Investors remain optimistic despite higher PH risks

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Thusday, June 1, 2017
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MANILA – Investors remain optimistic about the long-term prospect of business in Mindanao, according to an economist, but the government must be able to assure the general public that the threat to peace and order has been contained.

“They know there are pockets of violence in some areas but definitely not the entire Mindanao,” Cid Terosa, dean of the School of Economics at the University of Asia and the Pacific, told GMA News Online on Monday.

Government troops and Islamist terrorists have been battling it out in Marawi City, the capital of Lanao del Sur, since Tuesday, May 23, prompting President Rodrigo Duterte to issue Proclamation 216 – Declaring a State of Martial Law and Suspending the Privilege of the Writ of Habeas Corpus in the Whole of Mindanao.

Fitch Group think tank BMI Research downgraded the Philippine political risk index score to 63.1 from 63.5 previously, signaling heightened risks.

“President Duterte has also threatened to impose martial law across the country once again in order to combat the rise of the Islamic State. However, we do not see this as a prelude to a return of dictatorship in the Philippines or expect this to have a significant impact on the country’s economic growth outlook,” it said in report Friday.

S&P Global Ratings also assessed the risks in the Philippines.

“On May 23, 2017, we lowered our country risk score of Philippines from moderately high risk to high risk. This reflects slightly diminished predictability of future policies as a result of the government’s pronouncements on foreign policy and national security,” S&P Global noted.

No evident strength

“In our view, the Philippines no longer demonstrates an evident strength in its business or financial environment compared to those of similarly ranked countries such as Indonesia and Vietnam,” it said.

S&P noted it does not expect any improvements in the country’s economic, financial, and institutional environment in the near-term.

The business sector will continue investing in Mindanao despite “increased risks” due to political instability in the country, said Terosa. “Ultimately, those who want to make money in Mindanao will find ways to do so,” he said.

“If ever, the negative effect will be short-lived and isolated. Businessmen and investors don’t equate lawlessness to the entire Mindanao like they used to,” the economist added.

Conglomerate Metro Pacific Investments Corp. (MPIC) and newly listed Eagle Cement Corp. intend to pursue planned investments in southern Philippines.

“Definitely, Mindanao is still under our radar. Expect an announcement of investments in Mindanao soon,” MPIC chairman Manuel Pangilinan said last week.

Eagle chairman Ramon Ang said the company is pushing through with the construction of a $300 million factory in Davao come October.

The Mindanao Business Council earlier said businesses have so far been minimally affected by the declaration of martial law. (GMA News)

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