The economy grew at an enviable 6.2 percent a year during the term of President Aquino—the highest in four decades. Local and foreign economists forecast this to continue through the medium term, except for one caveat: It will depend on the conduct and results of the May 9 elections. The worry is that an electoral exercise that is not clean and peaceful—where the next leader is without a clear mandate, or the results are far from credible—could cause political instability and a leadership crisis that might wipe out the broad economic gains of the past six years.
The frontrunner in the last presidential surveys was Davao City Mayor Rodrigo Duterte. The race for vice president became a showdown between administration candidate Rep. Leni Robredo and Sen. Bongbong Marcos. The rise of the controversial politician from Mindanao and of the son and namesake of ousted dictator Ferdinand Marcos easily raised one question: If the economy has been expanding robustly and outperforming those of our neighbors, and voters necessarily seek continuity of economic progress, doesn’t logic dictate that the administration candidates lead in the run-up to the elections? The brief answer is that the positive side involves the macroeconomy, but if one were to look at the small parts, not all is well especially among the middle class and the CDE income classes. This is particularly true for residents of Metro Manila, where problems involving traffic and public transportation have gone from bad to worse.
For big business in general, the ideal scenario is a victory for the administration party as it will enhance continuity especially of good governance reforms that have resulted in better government finances that, in turn, led to the current stable economic conditions. These include historic low inflation and interest rates that translated to reduced costs of borrowing, strong foreign exchange reserves, and prudent monetary and fiscal policies, which led the country to survive volatilities in global markets.
However, the Aquino administration is not without its failings, including the persistently high poverty level of a little more than 20 percent of the population. But its conditional cash transfer program has eased the plight of this sector aside from making sure that the children of the program beneficiaries are going to school. Another major failing involves infrastructure and public spending. The Philippines has long suffered from congested airports, dilapidated highways, horrendous traffic jams and a very slow internet service. This acute lack of necessary infrastructure has affected the economy, with monstrous traffic jams estimated to result in daily economic losses of P3 billion.
But the bigger picture is that the Aquino administration has done much to stabilize and grow the economy. What is critical now is whether the next president will build on this administration’s positive economic gains and address its shortcomings, which basically involved inaction in areas like infrastructure and public transport. In short, President Aquino’s successor must address what Makati Business Club chair Ramon del Rosario Jr. termed “the indecisiveness and ineptitude that have deterred our progress.”
The new leader must also acknowledge the need to fight the corruption that persists in the government, expand the Aquino administration’s economic reform agenda to make the gains of progress trickle down to the middle class and the poor, review constitutional limits on foreign ownership to dismantle inefficient monopolies and duopolies that burden ordinary consumers, address the political patronage that has kept the rural areas in the grip of poverty, and put more focus on the neglected farm sector, which accounts for more than a third of the population.
But first, the most critical issue: The electoral process should be credible, honest and clean. (The one positive aspect of national elections is that heavy campaign spending historically stimulates strong economic activity and politicians’ doles provide an unconventional form of income redistribution.) At the end of the day, it will be good for business if the conduct and results of the elections are acceptable to the people. Otherwise, results are likely to be contested, triggering a protracted legal process or, worse, mass protests. We cannot keep going back to square one every six years.