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COUNTRY PROFILES


PROFILE

Country Profile

Area: 300,000 sq km (115, 830 sq miles), 7107 islands
Population: 98 million (2012 estimate)
Capital city: Manila, part of the Metro Manila conurbation (total population 12 million, 2012 estimate)
People: Filipinos are predominantly of Malay descent, although many have mixed ancestry, with Chinese and Spanish the largest influences.
Languages: Filipino, based on Tagalog, is the national language. English is also an official language. Over 150 native languages and dialects are spoken.
Religion(s): Roman Catholic (83%), Protestant (8%), Muslim (4.6%), Iglesia ni Cristo (2.3%) (National Statistical Co-ordination Board, 2008)
Currency: Peso
Major political parties:
- Liberal Party (LP) headed by Manuel Roxas II, party of President Aquino.
- Lakas-Kampi Christian Muslim Democrats (Lakas Kampi CMD) headed by former President Gloria Macapagal-Arroyo
- Nationalist People's Coalition (NPC) headed by Eduardo 'Danding' Cojuangco Jr.
- Nacionalista Party headed by Senator Manuel Villar
Party allegiances are fluid and elections are more about personalities than party manifestos. A large number of sectoral and cause-orientated groups compete for 20% of Congressional seats reserved for ‘party-list’ groups.
Government: Republic
Head of State and Head of Government: President Benigno “Noynoy” Aquino III
Vice President: Jejomar Binay
Foreign Minister: Albert del Rosario
Membership of international groupings/organisations: United Nations (UN), Association of Southeast Asian Nations (ASEAN), Asia Pacific Economic Co-operation (APEC), Asian Development Bank (ADB), Group of 77 at the United Nations (G77), International Atomic Energy Agency (IAEA), International Labour Organisation (ILO), International Monetary Fund (IMF), Inter- Parliamentary Union (IPU), Non Aligned Movement (NAM), World Health Organisation (WHO), World Trade Organisation (WTO), World Bank.

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ECONOMY

Basic economic facts (2011)

GDP: $ 208 billion
GDP Per Capita: $2,122
GDP per capita (adjusted for PPP): $3,546.2 (2009)
Annual growth: GDP 3.7%
Average rate of inflation: 4.8%
Major industries: Electronic components, Services (including call centres and business process outsourcing), Garments
Major trading partners: United States, Japan, European Union, China, Singapore, Taiwan, Hong Kong
Major investors: European Union (particularly UK, Germany and Netherlands), United States, Japan, Hong Kong, Singapore
Exchange Rate: £1 = approx. PhP 69 (average2011)
The Philippine economy grew a decent 3.7% in 2011 after roaring back in 2010 with 7.3% growth. Growth was supported by services growth at 5% and 3% agricultural growth while industries grew 2%. The Philippines has recently become a favourite destination of portfolio investments on account of greater confidence in the new government and sound macroeconomic fundamentals.

Remittances will continue to support growth. Almost a quarter of the country’s labour force works abroad and remittances (about 11% of GDP) prop up the balance of payments and support consumption and investment growth, particularly in the booming real estate sector. In 2011, remittances grew by 7% to $20 billion.

In 2010, then recently elected President Aquino has pledged to cut the deficit, though he hopes that better enforcement of tax collection will account for most of the decline. He held off increasing tax rates until the effects of administrative efficiency initiatives are seen. With good results from its tax administration efforts, the government now targets to index alcohol and tobacco taxes to inflation (partly due to losing its appeal at the WTO), increase mining taxes, and rationalise fiscal incentives.

Looking ahead, the challenge for the government is to encourage foreign and domestic investment, which have remained stubbornly low, and translate growth into poverty reduction. Inclusive growth will be the main theme of the next 6-year development plan – underpinned by increased spend for education and health and infrastructure investment through Public-Private Partnerships. The transparency initiatives in the budget and the government’s fight to rid itself of corrupt public officials are already increasing business confidence domestically and abroad – the stock market has doubled and gaining momentum, FDI applications have also increased.

