Ferdinand “Bongbong” Marcos Jr., only son of the late dictator, is set to be proclaimed as the next president of the Philippines this month after his win in the recent elections. Throughout his campaign with running mate Sara Duterte, daughter of strongman and sitting President Rodrigo Duterte, they have peddled a narrative of “unity” without declaring much by way of an actual platform.
Some might call this period the tail end of the pandemic, but record economic woes continue to plague Filipinos. Since January, the country has been hit by 14 oil price hikes with the government feigning powerlessness to do anything as fuel costs soar higher than ever. Between March and April inflation jumped 0.9 percent to reach 4.9 percent, according to the Philippine Statistics Authority. It is the highest inflation rate since the 5.2 percent seen in December 2018. Meanwhile, minimum wages have increased little in the last six years.
Despite this, the government’s economic director, Karl Chua, is optimistic about the numbers as the country’s GDP posted 8.3 percent growth in the first quarter. But economic think tank Ibon Foundation attributed the growth to election-related spending and increases in output for the manufacture of paper, apparel, information, publishing, and the like.
Moreover, Ibon Executive Director Sonny Africa warned that “the economy will remain weak and high growth difficult to sustain as the country has suffered the second biggest economic contraction in South, East and Southeast Asia in 2020 because of the government’s protracted lockdowns and aversion to a real fiscal stimulus. Most other countries in the region who locked down less and responded to the pandemic better actually contracted less or grew more in the last two years.”
Africa believes the worst is yet to come, especially since the incoming Marcos administration has yet to unveil anything to derail the bleak outlook. The lack of a blueprint is worrying. In contrast, past presidents by this time had already assembled their economic management staff with an agenda laid out for the public.
Chiding the incoming administration’s competence, Africa said, “We actually don’t expect any major policy changes under the Marcos Jr. presidency. Candidate Marcos Jr. has absolutely no record of original thinking or even any interest in economic policies.”
There is yet to be a sign of optimism in the foreseeable future. A day after the elections, the Philippine Stock Exchange Index or PSEi, an indicator of investor or business sentiments, dropped 3.14 percent. By the end of the week, the PSEi had lost 5.6 percent. Around the same time, finance giant JP Morgan dragged the Philippines to the bottom of its investors’ list. Since then, the finance giant has clarified its assessment.
In a statement, Patricia Anne Javier-Gutierrez, executive director and Philippines heads of communications for JP Morgan, said, “Our views on the Philippines are driven by long term global and local macroeconomic fundamentals, and not by election results or outcomes in general.”
Nevertheless, it is hard to discount that the global political economy has been upset by the return to power of a dictatorial family.
Filomeno Sta. Ana, business columnist and coordinator for policy group Action for Economic Reforms, explained where the wariness stems from. “The uncertainty is not just because of investors not yet knowing the economic team. The real fear is the opacity or the lack of clarity of Marcos’ plan for the economy. Worse, his past performance and pronouncements, which clearly defy fiscal [sense] and good governance, make investors worry.”
Apart from business interests, Africa stressed the state should look into the decline of social services and agricultural productivity, although he does not have high hopes. “Under the Duterte administration, agriculture’s share in the economy fell to its smallest in the country’s history” and manufacturing dropped to levels not seen in 70 years, Africa said. “Absent any radical changes under Marcos Jr. this downward trend will continue resulting in weaker domestic job creation and continued dependence on overseas work.”
Sta. Ana says Marcos Jr. made incredulous claims during the campaign, many of which have no basis in sound economic planning. He said he could lower the prices of rice per kilo to 20 Philippine pesos, that he would oppose “sin taxes” altogether, and even revive the abandoned plan for the Bataan Nuclear Powerplant. The project was touted as an answer to the country’s energy problems but was famously riddled with corruption during his father’s time.
“These examples show the risks arising from fiscal irresponsibility, at a time that the Philippines is incurring higher borrowings and deficit,” noted Sta. Ana.
Big pronouncements like setting up a major power plant must be strictly scrutinized according to industrial economics, said Dr. Krista Yu, an economic experts from the De La Salle University. She told The Diplomat that “the government has to review the capacity and efficiency of operating the powerplant. We have to remember that it was completed back in the 1980s. There is a need to conduct a cost-benefit analysis to compare the revival of the Bataan nuclear power plant and that of building a new nuclear power plant altogether.”
Professor Bobby Tuazon, a foreign policy expert from the Center For People’s Empowerment in Governance, suggests that the economic direction will simply follow the one it took under Duterte. A mantle was taken on not only because of a shared penchant by the Marcos and Duterte camps for conservative policymaking but because of the apparent symbiosis and patronage between the two camps.
“Marcos Jr. owes the outgoing president for the latter’s endorsement of his presidential bid through the ruling political party PDP-Laban (Philippine Democratic Party – People’s Power). It is just apt that Duterte’s centerpiece projects like the infrastructure-driven Build-Build-Build are continued. Marcos Jr. has also sworn to continue Duterte’s warm ties with China thus we can expect greater investments by way of Beijing,” noted Tuazon.
There is an overwhelming “business as usual” feeling to the Marcos administration’s anticipated policymaking. It’s almost as if there is no new regime to speak of, just new faces on a government the country has had for the last six years. Politically, Marcos Jr. also displays staggering overconfidence, and a lack of urgency on critical matters. The elections concluded on a sour note, riddled with glitches and complaints, but Marcos Jr’s victory margin was huge, accruing an estimated 31 million votes — around double the votes captured by the closest contender, sitting Vice President Leni Robredo.
But no matter how complacent the Marcos family is with their spoils, euphoria over the results will not last. Political instability may hound the Marcos tenure — not in the least because of electoral irregularities but because of the family’s history with dictatorship and the incoming administration’s apparent lack of an economic plan. A turbulent Philippines isn’t good for business, domestic or foreign.