A New President in Manila – Aquino Comes Out Swinging

By Ernest Z. Bower, Senior Adviser and Director, CSIS Southeast Asia Program

President Benigno “Noynoy” Aquino has come of out of his corner swinging – mostly at his predecessor former president Gloria Macapagal Arroyo.  Among the many challenges the new President will face the greatest will be striking a balance between prosecution and promotion.

Aquino has a dual agenda.  In his gut, he wants to change the culture of impunity that has crept into Philippine government and install accountability.  In his head, he has a strong commitment to generate new growth to create jobs, build infrastructure and provide public goods like education and public health to the citizens of his country.

The question is whether the capable technocrats he has selected for key Cabinet posts do both jobs at once, sequence these tasks, or leave the quest for truth and justice to the Philippine courts and the new Truth Commission.

The answer is that this will be determined as the Government goes along.  Early indications are that the core group of Aquino’s team, like Cesar Purisima the Finance Secretary, are likely to be empowered to do both tasks.

Yesterday in Manila, the new Energy Secretary Jose Rene Almendras, revealed to the media one of the alleged “midnite deals” of President Arroyo, specifically the issuing of an Executive Order (EO 701) that apparently mandated the partially privatized, and now partially Chinese owned, power transmission company of the Philippines (TRANSCO) to purchase assets from a Korean company even though TRANSCO’s current role is to be selling, not acquiring, its assets as part of its privatization schedule.  The deal, worth over $21 million, apparently happened after the May 10 Presidential elections.

At the same time, Almendras is tasked with finding new power sector investment to head of a pending electric power crisis that could cause black outs in the Philippines within a year if significant new generation capacity is not added immediately.  High stakes multitasking to say the least.

Although confidence in Aquino stands at 85% – a level unheard of since serious polling began in the country, he has strived to downplay expectations.  Like his US counterpart Barack Obama, Mr. Aquino focused on explaining that he’s inherited a government devastated by capricious spending, a culture of impunity, endemic corruption and a massive deficit.  In his state of the nation (SONA) address last week, he emphasized that only 6 percent of the budget he’s inherited is unallocated and focused on the serious deficiencies and troubling evidence of corruption he has found as his team has opened the files left by the Arroyo government.

It is clear that core members of the Aquino team include Cesar Purisima, the Finance Secretary, Paquito “Jojo” Ochoa, his Executive Secretary and legal adviser and Florencio “Butch” Abad, the Budget Secretary.   These are men the President trusts implicitly, who share his passion for reform and are therefore empowered a virtual super-secretaries in the new Philippine Government.

Purisima is well positioned to both promote and prosecute.  Earlier in his career, he was the young CEO of the country’s top audit firm, SGV.  He has worked many years in the private sector and knows how to speak the language of assets and liabilities.  He also knows how to follow the money in Manila.  As Arroyo’s former Finance and then Trade secretary – he defected with the “Hyatt 10” cabinet secretaries who fled Arroyo after accusations of vote fraud and corruption in the 2004 national elections.  Purisima knows Arroyo, her family, compromised officials and rotten contracts better than most.  If he allows himself, he could become the blood-hound of a righteous Aquino camp.

Secretary Purisima will lead an advance mission to make arrangements for President Aquino’s first trip to the US next week (August 7-14) along with the Secretary of Trade and Investment, Greg Domingo.  They will be establishing channels with their counterparts in the US Government, reaching out to Congress and think tanks and to the US business sector.  President Aquino will come to the US for the UN General Assembly (UNGA) and the Second US ASEAN Summit to be hosted by President Obama in Washington, DC or New York.

In terms of new business, Purisima and Domingo are the point men on soliciting new public private partnerships (PPP).  This is a model that was emphasized by President Aquino in his SONA in an effort to leverage private sector funds – because the Government does not substantial funds available – to energize the economy.  They are looking for new investment and partners in the following key sectors:  infrastructure; tourism; business process outsourcing; electronics manufacturing; mining; and, agriculture.

On the policy front, the economic team also says it wants alignment with the US and to establish new momentum on trade by joining the Transpacific Partnership (TPP) trade negotiations.  However, it was clear that this policy option had not yet been tested politically in Manila and it remains to be seen whether and when the Aquino team feel comfortable expending the political capital required to proactively seek membership in the negotiations.

President Aquino clearly has his own views on issues and having been elected, has surprised analysts who questioned his tenacity and drive.  His language in the SONA was simple and direct by design – he was addressing the Philippine people instead of policy makers and legislators.  His policy thrusts are likely to have a similar populist bent – focusing on job creation, poverty alleviation, education and social society.  Important issues to be sure, but there is also a nationalistic sub-text that is worth watching.   Benchmark issues to monitor include awaiting the President’s views on important security issues such as the US Visiting Force Agreement (VFA) and modernization of the Armed Force of the Philippines (AFP).

The new man in Malacanang is off to a strong start.  He is committed to a good fight and with few dollars in his pockets, but a solid team and determination expectations are high despite his best efforts to downplay the same.   The test of his term may end up being whether he can balance his obsessive passion for reform with the urgent need for economic growth.


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