The Philippine currency and stock markets are in turmoil, largely because of an impending Rodrigo Duterte presidency.
The peso hovers at P47 to one dollar, a depreciation of more than three percent from P45.50 to the dollar a year ago. The stock market index has fallen below 6,990 after hitting 7,372 index points on March 22 this year—a fall of 5.0 percent. April was when it became clear Duterte was on the way to win the presidency, by as many as 5 million more votes than his nearest rival.
To me, the fears of business are misplaced. Duterte could, in fact, be good for business. He hates red tape. In Davao City, all permits must be processed in 72 hours. Otherwise, the permits officer must explain to the mayor who could punish him if his explanation is BS. I assume Duterte will apply that policy nationwide.
A President Duterte will focus on education. In fact, he wants to divert infra money to education—for schools and scholarships. That’s improvement of human capital and human capital is what this country has plenty of.
He will focus on agriculture. Duterte laments that multinationals in Mindanao are using huge tracts of land to produce what he calls “cash crops”— pineapples, bananas, coffee and cacao, which are not consumed by the natives. I assume he will order these MNCs to produce also what he calls “food crops”—rice and corn, which are 15 percent of the consumer basket. So there will be a rice and corn surplus, which means no food shortages which means social stability because “a hungry man knows no law,” as Joseph Estrada says.
Duterte wants to double the salaries of policemen and soldiers. They earn P14,000 a month. Within maybe three years, that will be P28,000. That will, of course, trigger protest from the teachers who are college graduates (compared to policemen who are high school graduates). So teachers will also enjoy P28,000 monthly salary. Since teachers (741,000), soldiers (125,000), and policemen (174,000) are half of the government workforce, a doubled salary will create purchasing power which in turn will induce consumption, which in turn will induce economic activity.
Remember that consumption, including government consumption, makes up 84 percent of GDP (the value of economic production). Consumption has been the engine of growth in the last 20 years; it is not Matuwid na Daan which does not exist.
Duterte will remove income tax for those earning P25,000 or below a month. That will create savings that can go into tuition (human capital) or consumption (good for the economy). The President will also reduce corporate tax from the current 32 percent, the highest in Asia. That will free corporate capital that can go into fixed assets (machinery) or labor generation or dividends (which could go into consumption).
Of course, Duterte vows, with his life, to curb corruption and criminality. A third of the P3.5 trillion budget is stolen. Curbing corruption will divert more than P1 trillion into productive activities—like paying for doubled salaries of policemen, soldiers and teachers; investment in infra; and more cash for the very, very poor.
A curb on criminality will be good for the funeral industry but bad for Manila Bay which will be polluted by as many as 100,000 cadavers of criminals. The Supreme Court has a decision that penalizes big companies every time Manila Bay gets polluted. So either way —funeral business or Manila Bay pollution—will be good for the economy.
Finally, if Duterte gets pissed off, he will abolish Congress and declare a revolutionary government. We save money, at least P50 billion a year, if we have no Congress. And Duterte could just open up productive sectors of the economy to foreign investments and competition, with his revolutionary powers. And of course, the rebels, communists and Muslim separatists, will be forced to come to the negotiating table.
To paraphrase Jojo Binay’s jingle, only Duterte. The masa are willing to bet their future on that kind of presidency.
On a personal note, three of the 50 senatorial candidates are my compadres—Frank Drilon, Kiko Pangilinan, and Ralph Recto. Frank and Kiko are in the Top 3 so they don’t need my vote. Ralph is No. 11 or 12. So he needs my vote. Ralph is an economist and conscientious senator. Vote for him.
Also borderline is a good friend, colleague in Philconsa and my boss in this paper, lawyer Martin Romualdez. His INC endorsement should bring him up into the win column because the INC vote is good for about 1.5 million votes—exactly the number of votes he needs additionally, to win a Senate seat. So vote for Martin. As Duterte loves to say, “you won’t regret it.”
Finally for the youth vote, please vote for Win Gatchalian, another well credentialed candidate.
So there. This is my last column before the May 9 election. Read it carefully and be guided. You won’t regret it.