A virtual co-presidency

Two heads are better than one. This is particularly true if the two heads complement each other. Mutual respect is also necessary to make it work.

Co-CEOs are not uncommon in the business world. Welcome to our new political world. We now have a virtual co-presidency on top of the nation – an incumbent President and a former president who is now House Speaker.

Forget the Constitution for the moment, both the current and the proposed. Speaker Gloria Macapagal Arroyo will have more powers and more influence than any House Speaker in the past... a virtual prime minister.

President Duterte, with his spur of the moment style of policy making, had always needed someone like Speaker Arroyo with her reputation for hard work and deliberate vetting of details. And President Duterte obviously respects her and her nine years of experience in the job he now holds.

Mr. Duterte had confessed his inadequacy on economic issues. Hearing the thoughts of Speaker Arroyo will boost the President’s confidence when making economic decisions.

The President had previously given virtual autonomy to his economic cluster led by Sonny Dominguez, Ernie Pernia of NEDA and Ben Diokno of budget. But they had been found lacking political savvy.

The political noise generated by the surprising rise of inflation numbers the last two quarters revealed the economic managers’ political blind spot. Their response lacked empathy as they tried to explain away the inflationary impact of TRAIN 1 by crunching more numbers.

Speaker Arroyo’s arrival on the scene is perfect for Duterte who needs a politically astute adviser who understands economics. He said as much when he related how the new Speaker talked to him days before his SONA and urged him to do something about inflation.

Speaker Arroyo is obviously enjoying her new role as virtual co-president for economic affairs. She is boosting the Duterte brand where it needs boosting the most.

The first item on her agenda after becoming Speaker was to call a meeting of Duterte’s economic managers and her own circle of economic advisers, led by Reps. Joey Salceda of Albay and Arthur Yap of Bohol, to discuss what to do about inflation.

Last Sunday she called a meeting of administration officials and her technical working group to thresh out TRAIN 2. Expect the economic managers to recede to the background as Speaker Arroyo flexes her muscles on economic matters.

On TRAIN 1, the Speaker has formulated proposals to mitigate the negative political repercussions of some provisions. According to Rep. Salceda, the Speaker has proposed measures to hold prices of oil, electricity, fish, rice, meat and to arrest further depreciation of the peso. Since some of these measures require tariff reductions, the economic managers wouldn’t have volunteered to do any of those on their own.

Also in response to high inflation, she will prioritize the rice tariffication bill. It is supposed to help bring down the retail price of rice.

I think she will be very careful about TRAIN 2 even if she said she supports it in principle. I am sure she does not want to be blamed if investments flow out of the country as many warn when incentives are withdrawn or curtailed. The potential loss of BPO jobs is also too big a political risk for the Speaker to take.

Expect the Speaker to ask tough questions during budget hearings. DPWH and DOTr, among others, better have good explanations on why infra projects are slow to get started on the ground despite all the talk. Questions will be asked on the absorptive capacity of government units to take on ambitious programs.

But the show will still be Duterte’s and his Cabinet. It is still up to Duterte to make his infrastructure secretaries move faster on Build Build Build or get new ones who can be more decisive because they know what they are supposed to do.

Villar of DPWH and Tugade of DOTr seem lost, finding it difficult to start delivering after two years. Continued failure will affect the perception of analysts who anchor their positive outlooks of our economy on the administration’s ability to build needed infrastructure. Even our investment grade credit rating could be at stake.

The Speaker favors Charter change. Back in 2004, she announced a shift to a parliamentary and federal government is in her party’s campaign platform.

Her first resolution as an elected representative in 2010 called for amending the Constitution to give the country “competitiveness in a highly-globalized economy.” It can be assumed she shares the view of the business community on the need to make our country more attractive to investors by liberalizing the restrictive provisions in the current Constitution.

Speaker Arroyo will encourage Charter change discussions to be more substantive. She knows federalism has important implications to the economy and how business is done in this country.

Current plans call for a new charter approved via plebiscite in conjunction with the midterm election. There doesn’t seem to be enough time for that unless the new charter is rammed down our throats as would have happened under the old Speaker.

But assuming Cha-cha gets done and it calls for a parliamentary system with or without federalism, expect a Prime Minister Gloria Macapagal Arroyo to come to power. She denies she is interested and based on her history, that’s an indication she is interested.

She has so little time to do much as Speaker because she is no longer eligible to run for re-election as congresswoman. She could run for the Senate and she would win too. Maybe as Senate President, she will have increased ability to initiate Cha-cha as she sees it.

For now… I am hoping the virtual co-presidency of Duterte and Arroyo will stabilize the world’s perception of our political risk. I also hope it will bring about desirable change that Duterte alone cannot deliver.

Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco.