Investors await policies, action on RP's problems

Business World

A relatively smooth elections and the speedy release of results may have improved the market's view of the Philippines but actual investments will depend on the new administration's policy agenda, economists yesterday said.

Romeo L. Bernardo, a former Finance Undersecretary, said the outcome of Monday's exercise had put to rest market concerns of a failure of elections.

The election went smoother than expected. It seems the leading candidate has a clear mandate and we will not have dispute of proclamation, he said.

This removes the lack of certainty on succession.

But in the long term, said Mr. Bernardo, investors will be waiting for the composition of the new economic team and how the administration approaches problems such as the deficit and corruption.

Investors will want to see how cohesive his team will be in addressing these problems, he said.
HSBC economist Frederic Neumann, meanwhile, said investors would be taking a second look at the Philippines once a clear winner had been declared.

Despite worries, it went reasonably well, he said. Investors are going to be relieved that there is a clear winner, that there is certainty.

Citibank economist Francisco G. Trinidad, Jr. said that while the speedy count had bolstered the view of a credible elections, what is more important for the market is how the new administration sets the tone for policies.

Recent political developments have dispelled much of uncertainty prior to the elections but it will take familiarity with the new administration's policy agenda before we can ascertain the likelihood of the investment climate improving materially, he said.

Mr. Trinidad said investors would want the new administration to work on its fiscal position by improving tax administration and coming up with revenue measures.

[The] revenue side will be crucial to provide more cash flows to support anti-poverty programs and job creation, he said.

The government expects the deficit to hit P293 billion this year after reaching a record P298.5 billion in 2009.

As of the first quarter, the shortfall stood at P134.2 billion, higher than the programmed P110.9 billion due to higher expenditures and lackluster revenues.