A partial list of possible Cabinet appointees to the Marcos administration, particularly on the economic group, would at least quell the jitters of foreign investors, who have adopted a wait and see attitude.
To quell the uneasiness of investors, the camp of presumptive president Ferdinand Marcos Jr. released today a partial list of Cabinet members when they take over the reins from the Duterte administration in July.
The release was made in view of foreign investors adopting a wait and see attitude as to the Cabinet officials the presumptive president would pick and the policies to be implemented by the new administration.
As of May 12, the possible Cabinet members of the presumptive president Marcos Jr. were: Education, presumptive vice president, Sara Duterte-Carpio, Energy—Mikee Arroyo (son of former President GMA, who was the brains behind Sara’s run); Executive Secretary Atty. Vic Rodriguez, spokesman of Marcos Jr. during the campaign; Finance – Cesar Purisima (who held this post during the time of the late President Pnoy Aquino) or Jose Arnulfo Veloso ((president/CEO of Philippine National Bank) or Walter Wassmer, 63 (who retired last April from BDO Elite Savings Bank, formerly GE Money Bank and classmate of Marcos Jr. in La Salle); Foreign Affairs, Prof. Clarita Carlos; health Dr. Edsel Salvana; Interior and Local Government, Mayor Benjamin Abalos Jr.; Justice, Cong. Rodante Marcoleta; Labor and Employment Susan ‘Toots” Ople (daughter of Marcos Sr.’s Labor Secretary Blas Ople); Public Works, Cong. Roger Mercado (acting DPWH Secretary of Duterte); Science and Technology Dr. Carlo Arcilla; NEDA Dr. Arsenio Balisacan (same post he held during Pnoy and as head of the Philippine Competition Commission under Duterte); Spokesperson Atty. Karen Jimeno; Trade and Industry Jose Arnulfo Veloso (also being considered for finance) and Transportation Arthur Tugade (who holds the same post under Duterte).
Wassmer is said to have declined being appointed three days ago and the list is said to have come from some industry people.
Recovery from the pandemic
Investors are awaiting Mr. Marcos’s announcement of his economic team that will oversee the Philippines’ recovery from the pandemic.
Uncertainty over the lack of details of the incoming president’s economic policies may have spilled over to the stock market, where the Philippine Stock Exchange index (PSEi) dropped by as much as 3.1 percent on Tuesday morning. It closed 0.57 percent lower at 6,720.93.
“It’s too early to tell, because unfortunately, Marcos Jr. did not present much of a platform during the campaign,” BPI Lead Economist Emilio S. Neri, Jr. told Business World. “Hopefully he appoints the best economic managers to guide him in a more market-friendly direction and allows them to run their respective offices effectively.”
‘Credible and competent’ economic team
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the next administration would need a “credible” and “competent” economic team that will implement policies promoting environment, social, and governance (ESG) to attract investments.
In an interview with Bloomberg TV, PSE President and Chief Executive Officer Ramon S. Monzon told Bloomberg TV earlier that foreign investors are waiting to see who the members of Marcos Jr.’s economic team will be.
“The new economic team has a lot of things, a lot of hard work in front of them. Basically, I think they really need to look at finding a new revenue stream. We can’t be sustaining this economy with what we have now,” he said, noting the increase in foreign debt during the pandemic.
National Government debt stood at a record P12.68 trillion as of end-March, with external debt rising 25.8 percent year on year to P3.81 trillion. The debt to GDP ratio is at 64 percent.
“I think for the foreign investors, there will be a short wait-and-see (period) to see who the economic team will be,” he said. “I think the ingredients are there, it’s a question if the new team will have the dynamism the country needs,” Monzon added.
The government is targeting 7-9 percent gross domestic product (GDP) growth this year, although the ongoing pandemic, Russia-Ukraine war and high inflation has clouded the outlook.
Corruption, nepotism, poor governance
“Given his family background and his checkered political career to date, there are concerns among investors that his election will fuel corruption, nepotism and poor governance,” Alex Holmes of Capital Economics Emerging Asia economist said.
“Similar worries also greeted Duterte’s election victory in 2016 and corruption does appear to have worsened — the Philippines has fallen 16 places in the Transparency International Corruption Perceptions Index since the last election. Despite this, there was no major drop in the performance of the economy.”
He noted Marcos gave few policy details during the campaign but is widely expected to follow outgoing President Rodrigo R. Duterte’s lead, particularly the “Build, Build, Build” infrastructure program and closer ties with China.
“Extra spending on infrastructure would probably increase government debt. A bigger concern is the impact of the policy on the current account and the peso,” Holmes said.
He added that closer ties with China may involve a trade-off in the Philippines’ relationship with its traditional ally, the United States.
“There seems little economic rationale for turning away from a country that accounts for a greater share of export demand than China, has invested heavily in the large business process outsourcing sector and is a huge source of remittances,” he said.
Economic continuity
Victor A. Abola, an economist at the University of Asia and the Pacific (UA&P), said some degree of economic continuity is likely under the Marcos administration.
“I think there is going to be very little change in the policies. For one, infrastructure spending will continue. Because that’s a really urgent need, but that’s the one that has created jobs,” he said in an ANC interview.
However, Abola said Marcos will not inherit an economy with a healthy fiscal position this time, unlike the Duterte administration in 2016.
“Then you have high inflation and then you have debt, fiscal space is getting a bit narrower, but I don’t think that these are big enough to undo the gains that we have achieved in the past decade. With interest rates relatively low, we should be okay. There is still a lot of room because the budget is quite huge,” he added.
Headline inflation soared to 4.9 percent in April, the highest in over three years, fueled by the spike in oil and commodity prices due to the Russia-Ukraine war.
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