- Prospects for the Philippine Economy under the Duterte Presidency
President-elect Rodrigo Duterte is an enigma. Considered as an “outsider” in the current political structure, with meager electoral machinery at his disposal, he nevertheless confounded critics with a landslide victory on 9 May 2016. Unlike the other presidential candidates, Duterte’s campaign was short on concrete economic policies, but long on areas that touched a sensitive chord with the citizenry: stamping out corruption; restoring peace and order; eliminating drugs (which he considers as the scourge of society); and exercising decisive leadership. Now that the electoral dust has settled, it is time to examine what type of economic order one might expect from a Duterte presidency.
The first major point to resolve is where to position Duterte on the political spectrum, as this will influence his economic policies. Prior to the elections, presidential candidate Duterte shocked members of the Makati Business Club — a forum composed of senior executives of the leading business corporations in the Philippines [End Page 197] — with a rambling speech replete with expletives, but with little content about the economic policy that he would follow if elected as president.1 During the campaign, he referred to himself as a “socialist”.
How real this “socialist” streak is could be revealed through an examination of Duterte’s accomplishments when he was mayor of Davao City. Davao entrepreneurs waxed lyrical about how business friendly their mayor of some twenty years had been. He not only transformed one of the most violent cities in the country into a very peaceful community with low crime rates, but he also significantly improved the business climate by shortening the time for securing all types of business permits, getting rid of corruption in the bureaucracy and significantly improving the city’s infrastructure. Thus, his many years of experience of respecting market forces and the human rights of individual economic initiative contrast markedly with Duterte constantly referring to himself as a “socialist”.
Given his track record, Duterte was in truth and in deed not a socialist but a social democrat along the lines of the social market economy of the former Federal Republic of Germany. As Carlos Dominguez III, the presumptive secretary of finance under the Duterte administration, announced the eight-point economic agenda that Duterte intends to pursue, it became clearer that Duterte is far from being a socialist.2 He has no intention of nationalizing strategic industries, distributing private lands to small farmers, or increasing substantially both the fiscal deficit and national debt of the government, as did the most recent socialist governments of Greece, Venezuela, Brazil and up to recently Argentina, bankrupting their nations and drastically increasing the misery of the poor in their respective countries. On the contrary, Duterte wants to continue implementing the very prudent macroeconomics policies of his predecessor, President Benigno Aquino III, which leftists are referring to derisively as “neo-liberal”. Duterte wants to remove the restrictive economic provisions in the 1987 Constitution in order to attract more foreign direct investments. He also wants to involve more private participation in the construction of infrastructure projects by removing bottlenecks in the implementation of the Public Private Partnership (PPP) programme, an arrangement for funding and managing a public infrastructure project between a government unit and the private sector. These are all market friendly policies that are far removed from conventional leftist economic sentiments.
Duterte, however, does not believe in the absolute monopoly of the market. Very faithful to the principles of a social market [End Page 198] economy, he firmly believes that the government has to be strongly interventionist in areas where the market fails. The state must be responsible for keeping peace and order, administering justice, constructing public works and delivering social services especially to the poor. In essence, Duterte wants to focus on establishing the necessary conditions for sustainable social and economic progress. He wants to pursue a genuine agricultural development strategy that will depart from the simplistic approach of land redistribution. Furthermore, he wants to focus on providing support services to the small farmers who have been the beneficiaries of the first phase of agrarian reform introduced by former President...