EDITORIAL - A slide in confidence

The mention of the Philippines was brief, but significant: the country suffered the steepest drop in business confidence in Asia even as sentiment across the region rebounded in the fourth quarter, according to a survey.

While the Thomson Reuters / INSEAD Asian Business Sentiment Index covers only three months, the country’s slide from 67 to 83 is a steep one that should ring alarm bells.

The Aquino administration, with its focus on fighting corruption and promoting good governance, has enjoyed a long period of high business confidence. The country has also been rated investment grade for the first time by all the major international credit rating agencies.

Economic growth is lower than projected this year, however, as government spending slowed down. The government has blamed this on the scrapping of the Disbursement Acceleration Program, which the Supreme Court invalidated along with the pork barrel or Priority Development Assistance Fund. But the economy managed to grow in the past without the DAP, and it can continue to do so without Malacañang insisting on the discredited program.

The scandal over the DAP and PDAF raised questions on the commitment to reforms of the administration that promised to follow the straight path or tuwid na daan. Adding to the concerns is the clear reluctance of President Aquino to let go of administration officials and go after political allies who are accused of corruption.

There are other factors that can undermine business confidence in the Philippines when compared with the rest of Asia. Among these are the high cost and unreliability of power supply, inadequate infrastructure, poor regulation, a weak and unpredictable judicial system, and the continuing congestion in the Port of Manila.

The Aquino administration has had four years of uninterrupted high business confidence. The latest drop should give urgency to the implementation of more reforms in what the President has described as his last two minutes.