"Philippines 2000"

President Ramos’ first State of the Nation Address (SONA) described the strategic framework for development he was committing the Philippines to in the six years following his election in 1992. His “Philippines 2000” sounded the coming of the turn of the millennium.³⁹ The direction set was for the Philippines to perform as a newly industrialized economy (NIC) and be recognized as an “Asian tiger economy.” His National Security Adviser, General Jose Almonte,⁴⁰ elaborated thus: “Philippines 2000 was a vehicle for collaborative effort among national business, organized labor, and government, to assert Philippine competitiveness in the world.” It was a development strategy that incorporated the progressive shifts in political and economics thinking that emerged in the last decade of the 20th century in the Philippines.

Civil society organizations⁴¹ (CSOs) became major actors and agenda setters in many developing countries, including in the Philippines, where years under a dictatorship and an unsteady period of democratic renewal gave these organizations much to do to alleviate social problems. CSOs inflected development activities and service delivery to be community-driven and sensitive to human rights and cultural difference. These CSOs put forward a wide range of advocacies that were already informed by decades of experience. Many of their development ideas, fused with people oriented approaches to governance, especially after the EDSA People Power uprising, were to be enshrined in the Philippine Constitution of 1987. Promulgated after a popular referendum registered extraordinary consensus (more than ninety percent of the voting population went to the polls), the present Philippine Constitution had only begun to guide national policy when President Ramos took office.

With the Philippines emerging from a prolonged period of socio-political and security sector instability, President Ramos’ call in his SONA to first “put our house in order” was well-received. Easing instability as a precondition to growth was a shared logic. The newly elected president placed economic development front and center in his governance strategy. He prioritized job creation, for which it was necessary to radically raise the level of investments and build the necessary physical infrastructure. The envisioned foundation was designed for interlinking liberalization, social stability, and the peace and order agenda—an atypical integrative thrust in late 20th century Philippines, when governance formulations were still driven through line agency strategies that did not programmatically interweave.

The spirit of Philippines 2000 was articulated as two interwoven strategies, the first of which was the Medium Term Philippine Development Plan for 1993-1998 (MTPDP 93-98). The plan was aligned with the policy-driven construction of a stable political and socio-cultural climate, which, in President Ramos’ view, would guarantee economic growth. His administration saw the construction work for social equilibrium—the coupling of social and economic agendas to support and sustain a wholistic national trajectory—as its uniquely modernizing concept. It worked with a multi- and cross-disciplinary perspective of security, of which peace and order was only one aspect. The drivers of productivity, creativity, environmental sustainability, government partnerships with civil society, human resource enhancement, and fiscal responsibility, among others, had to work with each other. Human security was assured only by integrating sectoral courses of action.

President Ramos also began addressing armed rebellion and police issues as soon as he took office. The urgency was necessitated by on-going violent conflict, which escalated from previous decades. It was a situation that a bemedalled police and military general, a veteran of many combat duties, was uniquely prepared to address. He had just moved from a long career as a soldier and engineer when he took up the civilian post of Secretary of National Defense during the preceding Aquino administration. Assuming the presidency, he resumed peace talks with militants waging war to dismember the country. His strategy, a combination of enticement to surrender and effective counter-insurgency, was not original but effective. This formulation had won the peace in Central Luzon under the postwar presidency of Ramon Magsaysay, who was also a Defense Secretary faced with armed insurgency.

Forty years later, President Ramos arrived on the scene with an additional personal attribute that influenced policy making towards moving the Philippines out of a recurring undertow of war and civil unrest. President Ramos’ aptitude as an engineer—hence his interest in building systems, notably governance strategies and development blueprints—was expressed in an economic revitalization plan built in tandem with in an intricately crafted, multi-front peace process. He simultaneously addressed rebelliousness within the Armed Forces of the Philippines; separatist movements waged by Muslim Filipinos propelled by historical injustice; and a protracted Communist insurgency, were hot layers on top of a residual Cold War ideological battle. To the soldier-rebels, President Ramos granted amnesty through Proclamation No. 10; peace talks with Muslim separatists culminated in the 1996 Peace Agreement with the Moro National Liberation Front; Communist insurgents were assured political space with the repeal of the Anti-Subversion Law (RA 1700). Prior to this period, the Communist Party of the Philippines was outlawed and membership was penalized.

