Manila: One year into President Estrada's  term  and concerns are growing not over his  policies but  about increased links between business, government and the president's pals. Has nothing been learned?

by Philip Bowring

Manila: Elsewhere there is debate about how much has been
learned from the Asian crisis. Here, a year into the Estrada
presidency people are beginning to ask: have we forgotten what
was learned from the Marcos era?

In the short term, the situation is looking up. The
Philippines weathered the Asian crisis better than most
because, through no virtue of its own, it suffered fewer
excesses. President Estrada can claim to have got through his 
first year without major mishap. Now the economy is growing
again -- it should expand by at least 2.5% this year after
only a small decline in 1998.

Business sentiment, like the stockmarket, is improving as
interest rates and inflation fall, the currency remains stable
and exports increase. The recovery is being driven by a
revival in agriculture after a severe drought and this will
lead to a pick up in consumer demand. So the president can
blame past economic ills on his predecessor and look forward
to the rewards of recovery. 

Policy-wise there been no retreat from the liberalising agenda
of President Ramos. Legislation to open retail trade to
foreigners, to increase competition in banking, to privatise
the power industry is in process. Despite recession there has
been no major backsliding from tariff reform. Senior ministers
such as Finance Secretary Edgardo Espiritu, Trade and Industry
Secretary Jose Pardo and Economic Planning Secretary Felipe
Medalla all appear on top of their jobs and espouse coherent
policies. New central bank governor Rafael Buenaventura may
partly owe his position to having been a classmate of Estrada,
but enjoys the respect of his banking fraternity. 

The business community at least seems to have learned from the
Asian crisis. Corporations have been busy reducing debt,
closing loss-making factories and agreeing to mergers or 
joint ventures with foreigners.

But business -- and a growing segment of the metropolitan
middle class -- is also worried. It is not Estrada's policies
which are causing concern. It is his style. That matters in
the Philippines, a nation where government institutions are
weak and where politicians are easily influenced by the
patronage that the executive can bestow. Decisions on purely
business issues are being made in Malacanang (the presidential
palace) not the marketplace. Deal-makers close to the palace
have been key figures in big deals including acquisition of
control of Philippine Long Distance Telephone Co. (PLDT) and
the takeover of PCI Bank. The intermediary in these cases,
Mark Jimenez, is subject to extradition proceedings by the US
on criminal charges. Government and private sector social
funds have been used to promote particular deals and shares.

Several names closely linked to the Estrada administration are
new and not yet well known. But others include such prominent  
Marcos business associates as Eduardo "Danding" Cojuangco and
tobacco magnate Lucio Tan. Both had made partial comebacks
during the Ramos era, but are now enjoying the benefits of
having been strong backers of Estrada.

It has always been difficult to keep business (with its
oligarchical tendencies) and politics (with its quasi-feudal
basis) separate in the Philippines. Cultural habits of
rewarding friends are also strong. But Ramos made a conscious
effort to reduce the government's role, to undermine oligarchy
by increasing competition and to avoid allegations of
cronyism. Success was mixed but the trend was encouraging.

The extent of payola cannot be measured. But anecdotal
evidence indicates an increase. The latest World
Competitiveness Report, ranks the Philippines close to Russia
and Indonesia for tax evasion, irregular payments and
favouritism towards well connected companies.

Estrada is seen as governing by instinct rather than by the 
methodical ways of Ramos, a military man. Cabinet meetings are
few, and regular legislative/executive meetings designed to
push along priority bills are no more. Though Estrada
supporters currently dominate both houses of Congress,
legislation has been making snails' progress.

Estrada relies on his personal popularity. The public shrugs
off criticism of his personal life and believes in his
commitment, in real life as in his movies, to the poor and the
underdog. He makes a virtue out of what other see as a
weakness -- loyalty to his friends. His classmates from
school, colleagues from the movie industry, business
associates from his days as a mayor, late-night carousing
buddies -- all are friends are to be helped not forgotten.In
turn, they help him. For instance, the movie industry recently 
withdrew advertising from a newspaper which has been critical
of Estrada. So too did PLDT. This was "the voluntary act of
sympathetic people", explained a spokesman for an Estrada
showing growing irritation with media reports of scandals.

His administration is not without its successes -- for example
a reduction in kidnappings. But its association with people on
the fringes of the business world is causing concern in many
quarters, not just among censorious Catholic bishops. So too
is Estrada's encouragement of gambling, supposedly as a means
of raising money to help the poor. His  anti-poverty program
so far has consisted more of parades of movie stars --
reminiscent of past ventures by Imelda Marcos -- than efforts
to collect taxes and invest in irrigation, roads and schools.
Priority for agriculture is just rhetoric. 

Even under the best of administrations, a Philippines with
woeful infrastructure, narrow industrial base, high population
growth and limited natural resources would have difficulty in
maintaining the 5% growth of the Ramos period. Even that was
largely the work of remittances from overseas Filipinos and
foreign capital induced by the opening of markets. Estrada may
yet galvanize himself into action. He may listen more to
ministers and less to friends. He may use his popularity to
take on the church over family planning. He may collect taxes
and promote job-creating investment over crony capitalism. He
may remain popular regardless of his performance in office.

But there is a long way to go before the celluloid champion of
the poor becomes their real champion.




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