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What’s brewing in the Philippines?

Updated On: Nov 17, 2006

In spite of President Arroyo’s recent publicity blitz in Hong Kong and China to attract business and investments to Philippines, lingering doubts about the Filipino’s state of economy and political stability persist.

It was not too long ago, after the fall of the Thaksin regime in Bangkok, that coup rumours began to surface in the Philippines. The rumours reached its peak just before President Arroyo’s trip to China and Hong Kong and the Filipino nation, Malacanang presidential palace, as well as the military was put on high alert. The danger of another coup in Southeast Asia only came to a rest on Wednesday 15 November 2006 when ex-army colonel and former senator, Gringo Honasan, accused of masterminding a coup plot against Philippine President Gloria Macapagal Arroyo, was arrested. Honasan has been linked to many coup attempts and his arrest must have been a relief to many in the Philippines and external investors.

But this may not be enough for foreign businesses, fearful of political instability in the Philippines. To articulate their fears, the strong arm of business lobby came out in full force this week. On 13 November 2006, foreign chambers of commerce and multinational companies based in the Philippines urged President Arroyo to stop political assassinations in order to convince international investors that the country was sufficiently stable for investments. US-based apparel companies Gap, Polo Ralph Lauren, Wal-Mart, Liz Claiborne, American Eagle Outfitters, Jones Apparel Group and Phillips Van Heusen sent a joint appeal to the President to take firm action to stop such killings.

The human rights group Karapatan lists 765 victims of political violence since Ms Arroyo assumed the presidency in 2001 while The Philippines Inquirer places the figure at 256. Both numbers are sufficiently high to raise international concerns. According to the Joint Foreign Chambers of Commerce (JFC) in the Philippines (comprising business groups from the United States, Australia, New Zealand, Canada, Europe, Japan and Korea), an estimated $8.5 billion in foreign direct investment is waiting in the wings for injection into the Philippine economy over the next four years, which will generate employment for 2.9 million Filipinos. But this will happen only if the country displays sufficient political stability.

One reason for the increased activism of the international business community in the Philippines is the growing ethical focus of big businesses. They are sensitive to allegations that pursuing profit comes at a high human rights cost and are afraid of shareholder revolts over their indifference toward human rights. In addition, the timing also coincides with the union-friendly Democrats' victories in the House and Senate. Bringing jobs back to the US is one solution to solve the ethical conundrum of American enterprises in countries like the Philippines.

But not all news in the Philippines are bad. While Western companies are making their political lobbying presence felt, another emerging superpower is less focused on human rights and more on bringing business opportunities to the Philippines void of politics. China makes it clear that it intends to separate politics from economics and is willing to have business as usual for a win-win situation. Chinese tourists jumped by 34 percent for the period of January to September in 2006 compared to the same period in 2005. Arlene Alipio, head of the China team of the Department of Tourism (DoT), said the Philippines would be cited on 16 November 2006 in Shanghai by the China International Travel Mart both as among the top 10 rising destinations for Chinese tourism and MICE (meetings, incentives, conventions, and exhibitions) destinations. At this moment, the Chinese handshake is definitely friendlier for the Philippines.

Sources:

Philippines nabs coup plotter 'Gringo' (Bangkok Post, 15 November 2006)

Propaganda campaign highlighting RP killings’ (The Philippine Star, 15 November 2006)

'Progress' in Manila probe into slayings (The Straits Times, 15 November 2006)

Editorial Condemned (Philippines Inquirer, 15 November 2006)

Number of Chinese tourists up from Jan-Sept. (Philippines Inquirer , 15 November 2006)

Foreign businesses to Arroyo: Stop killings (Philippines Inquirer, 14 November 2006)