Business in our country is deeply influenced by politics. Major investment decisions will probably be delayed until after the May 9 election.
Investors need time to digest the meaning of the election results. They also want to see how the implementing rules for the investor-friendly reforms of the Duterte administration, such as the revised Public Service Act, take shape.
While no investor will talk in public about preferences, Bloomberg and Nomura did their surveys of investors in the Philippines. Both found out that for investors, Vice President Leni Robredo is emerging as their top pick to oversee an economic rebound.
Bloomberg’s survey of 28 investors and analysts – when asked whom they think is the best person to lead the Southeast Asian economy – gave Robredo the highest score of 106. Sen. Panfilo Lacson came in second with a score of 91, followed by Manila Mayor Isko Moreno with 81. Marcos and Senator Manny Pacquiao were at the bottom with a score of 46 and 44, respectively.
Respondents were asked to score the five candidates from five to one, with five as the most positive.
Nomura found out the same thing… that Robredo will likely be a more “market-friendly” president than Ferdinand “Bongbong” Marcos, Jr.
Nomura Global Research said that Robredo is “likely seen” more qualified to oversee the post-pandemic recovery of the country, citing the presidential candidate’s strategic roadmap that focuses on vital sectors, such as health and education.
“Marcos Jr., in our view, will likely be regarded as less market-friendly than Robredo, particularly when it comes to experience at the national level and in articulating a strategy for the country to recover from the pandemic,” the report said.
Fitch Solutions had this observation: “Although Ferdinand Marcos Jr. retained a wide lead against second-placed Leni Robredo according to recent polls, we believe that a Marcos victory is still not guaranteed…
“We continue to see uncertainty surrounding the outcome of the presidential election in the Philippines. This is despite recent opinion polls suggesting that frontrunner Ferdinand ‘Bong Bong’ Marcos Jr. maintained a wide lead over second-placed outgoing Vice President Leni Robredo…
“Robredo appears to be gaining political momentum based on anecdotal evidence, as Marcos has repeatedly missed national presidential debates and interviews by media platforms.
“Robredo has won endorsements from former Cabinet members of the Ramos (1992-1998) and Aquino (2010-2016) administrations, civil society groups, and retired military officials amongst others. Moreover, several media outlets have reported that Robredo’s recent rallies, including in her opponents’ traditional bailiwicks, have drawn enormous crowds.
“Despite uncertainty in the run-up to the May 9 presidential election, we expect broad policy continuity in the Philippines after the election, as the policy stance of leading candidates are not too dissimilar and are broadly aligned with the outgoing Duterte administration.”
Marcos could have done better in terms of trust among investors if he didn’t decline opportunities to pitch his program of government in various public fora. It need not be debates. Speaking before business groups would have been enough. Right now, investors and analysts, local and foreign, have no idea what the economic thinking of Mr Marcos is.
And unlike Ms. Robredo who was endorsed by hundreds of economists, no economist of note had so far been identified with Mr. Marcos.
This was unlike in the case of Duterte. It was known early in the campaign that his boyhood friend, Sonny Dominguez was most likely to be finance secretary. Sonny is well respected in the business community as a competent former agriculture secretary and chairman of Philippine Airlines.
There are, however, rumors that a senior executive of BDO Unibank, his classmate in La Salle Greenhills, will be named Secretary of Finance in a Marcos presidency. The banker mentioned also recently retired as head of institutional banking at BDO.
But no one knows the potential Cabinet choices, specially of the forerunner. And that’s a key problem of analysts trying to give political risk advice to clients. I heard that when Duterte economic managers called for a briefing of economic advisers of the key candidates to facilitate transition, lawyers showed up for Marcos Junior.
Teneo, a New York-based consultancy, pointed out, Cabinet composition will be key in maintaining confidence that relatively moderate economic policies will be implemented.
“The challenge is determining his broad policy preferences. Marcos Jr. has avoided many interviews or debates that could challenge him, preferring to stick to friendly media.
“But while this may make sense electorally, it diminishes the amount of information available on how he views important policy issues, especially in the context of his father’s history and how much it informs his own views on economic management.
“Marcos Sr. nationalized industries, elevated his cronies in key sectors and created state enterprises that had substantial roles in the economy. Some of these policies could be attributed to the import substitution wave of the 1970s.
“However, it is also largely unknown how many of these Marcos Jr. sees as reflecting his father’s legacy, and whether he will adopt derivatives of these policies.
“For instance, Marcos Jr. has already said that he is in favor of an oil price subsidy similar to the one created by Marcos Sr. in 1984. He has also spoken of the benefits of his father’s interventionist policies in the rice sector, from regulating prices to retail distribution. Whether he is simply doing so to ride on the nostalgia that seems to have generated some support for his candidacy or he believes that they are genuinely beneficial remains to be seen.”
Yet, if the Marcos boys just looked around more carefully, there are credible economists who are quietly inclined to see his presidency as an opportunity to continue structural reforms.
Said one to a private group of CEOs: “A BBM presidency is not invested in the 1987 Constitution and the Cory CARP Law. It has no leftists in its alliance and may be more open to amending them to continue the next stage of reforms.”
The next President must hit the ground running on economic reforms or doom our country’s effort to keep up with the fast growing ASEAN economies.
Boo Chanco’s email address is bchanco@gmail.com. Follow him on Twitter @boochanco