2016 Presidential Election - Potential Impacts

Potential Impacts of 2016 Filipino Presidential Election

November 19, 2015

Primary article contributor – Mary Peplinski

Team Leader following the Philippines – Cameron Torrens

Keywords: ICT, Presidential elections, corruption, foreign direct investment, Manuel Roxas, Benigno Aquino III

The upcoming presidential election in the Philippines on May 9th, 2016 will arguably be one of the most important and influential in the country’s history. The new administration has the potential to shape the recently successful economic landscape of the country for the next six years. Current President Benigno Aquino III is ineligible to seek re-election so this vote will determine the 16th President of the Philippines. This shift in power will ultimately come with a shift in policy that could impact the promising growth of the country’s technology sector.

Foreign investors have raised concerns about whether the next administration will continue the economic policies instituted by Aquino. Under the direction of the current government, there has been ongoing fiscal and debt consolidation and the Philippines credit rating was upgraded to investment grade. This is largely due to the improvement of political stability over the last six years. This political stability attracted much needed foreign investment, especially in the technology sector. In order to have a stable economic base, the country needs a continuation of stable governance.

President Aquino III has endorsed the Interior Secretary, Manuel Roxas, as his successor. The current administration is confident in Roxas’ ability to continue Aquino’s legacy in office. Roxas was largely responsible for establishing the Business Process Outsourcing industry, which has made the Philippines the, ‘call centre capital of the world.’ Despite the fast growth of the industry, the country’s poor infrastructure and slow Internet connectivity dissuades possible investors. The industry may take divergent paths depending on which candidate wins. Roxas’ platform has an emphasis on foreign direct investment. None of the other candidates have explicitly stated their plans for the information and communications technology sector (ICT). Two of the front-runners, Grace Poe and Jejomar Binay, have built their platforms around increasing the quality of education and health care in the country, which could potentially take funding away from the ICT industry.

The ICT sector is one of most profitable divisions in the Filipino economy with a projected US$ 50 billion in revenue by 2016. This positive trend could potentially change if the country’s level of governmental corruption increases along with the political and economic instability that a new administration brings. Given the country’s history of government corruption, changes in policy can be quick and easily instituted. However, investors can rely more heavily on the judicial system, as there have been major strides to legitimize these institutions. According to the World Justice Project Rule of Law Index, the country ranked its highest in history in the category “absence of corruption.” Having the judicial branch of government act as an effective check on legislative power and corruption will increase investor confidence in the region. Additionally, with the creation of the Department of Information and Communications Technology (DICT), corruption will become less of an issue as it reduces the amount of potentially corrupt organizations within the ICT sector. Although the past six years have seen dramatic improvements in political stability, it is still considered a developing country. Large investments into its economy must be treated with caution, as the issue of corruption is still ongoing.

To conclude, the emerging technology market in the Philippines is a promising sign for both local and international investors. The current government under the leadership of Aquino III has successfully promoted and developed this industry in the Philippines but there are still many political risks and challenges that remain. With the election under six months away, the continued success of the ICT sector will be in the hands of the succeeding administration and the economic policies that the new leader chooses to apply.