He established the Presidential Anti-Crime Commission (PACC)⁴² to address a criminality so rampant that theft and kidnapping were commonplace (the latter targeted Filipino-Chinese community so often that they were already outraged). The criminal networks involved police and military elements, aside from figures in the Philippine underworld linked to overseas cartels and syndicates. President Ramos appointed his Vice President, Joseph Ejercito Estrada, a former three-term mayor of the municipality of San Juan, Metro Manila, to head the PACC. The San Juan population was predominantly Chinese-Filipino since the mid-20th century; San Juan became a nerve center of both criminalities victimizing the residents and some of the criminals themselves. As PACC chief, Estrada knew that the terrain of engagement fanned out from or otherwise included San Juan. With President Ramos’ support and extreme familiarity with police matters, Estrada succeeded in disbanding the syndicates and unmasking “hoodlums in uniform” (i.e., the police) and “hoodlums in robes” (corrupt judges). Unusual for a Philippine president, Ramos the former police chief went into battle, as it were, allied with a mayor who also knew the lay of the land. Success had immediate positive repercussions in enlivening economic activities (in which Chinese-Filipinos were a valuable cog).

The interconnectedness of peace and order concerns and economic growth potential was demonstrated early in the Ramos presidency. On 17 July 1993, Memorandum Circular No. 2 was issued, directing the formulation of the Medium Term Philippine Development Plan (MTPDP) 1993-98 and the Medium Term Public Investment Program (MTPIP). The formulation process was itself an expression of the emphasis in the 1987 Constitution on people-centered governance, which was translatable to development planning. The MTPDP was crafted in the course of many fora involving sectoral advocacy groups. Each forum explicitly solicited multiple opinions and analytic inputs. The technocratic Ramos Cabinet understood that it had to work with an array of stakeholders, including the most underserved and underprivileged Filipinos as empowered actors.

The consultative nature with which President Ramos formulated policy was evident in the MTPDP 1993-1998’s development having gone through the following: the Legislative-Executive Economic Summit held on 20 August 1993; the Pre-Multisectoral Sectoral Summit on 2 September 1993; and a Multi-Sectoral People’s Summit  conducted on 8 September 1993. The outcomes of these fora were consolidated into the Social Pact for Empowered Economic Development (SPEED), as well as in a  common legislative agenda to support the development goals. The MTPDP 1993-98 benefited from a wealth of inputs from diverse groups of Filipinos. The compendium of policies and programs for the six-year period of the Ramos Administration was crafted jointly between the executive and legislative branches of government on the one hand, and with representatives of the private sector on the other hand. It was, in effect, a plan for collective empowerment. Globally recognized excellence was understood as accruing from the principle of inclusivity.

The MTPDP 1993-1998 had two companion documents. The first was the Medium Term Public Investment Program (MTPIP), which identified flagship projects (i.e., priority action areas) for which government investments were guaranteed. The other was the Implementation Plan (IP), which identified programs, projects, and activities that realized the policies and strategies of the MTPDP 1993-1998. President Ramos secured support from the bicameral Philippine Congress without significant resistance from its members. Adequate financial resources designed into the annual budget for the IP was safeguarded by the substantial political capital President Ramos enjoyed—despite having won the presidency by a narrow margin—deriving from the pivotal role he played in stabilizing the nation during the 1986 EDSA People Power uprising and the series of coups d’état that attempted to wrest power from President Aquino. His stature as a steadying presence in national life allowed him to persuade Congress to pass legislation supporting his economic agenda.

The Legislative Executive Development Advisory Council (LEDAC), created by Republic Act 7640, was one of the first laws passed by the 9th Congress on 10 December 1992 in support of President Ramos’ development plan.  The President chaired LEDAC himself, and along with his Cabinet he sat with representatives from the bicameral Congress. LEDAC identified and prioritized development initiatives that required legislation. The body also served as the main venue for consensus building between the executive and legislative branches of government. Philippines 2000 hinged on new supportive laws, and its success relied on a Congressional buy-in to a strategy collectively created by the full range of stakeholders.

