The Volatilian™ View

D-Day with Dominguez in Davao – farewell Makati

With Finance Secretary, Carlos Dominguez in Davao, Monday was D-Day for a new economic thrust which signals that time for ‘business-as-usual’ is over.

President-Elect Rodrigo Duterte’s 10-point socio-economic agenda was laid out before a consultative summit, attended by the Philippines major business groups, in the southern Mindanao city. Among those gathered there were representatives of the Philippine Chamber of Commerce and Industry, the Employers Confederation of the Philippines, the Federation of Filipino-Chinese Chambers of Commerce and Industry, and the Management Association of the Philippines. Socio-economics for the country and its people

This then, was not a junket held for the benefit of the great and the good of corporate Manila, it was a taking of the pulse of groups that battle daily with the difficulties of boosting trade for the archipelago and its people. These organisations are in the struggle to land foreign investment; to broaden the economy, and to release that economy from the narrow ownership that has kept it trailing much of the region. To these groups that is serious business.

The summit’s location is significant. Davao City is 930 air miles away from the capital – that’s about as far from Makati as it’s possible to get and still be in the Philippines. But while it’s the home town of Duterte and Dominguez, holding a conference of this importance there represents something much more – it issues a declaration that there has been a shift of power from “Imperial Manila” to the regions.

This is in line with Duterte’s federalist ambitions for the country; for the country it’s in line with their hopes that, this time, the trickle down will come – that the National Capital Region will no longer be, disproportionately, the major beneficiary of an improving economy.

Ironically, much of Manila’s abject poor are not from Manila at all, they are part of the constant wave of humanity that floods to the city from the jobless wastelands of the countryside in the belief that it must be better there than where they’re coming from. Sadly, for most, it’s not. The poverty rate in the Philippines last year was 25%; the United Nations 2015 Millennium Development Goals was to get it down to 16.6%. Let’s put that in a Southeast Asia context: Thailand 10.2%, Indonesia 11.3%, Malaysia 0.6% (2014), Vietnam 13.5%.

It’s likely that the switch of business venue from Metropolitan Manila will ruffle a few feathers in the corporate corridors of the capital. That might not have been unintentional. Last month, Duterte lambasted members of the Makati Business Club (MBC) as “a bunch of elitist fools”. But then he wasn’t exactly their first choice to be the new occupant of Malacañang, the presidential palace – actually, he was there last (though few would probably admit to that now).

A month earlier, following his talk to the MBC, its executive director, Peter Perfecto, commented that his members were disappointed by the lack of substance in Duterte’s delivery, “especially on the economy and doing business. That is what we asked for from the [presidential] candidates”.

We don’t have a copy of the Davao Summit’s registration or guest list, but it would not surprise us if the MBC, as an entity, was not included – and if that’s the case, it will be another clear signal that Makati’s position at centre stage of the country’s commercial dealings has been eclipsed.

In many ways, Makati symbolises everything that Duterte wants to change in the country’s corporate culture. Today’s Central Business District can trace its nascence back to the mid 19th century when Don José Bonifacio Roxas, a patriarch of the Ayala-Roxas clan, bought the farm lands of Hacienda  San Pedro de Macati from its Jesuit owners for PHP 52,800 – that’s US$1,136.13 at today’s exchange rate.

Ever since, this district and its development have been the sphere of influence of the Zóbel de Ayala family whose antecedents came from the Basque Country in Spain’s western Pyrenees in the early 1800s. And since the 1960s it has been the capital’s commercial hub – the Makati Stock Exchange opened there in 1963, banks and associated firms moved in as high-rise offices started to sprout up, and by the end of the decade Makati had established itself as the uncontested centre of business for the entire country.

Also missing from the gathering, we’re sure, would be certain sectors of a group that is normally in full attendance on such occasions – the media. The event was well-covered by the major networks, but the press knows that their previously unquestioned demands for government access received a major body blow when Paris-based, non-profit, NGO, Reporters Without Borders (RWB), blustered into a local fight between Duterte and the domestic media, over comments he has made about corrupt journalists paying for their crimes with their lives. With a mind-boggling lack of nouse, the over-zealous RWB prompted the local media to boycott Duterte’s events and sue him for defamation – well, they were only trying to help. That may be in the Paris Playbook for Promoting Press Freedom but it won’t work anywhere in Southeast Asia. What it will get you in this region is what it got the Philippine press for the past couple of weeks – a closed door. This abrasion will take some time to heal.

Duterte has wasted no time in putting down his marker – he doesn’t take his oath of office for another week. But there’s no ambiguity in his message: the ‘Manila elite’ and their indulged press entourages and fawning lobbyists will not be the favourites of this political court.