Background Notes: Philippines, October 1998
Released by the Bureau of East Asian and Pacific Affairs
U.S. Department of State
OFFICIAL NAME: Republic of the Philippines
Area: 300,000 sq. km. (117,187 sq. mi.).
Cities: (1997) Capital--Manila (pop. 10.4 million in metropolitan
area). Other cities--Davao (1.3 million), Cebu (3.1 million).
Terrain: Islands, 65% mountainous, with narrow coastal lowlands.
Climate: Tropical, astride typhoon belt.
Nationality: Noun--Filipino(s). Adjective--Philippine.
Population (1997): 73 million.
Annual growth rate: 2.3%.
Ethnic groups: Malay, Chinese.
Religions: Catholic 83%, Protestant 9%, Muslim 5%, Buddhist and
Languages: Pilipino (based on Tagalog), national language;
English, language of government and instruction in higher
Education: Years compulsory--6. Attendance above 97% in
elementary grades, 55% in secondary grades. Literacy--94%.
Health: Infant mortality rate (1997)--35.2/1,000. Life expectancy
Work force (1997): 30 million. Agriculture--47%. Government and
services--37%. Industry and commerce--16%.
Constitution: February 11, 1987.
Branches: Executive--president and vice president. Legislative--
bicameral legislature. Judiciary--independent.
Administrative subdivisions: 13 regions and Manila, 78 provinces,
61 chartered cities.
Political parties: Laban Ng Masang Pilipino (LAMP), Lakas Ng
Bayan (Lakas/NUCD), and other small parties.
Suffrage: Universal, but not compulsory, at age 18.
GDP (1997): $82 billion.
Annual growth rate (1997): 5.2%.
GDP per capita (1997): $1,145.
Natural resources: Timber, copper, nickel, iron, cobalt, silver,
Agriculture: Sugar, coconut products, rice, corn, pineapples,
bananas, aquaculture, mangoes, pork, eggs.
Industry: Types--textiles and garments, pharmaceuticals,
chemicals, wood products, food processing, electronics assembly,
petroleum refining, fishing.
Trade (1997): Exports--$25.2 billion. Imports--$36.4 billion.
The majority of Philippine people are of Malay stock, descendants
of Indonesians and Malays who migrated to the islands long before
the Christian era. The most significant ethnic minority group is
the Chinese, who have played an important role in commerce since
the ninth century, when they first came to the islands to trade.
As a result of intermarriage, many Filipinos have some Chinese
and Spanish ancestry. Americans and Spaniards constitute the next
largest alien minorities in the country.
About 90% of the people are Christian; most were converted and
Westernized to varying degrees during nearly 400 years of Spanish
and American rule. The major non-Hispanicized groups are the
Muslim population, concentrated in the Sulu Archipelago and
western Mindanao, and the mountain groups of northern Luzon.
Small forest tribes live in the more remote areas of Mindanao.
About 87 native languages and dialects are spoken, all belonging
to the Malay-Polynesian linguistic family. Of these, eight are
the first languages of more than 85% of the population. The three
principal indigenous languages are Cebuano, spoken in the
Visayas; Tagalog, predominant in the area around Manila; and
Ilocano, spoken in northern Luzon. Since 1939, in an effort to
develop national unity, the government has promoted the use of
the national language, Pilipino, which is based on Tagalog.
Pilipino is taught in all schools and is gaining acceptance,
particularly as a second language.
English, the most important non-native language, is used as a
second language by almost half of the population, including
nearly all professionals, academics, and government workers.
Spanish is spoken by few Filipinos, and its use is decreasing.
Despite this multiplicity of languages, the Philippines has one
of the highest literacy rates in the East Asian and Pacific area.
About 90% of the population 10 years of age and older are
The history of the Philippines may be divided into four distinct
phases: the pre-Spanish period (before 1521); the Spanish period
(1521-1898); the American period (1898-1946); and the years since
The first people in the Philippines, the Negritos, are believed
to have come to the islands 30,000 years ago from Borneo and
Sumatra, making their way across then-existing land bridges.
Subsequently, people of Malay stock came from the south in
successive waves, the earliest by land bridges and later in boats
called barangays. The Malays settled in scattered communities,
also called barangays, which were ruled by chieftains known as
datus. Chinese merchants and traders arrived and settled in the
ninth century A.D. In the 14th century, Arabs arrived,
introducing Islam in the south and extending some influence even
into Luzon. The Malays, however, remained the dominant group
until the Spanish arrived in the 16th century.
