Duterte won't veer from economic policies: Analysts

The Philippines has garnered strong annual average growth of 6 per cent and a fall in the ratio of government debt to gross domestic product under outgoing President Aquino.
The Philippines has garnered strong annual average growth of 6 per cent and a fall in the ratio of government debt to gross domestic product under outgoing President Aquino.PHOTO: BLOOMBERG

Incoming Philippine president will stick to what has worked for country, they say

Philippine president-elect Rodrigo Duterte may make controversial remarks about women and foreign policy but he will not rock the boat when it comes to economic policies, say observers.

There had been concern that the country's gains from predecessor Benigno Aquino's reforms, such as its strong annual average growth of 6 per cent and a fall in the ratio of government debt to gross domestic product, could be undone by the firebrand politician.

But analysts say his record as mayor of Davao city shows that he is unlikely to deviate from the economic policies that have helped lift the Philippines.

Mr Tan Kim Eng, a senior director in the sovereign ratings team at Standard and Poor's, said that "it's more what he did not do than what he did", when it came to economic policy. "While welcoming of investment, Mr Duterte did not introduce major policies or incentives different from elsewhere in the country," he noted. "Showing no inclination to be different from the status quo in the past, we expect he will not change the direction of national economic policy."

Ms Eugenia Victorino, an economist at ANZ bank, said Mr Duterte had improved Davao's economy because he had made the city safer although he did not implement any specific economic policies.

She noted that the incoming president is likely to be more open to foreign investment as he had said in February that he is open to raising the limits on overseas ownership - a move that would require amending of the Constitution.

Foreign ownership of companies in the Philippines is capped at 49 per cent, she said, except some sectors such as banking.

A Filipino official who did not want to be named said Mr Duterte's statement was "significant" as the matter has long been discussed by the private sector without success.

Mr Duterte's pro-investment stance will be welcomed by Singapore investors and businessmen.

Mr Glenn Penaranda, commercial counsellor at the Philippine Trade and Investment Centre in Singapore, said that while he has seen an increase in interest from Singaporean investors in the past two years, equity ownership has been their top concern.

Singapore was the fifth-largest source of investments in the Philippines last year at 16.8 billion pesos (S$494 million), up from 13.9 billion a year earlier, he said.

The peso posted its largest daily gain in months after the election results were announced on Tuesday. It was up 0.27 per cent at 33.98 per Sing dollar yesterday.

While a spokesman for Del Monte Pacific, which is listed in both Singapore and the Philippines, said the company was "neutral" on whether the election results would affect its business in the Philippines, mainboard-listed engineering company TEE International said it was optimistic about the country's economic prospects.

Mr Edwin Neo, head of infrastructure, said TEE will continue with its investments in infrastructure there.

"Political landscape in the Asean markets is often volatile, but these economies continue to grow at a stable rate," he said.

Mr Tan Soon Kim, assistant chief executive officer of International Enterprise Singapore, expects companies here to monitor the new administration in the next few months.

"From an investor's perspective, continuation of business-friendly policies is critical following a leadership transition," he said.

A version of this article appeared in the print edition of The Straits Times on May 12, 2016, with the headline 'Duterte won't veer from economic policies: Analysts'. Print Edition | Subscribe