The stock market and the peso against the United States dollar have continued their decline.
The Philippine Stock Exchange Index (PSEI) hit 7312 index points yesterday (Oct. 13), down 1.58 percent from the Wednesday’s closing index. It makes the Philippine stock market one of the worst performing in Asia.
The peso slipped 0.03 centavos or 0.06 percent to P48.47 Thursday from P48.50 the day before. In 30 days to Oct. 13, the peso has lost 1.76 percent of its value against the US currency and 5.36 percent for the first 10 months of this year. Now, 5.36 percent is a very deep depreciation. It makes the peso one of the worst performing against the US dollar in the region.
On June 8, when Rodrigo Roa Duterte was named duly elected president of the Philippines, the peso was doing P45.84, a slight appreciation from P46.85 at the beginning of 2016, meaning the currency market was taking his election positively then.
By yesterday, however, the peso has slumped to its seven-year low at P48.58, a depreciation of 5.97 percent from June 8, 2016, and a drop of 3.7 percent from January this year. They say it’s the Duterte factor, or more specifically, his expletive-laden saliva.
This is also the first time in our history where presidential saliva can move the stock market up and down, depending on whether Duterte is perceived by the market as either sane or sober (index up) or gone-berserk or a psychopath (index down).
An actress has called Duterte a psychopath (mentally ill). An arch supporter of the former Davao mayor, former President Fidel V. Ramos, has judged that Team Philippines is at the losing end under Duterte. “We find our Team Philippines losing in the first 100 days of Du30’s administration—and losing badly,” winces the West Point-trained former four-star general, armed forces boss, defense secretary, and veteran of nine coup attempts (both on the instigator and counter-coup side). FVR is also one of the Philippines’ best presidents, having rescued the country from a debilitating energy crisis, revived the economy, and attracted record foreign investments in key sectors of the economy during his presidency (1992-June 1998).
FVR finds Duterte a failure in two major areas—leadership and teamwork, writing “that is where the obvious failures have emerged at this point in time.” Boldface font his.
The former president writes:
“In terms of leadership, Senator Dick Gordon has said it so truthfully and directly: ‘Du30 Is Falling On His Own Sword” (The Manila Times, 04 Oct), adding that the President is too noisy, and should stop saying repetitively: ‘I will kill you.’ (Is this the norm in presidential public relations??). Ours is not to heap more brickbats on P. Du30—because he has had more than enough already—but to help enable him to transform (through his own efforts) from a mere provincial official to a capable international player at the head of 101,000,000 multicultured Filipinos.”
“The outcome aspired for by the majority of us is to insure the better future of our younger generations who, in due time—will assume the mantle of leadership over our nation’s political, security, cultural, economic and other interests.”
I could sense Ramos’ sense of frustration and anger at the turn of events under the young Duterte presidency.
An Italian developer was asking me yesterday: “What’s going on? What is the direction of the economy?”
I replied that Duterte is in his current saliva mode. The president is a creature of bars and dingy places where drinks are many, camaraderie is strong, and banter, along with ribald jokes and expletives, is freewheeling. In such an atmosphere one lets down his guard, relaxes, and damns tomorrow.
But there is a tomorrow, I assured my Italian friend, and it is bright. In Italy, he disclosed “puta” can also be a term of endearment in conversation among friends, not necessarily a challenge to one’s ancestry.
The Philippines has the best economic fundamentals in Asia today. They are so strong the country will just keep progressing even if the president of the Philippines were a dog—or a rat. In other words, the Philippines will survive a rotten chief executive.
The Philippines is a country of 102 million—the 12th largest consumer market on earth. The economy, the 33rd largest in the world, grows by 6 percent per year, among the fastest rates in the region. The country generates annually $26 billion from remittances of 12 million Filipino expats and beginning this year, $25 billion income from business process outsourcing or call centers. These earnings, $51 billion, would be valued at P2.44 trillion—enough to bankroll 73 percent of Duterte’s P3.35 trillion budget. About 84 percent of the economy is driven by consumption. On an economic output of P14 trillion, that 84 percent is easily P11.78 trillion. Why is consumption strong? Because of the remittances, the BPO proceeds, and savings rate of 32 percent of GDP or P4.48 trillion.
What these figures imply is that the Philippines does not actually need those so-called foreign investments (it was negative $136 million in 2015, a boom year for the economy and meaning we are exporting capital more than we receive). The country does not need investment-grade credit rating because it does not need to borrow. There is plenty of domestic capital. The Bangko Sentral alone has P2 trillion of excess private deposits safely parked by commercial banks in its vaults, for lack of borrowers).
Thankfully, Duterte is not at all a bad president. He knows his focus—illegal drugs, crime, corruption. The biggest victims of these three horrors are the poor. The poor are the biggest users and dealers of illegal drugs. The poor are the biggest victims and perpetrators of crime. Why? Because a hungry stomach knows no law. A small bottle of rugby, bought at P5, will carry a tyke through the course of a day, without meals. A phone snatcher will be able to feed his family of five for a day.
Corruption? Corruption is the reason why the government doesn’t pay attention to the poor. Because the money that should been used to buy food (55 percent of a poor household’s expenditure), render basic services like education (the average Filipino child reaches only Grade 4) and health (80 percent of Filipinos grow up without seeing a doctor), or even to give them basic transportation to and from their place of work—is stolen.
Somebody who can solve the riddle of illegal drugs, crime and corruption will be a great leader. Duterte could be it.