PRESIDENTIAL candidate Rodrigo Duterte told business leaders Wednesday that he would spend P18 billion yearly to support start-ups, made up mostly by micro, small and medium enterprises (MSMEs), with each region getting P1 billion.
“This is what I want the Trade department to do,” he said, addressing members of the Makati Business Club and the Management Association of the Philippines at the Manila Peninsula Hotel.
He said small businesses are forced to get financing from the loan sharks because there is no institutionalized government agency.
The Department of Trade and Industry, he said, should be in charge of loan assistance to MSMEs.
He said he has what it takes to be a capable president but people should not judge him superficially.
“This government will be clean,” he said.
“I am willing to turn a blind eye to what these corrupt officials have accumulated but once I am elected these activities should stop.”
Duterte also sought to put the business leaders at ease.
“Relax, I am not the man I am portrayed to be by some,” he said, apparently trying to rein in his use of profanity.
At one point, however, he turned to a racial stereotype—saying he would talk to the Indian ambassador to get Indian loan sharks to ease up on Filipino MSMEs.
Duterte also said he would discontinue the agrarian reform program because it has not benefited businessmen or farmers. He added that the Comprehensive Agrarian Reform Program has caused more agricultural lands to become less productive because farmers are not able to develop their lands for lack of resources.
His remarks on land reform drew the most applause from an audience that appeared tentative or lukewarm toward Duterte.
Duterte, who was mayor of Davao City for more than two decades, said he would not hesitate to “just plagiarize” the good development plans of previous administrations, including infrastructure projects that have been delayed.
On top of that, he promised to allocate as much as P30 billion as health assistance to poor families living in the poorest provinces.
“There should be at least, one doctor per barangay. I will make sure that government doctors will be compensated for their service,” he said.
Turning to his platform of law and order, Duterte said he would hire 3,000 more policemen and double the salary of security forces to start a bloody war against crime.
Duterte’s lead in the presidential race has unnerved the business sector. The peso slumped 1.6 percent in April, as opinion polls put the mayor firmly ahead of his rivals, despite his inflammatory comments about rape and extra-judicial killings.
Duterte trailed his two closest rivals in a Bloomberg survey of economists on which candidate would best steer economic policy.
Duterte’s popularity has been boosted by peoples’ anxiety over crime and, like US presidential candidate Donald Trump, supporters praise him for straight-talking. As the election looms, Philippine bond risk has climbed from near an eight-month low and foreigners have pulled $41 million from local stocks this month.
“Duterte represents uncertainty,” said Edwin Gutierrez, who helps oversee about $11 billion as head of emerging-market sovereign debt at Aberdeen Asset Management Plc in London. “He’s a bit of a one-trick pony with his law and order message. I don’t think he’d do anything to upset the apple cart with economic policy, but I don’t see economic reform as being his priority. The comparisons to Trump are obviously rather unflattering whether justified or not.”
The peso fell 0.1 percent to 46.81 per dollar as of 1:30 p.m. in Manila, while the nation’s benchmark stock index dropped 0.9 percent. The currency is headed for its worst month since August and reached 46.943 on Tuesday, the weakest level in seven weeks. ING Groep NV said it’s reviewing its forecast for the exchange rate to weaken to 47.60 by the year-end. Local-currency bonds have handed dollar-based investors a loss of 0.5 percent this month, a JPMorgan Chase & Co index shows.
“We could see the peso hitting 48 per dollar before heading back to 46.50 by the end of the year,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. in Manila. “It’s driven by fear and the normal reaction of local investors is to buy the dollar.”
Duterte’s spokesman sought to calm market jitters by saying uncertainty usually arises in the weeks before an election, and it will be “business as usual” should the mayor be elected president. The front-runner will provide businesses the “right and proper atmosphere” to prosper without sacrificing the welfare of the people, Peter Laviña said in a statement Tuesday.
The latest poll conducted by Social Weather Stations showed Senator Grace Poe in second place, while Mar Roxas, the candidate backed by Aquino, was third and Vice President Jejomar Binay fourth.
Duterte has won support from locals by transforming Davao from a city battling crime and gangs in the 1980s to what his campaign calls one of the nation’s safest. A controversial figure, the 71-year-old former lawyer and prosecutor is facing a backlash for comments he made April 12 about the rape of an Australian missionary in a 1989 prison riot. He told the US and Australian ambassadors not to meddle in Philippine politics after they condemned the remarks.
“His comments were a curve ball to the market,” said Joey Cuyegkeng, economist at ING Groep NV in Manila. “It more or less shakes the confidence of investors that gains in reforms are irreversible. We estimate something like 70 percent to 80 percent of the peso’s weakness is attributable to the local developments.”
The cost of protecting Philippine sovereign debt against non-payment for five years has risen eight basis points since April 19 to 104, according to data provider CMA. The credit-default swap contracts were at 93 on March 18, the least since July 2015. A three-month gauge of expected swings in the peso climbed 54 basis points in April to 5.70 percent, data compiled by Bloomberg show.
“Duterte’s governance philosophy doesn’t seem to have much focus on economic policy, and his lack of national experience is a drawback,” said Mixo Das, a strategist at Nomura Holdings Inc. in Singapore. “We are overweight on the Philippines but we’ll reevaluate our position if Duterte’s win looks more certain.” With Bloomberg
