The Donald and Rodrigo show is sure to win huge ratings in the days ahead, as two of the world’s most colorful strongmen meet for the very first time at the upcoming Association of Southeast Asian Nations (Asean) summit.
Testosterone will not be in short supply when they chat in Manila this week. US President Donald Trump might tout Wall Street stocks being at record highs. Philippine President Rodrigo Duterte will surely raise him, citing his economy’s China-beating growth rate.
The Philippines’ real concern ought to be about economic weakness, however.
Duterte, it’s important to recognize, has been riding former President Benigno Aquino’s wave since taking office some 500 days ago. From 2010 to 2016, Aquino improved transparency, boosted tax collection, attacked graft, demanded greater accountability and took on the powerful Catholic Church to impose some population control. In six short years, the ‘Sick Man of Asia’ morphed into an investment darling.
Enter strongman Duterte, who made his bones running the southern Davao City. Its pro-business ethos, lower crime rate and better record on inequality relative to many peer cities made Duterte a national hero of sorts. Voters hoped the blunt, blusterous tough guy would apply those lessons nationally, taking the Aquino boom to new highs. The rationale was akin to Indians turning to Narendra Modi to supersize the “Gujarat model” he honed successfully when running the city of that name.
Instead, Duterte pivoted toward a war against (alleged) drug dealers and users. All that extrajudicial shooting – and about 7,000 body bags – eclipsed the economic reform narrative. The chaos that ‘Duterte Harry’ has wrought makes Manila an uncomfortable backdrop for Asean’s 50th anniversary event.
If Asean were a more robust and credible grouping, there would be scope to call out Duterte’s gunmen. The same goes for Myanmar’s blind eye to persecution of the Rohingya Muslim minority, Thailand’s generals settling in for a long stay and Najib Razak’s corruption crisis in Malaysia. Asean’s penchant for non-interference means Duterte will avoid criticism either from Southeast Asian or US officials.
But this year’s Asean summit is likely to be remembered as the top tick for the Philippines’ Aquino revival, which Duterte continues to neglect. More than a quarter of Filipinos live below the poverty line, but so far Duterte has largely ignored his mandate to accelerate structural reforms. It’s telling, for example, that the peso is Southeast Asia’s worst-performing currency this year.
As Asean talks up the need for more inclusive growth, the bottom line is that summit host Duterte is doing little to keep the Philippines on a path toward greater prosperity
Duterte has also been slow to invest in productivity-enhancing industries that would create better-paying jobs, or to improve education and training. Instead, he has increased efforts to export more of the country’s labor force so that they will remit cash back home.
Aquino set the stage for bringing more of the diaspora home, understanding that people should never be a nation’s main export. Over time, it creates a brain drain that weakens labor markets, reduces productivity and fosters a variety of social strains.
Remittances become an addiction, relieving pressure on governments to generate good jobs. Far from wooing Filipinos back home, Duterte is creating an Overseas Filipino Bank to facilitate the people-export business.
Promises to declare war on Manila’s notorious traffic jams have gone nowhere. Even Duterte’s efforts to accelerate giant infrastructure projects is raising risks. Aquino championed private-sector-led projects to increase accountability and efficiency and attract more foreign direct investment. Duterte favors a return to government-led ones, raising concerns about the national debt and increased corruption.
As Asean talks up the need for more inclusive growth, the bottom line is that summit host Duterte is doing little to keep the Philippines on a path toward greater prosperity.
So, the Donald and Rodrigo show will likely feature a lively debate about whose economy is stronger and who’s got more political will. But the real story is how the Philippines is heading away from the impressive progress made since 2010, shooting its economic future in the foot.