Monday, August 28, 2017

"The government needs to address these major noneconomic issues now before it becomes too late, when foreign investors and tourists start looking elsewhere because of the political uncertainty they perceive in the Philippines."

"x x x.

Perceptions on peace and order

Editorial | Philippine Daily Inquirer | August 28, 2017

A number of noneconomic factors impact greatly on business, among them peace and order and the trade in illegal drugs.

Already, foreign business groups here have raised concerns regarding these issues, particularly the administration’s war on drugs that has resulted in thousands of deaths and the prolonged state of martial rule in Mindanao.

Their main concern is in investments and tourism, which the country needs to sustain economic growth that, in turn, is needed to achieve the government’s goal of lifting millions out of poverty by the end of President Duterte’s term in 2022.

Police data showing that the crime rate has either stabilized or dropped cannot change what people perceive as the true state of law and order, or the lack of it.

More than the numbers, people base their sense of the peace and order situation around them on TV and radio news broadcasts as well as newspapers and online news sites.

Each day, crimes are being committed against persons and property. Exacerbating these are news on killings done by both vigilante groups and the police in the name of the campaign against illegal drugs.

“If I were an investor from Europe or anywhere else and I want to put up a factory and I have $500 million, would I really want to put this in a country with issues on peace and order? I think the answer is, I would do so very hesitantly because you don’t understand what’s coming your way,” said Guenter Taus, president of the European Chamber of Commerce of the Philippines.

True, the impact of the current peace and order situation on foreign investments may be a bit of a stretch considering that these investors do more detailed analyses and consider a number of factors before deciding on whether or not to invest.

But this is not the same for tourists, who can decide based on what they read online or in media entities in their home countries.

Such is the view of the president of the American Chamber of Commerce of the Philippines, Bruce Winton, who is also the general manager of Marriott International hotels in Manila and Iloilo.

He points out that tourists do not observe the same level of meticulous research compared to foreign investors. For a tourist making a vacation choice, he or she will simply look at the headlines.

The government can counter that tourist arrivals are still growing, based on data from the Department of Tourism. The number of foreign visitors increased by 12.73 percent in the first half of the year to 3.36 million visitors, up from 2.98 million in the same period in 2016. But we should not wait until the numbers start falling before acting on the peace and order situation.

The government cannot easily dismiss all this as a perception issue or something that the media have blown out of proportion.

The case of 17-year-old Kian delos Santos, who was shot by policemen during a drug raid, is an example. It cannot be brushed aside as an isolated case because it has drawn much condemnation that, if ignored, can create much uncertainty in the political climate.

This uncertainty, in turn, can make not only tourists but also foreign investors hesitant to engage the Philippines.

The European Chamber’s Taus says it clearly: Business decisions are more difficult to make when investors view the Philippines from outside, especially given the negative reports on the country by the international media.

Reacting earlier to the declaration of martial law in Mindanao last May, Taus pointed out then that to a large extent, what has kept businesses out of the island was precisely the poor peace and order situation.

With the Marawi crisis dragging longer than what everyone had expected, this can indeed discourage investors who have been waiting on the sidelines.

The government needs to address these major noneconomic issues now before it becomes too late, when foreign investors and tourists start looking elsewhere because of the political uncertainty they perceive in the Philippines.

x x x."