Martial law in Mindanao deemed overkill by bank, welcomed by BSP
MANILA — The declaration of martial law in Mindanao was deemed to be an “overkill” by ING Bank Manila, although Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said Wednesday that government moves to suppress terrorist activities in the war-torn island would improve investor sentiment moving forward.
In a note to clients, ING Bank Manila senior economist Joey Cuyegkeng said a declaration of a state of emergency would have been “more appropriate” as the declaration of martial law “implies that the government has lost control of the situation in Mindanao when in fact the incident is isolated.”
“But the President has threatened in the past weeks to impose martial law as a result of movements of terrorist groups as well as military activities of the military arm of the communist party. His intentions are likely to give him more leeway to address the overall peace and order situation in the island including activities of not only extremist groups but likely also to address activity of the armed wings of the communist party,” Cuyegkeng said.
In terms of impact on the domestic financial markets, Cuyegkeng said it would likely be “limited,” adding that “calm likely to return after the initial reaction.”
“The problem is that markets are also affected by the surprise Moody’s credit rating downgrade of China by one notch this morning,” Cuyegkeng said, as the debt watcher warned that “China’s financial strength will erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows,” reports said.
But for Tetangco, the declaration of martial law covering the entire Mindanao was “a very decisive move in the part of the government,” as he noted that its main objective was to “improve the security and peace and order situation, which should lead to even greater confidence down the road.”
“There may be some transitory or temporary cautiousness, but in the end I think it will lead to a positive impact on sentiment,” Tetangco told reporters on the sidelines of the special testimonial luncheon in his honor that was hosted by seven local and foreign business groups.
Tetangco said the BSP has been monitoring the situation of bank offices and branches in Mindanao, “and the reports were it’s business as usual so far.” SFM
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