Filipinos choice of new leader a critical one

THREE candidates have officially declared for the Presidency as the good-governance-is-good-economics policy pursued over six years by Benigno Aquino draws to a close. With much at stake, Filipinos won’t want to leave anything to chance in 2016 . . .

he “sick man of Asia”, the Philippines is now back in shape and is even being groomed for the big league. The good-governance-is-goodeconomics battlecry of  President Benigno Aquino has resonated well, boosting investor confidence and helping the country achieve its highest growth trajectory in four decades, amid a regime of benign inflation.
The Philippines seems finally to have hit the sweet spot, and, if gains are sustained, could reap demographic dividends from the vast pool of young people entering the labour force.
Economic growth averaged 6.3 per cent over the past five years compared to 4.8 per cent during the nine-year term of Gloria Macapagal-Arroyo.  The trend growth rate under the Ramos regime was at 3.1 per cent, while that during the term of Corazon Aquino, the late mother of the President, was 3.4 per cent.
This year, the domestic economy will grow by at least 5.8 per cent, based on consensus forecasts, inching up to 6.0 per cent next year. These numbers are slower than the 7-8 per cent growth the Government desired (and the 6.1 per cent actual growth last year), but still mark a decent pace amid a backdrop of global gloom brought about by China’s economic woes.
Consensus forecast growth for ASEAN 4, referring to Southeast Asia’s four emerging markets —  Indonesia, Malaysia, the Philippines and Thailand — is at 4.5 per cent for this year, rising to 4.9 per cent next year.
One only has to stroll in any of the Philippines’ massive shopping malls or the vibrant night spots, or track record-high car sales to feel increasing consumer affluence, thanks to resilient overseas remittances and the growing business process outsourcing (BPO) sector.
And while the downturn in global commodity prices is scaring global investors, the Philippines actually stands to be a beneficiary, being a net oil importer. Apart from external shocks like a hard landing by China, one key risk on the horizon is the El Nino dry spell, which is projected to occur in the last quarter of 2015 up to the first quarter of 2016 — and could be one of the worst in recent years.
Fiscal discipline has allowed the Government to attain much-coveted investment grade status for the first time in history, bringing
interest rates to all-time lows.
The current account has been in surplus for more than a decade, supported by overseas
remittances and receipts from business process outsourcing services.
For the first time in history, the gross international reserves of the central bank have overtaken the size of the country’s foreign debt stock, turning the Philippines from a long-time net borrower into a net lender to the International Monetary Fund.  The banking system, hardened by the Asian currency turmoil of 1997, is in a good position to oil the wheels of the economy.
Yet everyone knows that six years — the term limit prescribed by the post-Marcos Constitution — is too short for a good President. At this same time next year, the Philippines will have elected a new President. 
The choice is a critical one, as it will spell the difference on whether a higher growth trajectory can be sustained, and whether the country can have a balanced mix of consumption and investment as growth drivers moving forward.
Three people have officially declared their intention to run for the Presidency. The front-runner, based on various surveys in September, is the popular neophyte, Senator Grace Poe, the adoptive daughter of the late actor Fernando Poe Jr who was widely believed to have been cheated of the Presidency in the 2004 election.
A foundling who is hounded by nasty rumours about her real parentage, the 47-year-old Poe is perceived to be a charismatic and intelligent person whose heart is in the right place.  However, critics are questioning her relative inexperience and national allegience because she resided in the US and acquired American citizenship at some point in her life.
Another key contender is Vice President Jejomar Binay, 72, the long-time Mayor of Makati, who is popular with the masses given his rags-to-riches story. But he is facing allegations of having amassed ill-gotten wealth which he hasn’t cared to explain, only dismissing everything as election mud-slinging. 
By playing the poor-versus-rich card to the hilt and presenting himself as the “Lee Kuan Yew of Makati”, he keeps a strong core of supporters who mostly bank on his ability to get things done, notwithstanding alleged skeletons in the closet. Binay narrowly beat President Aquino’s running-mate, Mar Roxas, during the 2010 elections.
Not surprisingly, Aquino’s annointed predecessor is Roxas, the Interior Secretary and the one who was ready to be the standard-bearer as early as 2010 — but was forced to give way to Aquino, then a reluctant candidate but one who was thrust into the limelight as the “fruit of the good tree”.
