From a shaky start to a sturdy partnership: Businesses buckle up for an economic liftoff

MANILA, Philippines - It was a shaky start in the relationship between the business community and then presidential frontrunner Rodrigo Duterte, with their views on various issues mostly on opposite ends.

Executives of big companies and influential business groups, after all, were looking for clear economic policies from the former Davao City mayor but instead, were more often treated to stories on womanizing and vigilante-style killings.

With a looming Duterte regime, businessmen turned jittery on growth prospects, uncertain on whether the strong pace of economic recovery would be sustained.

After Duterte won the national elections last May, he quickly assembled his economic team, which later came out with a 10-point agenda for further growth.

Bit by bit, concerns of a potential slowdown eased and Asia’s rising tiger goes back roaring in an instant.

“There’s momentum in the economy and there’s a lot of positive vibrations we’re feeling. It has a lot to do with the new administration. Their initial pronouncements are very positive and are very well received by the business community. The composition of the Cabinet is also very good, there are people there who are very highly respected,” Makati Business Club (MBC) chairman Ramon del Rosario Jr. said.

“So I expect pretty good growth this year. A six percent to 6.5 percent (growth rate) is my own expectation for the year. At the moment, there is reason to believe, and I think it is pretty certain, that the economy will continue moving forward quite well. On the whole there is a reason to be optimistic and hopeful,” he added.

Together with the MBC, other formidable local business organizations such as the Philippine Chamber of Commerce and Industry and the Management Association of the Philippines have likewise placed their bets the economy would expand at least six percent this year.

Prominent businessmen likewise shared their renewed optimism on the potential growth of the Philippine economy for the whole of 2016 and even in the years ahead.

“Economic numbers are there, the momentum is there. We just need to follow up on what has been created thus far from the previous administrations. I don’t think there will be any slowdown. Our numbers are correct, momentum is correct, interest rates are under control and there are no major geopolitical issues that are hanging over us like other regions in the world so I think we’re in a good space. We just have to mitigate certain risks,” former ambassador and Century Properties Group founder Jose E.B. Antonio said.

“As in any new administration, there is a lot of vision and a lot of good intentions. I think a big part of the success of any administration is in the implementation because as they say, vision without implementation is hallucination. So what is needed is really speed of implementation. The mandate that our new president got is resounding which reflects the impatience of people in having solutions in some very obvious problems. It is now up to the new administration to meet these expectations,” he added.

Tessie Sy-Coson, SM Investments Corp. vice chairperson, for her part said the company’s experience in Davao where Duterte reigned for a long time has been very positive, particularly in terms of peace and order and ease of doing business.

She hopes the same type of management and governance will be implemented nationwide.

“If they put their acts together and President Duterte looks into the peace and order situation and the anti-drugs so that the environment will be easier for businesses to do their own business, then I think our economy will be growing further,” Sy-Coson said.

While the local business community’s optimism with the country’s economic potential can be considered strong, that of the foreign business community is even more bullish.

Foreign business chambers in the Philippines for their part, are projecting the possibility of a gross domestic product (GDP) accelerating seven percent this year on the back of election spending, retaining of key macroeconomic policies from the previous administration, and the new administration’s 10-point economic agenda.

“We do not see why continued growth of the Philippine economy would not continue in 2016. The macroeconomic fundamentals remain favorable, and that picture is not expected to change any time soon. The business process outsourcing (BPO) sector will remain strong and growing. External factors could pose a threat to growth, but the Philippines should be able to sustain these fluctuations thanks to its strong private consumption in the domestic market,” Nordic Business Council of the Philippines president Bo Lundqvist said.

“A seven percent growth should be possible if the incoming administration continues the economic policies of the outgoing administration and can quickly resolve some of the transportation inefficiencies, achieve the five percent targeted level for public sector spending on infrastructure, introduce comprehensive tax reform quickly, and move forward on its 10-point program and the recommendations of business made in Sulong Pilipinas. When there is strong confidence in the business environment and reforms are underway, investments should increase,” American Chamber of Commerce of the Philippines senior advisor John Forbes said.

For European Chamber of Commerce of the Philippines president Guenter Taus, Duterte’s 10-point economic agenda presented during a business forum in Davao last month captured the business community’s confidence and cemented the view they can work together with the new administration to achieve joint goals.

“What we have seen up to now from the incoming administration is positive. The business community will now be watching to what extent the proposed measures are implemented,” he said.

While the growth in the first half of the year sets the country on track for a seven percent GDP growth rate, Taus, however, warned of potential factors that may hamper the country’s growth trajectory in the remaining months of the year.

“In terms of potential causes of a slowdown, it will be dependent on the actions taken in the first months of the new administration. But most important will be the potential impact of external factors, such as the uncertainty in European markets and the elections in the United States towards the end of the year,” he said.

“Some policies being voiced for labor and mining may undermine the business climate. There are some questions that we hope to clarify about labor policies, bans on responsible mining, and crime-fighting which could affect potential economic growth,” Forbes added.

Despite Duterte’s earlier pronouncement on mass killings of criminals, however, the entire business community remains hopeful the new President will respect the rule of law and constitutional rights of every citizen in carrying out its focused agenda on law and order enforcement.

“We are excited about seeing the reforms and pro-business policies which has been a central part of the Duterte platform of governance being implemented. We remain hopeful the good initiatives by the former administration will be continued, and that new be introduced with the objective of growing an inclusive economy that will benefit the Filipino community as a whole,” Lundqvist said.

“Over the last few years, the country has made progress in implementing good governance mechanisms. We would like to see this trend to be carried over to the new administration, harnessing an environment which has less bureaucracy, red tape, and corruption, and nurtures a culture of integrity and transparency,” he added.

For as long as the economy is taken care of and the rule of law is upheld, the business community sees no problem working with the President and his team for the next six years no matter how contradicting some of their views may be.