The philippines: the worst rich-poor divide in Asia

The situation where a big chunk of the Philippines' wealth is controlled by a few is typical in poor and developing countries that embrace the capitalist system. What is disturbing in the data presented last month by former economic planning chief Cielito Habito is the magnitude of such a reality here: the increase in the wealth of the 40 richest families in the Philippines that made it to the 2012 Forbes list of the world's billionaires accounted for 76 per cent of the growth of the gross domestic product.

It's one of the biggest rich-poor gaps in the free world and, Habito observed, the highest in Asia. He cited such examples as Thailand, where the top 40 families accounted for only 33.7 per cent of economic growth; Malaysia, 5.6 per cent; and Japan, 2.8 per cent.

Agence France-Presse also noted that, according to the Forbes 2012 annual rich list, the two wealthiest people in the Philippines, Henry Sy and Lucio Tan, were worth a combined US$13.6 billion, equivalent to 6 per cent of the Philippine economy.

In contrast, as the news agency pointed out, government data showed that about 25 million people, a quarter of the population, lived on $1 a day or less in 2009, which was little changed from a decade earlier.

To be poor meant earning less than 16,800 pesos (Bt12,250) a year (or 1,400 pesos a month or 47 pesos a day), which covers 26.5 per cent of the nearly 100 million Filipinos. Based on the official poverty data of the National Statistical Coordination Board, the proportion of poor Filipinos to the total population was 28.4 per cent in 2000, 24.9 per cent in 2003, 26.4 per cent in 2006, and 26.5 per cent in 2009.

This has led to the now oft-repeated term "inclusive growth", or economic expansion that creates jobs and reduces poverty, or allows the fruits to trickle down to lower-income segments of society. But this calls for structural reforms, which will take years to implement.

These reforms are "well-known", Motoo Konishi, the World Bank's country director for the Philippines, noted at the Philippine Development Forum in Davao City. "They have been studied, written about and reflected on for a long time." (He also said that now - under the Aquino administration - was the time to accelerate and sustain the reform agenda.)

Economists agree that little progress has been made in changing an economic structure that allows one of the worst income inequalities in Asia. As Habito, a columnist of the Inquirer, was quoted as saying, "I think it's obvious to everyone that something is structurally wrong. The oligarchy has too much control of the country's resources."

Income inequality is actually a global problem. Using different estimation models, a review of income distribution in 141 countries by Isabel Ortiz and Matthew Cummins for Unicef in April 2011 "found a world in which the top 20 per cent of the population enjoys more than 70 per cent of total income, contrasted by two paltry percentage points for those in the bottom (20 per cent) in 2007; using market exchange rates, the richest [20 per cent of the] population gets 83 per cent of global income with just a single percentage point for those in the poorest (20 per cent)".

"While there is evidence of progress, it is too slow; we estimate that it would take more than 800 years for the bottom billion [of the world's population] to achieve 10 per cent of global income under the current rate of change," the Unicef paper said. Overall, it noted that the extreme inequality in the distribution of the world's income "should make us question the current development model (development for whom?), which has accrued mostly to the wealthiest billion".

At home, as the government struggles to implement structural reforms, it is actually taking care of the poorest of the poor through its conditional cash transfer programme, The Aquino administration is spending more than 40 billion pesos this year on this flagship undertaking, which will see 15 million of the nation's poorest people receive money directly in exchange for their kids going to school and mothers and children getting proper healthcare.

What about the big proportion of people earning the basic minimum pay mandated by law? They can only pray for the kindness of their employers, for the latter to awaken to the virtue of giving and sharing. We've seen billionaires like Microsoft founder Bill Gates and tycoon Warren Buffett give away the bulk of their wealth to charity. The rich in the Philippines need not do as much. They need only give a little more.