Philippine President Rodrigo Duterte (C) waves after he delivered his annual state of the nation address at the House of Representatives in Manila on July 26, 2021. Photo AFP / Pool / Lisa Marie David

Five years into his chaotic tenure, Philippine President Rodrigo Duterte is suddenly remembering why he was elected back in 2016.

On Monday, his sixth and final State of the Nation Address channeled his predecessor Benigno Aquino’s reformist energy more than Duterte’s spin doctors would admit. His full-throated appeal to foreign investors to give the Philippine economy a look was ripped right from the “we’re-open-for-business” Aquino era.

Aquino, who died in June at 61, won the presidency in 2010 on pledges to restore trust in government and repair a long-neglected economy.

He hit the ground running, strengthening the national balance sheet, curbing graft, increasing accountability and transparency, going after tax cheats and taking on the Catholic Church’s meddling in politics to tame overpopulation.

In just six years, Aquino transformed the “sick man of Asia” into an investment-grade growth star. Sure, Aquino left much undone. He didn’t create enough good-paying jobs. But then, reversing decades of neglect dating back to the days of dictator Ferdinand Marcos isn’t a six-year job.

Enter Duterte, who was elected to turbocharge Aquino’s Big Bang reforms. Duterte rose to national folk hero status after two decades of running the southern city of Davao.

On his watch, the city developed a reputation for efficient governance with faster growth rates and better infrastructure than the national average. The hope was that Duterte would do the same nationally, taking Aquino’s inherited economy to new heights.

Yet Duterte largely rested on Aquino’s economic laurels. When Duterte arrived in the presidential palace on June 30, 2016, the Philippines was already enjoying its fastest growth since the 1970s. It helped that the global economy was enjoying a rare, synchronized growth spurt, one that even saw Japan eking out moderate growth.

Philippine President Rodrigo Duterte speaks during the annual state of the nation address at the House of Representatives in Manila on July 26, 2021. Photo: AFP / Pool / Lisa Marie David

Duterte, to borrow a baseball metaphor, started his presidency on third base – but thought he’d hit a triple. Rather than bring the Philippine economy home, so to speak, he benched Manila’s reform program and pivoted to a war of choice against the drug trade.

When he should have dispatched economic technocrats to curb graft, reduce bureaucracy and ensure infrastructure projects are being done sustainably, Duterte instead deployed legions of trigger-happy gunmen, landing Manila in the global headlines for all the wrong reasons.

Just last month, a prosecutor at the International Criminal Court urged the Hague tribunal to investigate Duterte’s drug war for crimes against humanity. And yet, when Duterte made his plea to foreign investors on Monday, he couldn’t help but tout his drug war as a great success.

To be sure, Duterte played his greatest hits in his speech while addressing lawmakers. He touted this administration’s work to accelerate infrastructure projects. He argued that Covid-19 – “unforeseen events,” as he put it — got in the way of him being able to fulfill the “dreams and visions of a better life for all Filipinos.”

In many ways, though, the Covid-19 crisis exposed the numerous pre-existing economic conditions that Duterte failed to address in the first three-and-a-half years of his presidency.

Now, says World Bank economist Kevin Chua, “growth prospects are subject to significant downside risks. A resurgence of infection due to the entry of new virus variants is the most significant risk, which may yet overwhelm the healthcare system. Scaling up testing, tracing, isolation, and treatment measures, along with the rollout of the vaccination program are key to the public health response.”

Tight global production supply and vaccine nationalism risk delaying the arrival of vaccines. As such, Chua says, “failure to effectively contain the virus or implement the mass vaccination program may extend mobility restrictions, which could lead to further job and income losses, disrupt businesses, and delay economic recovery.”

“There are also external risks including the risk of a slower-than-expected global recovery, disruptions in international logistics and global value chains, and trade protectionism,” he says.

Even so, Duterte’s urging of lawmakers to ease restrictions on international retailers and professionals and to allow foreigners greater ownership in certain public utilities has a better-late-than-never feel. All things that might’ve been nice to hear five years ago. But the real problem, and one that Duterte glossed over in his two hours and 45-minute speech-a-thon is the backsliding that’s made the Philippines a less trusted investment destination.

