Study: Phl has highest income inequality rate in ASEAN

August 6, 2011

MANILA (Xinhua) — The Philippines has the highest income inequality rate among members of the Association of Southeast Asian Nations (ASEAN), a recent study made by a local research firm has revealed.

The study, conducted by the Stratbase Research Institute, showed that the Philippines registered a Gini coefficient of 44 percent last year, higher than Thailand’s 42.5 percent, Indonesia’ s 39.4 percent, Malaysia’s 37.9 percent and Vietnam’s 37.8 percent.

“Gini coefficient” is the most common measure of income inequality developed by Italian statistician and sociologist Corrado Gini.

According to Victor Andres Manhit, Stratbase president, the result of the study showed that the gap between the rich and the poor in the Philippines is more pronounced than in the other countries in Southeast Asia.

Manhit said that the present government should address this huge disparity of income because this would breed “social tension and even political instability.”

If left unchecked, Stratbase said, this wide chasm could cause “the polarization of society and the creation of social tensions that would eventually undermine the process of growth and development.”

It said that inequality and marginalization can worsen without proper policies in place.

“The elected leadership must firmly hold the line against vested interests and political machinery that are poised to advance their position to the grave detriment of the majority,” Stratbase said.

Studies conducted by multilateral lenders such as the Asian Development Bank and the World Bank, as well as the United Nations Development Program, National Statistics Office and National Statistical Coordination Board also showed grave income inequality in the Philippines.

In a study, the ADB said that the vast inequality in the Philippines is not only in income but also in land distribution, welfare and human development.

The ADB study showed that the richest 10 percent of Filipino families were “raking in more than a third of the country’s total income.”

The World Bank report also showed that the richest 20 percent of the population in the Philippines “outspent” the poorest 20 percent by more than eight times.

“This huge disparity in expenditures can cause problems such as the lack of legitimacy, the weakening of social cohesion and the outbreak of social strife. [It can] exacerbate the existing differences and conflict between the poor and the non-poor,” the World Bank report said.

In another study unveiled on Tuesday in Tokyo, the ADB said that countries in Asia could be as wealthy as Europe by the mid- century, but only if it tackles key challenges from income inequality, corruption and climate change.

The latest ADB report, entitled “Asia 2050: Realizing the Asian Century,” said that based on current trends, Asia will make up half the world’s economic output by 2050, and another 3 billion people will have joined the ranks of the affluent, their incomes matching those of Europe today.

But the ADB study also pointed to a paradox — the fact that the world’s fastest-growing region, dubbed “Factory Asia”, is still home to almost half the world’s absolute poor, who earn less than 1.25 U.S. dollars a day.

Asia’s decades-long march to prosperity, the study said, is being led by seven economies with more than three billion people between them — China, India, Indonesia, Japan, South Korea, Thailand and Malaysia.

Under the best-case scenario, Asia’s combined gross domestic product (GDP) — also including poorer nations such as Laos and Pakistan — will rise from 17 trillion U.S. dollars last year to 174 trillion dollars in 2050, with per capita GDP of 40,800 dollars in current terms.

Aside from rising income inequality within and among countries, the ADB report also highlighted other key challenges, such as poor governance and corruption in many of them, and intensifying regional competition for finite natural resources.

In the worst case, it warned, Asia could face “a perfect storm” of bad macro-economic policies, unchecked financial sector exuberance, conflict, climate change, natural disasters, changing demography and weak governance.

To make growth sustainable, the study said, Asian countries must address poverty, equality of access and opportunity, and focus on education, entrepreneurship, innovation and technological development.

The ADB study said that countries in the region must emulate the past successes of top performers Japan, South Korea and Singapore by promoting inclusive and equitable growth.

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