Stocks, peso drop as foreign investors start worrying about Duterte’s course
Thousands of extrajudicial killings of alleged drug dealers and users, a “state of lawlessness” declaration and a spreading climate of fear is starting to worry foreign investors in the Philippines as the honeymoon period of acid-mouthed President Rodrigo Duterte seems to reach its end.
One of the most affected sectors is the stock market. Official data from the Philippine stock exchange showed the net foreign transactions on the benchmark Philippine Stock Exchange index fell every week between August 15 and September 16 as investors pulled out money rapidly. Dropping 4.48 per cent over the one-month period, the index was the worst performer in the region. Additionally, the Philippine peso dropped 3.37 per cent against the dollar during this period.
But the killings are just one problem. Duterte’s rants at the United Nations and at US President Obama make the impression on investors that he is a volatile and unpredictable figure. Remarks against China that cast doubts over the future of the country’s foreign policies are also not helpful.
Analysts say that, initially, many of Duterte’s proposed policies such as liberalising foreign direct investments and increasing infrastructure investment came as positive news for investors, but action on this economic agenda is so far lacking as it seems that the current administration has lost its focus on prioritising economic programmes, being to busy with the war on drugs which was just extended for another six months.
Investors thus are worried that the Philippine economy, whose strong growth in the past was firmly grounded in the policies of Duterte’s predecessor, Benigno Aquino III, will come to an end as Duterte seems to be unwilling to abide by conventional political norms that would retain the country’s relative political stability.
While drugs are indeed a menace to the country, and many in the Philippines think it is only right for the government to fight it aggressively, observers find this stance to be short-sighted. Drug problems almost always have their roots in social disorder and poverty, thus rather than killing drug users the Philippines shoudl walk a more sustainable path and create the jobs it needs to sustain the livelihood of its people.
This is partly done by foreign direct investment, but it is not going to realise its beneficial demographic dividend if the right policy is not in place for investors.
However, domestically, businesses have a more pragmatic stance, and members of the Philippine Chamber of Commerce and Industry (PCCI) countered claims that investors are being scared off by the rising number of drug deaths.
“What companies have said they will close down because of the war on drugs? I would like to ask them, name one or two,” PCCI Honorary Chairman Sergio Ortiz-Luis, Jr. said.
The “cold, hard truth,” he pointed out, is that foreign investors focus only on income.
“They don’t care if 50 per cent of Filipinos are killing each other so long as they’re not affected.”
Thousands of extrajudicial killings of alleged drug dealers and users, a "state of lawlessness" declaration and a spreading climate of fear is starting to worry foreign investors in the Philippines as the honeymoon period of acid-mouthed President Rodrigo Duterte seems to reach its end. One of the most affected sectors is the stock market. Official data from the Philippine stock exchange showed the net foreign transactions on the benchmark Philippine Stock Exchange index fell every week between August 15 and September 16 as investors pulled out money rapidly. Dropping 4.48 per cent over the one-month period, the index was the...
Thousands of extrajudicial killings of alleged drug dealers and users, a “state of lawlessness” declaration and a spreading climate of fear is starting to worry foreign investors in the Philippines as the honeymoon period of acid-mouthed President Rodrigo Duterte seems to reach its end.
One of the most affected sectors is the stock market. Official data from the Philippine stock exchange showed the net foreign transactions on the benchmark Philippine Stock Exchange index fell every week between August 15 and September 16 as investors pulled out money rapidly. Dropping 4.48 per cent over the one-month period, the index was the worst performer in the region. Additionally, the Philippine peso dropped 3.37 per cent against the dollar during this period.
But the killings are just one problem. Duterte’s rants at the United Nations and at US President Obama make the impression on investors that he is a volatile and unpredictable figure. Remarks against China that cast doubts over the future of the country’s foreign policies are also not helpful.
Analysts say that, initially, many of Duterte’s proposed policies such as liberalising foreign direct investments and increasing infrastructure investment came as positive news for investors, but action on this economic agenda is so far lacking as it seems that the current administration has lost its focus on prioritising economic programmes, being to busy with the war on drugs which was just extended for another six months.
Investors thus are worried that the Philippine economy, whose strong growth in the past was firmly grounded in the policies of Duterte’s predecessor, Benigno Aquino III, will come to an end as Duterte seems to be unwilling to abide by conventional political norms that would retain the country’s relative political stability.
While drugs are indeed a menace to the country, and many in the Philippines think it is only right for the government to fight it aggressively, observers find this stance to be short-sighted. Drug problems almost always have their roots in social disorder and poverty, thus rather than killing drug users the Philippines shoudl walk a more sustainable path and create the jobs it needs to sustain the livelihood of its people.
This is partly done by foreign direct investment, but it is not going to realise its beneficial demographic dividend if the right policy is not in place for investors.
However, domestically, businesses have a more pragmatic stance, and members of the Philippine Chamber of Commerce and Industry (PCCI) countered claims that investors are being scared off by the rising number of drug deaths.
“What companies have said they will close down because of the war on drugs? I would like to ask them, name one or two,” PCCI Honorary Chairman Sergio Ortiz-Luis, Jr. said.
The “cold, hard truth,” he pointed out, is that foreign investors focus only on income.
“They don’t care if 50 per cent of Filipinos are killing each other so long as they’re not affected.”
