Economics, presidential

electoral politics and

markets
Calixto V. Chikiamco
The Philippines will
grow irrespective of
who gets elected
Consumer spending remains strong

GDP by Expenditure Shares at constant 2000 prices

100% Source: Philippine Statistics
Authority

80%

60%
Statistical Discrepancy

Net Exports
40%
Capital Formation (FC + CI)

20%
Government Final Consumption
Expenditures
Household Final Consumption
Expenditure
0%
2008 2009 2010 2011 2012 2013 2014

-20%
Remittances and BPO revenues
continue to fuel the economy
There is room for robust fiscal
spending
budget (in Million PhP) expenditure (in Million PhP) revenues (in Million PhP)
2500000

2000000

1500000

1000000

500000

2010 2011 2012 2013 2014

Source: DBM, BoT
The root cause of the 6.3% average
growth for the past 5 years is ???

–Daang matuwid?
–Better credit ratings?

No and No
• The source of higher than average
growth rates is: POLITICS

• President Aquino won with an

overwhelming and unquestioned
mandate in the 2010 elections

• Lesson:
Lesson: conduct peaceful and
credible elections in May 2016
Mar Roxas

PROs CONs
1. No corruption 1. Baggage of Daang
scandal Matuwid
2. Daang Matuwid 2. Perceived
(hoping popularity of incompetence in
PNOY will rub off on running DOTC and
him) DILG
3. Money and 3. Perceived loser
organization 4. Split Western
Visayas vote
5. PNOY may be
hedging his bets
 PROs CONs
1. No political 1. No political party or Grace Poe
baggage group
2. Acceptable to the 2. No executive
Yellow Institutions experience
that had mobilized 3. Coalition partners
against her father include leftist
3. Can be a unifying Makabayan bloc
figure to major 4. Vulnerable to a TKO
political blocs
 Jojo Binay

PROs CONs
1. Extensive executive 1. Heavy political baggage
experience 2. Strong resistance from
2. Been preparing for the Yellow institutions
six years 3. Loss of control of Makati
3. Competent campaign City Government
team
4. Very pro-business
program
5. Has core support
 Miriam Defensor
-Santiago
PROs CONs
1. Strong among 1. Stage 4 lung cancer
millenials 2. No political party or
group
 Rodrigo Duterte
PROs CONs
1. Track Record 1. Is he running? Can he
in Davao run?
2. Action man 2. Leftist flirtations
image 3. Does he have
3. Latest front- resources?
runner per 4. Polarizing
SWS survey
Economic Programs of Candidates

Mar Roxas
– No to economic ChaCha
– No to income tax reform
– Unsure of TPP
– Continue Daang Matuwid (whatever that
means)
Economic Programs of Candidates

Grace Poe
– Yes to economic ChaCha
– Increase infrastructure spending to 5%
of GDP
– Yes to FOI
– Appoint good people (Bernardo,
Fabella, and Habito as economic
advisers)
Economic Programs of Candidates

Jojo Binay
– Yes to economic ChaCha
– Increase infrastructure spending
– Pro mining policies
– Pro business policies
Economic Programs of Candidates

Miriam Defensor-Santiago
– No to Belmonte resolution but for
Constitutional change

Rodrigo Duterte
– Federalism
– Shoot criminals
What’s needed for
Sustained, Inclusive
Growth?
 What’s needed for
Sustained, Inclusive Growth?

1. ChaCha to open up the strategic sectors

of the economy

2. Improve agricultural productivity

a. Rice liberalization
b. Amend CARL
 Amend Section 27 to allow for the leasing of
lands
c. Remove restrictions on agricultural patents
 What’s needed for
Sustained, Inclusive Growth?

3. Modernize the Labor Code

a. Allow for more flexible wage rates
b. Remove the stringent labor security regulations
c. Solutions: Apprenticeship Law, Job Start
Law, Labor Ecozones

4. Stable property rights regime in Forestry

and Mining
 Black Swan events?
1. Armed conflict over West Philippine
Sea
2. BBL not passed and resumption of
MILF-GRP hostilities and resurgence
of terrorism
3. Another Typhoon Yolanda
4. Economic crisis in oil-rich countries
with high number of OFWs.
Technology, more than politics will
have huge impact on businesses.
• More established companies and industries
will be “uberized.”
Industry Disruptor
Taxi Uber, Grab, etc.
Hotel AirBnB
Banks Fintech
Newspapers Social Media
Shipping RoRo,, Budget airlines
RoRo
Maps, Cameras, Watches, etc. Smartphone

• PLDT’s revenue already dropping as voice and

SMS revenues fall and shift to data happens.
 Summary
• BUY – if elections are credible and fair.
Winner is uncontested.
• SELL – if elections not credible. Winning
margin thin and lots of political uncertainty
• Philippines will continue to grow at 5% - 6%
irrespective of who becomes president.
• BUT, with right policies, we can grow much
faster.
Thank you.