Storm warning

Ben D. Kritz

Ben D. Kritz

ADMIT it, you’ve had this feeling, too: The foreboding that, despite all available evidence and in rejection of any sort of reason or logic, Davao Mayor Rodrigo Duterte is likely going to win this election.

That is going to be bad for business, one way or another, and we can consider that assertion a fact, simply because business says it would be. Makati Business Club Chairman Ramon del Rosario—presumably speaking for many of his group’s members, judging from the off-the-record comments some of them have made—hammered Duterte for his “lack of respect for the rule of law,” and his lack of interest in economic issues.

It does not matter whether the MBC or its chairman is correct in its implied assessment of Duterte, which could be politely summarized as, “We don’t know what this guy’s economic perspective and priorities are, because he doesn’t appear to have formed any, and the way he otherwise presents himself suggests that even if he did have some economic thoughts, they are probably not something we’d agree with.” Even if Duterte turns out to be surprisingly energetic and effective at guiding the economy, the fact that businessmen, or an apparent majority of them at any rate, believe he won’t be, means that fears of economic turmoil if he is elected are likely to be a self-fulfilling prophesy. Nervous investors will stay on the sidelines for a time until it becomes clear which way the new administration is heading; if perceived as positive (again, it doesn’t really matter if it actually is or not), the business interest will return quickly enough, but it will take some time to complete the cycle—at least until the government writes and passes its first budget, or in other words, not before the third quarter of next year.

It bears emphasizing that virtually no one who has expressed uneasiness about a Duterte presidency from a business or economic perspective can really quantify what kind of harm they fear he could do; the misgivings are based entirely on not knowing what to expect. The thing that’s really off-putting about Duterte is his volatility; one doesn’t know from one moment to the next if he’s going to be King Solomon, Captain Queeg, or Mang Kanor. That sort of inconsistency doesn’t work for most businessmen, especially when the would-be leader also makes it clear he has little use for rules, customs, or advice from others.

Although some of the recent downturn in the stock market and some up-and-down movement of the peso have been attributed to nervousness over a potential Duterte win, objective evidence does not really support that assertion yet; however, peso and equity market declines will probably be the first warning signs of the ‘Duterte downturn.’ Once it begins in earnest, we can expect some pullback in investments, perhaps slightly tighter lending, an uptick in bond rates, some retreat in imports and capital expenditures, and possibly—depending on the general mood of the country—an easing of consumption spending, all of which will degrade at a faster or slower rate depending on the strength or weakness of the peso.

The overall impact could be very mild, with GDP growth slowing by only a fraction of a percent, but that is only if Duterte demonstrates fairly quickly that he does, in fact, realize there is an economy to be managed and has a rational plan to do that. So far he has given absolutely no indication that is the case or ever will be, and that is what makes the business community uneasy, and rightly so. Of course, although it may already be unreasonably optimistic to hold on to the possibility, this all may be hypothetical; the country might yet, as unlikely as it seems, come to its collective senses and elect someone else. But I’m not betting on it.

* * *

A necessary but enlightening correction was brought to my attention a couple of days ago in regard to my last column (“BMI’s brave leap into PH election politics,” May 3) by Peter Hoflich, who is the senior manager of Communications for BMI Research in Asia.

In that column, I made the assumption that Fitch Ratings, which owns BMI, uses BMI’s research in its credit risk assessment work—why else would Fitch acquire a top-flight economic research firm?—but that is not necessarily the case.

As Mr. Hoflich explained, “I did notice that you also mentioned Fitch’s own reports a lot in the article—while it’s true that we’re a recently-acquired unit of Fitch, I need to explain that our research is actually completely separate from Fitch’s because we are run completely independently. Our offices are separate, as are our methodologies, mandates, databases and client bases. So our analysis and views in no way represent Fitch’s analysis and views.”


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  1. pedro somoroy on

    mr ben; im getting confused. you see you have a valid prediction based on i dont know what.. are you telling us that the businessmen will stop what they are doing and pull out their investment in our country? the only reason you offer is : duterte is a bad president if ever he wins. now will you explain the prosperity davao is experiencing? how come the giant san miguel is investing on a 2000 hectare ecozone with a private wharf and airport? is san miguel and the others will pull out their investments and transfer it somewhere? is sm going to demolish the 2 big stores they have in davao?

    i hope you are only joking. and please dont scare us with a coup de etat – one day when we move away from your beloved philippines , you will miss us in our islands. you will need a visa to visit us. we can make the sacrifice , we will stop buying anything from the philippines – anything. we will survive. i dont know if you will.