Potential growth drivers

Promotion of public-private partnerships
Thrust towards infrastructure development
Power sector privatisation
Availability of natural and mineral resources
Booming sectors e.g. BPO/IT outsourcing, education, energy, tourism

Potential growth challenges

Tax revenue leakage
Slow infrastructure development
Slow privatisation
World fuel and food prices
Continued violence and instability put off potential investors
Widespread corruption

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HISTORY

Recent history

Following World War II the Philippines gained independence from the United States of America in 1946. It retained close ties with the former colonial power, including through a Mutual Defence treaty and, until 1992, the presence of US military bases in the Philippines. Philippine political, administrative and legislative structures are closely based on their American counterparts. However politicians are drawn almost exclusively from the wealthy elite, many of them descended from Spanish settlers, and beneath the democratic veneer many aspects of the Spanish-era feudal structure remain.

In 1972 President Marcos, then nearing the end of his second elected term, declared Martial Law. The pretext was a series of bombings in Manila, some of which were later alleged to have been staged. During the next 14 years cronyism, corruption and patronage – never far from the surface in Philippine politics – became blatant. Marcos remained in power until 1986, when he was overthrown by the non-violent People Power Revolution – also known as the EDSA Revolution after the highway where protestors gathered. Marcos fled to Hawaii, where he died in 1989.

Marcos was succeeded by President Corazon Aquino, whose husband and vocal opponent of Marcos, Senator Benigno “Ninoy” Aquino, was assassinated in 1983. President Aquino supervised the introduction of a new constitution and the restoration of democratic politics, but she failed to tackle the vested interests of the political elite. Her Presidency was characterised by repeated coup attempts. The long running communist insurgency continued, as did the armed struggle for an independent Moro nation on the southern island of Mindanao. However Aquino’s term did see agreement reached with the US to withdraw from their military bases in the Philippines.

President Aquino’s successor, Fidel V. Ramos, was an ex-General whose switch of allegiance played a key role in the People Power Revolution. His Presidency (1992-1998) was characterised by relative peace and prosperity until the 1997 Asian Financial Crisis, which affected the Philippines along with neighbours including Thailand and Indonesia. Ramos reoriented the Philippines towards Asia in general and ASEAN in particular. He initiated successful peace talks with the Moro National Liberation Front (although splinter group the Moro Islamic Liberation Front (MILF) continued the armed struggle) and began talks with the communists.

Joseph Estrada, an ex-movie star with a populist pro-poor manifesto, was elected President in 1998. He quickly gained a reputation for corruption and incompetence. Impeachment proceedings brought against him by the House of Representatives were blocked by the Senate, leading to massive street protests (known as EDSA II). Estrada was ousted in January 2001 and was later charged with plunder. His conviction in 2007 was followed swiftly by a pardon.

Following Estrada’s removal and in line with the Constitution, Vice-President Gloria Macapagal Arroyo was sworn in as President. She was subsequently elected for a full term in 2004, although allegations that these elections were rigged dogged her term in office. And she is now (2012) under arrest on charges of election fraud.

Benigno “Noynoy” Aquino III, son of the late former President Cory Aquino, won the 2010 presidential elections. He was inaugurated on 30 June marking a smooth transition of power to a popularly elected president.

Longer historical perspective

The earliest inhabitants of the Philippines arrived from the Asian mainland around 30,000 years ago. They settled in scattered communities, developing distinctive languages, customs and traditions. Although displaced and discriminated against by later waves of settlers, many of these communities survive, with over 100 ethnolinguistic groups recognised by the Philippine National Commission on Indigenous Peoples.

The majority of Filipinos trace their ancestry from Malays who began arriving in the islands around 3000 BC. By the 14th century the Philippines engaged in extensive trade with China, India, Indonesia and Japan. Islam was introduced by Arab traders from Indonesia and became the dominant religion in the south.

In 1521 Ferdinand Magellan and his expedition became the first Europeans to visit the Philippines. Involvement in a conflict between two local leaders led to Magellan’s death, but members of the expedition went on to complete the first circumnavigation of the world.

The first permanent Spanish settlement in the Philippines was established in 1565. Spanish rule continued for over 300 years, apart from a brief period during the Seven Years War when the British occupied Manila and assumed sovereignty from 1762 - 1764. The Spanish integrated the Philippines into their global trading routes, created a nation-wide administrative system of provinces, municipalities and villages that survives largely unchanged and introduced Western-style education. They also introduced Catholicism, which was widely adopted.

