MANILA, Philippines – The foreign policy of the Duterte administration risks alienating its major economic partners and creating an “unwelcoming” environment to foreign investors, a private think tank disclosed yesterday.
Last week, Duterte said he was not worried about driving away European and American investors with his foul mouth as he could always turn to China and Russia for investments.
Dindo Manhit, president of Stratbase-ADR Institute (ADRi) for Strategic and International Studies, said the President’s independent foreign policy seemed to realign the Philippines’ relations with other countries.
“While the President’s mandate to define the country’s approach to foreign relations is unassailable, the government should nevertheless reconsider its strategy in terms of potentially alienating established economic and security partners,” Manhit said.
“The Philippines should maintain its good relations with trusted friends and pursue constructive ties with all of its neighbors, in both word and deed,” he said.
The S&P Global Ratings had earlier expressed concern over diminishing predictability of government economic policies.
Despite its concern, S&P affirmed the Philippines’ long-term credit rating of BBB and short-term credit rating of A-2, with a stable outlook.
Duterte shrugged off S&P’s concern, saying the Philippines was formulating “a new foreign policy.”
European business leaders said a rift with the European Union (EU) would have negative consequences for the Philippine economy.
Duterte used the F-word at the EU and flashed the dirty finger in remarks at a gathering of local officials in Davao City after the European Parliament criticized him for the rising death toll on his war on illegal drugs.
According to Manhit, the government’s 10-point economic agenda may be put at risk, given the current policy.
“An unwelcoming atmosphere in the Philippines could easily dampen the country’s economic relationships. In the United States, as elsewhere, private investors have reportedly grown skittish about the Philippines’ prospects,” he said.
The US is the Philippines’ largest source of private investment and second-largest export market after Japan.
“Unfortunately, in President Duterte’s case, the term ‘independent’ appears to be shorthand for pushing the US away and pulling China closer. Although his spokesmen and secretaries would issue follow-up statements to clarify the President’s statements, these do little to mask his sentiments on the Philippines-US relationship,” Manhit said.
EU to pursue FTA with Phl
Despite President Duterte’s recent outburst against the European Parliament, the EU continues to have a positive outlook on doing business in the country, but views political developments with caution.
EU Ambassador Franz Jessen said the economic bloc still has strong interest in pursuing a free trade agreement (FTA) with the Philippines, the next round of negotiations for which would be held in December.
“What we are more concerned about are the policies implemented by the Duterte administration. We are encouraged by the different statements coming from a number of secretaries. They all said the 10-point economic program laid down a couple of months ago is fully on track, is being implemented,” Jessen said in a press briefing in Makati City yesterday.
“And if you look at the 10-point agenda, it looks promising. What we are interested on the EU side of course is to focus on the free trade agreement and we see us working hand in hand with Duterte and his government in having this free agreement in place,” he added.
Jessen said the EU is keen on clinching the FTA in two years time.
The 28-member European economic bloc is seeking concessions for the export of motor vehicles and industrial goods to the Philippines and may take advantage of stronger economic ties to put up factories in the country.
The Philippines and EU completed in May the first round of negotiations and would engage in a second round of talks in December.
Guenter Taus, president of the European Chamber of Commerce of the Philippines, said that despite the outburst against the parliament, they have received positive signals on economic matters during their consultations with Cabinet secretaries.
Gov’t urged: End policy uncertainty
Senate Minority Leader Ralph Recto said while the peso’s depreciation was mainly due to external factors, political uncertainty and security concerns were also to blame.
Recto said officials of the Duterte administration could help in stabilizing the stock market and the peso’s value by being more prudent and circumspect in their public pronouncements.
Recto said talks about alleged plots to destabilize the administration, expletives hurled against world leaders, as well as the negative perception on the spate of extrajudicial killings, and the declaration of the state of national emergency, all contribute to uncertainty among investors and the international community.
“There must be more certainty. Treat the US and our allies well while we improve our relations with China. It doesn’t have to be one or the other,” Recto said in a telephone interview.
He said Malacañang needs to clarify how long will be the declaration of the state of national emergency as it is adversely affecting tourism.
“If you’re a tourist, will you visit a country that is under a state of lawlessness?” Recto asked.
He also said the ongoing quarrel between President Duterte and Sen. Leila de Lima – while providing “good entertainment” – is distracting Congress from working on urgent reform legislation. – With Paolo Romero, Delon Porcalla, Czeriza Valencia