OPTIMISTS say that the initiative of the Duterte administration to improve the peace and order situation in the country, coupled with the war against drugs, will be good for the flow of investments in the long term.
Simply put, foreign investors will have peace of mind if they see the government doing all it can to make sure that their investments will not be put to waste.
But the recent declaration of “state of lawless violence” by the President after a bomb explosion in Davao City early this month that killed around 14 people alarmed citizens and sent fears it could be a prelude to the declaration of martial law.
Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. does not see it that way, yet.
“That is going to be effective for the flow of investments over the longer term,” Tetangco said at the sidelines of the recent Euromoney Philippine Investment Forum held in Taguig early this month.
He said what could pose more risks to the domestic financial markets were the developments in the world’s advanced economies, particularly the highly-anticipated interest rates hike by the US Federal Reserve by the end of this year, the slowdown in the Chinese economy, the erratic movements in the price of oil in the global markets, and the lingering effects of “Brexit,” or the exit of Great Britain from the 28-nation European Union recently.
“So it [volatility in the domestic financial markets] is more externally driven… ,” Tetangco said.
But Tetangco said that the Duterte government must explain better the objectives of its policies to avoid any possible misunderstanding. “We must avoid the lack of information that could lead to a different picture,” the governor said.
ING Bank Manila senior economist Joey Cuyegkeng said in a report that the peace and order situation in the country, especially the spate of extra-judicial killings, could have a significant dent on the markets and the economy if not checked at once.
“For now, the impact is likely to be marginal and is likely to be offset with favorable macroeconomic fundamentals—structural inflows, higher foreign exchange reserves, strong domestic demand and monetary and fiscal leeway,” Cuyegkeng said.
Cuyegkeng said the concerns on extra-judicial killings and statements that might antagonize long-time allies were also making international news which elicited growing concerns also from investors.
But economic managers expressed optimism that the Duterte administration’s economic agenda remained intact, and the declaration of state of lawlessness should be welcomed by investors because it showed the President’s decisiveness as a leader.
10-point economic agenda
In line with the Duterte administration’s 10-point economic agenda, Bangko Sentral expressed its full commitment to adopt policies consistent with the delivery of its mandate of price and financial stability in the country.
Deputy Governor Diwa Guinigundo said there were many areas where improvements in the past have been made and the regulator would continue to bring about positive changes in its areas of concern.