Duterte harks back to bad old Marcos days in the Philippines, leaving investors on edge
William Pesek says the progress made under Benigno Aquino to erase the legacy of the Marcos dictatorship and promote investment has been largely undone by Duterte’s hardline anit-crime campaign and warm gestures to the Marcos family
The goal was partly personal, of course. In 1983, Aquino’s father was assassinated trying to oust the dictator Ferdinand Marcos. His mother, Corazon, helped lead the People Power Revolution that drove Marcos from office (she replaced him in 1986). But it was also smart economics. The kleptocracy Marcos created over 20 years concentrated wealth among a handful of tycoons. Smashing that system is the key to eradicating poverty and increasing global competitiveness.
By the time Aquino turned that task over to Rodrigo Duterte in June 2016, the Philippines was enjoying a renaissance: its first-ever investment-ratings, tidal waves of foreign capital and growth rates rivalling China. Why in the world, then, would Duterte drag the nation back to the bad old Marcos days?
It’s not just his authoritarian flourishes, affection for martial law, efforts to silence the press or a brutal drug war that’s filled more body bags (at least 7,000) than even Marcos. It’s Duterte’s bizarre Marcos revisionism that boggles the mind and speaks to why foreign investors who’d just rediscovered the Philippines are selling peso assets. This Marcos-rehabilitation push suggests investors are right to worry.
In the 1960s, the resource-rich Philippines was destined to be the Japan of Southeast Asia. Marcos ran the economy into the ground and raided the treasury. For decades, the family claimed it hadn’t fled to Hawaii with upwards of US$10 billion. After Ferdinand died in exile in 1989, his widow Imelda returned to the Philippines with the children, feigning poverty. Gone, she pretended, was her notoriously opulent lifestyle – the shoes, the jewels, the jet-setting.
Many Filipinos bought the act, even electing Imelda to the House of Representatives in 2010. Her daughter, Imee, became governor of Ilocos Norte. Son Ferdinand Jnr was a senator who ran for vice-president in 2016. But Duterte’s unlikely presidency is the real win for Marcos Inc. Duterte outraged millions by giving Ferdinand Marcos the “hero’s burial” the Marcos clan had long sought. Next, he marginalised Vice-President Leni Robredo, who has said publicly she believes he wants her out. Duterte raised the possibility of Ferdinand Marcos Jnr, whose nickname is Bongbong, replacing her.
Duterte’s latest pro-Marcos play may be the most surreal: allowing the family to return “a few gold bars” it claims it never stole to ease Manila’s budget shortfall. Why not seize it and all Marcos properties? Why not employ handcuffs and give 100 million Filipinos the justice they’ve long deserved?
The Marcos billions returned to global headlines in 2012 when Imelda’s secretary was indicted for selling a work from Claude Monet’s Water Lilies series. That re-energised efforts to go after 150 masterpieces by Michelangelo, Picasso, Raphael, Titian, Van Gogh and others that the Marcos family claims they don’t have. In 2016, Marcos daughters Imee and Irene were named in the Panama Papers – which detailed offshore accounts of rich and famous everywhere – along with several other family members.
The chilling thing is that Marcos Inc. now has an ally in the presidential palace. Thus far, Duterte’s most publicised sin is deputising bands of gunmen to kill drug pushers and users extrajudicially. Drugs should be addressed, of course, but all that shooting and bloodshed is eclipsing all else. An unabashed populist, Duterte’s mandate was using his strongman persona to, Donald Trump-like, take things to the next level. Instead, he pivoted to a war of choice, drawing human-rights rebukes and denting Manila’s global soft power.
Duterte has moved slowly to increase job creation, invest in innovation and productivity-enhancing industries, root out graft or build better roads, bridges, posts and power grids to boost competitiveness. His reliance on government-led infrastructure projects over private-sector ones could be a boon for public corruption, a downer for foreigner investors, and could blow up a national debt Aquino made inroads repairing.
Aquino’s remedy for balance-sheet renewal was attacking graft, increasing transparency and going after tax cheats. Duterte? Gold bars from a notorious family with designs on returning to the palace.
Duterte is lucky in one way: momentum from Aquino’s reforms continues to drive the economy forward, currently at a 6 per cent pace. It will prove fleeting if Manila doesn’t accelerate reforms at a moment when India, Indonesia and Thailand are vying for the same jobs, investors and factories. A bull market in armed assassins walking the streets doesn’t help.
Manila, meanwhile, has its own dangerous addiction, one Duterte is making worse: remittances. Weak job growth forces more than 10 per cent of Filipinos to work abroad and send money home. Far more would flee if immigration departments in Dubai, Hong Kong, Singapore and elsewhere processed visas faster.
Aquino realised that people should never be your main export, as the dynamic depletes local labour pools. He began the work of enticing his diaspora home. But Duterte sees overseas workers as a vital support base to be grown and catered to. Imelda Marcos, too. A sizable number of twenty-somethings working abroad, sadly, view the Marcos family more as celebrities than hoarders of national wealth.
For all the gains made since 2010, the Philippines has yet to have the cathartic break with the malfeasance of the past. It now has a president who seems nostalgic for the bad old days and squandering economic progress. If that isn’t a warning sign for investors pining for a new Philippines, what is?
William Pesek is a Tokyo-based journalist and the author ofJapanization: What the World Can Learn from Japan’s Lost Decades. Twitter: @williampesek