It was thus of tremendous importance that the Electric Power Crisis Act (Republic Act 7648) was passed into law in April 1993. It was followed almost immediately by the Amended Build-Operate-Transfer Law in July 1993. Joint legislative and executive attention to power supply and distribution was imperative at the outset of the Ramos administration—electricity was in short supply and the inordinately frequent power outages were crippling the economy. The eight-to-twelve-hour daily brownouts brought on serious misery.

Under the Electric Power Crisis Act, five power plants were constructed. Fifteen power plants were established under the Amended BOT Law, with the effect of eliminating the power outages by December 1993, only a year into the presidency. Duty-free incentives for the importation of power generator sets were also allowed. President Ramos was thus able to deliver on his promise to have a bright Christmas in 1993.

This quick turn-around implied that President Ramos succeeded early in orchestrating the efforts of his Cabinet members to align with the MTPDP and its IP. The momentum was maintained, and a good thing too, because the physical infrastructure to support business and agro-industrial development had to be put in place. The MTPDP outlined the building strategies and President Ramos refined them according to insights he gained from traveling the country extensively. The bankrupt economy his administration inherited from the cumulative impact of the Martial Law years and a preceding presidency that was impacted by numerous coups d’état was reversed by private-public partnerships.

Another critical issue addressed by President Ramos was telecommunications. PLDT was the putative and de facto monopoly, stifling both competition and the populace with its antiquated, inefficient service. To highlight the inadequacy of this sector,  Singapore President Lee Kwan Yew famously remarked that “98% of Filipinos are waiting for a phone and 2% are waiting for a dial tone.” President Ramos and his advisors understood both the substantial and symbolic effects of displacing the monopoly of PLDT to usher in competition.

President Ramos issued Executive Order 59, which required telecom carriers to interconnect with one another. Subsequently, Executive Order 109 was issued mandating a Service Area Scheme that divided the country into 11 franchise areas, and gave licenses for international and then-emergent cellular telephony to new operators on the condition that they install an additional 300,000 to 400,000 landlines within their respective franchise areas over five years. President Ramos, through a strengthened legislative coalition, then codified and institutionalized further reforms into law through Republic Act 7925, which created the Department of Transportation and Communications as a policy making body, and the National Telecommunications Commission as its independent regulatory arm to enforce the new law. Parallel to this was an attrition strategy to compel PLDT leadership to yield to these reforms, using PLDT shareholdings sequestered from identified Marcos cronies to appoint technocrats who enabled the company to allow competition, interconnections, and a more innovative sector to flourish.

These comprehensive moves resulted in a quadrupling of telephone density, from two phones per 100 citizens in 1992 to eight in 1998. More phone lines were added in this period than in the previous fifty years under PLDT’s hegemony.  Furthermore, this ushered in a mobile phone revolution, with over 10 million cellular phone users by the time President Ramos ended his term in 1998, versus a paltry 56,000 in 1992.

In addition, President Ramos also ensured that Information Technology, prioritized by his Education and Science Secretaries, would be a critical driver to bridge gaps in science and technology. Building on the deregulation of the telecommunications industry, the President and his Cabinet clusters worked to both foster the creation of a semiconductor industry on the one hand, and widen and rapidly improve access to the internet on the other hand, through the creation of public and private sector-led Internet Service Providers (ISPs). With the launch and adoption of internet-enabled systems by pioneering educational institutions Ateneo de Manila University and University of the Philippines in March 1994, Science and Technology Secretary William Padolina observed that:

the network grew exponentially. We expanded it to 20 schools. Then, several ISPs just came up like mushrooms… toward the end of the Ramos administration, we had 150 ISPs. We were the fastest growing internet market here in Asia at the time…. Ramos encouraged IT investment… he saw to it that he would inaugurate every new IT factory in the Philippines. And I would be asked to come along.

In transportation, President Ramos issued Executive Order 185 in June 1994, which likewise de-monopolized shipping routes and established a demand-driven environment, while providing incentives for less profitable routes to empower more marginalized regions and integrate them into the Philippine economy. This de-monopolization of shipping routes spurred the entry of new investors and shipping firms which resulted in lower fare rates, safer transport, and a marked transformation in amenities and comfort for the seafaring population. A parallel set of reforms were undertaken for the domestic airline sector, which was dominated by one entrenched carrier—Philippine Airlines—until 1994 when the President, through the new DOTC, liberalized the sector and ushered in new entrants, a more broad-based tourism sector, and competitive standards, which are enjoyed by tourists and business travelers up to this day.