Throughout the period of Spanish rule there were sporadic localised attempts to overthrow the colonial government. A nationalist movement developed in the late nineteenth century, led mainly by educated Filipinos who had spent time in Europe including national hero Jose Rizal, who lived in London’s Primrose Hill between 1888-89, a fact celebrated today by a blue plaque on the house in which he lived. The Philippine Revolution began in 1896. In 1898 the Spanish-American War initially led the Americans to ally themselves with the Philippine revolutionaries but the US later excluded them from the capture of Manila. At the end of the war Spain ceded the Philippines to the United States of America in return for $20 million, leading to a new round of hostilities between the US and the revolutionaries.

By 1901 the US had defeated the rebels and begun a series of reforms aimed at preparing the Philippines for eventual independence. These included a switch to English as the official language, disestablishment of the Catholic Church and the introduction of a civil government, as well as an elective political system. In 1935 the Commonwealth of the Philippines was established, with a plan for transition to full independence after 10 years.

World War II interrupted these plans. The Japanese invasion of the Philippines began 10 hours after the attack on Pearl Harbour in December 1941. By May 1942 US and Filipino troops were defeated, although resistance by guerrilla groups continued throughout the war. US troops returned to retake the islands in October 1944 and the Japanese formally surrendered on 2 September 1945. An estimated 1 million Filipinos were killed during the war and the historic Walled City of Manila (Intramuros) was devastated by aerial bombardment.

Elections were held in April 1946 and Manuel Roxas became the first President of the independent Republic of the Philippines on 4 July 1946.
BBC News Country Timeline: Philippines (http://news.bbc.co.uk/hi/english/world/asia-pacific/newsid_1264000/1264117.stm)

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INTERNATIONAL RELATIONS

Relations with the United States remain of major importance to the Philippines. The US is the largest bilateral trading partner and source of foreign investment. Although the US no longer has a permanent military presence in the Philippines, there are annual joint exercises and the US provides support for Philippine counter-terrorism efforts.

China is also increasingly important as both a trading partner and a source of development assistance. There is an established and wealthy Chinese-Filipino community in the Philippines that predates the first Spanish settlement. Chinese interest is welcomed as a counterbalance to US influence. Tensions remain however over the Spratly Islands, where the two countries have competing territorial claims.

The Philippines was a founder member of the Association of South East Asian Nations (ASEAN) in 1967. It remains actively engaged with this and other international organisations such as the UN, where it is a member of the G77 group of developing nations. Current international negotiations of particular concern include the WTO Doha Development round and the UNFCCC climate change negotiations.

The President of the May 2010 Nuclear Non-Proliferation Treaty Review Conference was Ambassador Cabatulan from the Philippines. He won praise for his work to ensure a successful and balanced outcome.

Ensuring the safety and wellbeing of Overseas Filipino Workers (OFWs) is a key foreign policy concern. Over 1 million Filipinos leave the country each year for short-term contracts abroad, primarily in North America and the Middle East. There are currently approximately 250,000 Filipinos living in the UK.

Philippine relations with the UK

The UK and the Philippines enjoy a close and substantive bilateral relationship. Areas of common concern include climate change, human rights, economic reform, good governance, counter terrorism, conflict prevention and peace building. Trade and investment links are strong.

In December 2009 the UK accepted an invitation to join an International Contact Group of states and NGOs tasked with supporting the peace process between the MILF and the government in order to build a lasting peace in Mindanao in the Southern Philippines.
The UK also supports a range of projects in the Philippines to promote economic reform, counter corruption, deal with climate change, resolve conflict, counter terrorism and promote human rights.

The British Council has an office in Manila. They run an extensive programme of English language examinations. They also work with the Philippine government and others on projects in areas such as education, governance and inter-faith dialogue. Together with the British Embassy they select Filipino candidates for the Foreign Office funded Chevening scholarship schemes.

There is a small British community in the Philippines of around 15,000. About 70,000 British nationals visit the Philippines annually. The Filipino community in the UK is currently estimated at around 250,000. Many Filipinos work in the health and care-giving sectors but they are also employed in sectors such as finance, law and technology. The UK is the leading European destination for Filipino students in higher education.

