Investment News Analysis

East meets East in Asian superfamily

Philippines-ASEAN trade

Philippine President Rodrigo Duterte continues to clock up the air miles. In September he visited Laos for the Association of Southeast Asian Nations (Asean) Leaders Summit; then Vietnam; then Indonesia. This month he’s been to Brunei and is presently in China. The Volatilian™ understands that a Malaysia state visit is also being planned, as well as a long-haul trip to Moscow. This is galvanising the map, Duterte style.

From this alone, Duterte’s road to economic development and the independent foreign policy he will ride to get there should be transparent. This is a Far East story. It looks east, not so much west; it’s regional, not so much global. It seeks to trade on a commonality of culture, interests and social values within an immediate geography. All nine fellow members of Asean, along with China, Russia, Japan, South Korea and Taiwan form the superfamily which Duterte is seeking to cultivate. By the way, that’s 30+something% of all world trade right there. For investors, then, this is the key.

But that is not so say that America and Europe are excluded. Far from it; they are as welcome as any to pursue trade and investment prospects with the Philippines. Their funding and their expertise is highly desirable in everything from infrastructure to agriculture; telecommunications to tourism. But they need to start looking closely at the opportunities right now. The Philippines is opening up and there’s already plenty of interest.

The Volatilian™ understands the concerns that some Western corporations might have with regard to the Philippines’ war on drugs – particularly with Western media and the governments they serve linking it to extrajudicial killings, even though there is no hard evidence to make that link. The death toll will continue to climb; blood, sadly, is a product of war.

We also understand that Duterte’s own ‘Pivot to East Asia’ – southeast, north and northeast – might be embarrassing to Washington and its plans to effect that same pivot. But that’s a political not an investment headache. And so, until Washington or Brussels actually bans companies from doing business in Duterte’s Philippines – and who knows what they’re capable of? – nothing’s actually changed. Apart from, of course, it’s getting easier to do business there; and will continue to.

Investors, irrespective of their national status, have been given Duterte’s personal assurance that their assets will be safe and that they will be treated well in his country. He has even said that if they have a problem they should bring it directly to him and he will sort it out. We’ve never heard that speech from a US president or a president of France, or a Mexican leader for that matter.  And one thing that should be glaring apparent by now is that Duterte is a man of his word: he promised his people he would rid their society of narcotics and thieves and rapists – politically fraught though that continues to be – and he’s doing just that.

So, believe him when he says he is going to pursue a socio-economic agenda that will decimate poverty and unleash a massive youthful and industrious workforce; believe him when he says he is going to break the Philippine monopolies, duopolies and the insular protectionism of the oligarchs and the entrenched clans; believe him when he says he is going to correct society at every level and usher in a new ethos of behaviour that will show the Philippines in its true light as a caring nation; and believe him when he says he will ignore the directives and veiled threats of Western powers and their proxies that stand in the way of his nation building and a new Philippine sunrise. Believe it; he will do all these things.

All this – and more – is a massive project. But this presidency is not just about one man. DU30 is a movement that has taken over the grassroots of the country, and it wants what the president is delivering. It will have no truck with other governments and their agents – the mainstream media and the NGOs – which attempt to knock him off course. This movement is as defiant as Duterte himself. It has been cast in he same furnace.

Furthermore, the president has surrounded himself with an impressive Cabinet of extremely capable people; men like Carlos Dominguez, finance; Manny Piñol, agriculture; Arthur Tugade, transport – to name just three. They, like their boss, are there as public servants; a job title they take pride in. Unless we missed it, we can’t recall department secretaries in previous administrations describing themselves that way.

From the top down, this administration’s determination to build an expansive economy from which every strata of society will benefit as an active stakeholder should not be underestimated. Nor too should the abilities of Duterte and his team of architects. Investors who do that, not just miss the point, they’ll miss the boat.