By Richard Heydarian
When he was serving as director-general of the Philippines’ National Economic and Development Authority, Ernesto Pernia dismissed international criticism of President Rodrigo Duterte’s human rights record as “rising political noise.”
A world-class technocrat who has dedicated his life to improving the Philippines’ economic prospects, Pernia’s apparent cold-heartedness came as a shock. But if we Filipinos have learned anything in recent years, it is that bad politics can poison economics, undermining even the best technocrats.
In 2017, a year into Duterte’s violent drug war that claimed the lives of thousands of suspected drug dealers, foreign investment dipped by 90% amid growing worries over the deterioration in the rule of law.
In 2020, the Philippines posted one of the world’s deepest economic recessions following Duterte’s abrupt decision to impose prolonged lockdowns in response to the COVID-19 pandemic.
Taking a page from Duterte’s playbook, the incoming Philippine president Ferdinand “Bongbong” Marcos Jr. has appointed an ostensibly A-list group of economic managers. While the business community has cautiously welcomed the President-elect’s initial appointments, the son of the notorious dictator Ferdinand Marcos Sr. will have to embrace responsible politics if he is to usher in a new era of economic prosperity.
In fairness, Marcos Jr. has shown neither the authoritarian predilections of his father nor the populist impulsiveness of Duterte. As I have written in the article “Emphatic Marcos victory no cause for panic” published on May 10, his election victory should not be a cause for panic per se, notwithstanding the lingering concerns over the family’s record.
While Marcos will likely share power with other key figures such as Vice President-elect Sara Duterte, the daughter of outgoing President Rodrigo Duterte, and, unlike the outgoing incumbent, Marcos is an urbane and soft-spoken princeling whose stints at Oxford and Wharton have imbued him with a basic understanding of macroeconomics.
The president-elect’s wily sister, Sen. Maria “Imee” Marcos, has made it clear that her family is “very grateful” and does not want to waste a “second chance,” thus her brother’s determination to offer unity and “strong leadership.”
It was Imee Marcos who advised her brother to appoint a “team of rivals” cabinet to try to steer the country toward economic recovery and political stability.
Just days after his election victory, Marcos Jr. sought to reassure both the business community and international partners by holding cordial meetings with diplomats from traditional allies, including the U.S. and Japan, as well as appointing some progressive figures to his cabinet.
Nevertheless, investor jitters are unlikely to go away anytime soon. On one hand, concerns about good governance remain. The Marcos family stands accused of amassing up to $10 billion in ill-gotten wealth during the reign of Marcos Sr. and now reportedly faces $4 billion in outstanding real estate taxes.
Moreover, Marcos Jr.’s presidential campaign, while rich on fantastical promises, was vague on policy details. As a presidential candidate, he refused to attend even a single presidential debate organized by the Commission on Elections and mainstream media outlets.
No wonder then that Marcos Jr. placed almost last on a list of preferred presidential candidates on a pre-election survey of top investors and economists conducted by Bloomberg. Those jitters were on full display when the Philippine Stock Exchange fell to its lowest in nine months just hours after Marcos Jr.’s landslide victory became clear.
In order to boost the Philippine economy, Marcos Jr. will have to move on multiple fronts. First, he should roll back his populist antics and instead adopt a responsible macroeconomic policy framework.
Throughout the election campaign, Marcos Jr. vowed to expand Duterte’s massive infrastructure development program as well as slash the cost of basic food commodities, including rice. That may have won him votes, but a growing fiscal deficit and rising inflation should give the new administration pause.
After five successive quarters of economic contraction, outgoing Finance Secretary Carlos Dominguez has warned that the new administration will have to adopt “fiscal consolidation,” including tax increases, in order to spare “future generations.”
Marcos Jr. should increase efforts to curb institutionalized corruption and uphold bureaucratic accountability, and not interfere with agencies such as the Presidential Commission on Good Government, which targeted his family’s financial holdings.
Finally, Marcos should respect the rule of law. Under Duterte, a scorched-earth drug war claimed thousands of lives; critics such as Sen. Leila De Lima and Nobel Prize Laureate Maria Ressa faced dubious charges; and independent media outlets such as ABS-CBN were forced off the air.
The outgoing president’s arbitrary exercise of power not only damaged the country’s democratic institutions but rattled the business community. Recognizing the negative impact of Duterte’s policies, Marcos Jr. has expressed his commitment to recalibrate the drug war by adopting a more public health-focused approach.
The Marcoses have also indicated their openness to reinstating ABS-CBN’s broadcast franchise, while the incoming Department of Justice Secretary has vowed to review questionable charges against opposition figures such as De Lima.
By embracing good governance and correcting the excesses of his predecessor, Marcos Jr. can facilitate sustained economic growth at home, if not clear his family’s tarnished image the world over. He must not squander the second chance given to his family by the Filipino people.
Richard Heydarian is a Philippine-based academic and columnist. He is author of “The Indo-Pacific: Trump, China and the New Struggle for Global Mastery.”