Diplomatic links

The first British Consul arrived in the Philippines in 1844. In July 1946 the UK was one of the first countries to establish diplomatic relations following Philippine independence. A new purpose-built Embassy building in Manila was officially opened in McKinley Hill, Taguig on October 20, 2008. That date is commemorated annually as RP-UK Friendship Day. There is also an Honorary Consulate in Cebu. The current Ambassador, Stephen Lillie, took up his post in August 2009.

Former President Arroyo met Her Majesty the Queen when she visited the UK in December 2007. The most recent UK ministerial visit to the Philippines was in December 2012 by FCO Minister of State for Asia, Jeremy Browne MP.

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GEOGRAPHY

The Philippines consists of over 7,100 islands covering 300,000 square kilometres (just less than the British Isles) divided into three main areas: Luzon (which includes Manila) in the north, the Visayas in the central area, and Mindanao to the south. The archipelago is 65% mountainous and 35% coastal lowlands. The islands are volcanic in origin and there are around 20 active volcanoes. Earthquakes are relatively frequent although most do not cause significant damage. The country has a tropical climate with a rainy season, although showers are possible at all times of the year. Situated on the edge of the South China Sea, the country is prone to typhoons. While on average 8 or 9 make landfall each year, the exact number is variable. The Philippines is particularly vulnerable to the effects of climate change, given the low-lying nature of many of its islands.

Bilateral trade

UK-Philippine trade relations are good. The balance of trade over the last few years has been in favour of the Philippines.

There has been a growing trend in UK exports to the Philippines. For 2010, a total export of goods only to Philippines was £285m, an increase of 11% on the same period in 2009. Top UK exports include: electrical apparatus/appliances and spares, medical and pharmaceutical products, manufactured metals, office and data processing machinery, general industrial machinery and power generating machinery.

One of the thrusts of the Philippine government is the promotion of Public-Private Partnerships (PPPs) to help with the much needed infrastructure development. The government has set up a PPP Centre to oversee implementation. Focusing on the immediate priorities, there are “High Value Opportunities” for UK companies in major infrastructure projects, notably for rail, roads and airports. Other projects include power, water, construction, oil and gas, healthcare, education. Other areas offering opportunities for UK companies include: financial services, environmental technologies, education and training, and consumer goods. Roadshows to promote PPP and investment opportunities are being planned for several countries, including the UK.

UK imports in 2010 were valued at £493m, a rise of 32% on 2009. Top UK imports include: electrical and office equipment and machinery, apparel, miscellaneous manufactured material, road vehicles, fish products, textile fibres, yarn and made up articles.

In 2010, the Chartered Institute of Management Accountants (CIMA) entered into a partnership with the Asian Institute of Management (AIM) and the De La Salle University (DLSU) for the delivery of their courses. These follow CIMA’s signing of a Memorandum of Understanding with the Philippine Institute of Certified Public Accountants in 2009.
JaoTech Limited, was able to secure business deals with the two biggest hospitals in the Philippines and found a local distributor for their “smart terminals.”
IT company, ITRS, is presently setting up an office in the country.

Design firm, Broadway Malyan, was working on major projects with one of the Philippines’ major developers, Century Properties.

Bilateral investment

The UK is among the leading foreign investors in the Philippines. Data from the Philippine Central Bank shows that the UK regularly tops lists of portfolio investors, due largely to the pre-eminence of the UK as a global financial centre. Britain also has major direct investments in the Philippines concentrated in power, energy, water, business process outsourcing and financial services.

Cumulatively, the UK is the largest investor in the Philippines for the past decade. Combined net foreign direct and net portfolio investments from 1999-2009, amount to $9.7 billion ($8.7 billion in portfolio investments and $930 million in FDI).

In 2010 B/E Aerospace UK announced plans to set up a major manufacturing a facility in the Philippines to produce aircraft galleys for the Airbus A-350. The UK electronics company, STI, recently established a manufacturing facility in Cebu to supply to both the domestic and regional electronics markets.

