Market impact of Marawi clashes deemed temporary, but business groups press for swift resolution
SECURITY CONCERNS due to clashes between government troops and militants in Marawi City — coupled with warnings from President Rodrigo R. Duterte that he was ready to widen martial law coverage to the entire country from just Mindanao currently — will likely cause a “temporary” slide of financial markets, but investors should eventually gain confidence from the national leadership’s display of decisiveness, the chief of the Bangko Sentral ng Pilipinas (BSP) said yesterday.
Still, business leaders interviewed yesterday said they want the uncertainty to end soonest.
“I think it is a very decisive move on the part of government and the main objective is to improve the security and peace and order situation which should lead to even greater confidence down the road,” BSP Governor Amando M. Tetangco, Jr. told reporters on the sidelines of a luncheon hosted by the Financial Executives of the Philippines.
“There may be some transitory or temporary cautiousness, but in the end it will lead to positive impact on sentiment.”
The peso weakened by 0.35% against the dollar yesterday to P49.995, its poorest showing in over six weeks, while the Philippine Stock Exchange index climbed for the fourth straight day at the end of trading, edging up 0.33% to close 7,837.82 but only after opening weaker at 7,788.11 from Tuesday’s 7,812.14 finish and hitting the day’s low at 7,761.61.
Upon his arrival from Moscow on Wednesday afternoon, Mr. Duterte — when asked for his thoughts on growing concerns among investors due to his martial law declaration — replied: “That is why I said we must be fast and restore normalcy.”
“If it can be done one week, I’d be very happy. But if it would take me until the end of my term to see that Mindanao is safe for everybody, I will do it.”
For Jennifer Santiago Oreta, political science professor at the Ateneo de Manila University, putting the entire Mindanao under martial law was “drastic,” noting the nationwide “state of lawless violence” declared by Mr. Duterte in September last year after a blast in Davao City was still in force.
Business leaders said the incident could spook investors momentarily, but that they should be able to see through the smoke a state exercising lawful powers to keep law and order needed for businesses to run smoothly.
Mindanao Business Council Chairman Vicente T. Lao said martial law “will hasten the solution of some of our security and peace-and-order problems.”
“This will give more flexibility to the President to fight terrorism,” Mr. Lao said, while cautioning: “He should try to be vigilant against opportunistic elements who will use the martial law as an excuse to further their bad intentions.”
Stephen A. Antig, executive director of the Pilipino Banana Growers and Exporters Association, Inc., said: “If it will solve the worsening peace and order in Mindanao, then I am for it.”
“Just hope that it will not be abused by some sectors in the government. There should be restraints in the use of power… We do not want history to repeat itself,” he added, referring to martial law under the late strongman Ferdinand E. Marcos that was marked with human rights abuses.
For Joji Ilagan- Bian, former chairman of the Mindanao Business Council, “the President must use this absolute power to make sure that the various groups responsible for all the peace disturbance not only in Marawi but also other areas of Mindanao are dealt with an iron fist.”
“This situation has been going on for so many years and solutions were all palliative in nature. Martial law in Mindanao might be the ultimate solution.”
At the same time, Ms. Ilagan-Bian admitted “this will have an effect on business and even tourism for a time, especially for us in Davao since you can never isolate Davao from Mindanao.”
“We are closely monitoring situation like most Filipinos for now,” Peter Angelo V. Perfecto, executive director of the Makati Business Club (MBC), said in a text message.
For Edgar O. Chua, MBC’s chairman, the clashes and declaration of martial law constitute “a temporary set back to the improving business sentiment.”
“The silver lining is that after this incident, gov’t would have made a significant improvement in the peace and order situation in Mindanao,” Mr. Chua said.
“What’s more important is how it is now used to decisively deal with the various lawless elements in the area within the 60 day period” prescribed for martial law.
Philippine Chamber of Commerce and Industry President George T. Barcelon said separately that business worries “cannot be avoided”.
“Hopefully the issue will be resolved as quickly and with minimum loss of lives/properties,” he said via text. “This drastic and firm action should send a clear message to radicals group: our President is not to be messed with or they suffer the consequences.”
European Chamber of Commerce of the Philippines President Guenter Taus cautioned about keeping the business community “in the dark.”
“The longer the business community is kept in the dark about the situation’s progress or the longer that there are no signs of the situation improving, we fear that this will negatively affect the country’s attractiveness as an investment destination, not only from the European point of view, but globally,” Mr. Taus said in an e-mailed statement.
“With regard to how this will affect business sentiment: peace and order is a vital factor for business establishments anywhere in the world. To a large extent what has kept businesses out of Mindanao was/is exactly the peace- and- order situation, hence from that point of view it is essential that the situation will be contained.” — with in Davao City