President Ramos visited thirteen out of the fifteen administrative regions of the country within his first one hundred days in office. Connecting with local government executives, he balanced his insights with meetings with non-government organizations (NGOs) and people’s organizations (POs). His familiarization tours had the same spirit of intelligence gathering from his military life, but this time modulated with a statesman’s interest in historical and environmental contexts. During these visits, he was known for his encouragement of dialogue among elected and appointed local government officials, grassroots organizations, local military and police units, and local business and entrepreneurial leaders.

President Ramos espoused the Cabinet Officers for Regional Development (CORD) System, established by President Aquino, which assigned specific Cabinet Secretaries as “champions” of specific regions. They identified their development requirements and coordinated with peers in the Cabinet to strategize action to address these needs. Championing particular strategies in response to particular challenges became a defining methodology of the Ramos administration. The Cabinet functioned cohesively, following a head of state whose governing style required military precision and complete staff work, close coordination, and sharp listening ears trained on the grassroots. President Ramos institutionalized a “People’s Day” in Malacañang, the presidential residence and seat of government. Joining his Cabinet on this day, they all responded to issues and concerns raised by the public. The fiesta-like physical layout consisted of booths providing employment assistance and advise, as well as medical services. Through all of these means, an in-depth appreciation of development requirements and shared aspirations was obtained. A Social Reform Agenda (SRA) was formulated in due course, after the flagship projects were identified and the overall framework of the MTPIP determined.

President Ramos gave his report to the nation—the Ulat sa Bayan—on 7 January 1993, where he set precise targets he thought attainable by the end of his term in 1998. He aimed for 10% real GNP growth and 6-8% GDP growth; USD 1,000 income per capita; and poverty incidence reduction from 39.2% in 1991 to about 30%. Embedded in the framework for an empowering economic development, these projections were reckoned achievable by his economic and social development managers, within the peace he was already winning. The Philippines was stabilizing politically and militarily as the targets were being set. Moreover, the rest of the world was enjoying its post-Cold War prosperity. The global financial crisis was still a few years in the future as the Philippines restarted its democratic project in the Ramos decade with an attendant economic agenda. As 1993 began to unfold, the Ramos infrastructure for community-driven growth only needed sufficient revenue to fuel successful implementation.

To fund the robust growth as envisioned, “big ticket items” were moved to the private sector, notably the following: Petron, the government run oil company; the Philippine National Bank (PNB); the flag carrier Philippine Airlines (PAL); and the Metropolitan Waterworks and Sewerage System (MWSS). Privatization and re-privatization filled the depleted government treasury. Privatization was also the key part of a culture of governance, based on the economic logic of liberalization, that in the decade before the global financial crisis was ascendant among the world’s democracies.

Increased efficiencies in taxation buttressed the logic of privatization. In February 1994, President Ramos established a presidential task force to develop the new Comprehensive Tax Reform Package (CTRP), which directed the formulation of an economically efficient and socially equitable tax system. The CTRP increased revenue by adjusting and simplifying the tax system, capturing undeclared taxes, and removing areas of discretion that allowed for tax evasion.

For urgent reasons, crucial tax measures were implemented even before the CTRP was finalized. These included a substantial increase in excise taxes on alcoholic beverages and cigarettes (Republic Act 8240, 22 July 1996), and an increase in value added tax from 4% to 10% (Republic Act 7716, 5 May 1994).

President Ramos entered his term having to address a Central Bank that was compromised during the later stage of the Marcos regime, and that struggled to cope with financial challenges during the Aquino presidency. He took the unprecedented move of creating a new Bangko Sentral ng Pilipinas (BSP) that, unlike the previous Central Bank, enjoyed fiscal and administrative autonomy. Republic Act 7653 or the New Central Bank Act was promulgated on 14 June 1993 with the support of LEDAC and Congress. Coming from the liabilities of the old Central Bank, the new BSP had a clean slate. The liberalization of the entry of foreign banks in 1994 resulted in ten of them establishing operations in the country. The liberalization of bank branching and the push for the establishment of thrift banks ensured that banking services were provided to the majority population that was heretofore underserved by financial institutions.