Ferdinand Magellan claimed the Philippines for Spain in 1521, and
for the next 377 years, the islands were under Spanish rule. This
period was the era of conversion to Roman Catholicism. A Spanish
colonial social system was developed, complete with a strong
centralized government and considerable clerical influence. The
Filipinos were restive under the Spanish, and this long period
was marked by numerous uprisings. The most important of these
began in 1896 under the leadership of Emilio Aguinaldo and
continued until the Americans defeated the Spanish fleet in
Manila Bay on May 1, 1898, during the Spanish-American War.
Aguinaldo declared independence from Spain on June 12, 1898.
Following Admiral Dewey's defeat of the Spanish fleet in Manila
Bay, the United States occupied the Philippines. Spain ceded the
islands to the United States under the terms of the Treaty of
Paris (December 10, 1898), which ended the war.
A war of resistance against U.S. rule, led by Revolutionary
President Aguinaldo, broke out in 1899. Although Americans have
traditionally used the term "the Philippine Insurrection,"
Filipinos refer to these hostilities as the Philippine-American
War(1899-1902). In 1901, Aguinaldo was captured and swore
allegiance to the United States, which ultimately crushed the
U.S. administration of the Philippines was always declared to be
temporary and aimed to develop institutions that would permit and
encourage the eventual establishment of a free and democratic
government. Therefore, U.S. officials concentrated on the
creation of such practical supports for democratic government as
public education and a sound legal system.
The first legislative assembly was elected in 1907. A bicameral
legislature, largely under Philippine control, was established. A
civil service was formed and was gradually taken over by the
Filipinos, who had effectively gained control by the end of World
War I. The Catholic Church was disestablished, and a considerable
amount of church land was purchased and redistributed.
In 1935, under the terms of the Tydings-McDuffie Act, the
Philippines became a self-governing commonwealth. Manuel Quezon
was elected president of the new government, which was designed
to prepare the country for independence after a 10-year
transition period. World War II intervened, however, and in May
1942, Corregidor, the last American stronghold, fell. U.S. forces
in the Philippines surrendered to the Japanese, placing the
islands under Japanese control.
The war to regain the Philippines began when General Douglas
MacArthur landed on Leyte on October 20, 1944. Filipinos and
Americans fought together until the Japanese surrender in
September 1945. Much of Manila was destroyed during the final
months of the fighting, and an estimated 1 million Filipinos lost
their lives in the war.
As a result of the Japanese occupation, the guerrilla warfare
that followed, and the battles leading to liberation, the country
suffered great damage and a complete organizational breakdown.
Despite the shaken state of the country, the United States and
the Philippines decided to move forward with plans for
independence. On July 4, 1946, the Philippine Islands became the
independent Republic of the Philippines, in accordance with the
terms of the Tydings-McDuffie Act. In 1962, the official
Independence Day was changed from July 4 to June 12,
commemorating the date independence from Spain was declared by
General Aguinaldo in 1898.
The early years of independence were dominated by U.S.-assisted
postwar reconstruction. A communist-inspired Huk Rebellion (1945-
53) complicated recovery efforts before its successful
suppression under the leadership of President Ramon Magsaysay.
The succeeding administrations of Presidents Carlos P. Garcia
(1957-61) and Diosdado Macapagal (1961-65) sought to expand
Philippine ties to its Asian neighbors, implement domestic reform
programs, and develop and diversify the economy.
In 1972, President Ferdinand E. Marcos (1965-86) declared martial
law, citing growing lawlessness and open rebellion by the
communist rebels as his justification. Marcos governed from 1973
until mid-1981 in accordance with the transitory provisions of a
new constitution that replaced the commonwealth constitution of
1935. He suppressed democratic institutions and restricted civil
liberties during the martial law period, ruling largely by decree
and popular referenda. The government began a process of
political normalization during 1978-81, culminating in the
reelection of President Marcos to a 6-year term that would have
ended in 1987. The Marcos' government's respect for human rights
remained low despite the end of martial law on January 17, 1981.
His government retained its wide arrest and detention powers.
Corruption and favoritism contributed to a serious decline in
economic growth and development under Marcos.
The assassination of opposition leader Benigno (Ninoy) Aquino
upon his return to the Philippines in 1983,after a long period of
exile, coalesced popular dissatisfaction with Marcos and set in
motion a succession of events that culminated in a snap
presidential election in February 1986. The opposition united
under Aquino's widow, Corazon Aquino, and Salvador Laurel, head
of the United Nationalist Democratic Organization (UNIDO). The
election was marred by widespread electoral fraud on the part of
Marcos and his supporters. International observers, including a
U.S. delegation led by Senator Richard Lugar (R-Indiana),
denounced the official results. Marcos was forced to flee the
Philippines in the face of a peaceful civilian-military uprising
that ousted him and installed Corazon Aquino as president on
February 25, 1986. Fidel Ramos was elected president in 1992.
