ASEAN KEY DESTINATIONS
Philippines lustre dims as investors look beyond Aquino
THE Philippines has been a magnet for foreign investment over the past five years, pushing its stock market to record highs and lowering the cost of its debt, but next year’s change of government is reintroducing an old risk - political uncertainty.
Since Benigno Aquino won the presidency in 2010 promising reform and clean government, the Philippines has outpaced its neighbours and drawn money into its markets.
But with elections next year, and global volatility already pushing investors to seek safe havens, the uncertainty over his successor is a reason for caution.
In the June quarter, foreign investors sold a net US$700 million of shares - the most since the Asian crisis in 1998. Still, they are net buyers of more than US$4.6 billion of stocks since Aquino assumed office.
But presidents are limited by law to a single six-year term, and Aquino’s final State of the Nation address on Monday will keep the succession issue prominent.
“The Philippines has, over a long period of time, suffered from cycles of better governance and poorer governance,” said John Forbes at the American Chamber of Commerce in Manila.
“It is in a cycle of better governance right now but it has not proven its ability to make that sustainable in the long run,” he said.
In 2010, the runner-up to Aquino in the presidential vote was Joseph Estrada, the former president who was forced from office in 2001 and jailed for plunder.
“The risk as we move forward into 2016 is that whoever takes over may not impart the same economic stability as this president,” JP Morgan economist Sin Beng Ong said.
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