Putting the “house in order” also meant restructuring the medium- and long-term commercial bank debt of USD 4.5 billion. The Ramos administration entered into a restructuring agreement in December 1992 that generated savings for the Philippine government of approximately USD 1.5 billion and gross interest savings of about USD 1.8 billion over the next five years. Moreover, the merger of the Manila and Makati Stock Exchanges into a unified Philippine Stock Exchange (PSE) on December 1992—regarded broadly as a landmark achievement early in Ramos’ term of office—sent signals globally about Philippine readiness to streamline oversight of the corporate world. Among the changes that followed, the unified PSE eliminated inefficiencies in stock trading such as price arbitrage when separate markets listed the same issue or company. The PSE represented competence adequate to the end of a century of haphazard corporate growth.

The outcomes of these new or refreshed instrumentalities were consistently positive. The targets set for a six-year period were achieved midway through the term of the Ramos administration. Per capita income increased from USD 850.9 in 1992 to over the thousand-dollar target at USD 1,115.00 in 1995. GNP increased from USD 53.9 billion in 1992 to USD 76.2 billion by 1995. GDP increased from USD 55.6 billion to USD 78.4 billion. Social indicators also posted positive developments. Life expectancy increased from 65 years in 1992 to 66 years in 1995. Unemployment rates decreased from 9.8% in 1992 to 9.5% by 1995. And poverty incidence was at 35.5% by 1994.⁴³ The achievements were palpable. In 1993, the Philippines was recognized and granted a credit rating of BB- by Standard & Poor’s, with an outlook of stable. In subsequent years, Standard and Poor’s as well as Moody’s gradually adjusted the country’s credit rating to BB+ and the outlook improved from stable to positive until 1997. Importantly, the tax efficiency ratio was rosy, and the reform of the Board of Investments took hold.

The 1993 credit rating was a first-ever for the Philippines. The watershed event was mirrored in an assessment by Salomon Brothers in 1994. The highly regarded international investment house issued the following assessment of the Philippines:

[O]ver the past 18 months... the Philippines has made enormous progress towards setting the foundation for longer-term economic and political stability... better than at any time since 1986. Macroeconomic indicators compare favorably with... a number of investment-grade countries. The conditions for achieving sustainable growth are now firmly in place.

Foreign Direct Investments (FDI) flowed into the Philippines as the macro economic landscape improved dramatically. President Ramos’ term, from 1992-1998, registered a total of USD 8.9 billion of FDI. From a trickle of USD 226 million during the first year of his term, when these structural reforms were initiated, the annual FDI rose to an average of USD 1.45 billion per annum, with portfolio flows rising exponentially. Critical to this development was the President’s personal involvement as a self-styled “salesman in chief,” leading an aggressive economic diplomatic push to engage and entice international investors to direct capital and technology into the Philippines. Then-US Ambassador John Negroponte stated that Ramos’ presence in leading “Team Philippines” investment missions was the biggest factor in encouraging FDI in the country.

President Ramos was able to leverage the transformation of the former American bases in Subic and Clark into export-oriented economic zones with superior infrastructure and location. As a civil engineer himself, the President personally led the seamless conversion of these erstwhile military facilities into special economic zones under the auspices of the newly created Subic Bay Metropolitan Authority (SBMA) and the Clark Development Corporation (CDC), both of which operated under the Bases Conversion and Development Authority (BCDA).  With the success of these pilot hubs, President Ramos and his economic team engendered the passage of the Special Economic Zone Act of 1995, establishing the Philippine Economic Zone Authority (PEZA), which has since created, expanded, and overseen over a hundred strategic economic zones all over the country, catalyzing and decentralizing growth across the archipelago.

Parallel to these local efforts, President Ramos and his economic team shepherded the Philippines’ entry into the newly created World Trade Organization (WTO). This effort to become an active member in the global economy had to hurdle initial public opposition and skepticism at the Philippine Senate. Through the persistent efforts at public discourse and engagement, the President and his economic team managed to obtain the legislature’s ratification of the treaty allowing Philippine participation in the WTO in December 1994. The Ramos administration then had to overcome the challenge posed by a petition to nullify the agreement at the Supreme Court. The validity of the treaty was upheld by the Supreme Court on May 1997. This landmark entry into the WTO helped further integrate the country into the global economic community, facilitating access to trade and investment, and paving the way for other international and regional cooperation platforms such as APEC, AFTA, and BIMP-EAGA.