Early in his administration, Ramos declared "national
reconciliation" the highest national priority. He legalized the
communist party and created the National Unification Commission
(NUC) to lay the groundwork for talks with communist insurgents,
Muslim separatists, and military rebels. In June 1994, President
Ramos signed into law a general conditional amnesty covering all
rebel groups, as well as Philippine military and police personnel
accused of crimes committed while fighting the insurgents. In
October 1995, the government signed an agreement bringing the
military insurgency to an end. Although the other peace talks
have not fully resolved outstanding differences and many of the
underlying social problems have yet to be addressed, the
communist and Muslim insurgencies no longer pose a threat to the
government. A peace agreement with one major Muslim insurgent
group was signed in 1996.
GOVERNMENT AND POLITICAL CONDITIONS
The Philippines has a representative democracy modeled on the
U.S. system. The 1987 constitution, adopted during the Aquino
administration, established a presidential system of government
with a bicameral legislature and an independent judiciary. The
president is limited to one 6-year term. Provision also was made
in the constitution for autonomous regions in Muslim areas of
Mindanao and in the Cordillera region of northern Luzon.
The Philippine Senate is elected at large. There are currently 23
senators rather than the usual 24, since Senator Gloria
Macapagal-Arroyo became Vice President in the May 1998 elections
and a replacement could not be chosen without a national
election. Two hundred six of a possible 250 members of the House
of Representatives are elected from the single-member districts.
The remainder of the House seats are designated for sectoral
representatives elected at large through a complex "party list"
Joseph Estrada took office June 30, 1998, succeeding Fidel Ramos,
under whom he had served as Vice President. Despite coalitions
and party identification, members of the Philippine congress tend
to be independent, changing party affiliation with ease.
Following his election, President Estrada formed the LAMP party
out of a tri-partite alliance that had helped him get elected.
Some members of former President Ramos's Lakas Party defected to
LAMP. President Estrada has publicly declared that the battles
against poverty and corruption will be his highest priority.
Principal Government Officials
President--Joseph E. Estrada
Vice President--Gloria Macapagal-Arroyo
Foreign Secretary--Domingo Siazon, Jr.
Ambassador to the United States--Raul Chaves Rabe
Permanent Representative to the UN--Felipe Mabilangan
The Republic of the Philippines maintains an embassy in the
United States at 1600 Massachusetts Avenue NW, Washington, DC
20036 (tel. 202-467-9300). Consulates general are in New York,
Chicago, San Francisco, Los Angeles, Honolulu, and Agana (Guam).
Since the end of the Second World War, the Philippine economy has
had a mixed history of growth and development. Over the years,
the Philippines has gone from being one of the richest countries
in Asia (following Japan) to being one of the poorest. Growth
immediately after the war was rapid, but slowed over time. A
severe recession in 1984-1985 saw the economy shrink by more than
10%, and perceptions of political instability during the Aquino
administration further dampened economic activity. During his
administration, President Ramos introduced a broad range of
economic reforms and initiatives designed to spur business growth
and foreign investment. As a result, the Philippines saw a period
of rapid sustained growth, but the spreading Asian financial
crisis has slowed economic development in the Philippines once
again. President Estrada has repeatedly said that he will resist
protectionist measures and continue the reforms begun by the
Important sectors of the Philippine economy include agriculture
(making up one fifth of economic production) and industry
(particularly food processing, textiles and garments, electronics
and automobile parts). Most industries are concentrated in the
urban areas around metropolitan Manila. Mining is also important
in the Philippines, which possesses significant reserves of
chromite, nickel and copper. Recent natural gas finds off the
islands of Palawan add to the country's substantial geothermal,
hydro and coal energy reserves.
For the past year, the Philippines has been less severely
affected by the Asian financial crisis than its neighbors. While
that remains true, the continuing crisis has taken its toll on
the Philippines. The government has recently reiterated its
target of 2-3% real GNP growth (about one percentage point lower
for GDP), but private forecasts range as low as negative 2% real
GDP growth, or lower. Technically, the Philippines is already in
recession, having seen negative GDP growth (quarter on quarter,
based on seasonally adjusted figures) for the first two quarters
Agricultural output in the first half of 1998 was down 7.5% from
the same period in 1997, because of the El Nino-related drought.
