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Economy

The Philippines: A toothless tiger?

The Philippines is one of the fastest growing economies in Southeast Asia. But economic growth remains one-sided and so far hasn't resulted in a decline in poverty levels. DW takes a look at the nation's growth story.

Philippine economy booming

Ninja Santiago is an entrepreneur running a so-called Sari store in a small Philippine town, which is about two hours' drive from the capital Manila. The middle-aged woman is proud of her shop, which is located near a busy highway.

The store is covered by a shed roof. It has clay-paved ground and a couple of wooden shelves, cans and noodle soups lie at a corner. With this business, Santiago has been able to feed her family and support her sick father.

Pointing to a dark corner, Santiago says she started the business with just a tray. "I packed up a few goods and began selling right here in front of the house," she told DW. Her initial investment amounted to around $40 (29.2 euros) to purchase the goods.

Shampoo in sachets

Roughly a million such tiny shops operate in the Philippines, supplying the population with basic necessities, albeit in very small quantities. Their customers are mostly poor Filipinos who buy shampoos not in bottles, but in small pouches.

Bam Aquino

Bam Aquino is a staunch supporter of socially responsible enterprises

"These are sachets," said Santiago, pointing to the plastic bags that are hanging in a kind of leash. Each bag contains shampoo that is sufficient for one shower.

Big supermarket chains have been hesitant to expand into rural areas of the Philippines due to a lack of sufficient infrastructure and the population's limited purchasing power.

But the situation can change quickly. According to a recent study by the consulting firm IHS, the Southeast Asian nation's per capita income - which currently stands at $2,800 dollars - is set to rise to $5,800 dollars by 2024, underpinned by strong economic growth. The economy is estimated to expand by well over 5 percent this year and prospects for the coming years remain bright.

Growth does not reach all

However, growth remains one-sided as poverty in the country hasn't declined so far. The country's population is around 100 million and is growing by a further two million year after year. While 28 percent of the population is considered poor, 10 million people are either unemployed or underemployed.

Rice growing in the Philippines

Agriculture is no doubt a major pillar of the Philippines' economy

Bam Aquino has been a senator in the Philippines since last year. He hails from one of the country's big political families. DW met him at his official residence in Manila. At 37, Aquino is the youngest of 24 senators and is a controversial figure. He wants to see the government support social enterprises. Aquino founded a social enterprise that he worked on for six years, hoping to garner societal change, before entering political office.

Fight against poverty

"Here in the Philippines we tried so many things and I always say you can´t use old solutions to solve old problems. The reason why these problems are still here is because your solutions don´t work. So you need new solutions to solve old problems and part of these new solutions is social enterprises, inclusive supply chains, inclusive businesses."

Aquino's company is called Hapinoy, which roughly translates as the "lucky Filipino." After his election as senator Aquino passed the company along to his partner. Some 30,000 sari-sari shops are represented by the firm. Aquino and Mark Ruiz founded Hapinoy seven years ago in order to support small business owners, whom they train in product selection, marketing and book-keeping.

Manila construction site

The economic upswing hasn't meant that overall poverty levels have gone down

The business owners can also get loans, which help the sari-sari shops survive. Many families rely on the shops for their own well-being. Today some 30,000 small shops are members of Hapinoy. Profits are re-routed back into the company or donated to a charitable foundation. Aquino says his aim is not profit but to help provide poorer entrepreneurs with an income. That, he says, is the point of a social enterprise.

Growth for all

"The number-one goal is inclusive growth, because growth that is not inclusive will just really be for a few and that is not acceptable for Filipinos."

Ninja Santiago is also a member of Hapinoy. She has already completed a number of training courses and knows where to find superior products. Recently she even procured a large refrigerator. Now she is able to sell chilled soft drinks, which are in high demand as summer temperatures rise.

Santiago's income has tripled in recent years to about 200 euros a month. With the money she makes from her business she is able to finance her father's visits to a doctor. For this reason she is regarded as a role-model entrepreneur in her community.

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