With greater global integration came the imperative to further empower local communities with the same structural reform. President Ramos’ term came on the cusp of the implementation of the watershed Local Government Code of 1991. The new President championed devolution and decentralization, and proceeded to remove deterrents to this trajectory. Through LEDAC, of which the League of Provinces was a key member, he galvanized a Congressional coalition to increase the share of local government units — the Internal Revenue Allotment or IRA — in the National Budget from five percent to as high as eighteen percent during his term in office. The establishment of the League of Barangays during Ramos’ presidency helped institutionalize and mobilize action, share best practices, and ensure empowerment at the last mile delivery level.

The Updated MTPDP 1996-98 was written at the midterm of his presidency, incorporating insights from the early implementation stage of the plan. President Ramos provided the introduction, writing that “[t]he updated MTPDP for 1996-98 documents the unfinished business, the remaining elements of the structural reform program that we must complete to maximize the success rate in battling the challenges of the new economic order.” The midterm achievements were vital in light of the Asian financial crisis of 1997,⁴⁴ when Asian economies were severely disrupted. Beginning as a currency crisis in Thailand when the Thai baht was unpegged from the US dollar, the sequence of events consisted of currency devaluations and massive capital flight, not only from Thailand. Other ASEAN countries, notably Indonesia which suffered an eighty percent decline in the value of its rupiah, sustained damage. The South Korean won depreciated in value by nearly fifty percent and the Malaysian ringgit by forty-five percent.

Collectively, the economies of these countries experienced a drop in capital outflows of more than USD 100 billion in the first year of the crisis. But because of the financial reforms and prudent monetary policies already in place, the Philippine economy escaped the recession experienced by its Asian neighbors. The Philippines managed to maintain inflation at a single digit level when, in general, inflation over the period 1993 to 1997 averaged seven and a half percent. The Philippines was recognized by the global financial and mainstream media as the best prepared and best positioned Asian nation to overcome the crisis.

In defense of the International Monetary Fund’s imposed discipline on indebted countries, The Wall Street Journal Asia wrote in 23 December 1997,

…[T]o judge by the health of the [International Monetary Fund]'s oldest Asian patient, the Philippines, the answer is that the cure can work, at least in some countries and under certain conditions…. But the IMF's cure set in over time in the Philippines and played a major part in pushing the nation away from the crony capitalism of the late dictator Ferdinand E. Marcos and toward a vibrant free market. The Fund also is credited with helping the Philippines avoid economic excesses that have toppled neighboring economies.

In fact, the global financial prescription adopted to reverse the downspin is based on what is now well-known as the ‘Manila Framework’ which calls for internal reforms within the severely affected economies and tighter cooperation worldwide.

In “Last Laugh for the Philippines,” 11 December 1997, The New York Times⁴⁵ wrote about a country turning a corner in the view of Western economies:

[O]ne-time joke economy (the Philippines) has avoided much of Asia's turmoil... [a]voiding the more damaging banking and real estate chaos that has afflicted other countries in East Asia.  

Meanwhile, International Herald Tribune showed in “Ranking of Nine Key Asian Economies,”, 17 September 1997,⁴⁹ the Philippines as the 5th best economy in the region—next to China, Hong Kong, Singapore, and Japan.  The ranking assessed “their prospects of overcoming the turmoil; grappling with loan losses in financial and property sectors, and recovering or maintaining their economic growth potential.”

One informed evaluation said that

“[i]n closing, Philippines 2000 achieved what it set out to do, i.e., demonstrate the capacity of the Philippines to compete globally. Real per capita income recovered and reached more than a thousand US dollars by 1998. Exports expanded enabling the Philippines to elude the painful impacts of the 1997 Asian financial crisis. When Ramos exited in 1998, he handed a long-term plan to the incoming president that embodied a 2020 vision, essentially a continuation of the comprehensive reform process aimed at transforming the Philippines into a newly industrializing economy by the year 2020.”⁵⁰