Postcard From Manila by Matthews Asia
Newly elected Philippine President Rodrigo Duterte has clinched a victory on a platform around a tough approach to crime and corruption. Likened to U.S. presidential contender Donald Trump, Duterte is known for being vulgar and offensive. The mayor of the southern city of Davao, he has a reputation as an iron-fisted maverick, but has not taken a clear stand on major economic policies nor appointed a set of reputable policy advisers. Apart from economic policy, his authoritarian bent has raised fears that the progress in governance achieved over the past six years could be eroded. This has led to concerns in the business sector over potential parallels with the former Estrada administration, when the popular movie star led a disastrous presidency that saw him ousted after three years.
Is a Duterte presidency a tail risk to the market? In terms of economic policy, many would say that differences between the four presidential candidates have not been black and white, but rather shades of gray. For instance, all candidates supported further infrastructure investment, but while one favored railways or public-private partnerships (PPP), another favored agriculture or a non-PPP approach. Likewise, the candidates all supported increasing foreign direct investment, but while one wanted to amend the constitution to spur investment, another preferred a different method. Duterte, for all his provocative soundbites, sounds much like the other candidates when it comes to economic development.
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For his administration, Duterte has indicated he may appoint candidates with “economic minds,” given his self-admitted lack of economic expertise and has hinted at experts from past governments, with a focus on “managers and not politicians.” A credible election process coupled with a strong popular mandate should translate to strong political capital, which will be helpful in pushing for continued reform and marshaling support from the legislature. Duterte is expected to be inaugurated at the end of June for a single six-year term, and we will watch his policy agenda closely for clues to the next phase in the Philippines’ development trajectory.