Sociopolitical concerns surrounding the Philippine market are starting to dent the confidence of international investors, according to S&P Global Ratings.
"(I)nternational investors may be getting worried about potential diplomatic complications and short-term law and order issues on the ground," S&P said in the September 2016 issue of Asia-Pacific Economic Snapshots.
Foreign business groups such as the European Chamber of Commerce of the Philippines (ECCP), the Nordic Chamber of Commerce of the Philippines (NorCham), and the American Chamber of Commerce of the Philippines (AmCham) have all voiced their respective concerns about the government’s war on the illegal drugs in which more than 2,000 people have been killed so far – supposedly without any due process.
"Certainly, the illegal drug menace is a serious threat in the Philippines, as it is in the US and elsewhere. However, the increased number of killings during the heightened anti-drug campaign is harming the country’s image, as portrayed by international media, and some investors are now asking whether this campaign reduced the rule of law," the AmCham said.
Some 2,400 have been killed, supposedly in connection with the administration’s campaign against illegal drugs, Reuters said in a report earlier this month.
President Rodrigo R. Duterte slammed both the European Union and the United States for voicing concerns about drug-related killings in the Philippines.
"Iyong nabasa ko ang EU condemnation sa akin, sabihin ko sa kanila, ’F_ _ _ you," Duterte said Tuesday.
Duterte also said earlier this month he does not owe US President Barack Obama any explanation regarding the issues on extrajudicial killings and human rights, compelling the US President to cancel their bilateral meeting on the sidelines of the ASEAN Summit in Vientiane.
Duterte has since expressed regrets that his tirade "came across as a personal attack on the US President."
S&P noted the Philippine peso has been trading at new lows and lagging behind its peers. "The peso has been one of the region’s weakest performers since June," it said.
At P47.845:$1, the local currency has settled at nearly seven-month lows since closing at P47.86:$1 on February 3.
Still, S&P noted that Philippine economic policies appear to be on the right track.
"The new administration’s economic policies appear sound, targeting higher infrastructure and education spending, among others," it said.
Duterte presented in June his 10-point economic agenda, mainly continuing the economic reforms of the administration of former President Benigno Aquino III and adopting a comprehensive tax reform package.
S&P said it now expects Philippine economic growth at 6.5 percent over the next few years.
The inter-agency Development Budget Coordination Committee (DBCC) expects the gross domestic product (GDP) to grow by 6.0 to 7.0 percent this year, 6.5 to 7.5 percent in 2017, and 7 to 8 percent in 2018 to 2022.
Source: GMA News