Business Consulting BlogWhy the PH Elections matter so much to the Economy?

April 28, 2015
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What to expect from the successor of Benigno Aquino III for the next mandate?

Philippines is ready for the upcoming political speeches heavily enriched with religion and paternalism appeals. God will be more than ever pronounced by political figures and big giveaways widely given throughout the country.

In May next year, Philippines will face the election of its 16th President. Although candidates were not yet officially launched, some well-known leaders in the political scene are already in the spotlight of the news as Benigno Aquino III cannot apply for a re-election after his six-year term.

The current vice president, Jejomar “Jojo” Binay, is ranking on the top of opinion polls and has been highlighting the importance of his political journey against his younger opponents. Senators Alan Peter Cayetano, Grace Poe and Local Government Secretary, Mar Roxas, have publicly disclosed their intentions to candidate for Presidency as well. Whoever will be elected in 2016 is expected to, not only maintain the political stability, but promote further investment from international companies, reduce the high unemployment rate, address infrastructure issues and develop the national industry at the same time.

In the past four years, the political stability played a decisive role in the Foreign Direct Investment (FDI) and GDP increase of more than 6%. According to the World Bank, during the period between 2010 and 2013, the political stability index of the country grew from -1.63 to -1.06 (being -2.5 the weakest and 2.5 the strongest rate).  The index measures the perception of the likelihood that the government will be overthrown or destabilized by unconstitutional means.

In this latter point, the successor of “Noynoy” will need to conduct a better political strategy to mitigate the tension between the government and the Autonomous Region of Muslim Mindanao (ARMM).  The clash happened last January, when 44 police commandos were killed in Maguindanao ,was responsible for a huge drop in the popularity of Aquino.

As the forecasts for the political stability of the Philippines remain positive, more foreign companies are interested in exploring the Philippine market and its high-skilled labor force, while local companies also feel more confident to expand operations by importing new products and hiring new staff.

If The Philippines wants to become a trillion dollar economy by 2029 and keep last year’s FDI growth, needs to also improve its international perception. According to Germany-based watchdog Transparency International’s Corruption Perceptions Index (CPI), Philippines climbed 9 spots in 2014 (85 from 94 in 2013) and occupies a place in the mid table. When compared to its neighbors, The Philippines only ranks behind Singapore, Brunei and Malaysia. This is in our opinion of the biggest achievements of Presidency Aquino and has decisively contributed to the 66% surge in Foreign Direct Investment in 2014.

If you would like to learn more about the Philippines, contact us. We help and consult our clients to succeed in this country through a variety of services and professional with deep experience across several industries.

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