  2. e kung ang mga papatayin lang naman yung mga taong nagpapahamak sa marami nating mga kabataan dahil sa illegal na droga na kagagawan ng mga drug pushers, drug lords at mga tiwaling kasabwat ng mga ito, alin ang pipiliin nyo mabubuhay ang mga taong ito na nagpapahamak sa maraming tao o mawala na sila sa mundo…hanga ako sa mga bansang pumapatay ng mga drug pushers or drug couriers dahil mahal nila ang kanilang mga kababayan at ayaw nilang mapahamak sa droga…

  3. Well! Duterte is an iron man and not a robot to control his movement. Talking about his perspective a very well done that’s why they are worried time will come if he become a President all syndicates will stop.

  4. Amnata Pundit on

    Why should the people be grateful to the establishment, can you explain? If the people prefer an anti-establishment candidate, can you blame them?

  5. Capital investments does not like uncertainties. Investors with billions of dollars invested in our country will think twice if Duterte wins. Casinos like Tiger, Resort Casino, City of Dreams , Solaire for sure are planning a way to divest their investment in our country. That is human nature and it makes economic sense. That is why this country went bankrupt during martial law. Expect a military coup the first 6 months of Dutertes reign. That is the only solution for this country to survive. The error of our misguided voters is the one to blame . Duterte said, you voted for me, accept the consequences good or bad.

    • “That is why this country went bankrupt during martial law.” Simply too simplistic and conclusive generalization. Unworthy of someone with a name like “to the Max” or is it apropos “to the Max”? Include the global economic situation at the time. You may be able to think “to the max”. Do a little investigative journalism of the decade of the 70’s. Wikipedia can give a short cut to the economic picture worldwide. If the IMF loaned a nation so much, rest assured that IMF experts were confident about the credit rating. But even the IMF was blindsided by the turn of economic events in the 70’s. In an unexpected economic downturn, both lender and debtor are unfortunate investors. Investing per se is risky. Economics being such a “dismal science” leaves the best of the economists of any period at a loss when economic forecasts get mixed up in economic seismic events.

  6. ecclesiastes on

    These businessmen buccaneers in Makati wants a President that they can easily manipulate and control for their own selfish interest….And they fear that Duterte will be uncontrollable, the man being not part of their oligarchy.

    • Businessmen are not in business to control the president. Their main objective is to maximize profits in a free environment. That is Economics 101.

  7. We need change, and there are only 2 candidates who are worth voting for in this presidential election, Dutarte, but his lack of a credible is a platform is a serious problem. And Miriam Santiago, whose health is the main issue. Aside from these two who else is will lead us to the much needed change?

  8. A storm or another lameduck? The former is what all angry people want to happen. today. You see, desperation breeds hopelessness and hopelessness leads to anger.. Its this angry force that feeds into the psyche of the candidate and his supporters that gives him a semblance of popularity, yes, but that is not equivalent to CHARISMA. Far from it, he is like a mad dog, a foul mouthed berdugo that people want to unleash on this elite ruled, incompetent administration. Can we blame them? No! But, I have trust and faith in the inner capacity and intelligence of my countrymen to do the right thing and not vote him to power as they know deep inside they cannot trust a dog or a torturer to be all over the place, including the privacy of his/her home. SO, IF YOU THINK THIS PIECE WILL CONVINCE THE UNDECIDED, YOU’RE IN FOR A BIG SURPRISE. May pag-iisip, dignidad at moralidad pa ring natitira ang mga mahihirap… BINAY ang kanilang iboboto. Just watch.

    • Yes! You are right Roger. Kami dito in final analysis on what is happening have decided to vote for Binay. He has the competence, the kindness toward the poor and the oppressed, and has that forward look on the economy for our country.

    • kaya namna pala e hehehe sa bandang huli die hard binay ka pala, watch na lang kung paano pupulutin sa kangkungan ang idol mo na si binay hehehhe

  9. Mariano Patalinjug on

    Yonkers, New York
    04 May 2016

    On the basis totally of what presidential candidate RODY DUTERTE has been quoted on the campaign trail and elsewhere as saying, plus his well-known record as a lawless Mayor of Davao City, I say that what Ben D. Kritz predicts as a “Storm warning” if Duterte gets elected President is well founded.

    As late as now, May 4th, 2016, reports have it that Duterte is still leading in national polls–as he has been doing the last several months. That consistency in his national poll ratings do not bode well for the final outcome on May 9th which is just 5 days away from here in New York!

    If elected President, however, it is not certain that Rody Duterte will choose to be a lawless President, knowing that if he does so, he opens himself up to being impeached by the Congress, or that the Military may even launch a putsch against him.

    I prefer to believe that he is not THAT stupid!


    • I firmly believe in the saying that you cannot teach old dog new trick. Duterte is an old dirty mouth dog and being a president, you must have new trick. Duterte statements are not a joke. Ideas comes from ones own thinking and communicated via statements and pronouncements. Expect 100 percent that there will be thousands and thousands of people in summarily killings. Criminal or not, we will never know. Expect a military coup in the first 6 months when people are assassinated and dead bodies litter the streets of Manila. That is Duterte platform. That is his legacy to the Pilipino people.