ASEAN KEY DESTINATIONS
Cautious optimism prevails after Philippine elections
THE election of controversial politician Rodrigo Duterte to the nation’s highest office has so far had little impact on the robust Philippine economy. In fact, quite the reverse has happened since the polls on Monday.
Investors have cheered the outcome, pushing the benchmark stock market index to its highest levels in nine months. The peso has also strengthened against the US dollar, marking its best performance in six weeks.
There were widespread concerns going into this week’s polls that a win for Duterte, a tough- talking mayor from the southern city of Davao more concerned with crime busting, would undermine the strong gains in the economy over the last six years under current President Benigno Aquino.
Those worries are now giving way to cautious optimism.
“He has not laid out any clear economic plans but, generally, we are positive about the economy under him (Duterte),” said Joyce Ramos of SB Securities in Manila.
“Duterte is pragmatic and he isn’t going to run the economy to the ground. He will appoint the right people to the Cabinet to handle the economy and focus on peace and security,” said David T del Rosario of CLSA Philippines in Manila.
But details remain sketchy about Duterte’s economic vision.
In recent days, he has made some remarks that he would favourably look at reviewing limits on foreign ownership in some sectors to attract foreign direct investment and push for the award of infrastructure projects to generate economic growth.
He has also identified close friend and businessman Carlos Dominguez as his leading choice for either the finance or transportation portfolio. Dominguez - who served in the Cabinet under former presidents Fidel Ramos and Corazon Aquino - is highly regarded to deal with these tough portfolios, particularly transportation, which analysts say is riddled with corruption and needs urgent attention.
Some economists have suggested that Duterte opt for continuity in key government portfolios to try and heal the rifts following a very divisive election. They noted that he secured only approximately 38 per cent of the popular vote while two of his closest rivals, who are aligned to Aquino, together accounted for more than 45 per cent.
The closely watched portfolios are the Department of Finance headed by Cesar Purisima, the Department of Budget and Finance chaired by Florencio Abad and the Department of Trade and Industry led by Adrian Cristobal. Amando Tetangco, whose term as central bank governor expires next year, will not be affected in any post-election reshuffle.
Duterte will be inheriting a robust economy that is expected to expand by 6.5 per cent this year. Many analysts say the economy will continue on its expansion track because remittances from Filipinos working abroad and the country’s robust business process outsourcing sector, often referred to as BPO, are likely to be immune from any post-election hiccups.
“Our big concern is politics,” said CLSA’s del Rosario, referring specifically to Duterte’s avowed plan to amend the Constitution, which could lead to a very nasty public backlash and trigger impeachment moves.
Duterte is due to be sworn into office on June 30 for a six-year term.
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