Agriculture accounts for one fifth of the Philippine economy. A
sharp rebound in the second half of 1998 is possible, but is not
The Philippines continues to record monthly export figures up
significantly on year-earlier levels, but examination of the
month by month export figures had suggested that the export boom
is running out of steam. Monthly exports were roughly flat from
September 1997 to June 1998, but have resumed growth since then.
Electronic and auto parts exports in particular still record
strong growth, but reports from the U.S. suggests slowing demand
for computers and other electronic equipment. The Philippines'
traditional exports are stagnant or declining.
The financial sector has been buffeted by higher interest rates
which, combined with the region-wide economic slowdown, have
pushed the level of commercial banks' non-performing loans
(NPL's) to 9.6% of total loan portfolio. This is still far below
the levels in several neighboring countries. Analysts expect the
level of NPL's to reach 15%, a level which will be painful but
will not threaten collapse of the financial sector.
The Philippine peso has lost over 40% of its value vis-ˆ-vis the
U.S. dollar since mid-1997. The peso will probably continue to
weaken as the government and the central bank concentrate
monetary policy on reducing interest rates. The Philippines'
inflation rate of near 10% means that continued depreciation will
be necessary to maintain the currency's relative value. Despite
these near-term problems, the Philippines' longer-term prospects
remain bright. The Aquino and Ramos administrations opened up the
relatively closed Philippine economy and provided a firmer base
for sustainable economic growth. President Estrada and his
cabinet have stated repeatedly that they will continue with, and
expand, liberalization and market-based policies and reforms. If
the new government is able to overcome transition-related
uncertainties resulting from sometimes conflicting policy
signals, it can successfully build on its predecessors'
accomplishments to position the Philippines for a period of
Agriculture and Forestry
Arable farmland comprises an estimated 26% of the total land
area. Although the Philippines is rich in agricultural potential,
inadequate infrastructure, lack of financing, and past government
policies have limited productivity gains. Philippine farms
produce food crops for domestic consumption and cash crops for
export. The agricultural sector employs about 47% of the work
force but only provides about 22% of GDP.
Decades of uncontrolled logging and slash-and-burn agriculture in
marginal upland areas have stripped forests, with critical
implications for the ecological balance. The government has
instituted conservation programs, but deforestation remains a
With its 7,107 islands, the Philippines has a very diverse range
of fishing areas. Notwithstanding good prospects for the
aquaculture subsector, the fishing industry continues to face a
bleak future due to destructive fishing methods, a lack of funds
and an absence of government support.
Industrial production is centered on processing and assembly
operations of the following: food, beverages, tobacco, rubber
products, textiles, clothing and footwear, pharmaceuticals,
paints, plywood and veneer, paper and paper products, small
appliances, and electronics. Heavier industries are dominated by
the production of cement, glass, industrial chemicals,
fertilizers, iron and steel, and refined petroleum products.
The industrial sector is concentrated in the urban areas,
especially in the metropolitan Manila region and has only weak
linkages to the rural economy. Inadequate infrastructure,
transportation, communication, and electrical power shortages
have so far inhibited faster industrial growth.
The country is well-endowed with mineral and thermal energy
resources. A recent discovery of oil and gas reserves off Palawan
Island offers potential in that sector, as well. Philippine
chromite, nickel, and copper deposits are among the largest in
the world. Other important minerals include iron, silver,
manganese, coal, gypsum, sulfur, mercury, and gold. Significant
deposits of clay, limestone, dolomite, feldspar, marble, silica,
and phosphate exist. Fifty-nine percent of total mining
production is accounted for by the mining of copper concentrate
In steady decline since 1989, the value of both mineral
production ($810 million) and mineral exports ($672 million) of
the Philippine mining industry declined by 14% in 1992. Low metal
prices, high production costs, and lack of investment in
infrastructure have contributed to the mining industry's decline.
In its foreign policy, the Philippines cultivates constructive
relations with its Asian neighbors, with whom it is linked
through membership in ASEAN, the ASEAN Regional Forum (ARF) and
the Asia-Pacific Economic Cooperation (APEC) forum. The
Philippines is a member of the UN and some of its specialized
agencies, the Non-Aligned Movement (NAM)(since 1992) and has
observer status in the Organization of Islamic Conference (OIC).
The Philippines has played a key role in ASEAN in recent years
and also values its relations with the countries of the Middle
East, in no small part because hundreds of thousands of Filipinos
are employed in that region. The fundamental Philippine
attachment to democracy and human rights is reflected in its
U.S.-Philippine relations are based on shared history and
commitment to democratic principles, as well as on economic ties.
