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Business Matters

Crossroads

As early as December last year, I had speculated in my commentary piece titled “Crystal Ball” that “I foresee President Duterte gaining majority control of both chambers of Congress after the 2019 midterm elections.”

That’s exactly what has happened, and while I don’t claim to be prescient, I did base my speculation on elements that supported an educated guess, foremost of which was that, in my many years of public service through several administrations and presidents, this was the first time I had observed a Philippine president sustain an 80-percent approval rating all the way through the middle of his term.

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Without much doubt, President Duterte connects well with the majority of Filipinos who have for some time longed for a leader who could match their perception of a champion of the poor and their concerns with decisive action more than patronizing words and oratorical finesse. In more recent times, they thought they had found that combination in the form of action stars from the film industry, but instead found themselves frustrated and disillusioned. In President Duterte, however, it appears they believe they’ve found the real deal.

The midterm election results position the President in effective suasion, if not outright influence, over all three branches of government as he begins the second half of his term. It is a vital crossroads not just for him but the entire nation as well. We’ve all experienced being at such a crossroad more than once in our postwar economic history, but it seems that time and again our leaders had wasted the opportunity to take the road less traveled that would lead the country toward the greatness that its potential could have more easily brought it, and in a much shorter period of time.

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Can President Duterte reverse this sordid trend? For his and the nation’s sake, we should all hope so. He does have a good hand of aces to parlay on the economic front, namely a continuing healthy economic growth rate (still around 6 percent), an improved upgraded Philippine competitiveness ranking (up by four ranks), a benign inflation rate (less than 3 percent), strong prospects for greater direct foreign investments inflow from more diversified sources and a heightened possibility of domestic economic diversification via the opening of business and job opportunities, stimulated by the continued emphasis on infrastructure-building.

These are all advantages to nurture and build upon, not laurels upon which to rest, particularly as storm clouds gather on the external front with continuing uncertainties in both the United States, which is undergoing a prolonged cultural and political civil war, and Europe with its Brexit struggle (among many others), plus the ongoing US-China trade war. At this crossroads, most economic analysts warn that the wrong road to choose would be one replete with mistargeted subsidies, regulatory uncertainty in long-term contracts and the continuing temptation to shift to federalism.

The road to enduring progress requires finalization of tax reform, a more urgent implementation of the infrastructure program and a focused identification of our comparative advantages in an evolving world order that will see the rise of Asia in this century, combined with a more precisely targeted development of these advantages such as transforming the agricultural sector toward high productivity and agro industry, maximizing our tourism potential, decongesting our urban centers, enhancing our global positioning in cyberspace services and technology, among others.

At the same time, a strategy of transforming externally generated challenges into opportunities—by means of trade and investment policies that would promote the Philippines as an attractive investment and trade partner to the United Kingdom as it Brexits, and China as it continues its upward trajectory, while maintaining a balanced external funding inflow from diversified sources such as Japan, the United States and Asean—will allow our economy to reap economic benefits while avoiding excessive dependence on a few.

It would then be really more fun in the Philippines even for the Filipino majority, at last.

Roberto F. de Ocampo, OBE, is a former finance secretary and was Finance Minister of the Year in 1995, 1996 and 1997.

Business Matters is a project of the Makati Business Club ([email protected]).

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TAGS: Midterm elections, Philippines, Rodrigo Duterte
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