Investments News Analysis

Investors’ optimism and security fears

As overseas investors express their bullish view of the Philippines under a Duterte presidency, recent terrorist atrocities in southern Mindanao are likely to spark new concerns over security.

Exactly one year ago, and five months before he declared his candidacy for the Philippines presidency, Davao City Mayor, Rodrigo Duterte, attended the 2015 Asia CEO Forum where a number of the region’s top executives and others from Europe, urged him to run for the country’s top post – declaring that a Duterte-led administration would be good for business.

And in April, one month before the Philippine electorate cast their votes, many of those who had attended last year’s gathering at the plush Makati Diamond Residences in Manila’s central business district, met in Frankfurt, Germany at another business conference. Fired up by Duterte’s fast rise in the election polls they once again declared their support for his campaign, adding that if he made it to Malacañang, the presidential palace, their companies would be investing in his country. Duterte’s words in Makati had assured them that he would implement much needed changes to the investment landscape.

Jayesh Singh of the Indian multinational conglomerate, TATA Group, told the German newspaper, Spiegel, that if Duterte is elected, his group would be looking to make investments in the Philippines, and a Japanese CEO said that he was interested in bringing waste-recycling technology to the archipelago. Two dozen other company heads from Austria, Australia, Denmark, Germany, India, Indonesia, Japan and Singapore expressed similar wishes. The sectors in which they had interests included: electronics, power and energy generation, agricultural-equipment manufacturing, IT, and metals.

TATA Motors which has operations elsewhere in Asia, in Indonesia, South Korea and Thailand, was one of the co-presenters of the April 2016 Manila International Auto Show. The company has one dealership, at Cagayan de Oro City in northern Mindanao and workshops in Manila, Cebu City and Davao City. Another Group company, TATA Consultancy Services – an IT and business-solutions provider – is opening a 1,500-seat business-processing outsourcing facility in Angeles City, Pampanga.

Duterte, the first politician to be invited to give the Asia CEO Forum’s keynote speech – traditionally that role is offered to a prominent business leader – had impressed the corporate leaders, not only with his views on how the processes could be made easier and fairer for foreign investors, but also on tackling security issues which feature prominently among their concerns. In his interview with Spiegel, Singh said that TATA believed that security would improve under Duterte.

The killing by southern Philippines Muslim terrorist group, Abu Sayyaf, of a 50-year-old Canadian national, Robert Hall, whose severed head was found near a Catholic church on Jolo Island in Mindanao on 13 June, and the killing of another Canadian national, 68-year-old John Ridsdel, in April, will reignite security concerns – arguably the biggest single threat to attracting overseas investors to set up in the Philippines. It will also have a damaging effect on the region’s tourism industry (see: Terror threat to tour and travel trade).