The Race for Malacanang

Brett M. Decker

Posted on February 23, 2009

Philippine voters are looking for change. But will they get it?

(From today’s Wall Street Journal Asia)

The presidential race is on in the Philippines. Although the election is not until May of next year, the main players have declared their candidacies and jockeying for position is well underway. Much is at stake.

Simply put, the governing system is broken. In 11 years since the end of Fidel Ramos’s reformist administration, the nation’s democratic institutions have reverted to oligarchic command reminiscent of the Ferdinand Marcos years. Congress is not a check on the presidency but rather acts as its servant. Major government contracts all pass through Malacanang Palace, and corruption is rampant.

The situation has had a suffocating effect on the business climate. Economic growth in 2008, at just 4.6%, was the slowest in seven years; government debt is at a record high of $88.3 billion, or 56% of GDP; 23 million Filipinos live in poverty in a country of 90 million. Thanks to the global economic downturn, remittance payments from overseas workers, which are vital to the economy, are expected to plummet. Filipinos are looking for change.

The frontrunners from the opposition coalition are Senators Manuel (“Mar”) Roxas II of the Liberal Party and Manuel (“Manny”) Villar, Jr. from the Nacionalista Party. Mr. Roxas comes from one of the most distinguished political dynasties in the country. His grandfather was the first president of the independent Philippines. A provincial capital and Manila’s main boulevard carry the Roxas name. In his 2004 Senate run, he received 20 million votes, the most votes cast for anyone seeking any national office in Philippine history.

Mr. Villar boasts a genuine rags-to-riches story. He went from being a delivery boy to building one of the country’s largest construction empires, centered on his flagship company Vista Land. Forbes magazine lists Mr. Villar as the 11th richest man in the Philippines. He is one of the only politicians who can outspend Mr. Roxas in a campaign.

Both candidates will lean heavily on their economic credentials. Mr. Roxas is a graduate of the University of Pennsylvania’s Wharton School of Business, a former Wall Street investment banker, and served as Secretary of Trade and Industry during President Gloria Macapagal Arroyo’s first term. Mr. Villar’s $425-million fortune is evidence of his business acumen, and his company has won kudos for building low-cost, high-quality housing for the poor.

Messrs. Roxas and Villar both champion the free market and promise reforms to the current government’s state-directed, protectionist policies. Mr. Roxas has argued for lowering or eliminating tariffs. He also supports a stronger currency, comprehensive deregulation, and cutting tax rates for businesses and individuals. Mr. Villar has focused on helping small- and medium-sized companies compete, especially through greater access to credit and reduced red tape.

Contrast that with the ruling-coalition candidates. The leading contenders are the current vice president, Noli de Castro, and Senator Loren Legarda. Mr. de Castro, who enjoyed a long career as a prime-time news anchorman, is mostly seen as a likable lightweight. He spent only three years in the Senate before being elected vice president in 2004 and has no legislative record and few clear-cut positions on issues. Ms. Legarda is chiefly known for advocating new environmental laws, such as strict emissions caps, which raise hackles in the business community. She also was one of only five senators to vote against the 1998 Visiting Forces Agreement with the U.S., under which American troops are allowed on Philippine soil to help combat Islamic extremism.

There will be a lot of machinations between now and election day. On the opposition side, leaders worry that Messrs. Roxas and Villar would split the vote and hand the election to Ms. Arroyo’s anointed successor. There’s already talk of trying to unite the two on a joint ticket. Mr. Roxas could harness his popularity in the agricultural south of the country, while Mr. Villar could deliver votes from northern Luzon. The only problem would be deciding which candidate would be at the top of the ticket — neither is likely to give up his presidential aspirations without a fight.

Meanwhile on the ruling side, Ms. Legarda is the favorite at the moment, but that could change. Mr. de Castro’s best chance is to paint Ms. Legarda, who changed her party affiliation four times in five years, as fickle and unpredictable. But that will prove a tough task given that he is an independent with no party to back him up. Ms. Legarda would benefit from being the only female candidate in the race in a matriarchal society in which two of the last four presidents have been women. And there is the danger that whoever does not get the nod would switch allegiance and campaign for the opposition out of sour grapes.

The biggest wild card is former President Joseph Estrada. Even after his 2001 overthrow and subsequent imprisonment for plunder, the 71-year-old former actor remains a beloved national figure. He has said he would consider entering the race if the opposition does not settle early on a winnable candidate. Mr. Estrada had a mixed economic record during his short presidency. Another dark horse is Senator Panfilo (“Ping”) Lacson, a former general, who is celebrated among the working class. Famous mostly for cleaning up the Philippine National Police, he’s the first senator to swear off pork-barrel spending.

The Philippines has long been regarded as “the sick man of Asia.” Its economy lags behind neighboring Thailand, Indonesia and Malaysia despite many advantages, such as an English-speaking population, a large skilled workforce and an old, close relationship with U.S. businesses. There are candidates for president in 2010 who are well-suited to address the nation’s problems. It’s an even bet whether one of them can make it to Malacanang Presidential Palace.

Mr. Decker, a former editorial page writer for The Wall Street Journal Asia, is author of “Global Filipino” (Regnery, Dec. 2008).

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