Duterte’s anti-US rhetoric, policy jitters spook investors

PRES. Rodrigo Duterte’s anti-US rhetoric, policy uncertainties and concerns of law and order are starting to spook investors notwithstanding the country’s status as Asia’s fastest growing economy, an economist from Dutch financial giant ING suggested.

“Market’s perception of the political and diplomatic environment has turned for the worse. The incessant anti-US rhetoric from the new government and concerns of law and order (related to extra-judicial killings) and policy uncertainties have contributed to the guarded view of investors,” ING economist for the Philippines Joey Cuyegkeng said in a research note issued on Wednesday.

Cuyegkeng also expressed concern on indications of a widening of rift between the Philippines and long-time ally US, as reported by the media.

“Today’s headline continues with the perceived “anti-US” sentiment or rhetoric of government with the order for the US to remove its military personnel in Mindanao who have been present in Mindanao for years. The reason being that US military personnel would be high-value targets of the ASG (Abu Sayyaf group),” Cuyegkeng said.

The economist also noted a report from the Philippine National Police that a little more than half of the almost 3000 killed during the on-going anti-illegal drugs campaign of government were under investigation and had been considered by media as vigilante killings. The other half was reportedly killed during police operations.

Cuyegkeng also took note of reports that the President intentionally did not attend the US portion of last week’s Association of Southeast Asian Nations (Asean) Summit although representatives pointed to a bout of migraine.

Mr. Duterte said he had skipped the Sept. 8 meeting between Asean leaders and US president Barack Obama in Laos on Sept. 8 because as president of a sovereign state, he did not want to be lectured about his war on drugs.

“Recent policies have challenged the prevailing economic order too. Some may have acceptable reasons such as to encourage greater competition and bring about greater service to the consumers or to address rent-seeking activities and promote fair play and to improve inclusivity of economic growth and bring about a greater number of beneficiaries of the relatively high growth of the economy that is expected for the rest of the decade,” Cuyegkeng said.

“But the policies also bring about questions of sustainability of economic activity and private investments. All these uncertainties and concerns exert greater importance in the investment decisions of local and offshore investors. These too could eventually undermine prevailing macroeconomic fundamentals as the new government puts in place a new political, diplomatic and economic order.