This was because his mother, Corazon Aquino — the heroine of the 1986 peaceful “People Power” revolution that toppled the Marcos dictatorship — died one year before the elections.
Roxas, the father of the BPO sector, is seen as a man of integrity and vast experience as a former investment banker, legislator and Cabinet member. But he is also seen to have strong ties to the oligarchy (of which he is very much part) and is likewise hounded by the slow progress of public-private partnership (PPP) infrastructure projects and an inability to resolve mass transportation woes when he handled the transportation portfolio in the earlier years of the Aquino Administration.
Based on the Social Weather Stations (SWS) survey of voter preference conducted from September 2 to 5, Poe leads the race with a share of 26 per cent, followed by Binay with 24 per cent and Roxas with 20 per cent.  The survey had a margin of error of plus or minus three per cent, so experts say the figures indicate a statistical tie — which means it’s too early to predict any clear winner.
Aquino, for his part, has framed the 2016 Presidential election as a referendum for continuity, saying that economic progress under his administration would continue under Roxas.
Poe, however, is also seen to have the same commitment to good governance. Investors seem to be comfortable with either one of them.
Citigroup economist Jun Trinidad said in a September 17 research paper that “policy continuity risk may diminish with either former Interior Secretary Roxas or Senator Poe, who are both inclined to sustain Aquino’s agenda”. 
Some stock market experts have also said that if either Roxas or Poe win the 2016 elections, local equities will rally.
Up to the last minute, Aquino was hoping that Poe would agree to slide to Vice Presidential candidacy as a running-mate to the more experienced Roxas, but emboldened by high popularity ratings, she recently declared her Presidential candidacy as well. “Clearly though, her entry into the race will benefit Binay, as she and Roxas will split the votes of those supportive of the Administration,” the US-based think tank, Global Source, said.
Whoever wins the 2016 election faces the challenge of sustaining a higher growth path in order to make more meaningful progress on the overarching goal of poverty alleviation.
The ratio of Filipinos who live on US$1.25 a day — an internationally comparable measure of extreme poverty — remained at 19 per cent as of 2012, only slightly improving from 24.6 per cent in the year 2000. China shrank this gauge of extreme poverty to 6.3 per cent as of 2011 from as high as 28.1 per cent in 2002 as its economy sustained average growth above 10 per cent over the a decade.
Fitch Ratings, which recently signalled another sovereign upgrade for the Philippines from its minimum investment grade of BBB at present, noted that low per capita incomes are still a structural weakness, with GDP per capita income at US$2,836 in 2014 compared with the ‘BBB’ median of US$10,654.
Also, despite tedious “house-cleaning” undertaken during the Aquino Administration in line with the regime’s promise to stick to the “righteous path”, the Government has been slow in the rollout of much-needed infrastructure. The PPP programme, much-hyped during the first year of the Administration, executed only a few big ticket projects.  On a rainy day it can take as long as six hours to traverse 16 km to Quezon City from the Makati central business district. 
Such episodes of “carmageddon”, a word coined by frustrated urban dwellers, have become more frequent, especially during the wet season. The next President thus needs to implement a metropolitan flood control programme, make the railway lines run more efficiently, offer more mass transportation options and make sure netizens get access to faster and more reliable Internet. 
The World Bank recently said that growth in the Philippines could be sustained and made more inclusive by pursuing structural reforms and investing more in human and physical capital. “Key structural reforms include protecting property rights, promoting more competition, and simplifying regulations,” the Bank said.
Getting a bigger share of foreign direct investment (FDI) is also imperative,  and this may require liberalising the economy further.
The Constitution currently restricts foreign participation in key sectors like land ownership, public utilities and exploitation of natural resources.
Getting more FDI is important to create more jobs. “The ability to attract infrastructure investments will ride largely on the next President and how much he/she will spend political capital on further promoting regional ties,” the Swiss investment bank, UBS, says.
The age of social media has heightened demand for transparency and accountability, and some say it would likely be difficult to undo reform momentum once people have become accustomed to a better system of governance. The passage of the Freedom of Information Bill — which mandates the disclosure of public documents — is seen one way of institutionalising good governance.
With so much at stake, it’s best for Filipinos not to leave anything to chance come 2016.