Vice President Jejomar Binay. INQUIRER FILE PHOTO/NINO JESUS ORBETA
FOREIGN investors are likely to adopt a wait-and-see stance in 2016 pending the change in administration in the middle of the year, according to The Economist Intelligence Unit (EIU).
But a victory of Vice President Jejomar Binay in the presidential race may impact investor confidence adversely, said the EIU, the research and analysis division of the UK-based Economist Group, the sister company of The Economist weekly newspaper.
In an analysis titled “Asia in 2016: Elections” published last week, the EIU noted that while general elections are scheduled in at least six countries in the Asia-Pacific region this year, “only in Taiwan and the Philippines are elections likely to bring significant change.”
Significant hurdles
In the Philippines, “the ballot will determine whether the policy platform put forward by the current President, Benigno Aquino III, which focuses on improving the business environment and reducing corruption, will be maintained,” the EIU said.
“Although support for Mr. Aquino might boost the prospects of like-minded liberal candidates, who are expected to retain his policies, the two hopefuls falling into this camp—Grace Poe and Manuel Roxas—face significant hurdles,” the EIU noted.
In the case of Poe, an independent candidate, the EIU cited that she “looks set to be disqualified from the election over failing to meet the adequate residency requirements.”
As for Roxas, the standard-bearer of the ruling Liberal Party, he “remains dogged by criticism of his slow response as secretary of the interior to Typhoon Haiyan (Supertyphoon ‘Yolanda’) in 2013,” the EIU said.
The EIU noted that Roxas “could benefit from Poe’s disqualification as the sole liberal candidate.”
Odds favor Binay
But the bigger winner if Poe gets disqualified would be Binay, according to the EIU.
“Although there is a good chance that the electorate will vote for a liberal candidate who represents a continuity of Aquino’s administration, there is a risk that a more populist figure, such as the current Vice President, Binay, will win,” the EIU said.
After all, the EIU noted that in the Philippines, “presidential races have, in the past, been driven more by personality than party allegiance.”
“At present, the situation is very fluid, including the possibility that Poe will win an appeal against her disqualification, but the odds seem to favor Binay,” the EIU said.
According to the EIU, “should Binay win the presidential election, this would probably herald a period of increasingly nationalistic policy-making and a deterioration in investor sentiment.”
3-horse contest
A separate EIU report on the Philippines noted that at present, the domestic political scene “is dominated by campaigning for the May 2016 general elections.”
The EIU sees the presidential race to likely become a “three-horse contest,” with “popular” Poe, Binay and Roxas as front-runners.
“An impending change in administration raises risks of policy instability during the transition phase. During this phase, investment is likely to dip slightly,” the EIU warned.
The EIU said it expected the Philippine economy to expand by 5.9 percent annually between this year and 2020, slower than the over 6-percent average growth posted during the Aquino administration.
Reassurances
The Binay camp Monday assured businessmen and investors of a stable business environment under a Binay presidency.
“Vice President Binay is committed to pursue economic reforms but will introduce efficiency, consistency, decisiveness and a sense of urgency,” said spokesperson Joey Salgado in reaction to the EIU report.
Salgado said being a former mayor of Makati City, the country’s main financial center, Binay “recognized the important role of the business sector in moving the economy forward.”
“But economic growth must both be sustainable and shared with the poor and marginalized sectors. Jobs must be created by allowing more foreign investments especially in agriculture and improving the way government works,” he said.
Citing the latest Pulse Asia survey where Binay was “statistically tied with the Liberal Party candidate” among Class AB, which includes the business sector, Salgado said this showed “growing appreciation of the VP’s experience and competence as an executive and a recognition that we cannot entrust the economy to the inexperienced, the unpredictable and performance-challenged.” With a report from Christine O. Avendaño