Dr Imelda Deinla is a Fellow at the School of Regulation and Global Governance and the Project Director of the Philippines Project, a policy-engaged research initiative between ANU and DFAT on Philippine economy, trade, politics and governance.
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Having generated a maelstrom of controversy during his campaign, Rodrigo Duterte has analysts scrambling to understand what his presidency will mean for the Philippines and the region, writes Imelda Deinla.
Even before he took the top job, newly-elected President of the Philippines, Rodrigo Roa Duterte, gained international notoriety for his crass joke about the rape of an Australian nun and crude insults against the Pope, the United States and Singapore during his campaign sorties.
Many analysts are concerned that a Duterte presidency will lead the country towards economic perdition by damaging its relations with key economic and political allies, and tarnish the Philippines’ international image. Worse, they are alarmed that Duterte’s bellicose personality will further escalate tension with China over the South China Sea dispute.
Initial fears over a possible Duterte presidency soon dissipated after he won by a large margin. The stock market greeted his victory enthusiastically, posting a nine per cent jump, while the Philippine peso rose against other currencies in Asia.
Having articulated little of his economic and governance platform during the campaign, there is lingering doubt over what a Duterte presidency will mean for the country and its foreign relations. What will Philippine foreign policy be under Duterte? How will Duterte, a former mayor of Davao City and a public prosecutor, provide leadership in navigating the often complex and delicate process of international diplomacy? And how will his administration deal with China, and work with its neighbours in ASEAN?
Domestic policies are shaped by both domestic and international interests. Good leadership is needed to manage competing claims and steer a common vision that serves broader goals and interests. The election discourse clearly underlined a popular demand for inclusive growth where many ordinary Filipinos expressed their frustration over the elites’ privileges in reaping economic benefits. It brought to the fore the need for a fair and effective legal system, the delivery of public services by competent and apolitical bureaucracies, a safe and secure environment, and a level playing field for economic opportunities.
Foreign relations did not get as much attention as domestic concerns in the campaign. However, business unease over Duterte’s remarks on the US, Australia and China reflects that sustaining economic growth depends on favourable external relations. These include the economy’s need for a sustained inflow of foreign investments, and for overseas employment for Filipinos and their dollar remittances. Enhancing regional cooperation and maintaining security and stability is essential in increasing investment and trade flows that will in turn generate domestic growth and jobs.
Duterte’s newly released 8-point Economic Agenda, and early pronouncements on increased diplomacy with China and a state visit to Indonesia, point to a measured approach to intertwined domestic and international issues. If this is the case, it will sustain macroeconomic policies and governance reforms that stimulated growth and generated foreign investor confidence under the Aquino administration.
The difference with the Duterte administration is the commitment to accelerate long-promised reforms, and allow the majority and marginal sectors to benefit from economic growth. Priority measures will accelerate infrastructure growth, enhance economic competition by addressing structural barriers of monopolies and concentration, create a more competitive business environment, and improve the ease of doing business. These are programs that were started by the past administration but have lagged or been constrained by political rent-seeking and corruption. The bungled attempt by Telstra in the Philippines to invest in telecommunications was largely blamed on a ‘duopoly’ in this sector, and a weak competition and regulatory regime. Duterte’s transition team has promised a more transparent administration, and have vowed to implement freedom of information in the executive department and tackle issues of unfair playing fields and corruption in government. A Davao Job Fair is planned for recruiting the best and brightest to fill over 400 top jobs in the bureaucracy.
Duterte’s economic agenda makes big promises, putting constitutional amendment as a top priority by proposing a shift from the current presidential-unitary system of government to a parliamentary-federal system and proposing a review of nationalist restrictions on foreign ownership that have so far only benefitted the entrenched elites in the country.
At the micro level, the economic program will address problems in land administration and management, where disputes over land have been one of the major causes of conflict and violence. Moreover, a progressive tax system and expansion of the conditional cash transfer system are aimed at facilitating a ‘trickle-down’ of wealth to the poor and marginalized sector.
Strengthening regional cooperation and fostering stronger relations with neighbours seem to be high on Duterte’s agenda, as evidenced by the announcement of a state visit to Indonesia.
ASEAN should also be a priority for the new President; the Philippines will assume the Chair of the organisation in 2017. It is an opportunity to enhance trade relations under the umbrella of the ASEAN economic community which, in recent years, have influenced governance and regulatory strategy in the Philippines such as reforms in customs administration and trade facilitation.
The Philippines is not a key player in intra-regional trade but has good prospects for benefitting from possible freedom of movement of skilled labour given its vast supply of educated and English-speaking professionals. A revitalisation of the BIMP-EAGA, an ASEAN initiative in which Duterte and Davao have played a major role since the 1990s, is expected to be injected with more vigour as the new President is known to support economic initiatives that would stimulate development in Mindanao.
It is also good time to seek greater cooperation from ASEAN to strengthen its position on the South China Sea issue. However, it is not yet clear what Duterte means by ‘more diplomacy’ except by stating the need ‘to talk’ with China. Duterte will have to manage this carefully, given that the Philippines had also strengthened ties with the United States under the Aquino presidency to counter China’s growing aggressiveness in the disputed area.
There are high expectations of the Duterte administration on both the domestic and international fronts although it is too early in the day to judge whether he can meet these. But his ‘can-do’ and ‘problem-solving’ attitude has captivated a broad spectrum of Filipinos and President Rody, as he wants to be called, may well just surprise the critics.
This article was originally published on Advance.