The historical and cultural links between the Philippines and the
U.S. remain strong. The Philippines modeled its governmental
institutions on those of the U.S., and continues to share a
commitment to democracy and human rights. At the most fundamental
level of bilateral relations, human links continue to form a
strong bridge between the two countries. There are an estimated 2
million Americans of Philippine ancestry in the United States and
more than 100,000 American citizens in the Philippines.
Until November 1992, pursuant to the 1947 Military Bases
Agreement, the United States maintained and operated major
facilities at Clark Air Base, Subic Bay Naval Complex, and
several small subsidiary installations in the Philippines. In
1983 and 1988, the United States and the Philippines completed
successful reviews and extensions of the Military Bases
Agreement, as amended. In August 1991, negotiators from the two
countries reached agreement on a draft treaty providing for use
of Subic Bay Naval Base by U.S. forces for 10 years. The draft
treaty did not include use of Clark Air Base, which had been so
heavily damaged by the 1991 eruption of Mt. Pinatubo that the
U.S. decided to abandon it.
On September 16, 1991, the Philippine Senate rejected the bases
treaty, and despite further efforts to salvage the situation, the
two sides could not reach agreement. As a result, the Philippine
Government informed the U.S. on December 6, 1991, that it would
have 1 year to complete withdrawal. That withdrawal went smoothly
and was completed ahead of schedule, with the last U.S. forces
departing on November 24, 1992. On departure, the U.S. Government
turned over assets worth more than $1.3 billion to the
Philippines, including an airport and ship-repair facility.
Agencies formed by the Philippine Government have converted the
former military bases for civilian commercial use, with Subic Bay
serving as a flagship for that effort.
The post-U.S. bases era has seen U.S.-Philippine relations
improved and broadened, focusing more prominently on economic and
commercial ties while maintaining the importance of the security
dimension. Philippine domestic political stability has resulted
in increased U.S. investment in the country, while a strong
security relationship rests on the U.S.-Philippines Mutual
Defense Treaty. Although U.S. aid to the Philippines has taken on
a far less prominent role than in the past, assistance programs
continue, highlighted by the July 1996 opening of a major airport
and harbor project in General Santos City with U.S. Agency for
International Development funding. Then-President Ramos
underscored the strength of the bilateral relationship by
declaring July 4, 1996 to be Philippine-American Friendship Day
in commemoration of the 50th anniversary of Philippine
independence. Ramos visited the United States in April 1998.
Trade and Investment
Two-way U.S. trade with the Philippines amounted to over $16.7
billion in 1997. The strong trade ties between the U.S. and the
Philippines is reflected in the fact that some 22% of the
Philippines' imports in 1997 came from the U.S., and about 41% of
its exports were bound for America. Key exports to the U.S. are
semiconductor devices and computer peripherals, automobile parts,
electric machinery, textiles and garments, and coconut oil. In
addition to other goods, the Philippines imports raw and semi-
processed materials for the manufacture of semiconductors,
electronics and electrical machinery, transport equipment and
cereals and cereal preparations.
U.S. investment in the Philippines is estimated at some $2.5
billion, slightly more than 29% of all foreign investment in the
Philippines. Since the late 1980's, the Philippines has
committed itself to reforms that encourage foreign investment as
a basis for economic development, subject to certain guidelines
and restrictions in specified areas. Under President Ramos, the
Philippines expanded reforms, opening the power generation and
telecommunications sectors to foreign investment, as well as
securing ratification of the Uruguay Round agreement and
membership in the World Trade Organization. As noted earlier,
President Estrada has said his administration will continue such
reforms, a position which generally enjoys domestic political
During the last few years, the relatively closed Philippine
economy has been opened somewhat by foreign exchange
deregulation, foreign investment and banking liberalization, and
tariff and market barrier reduction. President Estrada continues
to support further economic reform, but a reluctant congress and
vested interests at times have stalled additional progress. Trade
opportunities for exporters exist in a range of industries,
especially the power generation sector.
Principal U.S. Embassy Officials
Ambassador--Thomas C. Hubbard
Consul General--Caryl Courtney
The U.S. embassy is located at 1201 Roxas Boulevard, Manila; tel.
(63)(2)521-7116; fax 522-4361; telex 722-27366 AME PH.
TRAVEL AND BUSINESS INFORMATION
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Trips for Travelers publication series, which contain information
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Emergency information concerning Americans traveling abroad may
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Travelers can check the latest health information with the U.S.
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DC 20402, tel. (202) 512-1800.
Information on travel conditions, visa requirements, currency and
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Further Electronic Information
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