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By Roy Stephen C. Canivel


Duterte starts to worry US businesses




Posted on September 09, 2016


THE AMERICAN Chamber of Commerce of the Philippines, Inc. (AmCham) yesterday added its voice to those of European counterparts in flagging the potential negative impact on business of President Rodrigo R. Duterte’s unconventional style and methods in policy and diplomacy.

“The American Chamber of Commerce of the Philippines voices growing concern over developments that could harm the long-standing optimism of American business to invest in the Philippines,” the group said in a statement e-mailed to journalists.

“While the country’s economic fundamentals are strong and its potential is high, our members have raised concerns that some basic American values -- which Filipinos have long shared -- may be weakening in the current environment.”

This is the first time that AmCham has explicitly warned about a possible backlash from US investments, joining the European Chamber of Commerce of the Philippines (ECCP) and the Nordic Chamber of Commerce of the Philippines (NorCham) that had voiced concern over the Duterte administration’s bloody war against the illegal drug trade that has claimed well over 2,000 lives in the past two months.

“Certainly, the illegal drug menace is a serious threat in the Philippines, as it is in the US and elsewhere,” AmCham said in its statement.

“However, the increased number of killings during the heightened anti-drug campaign is harming the country’s image, as portrayed by international media, and some investors are now asking whether this campaign reduces the rule of law.”

Recent months have seen similar warnings from private sector economists, including one from a credit rater, that the marked increase in killings both by cops and suspected vigilantes could eventually erode the confidence of business, which regards rule of law as an anchor of any investment environment.

AmCham also cited insults President Rodrigo R. Duterte hurled against US President Barack H. Obama that prompted the latter to call off bilateral talks at a regional meeting in Laos.

“In addition, traditionally excellent bilateral relations between the United States and the Philippines have recently been strained by language from Philippine leaders. Although statements of regret soon followed, such words and their international policy also create investor concern.”

Agence France Presse yesterday reported that Mr. Obama urged Mr. Duterte on Thursday to conduct his crime war “the right way”.

“As despicable as these (crime) networks may be and as much damage as they do, it is important from our perspective to make sure that we do it the right way,” Mr. Obama told reporters when asked about his conversation with Mr. Duterte on the sidelines of a regional summit in Laos.

AmCham’s statement comes in the wake of just-released results of a April 25-May 24 2017 ASEAN Business Outlook Survey that showed 77% of 53 senior executive-respondents of US firms operating in the Philippines said the investment environment was improving, against 45% of such response across the Association of Southeast Asian Nations (ASEAN), making the Philippine-based executives the “most optimistic” in the region.

Sought for comment, Trade Undersecretary and Board of Investments Managing Head Ceferino S. Rodolfo said businessmen can look at the larger context of bilateral relations.

“We’d like to believe that we have a mature relationship with the United States in the case of our history, mutual respect and benefit. Ang economic relations naman natin is not defined how media reports certain statements by the leader, but actually are framed by bilateral institutions and international agreements that continue to enhance and strengthen our relations,” Mr. Rodolfo said.

AmCham’s statement is particularly significant for a country that has long been considered a linchpin of Washington’s security strategy in the western Pacific through various US administrations.

Moreover, the US is a key source of foreign direct investments (FDI) to the Philippines. Latest available central bank data show last year saw $730.96-million net FDIs from the US, making up the biggest single source of FDIs to the Philippines at 12.77%. They were, however, 24.56% down from 2014’s $968.89 million. The decline has continued this year, with the first five months recording $62.26-million net US inflows that reflected a 77.09% drop from the $271.72 million in 2015’s comparable period.

The US is also the Philippines’ third-biggest merchandise trade partner, with latest available Philippine Statistics Authority data putting value of bilateral trade at $7.743 billion in the first semester of 2015, accounting for 13% of the total trade in goods of the Philippines in those six months against Japan’s 14.7% and China’s 13.1%.

ECCP President Guenter Taus yesterday shared AmCham’s sentiment, saying in a mobile phone message: “The ECCP now for weeks has aired the view that the current situation is not very conducive to attract more FDI from Europe...”

Early this month, NordCham President Bo Lundqvist described the bloody war on the illegal drug trade as a disincentive to business, saying the group’s members “see it really as a threat to foreign investment in the Philippines also from the countries we represent.”