There has never been a time the oligarchs had a good reputation amongst the average Filipino. That ended with Marcos’ ouster in 1986. But then, they were referred to as cronies. Post-EDSA, they were still cronies and among all of them, it was only Eduardo Cojuangco Jr. who was able to make a succesful comeback after his short US exile. Lucio Tan never left and did not get mired in sequestration issues with the PCGG. Why this happened only Kapitan knows.
Former Ambassador to Greece and Presidential Chief of Staff Bobi Tiglao is optimistic that the cronies cum oligarchs will help BBM in keeping the economy afloat despite the strong headwinds it faces externally. The only way this can happen is if the cronies cum oligarchs stop the pursuit of rent-seeking business ventures and put up manufacturing facilities processing agricultural raw materials. Increased agricultural productivity is the key to consistent economic growth and is a strong employment driver.
Up to today, Marcos has not named a Secretary of Agriculture. There is the issue of agrarian reform which now falls on the lap of his LSGH batchmate, Conrado Estrella III, whose own father headed the ministry during the time of Apo Lakay.
The conundrum has always been land for the landless or land for the scaleability; meaning the economies of scale needed for agriculture to be profitalble and mass produce vegetables and livestock to feed 106M Filipinos. This is a quandary which has befuddled every President since Roxas up to Duterte. It is the basis for the “revolution” of the Left which is also never-ending. They have been at this since the 1930s with the founding of the Partido Komunista ng Pilipinas, which was revived by Jose Maria Sison and Ninoy Aquino in 1968 as the Communist Party of the Philippines.
In the past, it was our colonial masters which held us back. After 1946, the Americans never left and went into partnership with the elites of society, the oligarchs or cronies. Cronyism was not a Marcos invention. It has been there since the colonial period. It has dragged down our economy because they do not like competition which is why our Constitution is inward-looking.
BBM has another ace up his sleeve to help him in handling the economy. The big businessman the Yellows had vilified as “cronies” of his father have proven wrong the accusations against them that they are dependent on government favors: They have created the country’s biggest conglomerates since Marcos fell in 1986, among them the late Eduardo Cojuangco’s San Miguel Corp., now mainly owned by his protégé Ramon Ang, the Lucio Tan group, the J.Y. Campos, the Tantocos, Antonio Floirendo.
While certainly not accused of being cronies, include there the families of taipans whose conglomerates grew during martial law, and who do not share the Yellows’ vilification of Marcos, among them, those of the late Henry Sy and George Ty — and of course the defense secretary of BBM’s father, Juan Ponce Enrile, and his trade and industry head, Roberto Ongpin, both on top of huge business groups. Duterte, I think, will ask his Davao tycoons to support BBM.
These powerful magnates will be supporting BBM in a way they have never supported previous presidents before. The heads of these conglomerates now are in BBM’s age cohort, and it seems several of them, like the super billionaire Iñigo Zobel, Kevin Tan of Megaworld and Sabin Tan have been his close friends for a long time. Even the once politically powerful Araneta-Roxas clan — two scions of whom were imprisoned by his father — will likely be BBM supporters, with his wife Louise and sister Irene’s husband Gregorio being Aranetas after all.
BBM can call on these deep benches of tycoons to seek their advice on the course of the economy, or get their support — financial or otherwise — to steer the economy in the way he and his economic managers want.
Come to think of it, there hasn’t been a post-EDSA president as close to such a large group of magnates as BBM. That of course is a huge strength. But it could also be a weakness if they dominate his ears: He should exert efforts to talk to and be with the masses.
The question is what will be the extent of the capital investments of these “cronies” be and will it be enough to make an impact on the economic recovery?
External factors weighing heavily on the domestic economy are interest rates and oil prices, both of which have more upward leeway to move to under the present circumstances.
While the US and its NATO allies are battling inflation, they are also looking for ways to keep a cap on Russia’s energy exports in order to make sanctions effective and push Russia to the negotiating table to end its invasion of Ukraine. Unfortunately, there has been no gains made as sanctions have been rendered inutile because Europe cannot just stop buying Russian oil and gas.
Finance Secretary-designate Benjamin Diokno has been quoted as saying that the debt level is manageable provided the economy grows at a consistent 6%. Most forecasts are slightly below this level, with the lowest being at 5.4%.
The Philippine Institute for Development Studies forecast debt-to-GDP level to go back to normal only by 2031 and this is at the same economic growth rate of 6%, taking into account fiscal consolidation and debt servicing requirements.
However, it is not a simple matter of keeping inflation in check and rolling with the punches on oil price hikes. The Federal Open Market Committee meets on June 15. There is speculation that the rate hike may be a minimum of 50 basis points or be as high as 75 basis points, depending on how US monetary chiefs view the threat of inflation to the US economy and how fast they want to bring it down to a more manageable level given it is at a forty-year high of 8.6%.
Any US rate hike impacts the peso against the dollar as the latter appreciates and the former depreciates. The peso already hit a low of P53.00:$1.00 last Friday.
There is also the political angle to be considered as moves by BBM favoring his friends and supporters could be interpreted as a repeat of cronyism though that would be farthest from the truth. Still he has to be more than cautious given all eyes are on him and it is tantamount to his being under a microscope.
Long story short, capital investments by the country’s richest individuals and their conglomerates will definitely be a big help but what the country really needs is large-scale foreign direct investment.
Stock markets worldwide are down. Currencies are taking a beating against the dollar in anticipation of the Fed rate hike, which has been factored in by traders already. Even crypto has taken a beating even if it was supposed to be a safe haven like gold.
BBM will definitely have a full plate of problems when he officially begins his tenure on July 1. With his overwhelming mandate, he has plenty of political capital to spend and we should all do our share in facing the challenges together as a nation.
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