There are currently around 200 British companies active in the Philippines, ranging from big multinationals to small one-man shows. Major British companies operating in country include Shell, HSBC, Standard Chartered, Pru Life UK, Diageo, GlaxoSmithKline, AstraZeneca, Unilever, G4S and Logica. Several UK brands have also been successfully established locally, including Debenhams, M & S, Topshop, Burberry, Paul Smith, Jaguar, Mini, Body Shop, Dorothy Perkins, Speedo, Clarks and Lush.

UKTI Country Profile Philippines
(https://www.uktradeinvest.gov.uk/ukti/appmanager/ukti/countries?_nfls=false&_nfpb=true&_pageLabel=CountryType1&navigationPageId=/philippines)

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TRADE AND INVESTMENT

UK-Philippine trade relations are good. The balance of trade over the last few years has been in favour of the Philippines.

There has been a growing trend in UK exports to the Philippines. For 2010, a total export of goods only to Philippines was £285m, an increase of 11% on the same period in 2009. Top UK exports include: electrical apparatus/appliances and spares, medical and pharmaceutical products, manufactured metals, office and data processing machinery, general industrial machinery and power generating machinery.

One of the thrusts of the Philippine government is the promotion of Public-Private Partnerships (PPPs) to help with the much needed infrastructure development.  The government has set up a PPP Centre to oversee implementation.  Focusing on the immediate priorities, there are “High Value Opportunities” for UK companies in major infrastructure projects, notably for rail, roads and airports. Other projects include power, water, construction, oil and gas, healthcare, education.  Other areas offering opportunities for UK companies include: financial services, environmental technologies, education and training, and consumer goods. Roadshows to promote PPP and investment opportunities are being planned for several countries, including the UK.

UK imports in 2010 were valued at £493m, a rise of 32% on 2009.  Top UK imports include: electrical and office equipment and machinery, apparel, miscellaneous manufactured material, road vehicles, fish products, textile fibres, yarn and made up articles.

In 2010, the Chartered Institute of Management Accountants (CIMA) entered into a partnership with the Asian Institute of Management (AIM) and the De La Salle University (DLSU) for the delivery of their courses. These follow CIMA’s signing of a Memorandum of Understanding with the Philippine Institute of Certified Public Accountants in 2009.
JaoTech Limited, was able to secure business deals with the two biggest hospitals in the Philippines and found a local distributor for their “smart terminals.”
IT company, ITRS, is presently setting up an office in the country.

Design firm, Broadway Malyan, was working on major projects with one of the Philippines’ major developers, Century Properties.

Bilateral investment

The UK is among the leading foreign investors in the Philippines. Data from the Philippine Central Bank shows that the UK regularly tops lists of portfolio investors, due largely to the pre-eminence of the UK as a global financial centre. Britain also has major direct investments in the Philippines concentrated in power, energy, water, business process outsourcing and financial services.

Cumulatively, the UK is the largest investor in the Philippines for the past decade. Combined net foreign direct and net portfolio investments from 1999-2009, amount to $9.7 billion ($8.7 billion in portfolio investments and $930 million in FDI).

In 2010 B/E Aerospace UK announced plans to set up a major manufacturing a facility in the Philippines to produce aircraft galleys for the Airbus A-350.  The UK electronics company, STI, recently established a manufacturing facility in Cebu to supply to both the domestic and regional electronics markets.

There are currently around 200 British companies active in the Philippines, ranging from big multinationals to small one-man shows. Major British companies operating in country include Shell, HSBC, Standard Chartered, Pru Life UK, Diageo, GlaxoSmithKline, AstraZeneca, Unilever, G4S and Logica.  Several UK brands have also been successfully established locally, including Debenhams, M & S, Topshop, Burberry, Paul Smith, Jaguar, Mini, Body Shop, Dorothy Perkins, Speedo, Clarks and Lush.

UKTI Country Profile Philippines
(https://www.uktradeinvest.gov.uk/ukti/appmanager/ukti/countries?_nfls=false&_nfpb=true&_pageLabel=CountryType1&navigationPageId=/philippines)

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POLITICS

Recent political developments

In 10 May 2010, the country held its first automated national election, which was widely viewed as a success. Over 17,000 candidates stood for elected office, including 9 Presidential candidates. Benigno “Noynoy” Aquino III won the elections with approximately 40% of the vote, beating his nearest rival by 15%. He took office on 30 June 2010 and has made fighting corruption, stimulating employment and increasing foreign investment his key policy priorities.


