have died in anti-drug operations as of 20 March 2018. In addition to this, under the broad heading of the government’s anti-illegal drugs campaign, the Duterte Administration Year-End Report 2017 Key Accomplishments reported some 16,355 homicide cases under investigation as of 30 September 2017.

The recent pronouncements of the Philippine National Police to protect human rights and to tackle the supply side of the illegal drugs trade (rather than simply focus on punitive methods on the demand side) is a welcome change in strategy. But the killings continue – both those resulting from police operations and those by unidentified individuals (sometimes described as vigilantes) – and these signal continuing weaknesses in the country’s system of law and order.

Some saw the midterm elections as a ‘referendum’ on the Duterte administration and the ‘overwhelming victory’ of presidential allies in the Senate race as proof of the public’s continued confidence in the Duterte administration. With a ‘Die-hard Duterte supermajority’ in both houses of Congress, President Duterte could now enjoy unhampered progress in pushing his reform agenda, such as redrafting the country’s constitution and reinstating the death penalty.

However, even prior to the elections and certainly since then, the so-called ‘supermajority’ already demonstrated some cracks. In 2018, Congress failed to pass the national budget on time. This was the first time in eight years that the budget was re-enacted, and it was an odd thing to happen the year before an election year. It definitely did not signal cohesiveness and control – just the opposite in fact: an inability by many in the ‘supermajority’ to toe the line.

Meanwhile, the claim that the Senate election result was an ‘overwhelming victory’ for the Duterte administration must be viewed from its historical context in Philippine politics. A cursory review of the last five midterm elections (post-Marcos) suggests that the party of the incumbent President almost always tends to do well, particularly when one considers the advantage of incumbency and the traditionally high approval ratings of post-Marcos presidents going into the midterm elections.

In addition, the very public wrangling for committee chairmanships in the Senate, the initial rumours about replacing the Senate President, and the recent brouhaha over the House Speakership (later settled by a term-sharing arrangement between Congressman Alan Peter Cayetano and Lord Allan Velasco) further signalled potential cracks in the ruling coalition.

The President’s daughter and re-elected Mayor of Davao City, Sara Duterte, and her Hugpong ng Pagbabago Party is expected to be the decisive voice on the Speakership competition – particularly as many assume she will be the presumptive administration candidate for the presidential race in 2022. Yet her party’s choice for Speaker did not win out, and this test of her influence may have exposed that she is not necessarily the only strong contender within the broad alliance.

As the constitution prohibits the re-election of the President, the sustainability and continuity of Duterte’s reforms is not assured in the next administration. At most, Duterte can only successfully push for reforms until 2020 or early 2021.

Currently, we see pre-positioning moves by some politicians in the ‘game of thrones’ for 2022. The Duterte administration’s understandable sense of urgency in fast-tracking the passage and implementation of key economic and political reforms will likely have to face the realities of the political cycle – just like the administrations before this one.

Dr Ronald U. Mendoza is the Dean of the Ateneo School of Government at Ateneo de Manila University. He is an economist, and has an extensive background in international development policy and international cooperation.

Leonardo M. Jaminola III graduated with a degree in Political Science from the University of the Philippines – Diliman. He currently works as a Research Assistant at the Ateneo Policy Center.

*This article draws on a full study that can be downloaded using this link: Mendoza, Ronald U. and Jaminola, Leonardo, President Rodrigo Duterte on Year 3 (June 27, 2019). ASOG WORKING PAPER 19-010. Available at SSRN: https://ssrn.com/abstract=3410692.

**Articles published by The Asia Dialogue represent the views of the author(s) and not necessarily those of The Asia Dialogue or affiliated institutions.

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