System of government/elections

The Philippines' political system is modelled on that of the US. There is an executive Presidency and a two-chamber legislature (Congress), comprising the Senate and the House of Representatives. The Presidential term of office is six years, with no possibility of re-election.

The Senate has 24 members, elected for six-year terms on the basis of national voting. The House of Representatives has 220 directly elected members representing Congressional districts, and up to 55 “party list” members whose organisations are voted for alongside district representatives. Representatives are elected for three-year terms.
Elections for seats in the House of Representatives and half the Senate are held every three years. Provincial and municipal elections are held at the same time.

Internal conflicts

The Philippines is affected by two internal armed conflicts. The Communist Party of the Philippines (CPP) and its armed wing, the New People’s Army (NPA), seek a “national democratic revolution”. NPA units are present in rural areas throughout the Philippines.

The NPA carries out guerrilla attacks on Philippine military and police forces. Companies and landowners that refuse demands for “revolutionary taxes” have also had their property and equipment attacked. Peace talks between the Government and the NPA resumed in February 2009 after a seven year gap since the last round of talks. The second conflict is between the government and armed groups seeking an independent Muslim state on the southern island of Mindanao. Mindanao was once predominantly Muslim but migration from other parts of the Philippines has changed the religious and ethnic balance. In 1996 a peace deal was signed with the Moro National Liberation Front (MNLF), creating the Autonomous Region of Muslim Mindanao (ARMM). However a splinter group, the Moro Islamic Liberation Movement (MILF), refused to settle for autonomy and thus continued the armed struggle.

A cease-fire with the MILF was signed in 2003 but peace negotiations broke down in August 2008. An initial outbreak of violence led to large scale displacement of civilians. Hostilities ceased in August 2009 and peace talks resumed in December 2009. In 2009 the UK was invited by both sides to join an International Contact Group of states and NGOs tasked with supporting the negotiations. Talks under the Arroyo administration ended with a declaration of continuity and agreement to maintain the ceasefire. Talks resumed on the eight month of the Aquino administration. Some members of the MILF have broken off from the leadership saying the latter has reneged on its position for an independent state.

Terrorist group Abu Sayyaf (ASG),known to have links with Jamaah Islamiyah, is responsible for incidents of kidnap-for-ransom and bombing of public areas in south western Mindanao. They are alleged to be hiding in MILF and MNLF-controlled areas.. Although the Armed Forces have had significant success in crippling terrorist groups by going after their leaders, there is still ahigh threat from terrorism throughout the Philippines.

Please see our Travel Advice (http://www.fco.gov.uk/en/travel-and-living-abroad/travel-advice-by-country/asia-oceania/philippines/) for further information.

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HUMAN RIGHTS

The Philippines is a functioning democracy with a flourishing civil society and a lively independent media. It is one of only a few countries in South-East Asia to have abolished the death penalty and has acceded to most UN Human Rights Treaties. It performs particularly strongly in areas such as gender equality and migrants’ rights.

The Philippines has been outspoken on the human rights situation in neighbouring countries, e.g. Burma, and strongly advocated the creation of the ASEAN Inter-governmental Commission on Human Rights (AICHR).

While formal institutions of democracy are firmly established, domestic implementation of legislation designed to protect human rights is often poor. International concern has been expressed about the numbers of unexplained killings and disappearances in the Philippines, and the government’s apparent inability to address this problem. Extra judicial killings have decreased markedly over recent years, but there is still international concern about the lack of prosecutions. In November 2009, 57 civilians were killed in the worst incidence of political violence in recent Philippine history. The ongoing trial is widely seen as a test case for the Philippine judicial system in dealing with political killings. Other human rights concerns include use of torture and poor detention conditions, electoral fraud and violence, recruitment of child soldiers by insurgent groups, child labour, violence against women and sexual abuse of children, including by travelling sex offenders, a slow justice system and lack of transparency in governance.

When President Benigno Aquino III assumed office in June 2010, he declared the protection and promotion of human rights an essential component of his overall vision of just, transparent and pro-poor government.

Philippine Commission on Human Rights (http://www.chr.gov.ph/)

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Last Updated: March 2012

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