Filipinos wait in line at a community pantry as they receive goods from a Catholic church in Antipolo City, Philippines on April 22, 2021. Photo: AFP via NirPhoto / Ryan Eduard Benaid

The problem can be summed up with one number: 115, which is Manila’s current corruption ranking on Transparency International’s league tables. This 20-point erosion from the end of the Aquino era puts the Philippines behind Mongolia and Panama. It also puts Manila 13 rungs behind Indonesia, 11 behind Thailand and Vietnam. Duterte’s economy now trails India by 29 rungs; China by 37.

All these nations are vying for, or working to retain, the same multinational companies the Philippines hopes might open factories within its borders. Duterte may have made it easier to do business in the Philippines, but by prioritizing speed over transparency – and basic checks and balances – his tenure has been great mostly for the rent-seeking class and less so for foreign investors.

The “build, build, build” program, a Dutertenomics centerpiece, is a case in point. A common Aquino era gripe was that his focus on open bidding, checks and balances on construction companies and environmental studies slowed projects to a crawl. The same with Aquino’s emphasis on public-private partnerships to finance projects.

Duterte replaced these initiatives with an old-school emphasis on publicly financed projects completed quickly for maximum economic impact. What the Philippines is getting is a short-term sugar high and longer-term headaches like rising graft and public debt.

Yet missing from Duterte’s comments this week was a plan to contain the pandemic. Or to address the fallout from Duterte’s decision to prioritize China’s Sinovac vaccine, which is proving less effective than most others.

Earlier this month, Fitch Ratings fired a shot across Manila’s bow, hinting at a downgrade if the nation doesn’t get serious about the pandemic and the government’s debt to gross domestic product ratios.

“There are downside risks to medium-term growth prospects as a result of potential scarring effects, and possible challenges associated with unwinding the exceptional policy response to the health crisis and restoring sound public finances as the pandemic recedes,” says Fitch analyst Sagarika Chandra.

Economist Nicholas Mapa at ING Research adds that “with businesses concerned about a potential return to stringent lockdowns,” the “ongoing pickup in the Delta variant” is the last thing Duterte’s government needs.

A man wears a face mask as a preventive measure against the spread of the coronavirius in Manila, March 2020. Photo: AFP/Maria Tan

Mixed messaging from the Duterte administration on pandemic mitigation measures and misinformation on social media has allowed anti-vaccination propaganda to run wild. “It’s a polluted media landscape,” says Melissa Fleming, the United Nations’ under-secretary-general for global communications. “This infodemic has shifted now, and the focus is misinformation on vaccines. It’s about instilling fear in people.”

And that, in turn, could instill additional fear among the foreign investors Duterte has finally gotten around to courting. So might the growing odds Duterte will try to extend his tenure beyond the six-year limit in mid-2022. Speculation is rife that his daughter, Sara Duterte, might run for president next year and that dad might angle for the vice presidency.

“They keep on threatening me with lawsuits and everything,” Duterte said on July 17, referring to his political enemies. “But the law says if you’re president, vice president, you have immunity. So I’ll just run as vice president.”

How foreign investors might respond to a Duterte-Duterte ticket is anyone’s guess. It’s hard to see how another family dynasty serves average Filipinos still suffering fallout from the Marcos, or multinational companies potentially eyeing the Philippines. Though Marcos was ousted by a people-power revolt in 1986, the kleptocratic system he created has proven hard do dismantle.

Amid the political jockeying, it’s hard to see Duterte multitasking sufficiently to regain reformist momentum. More likely, it will be more about short-term tinkering to keep growth in the 5.1% range that economist Emilio Neri at Bank of the Philippine Islands expects this year, down from his earlier 6.3% forecast.

Yet economist Ruben Carlo Asuncion at Union Bank of the Philippines speaks for many in expressing disappointment that Duterte’s team isn’t talking more about boosting GDP. At this point, he says, “next year’s budget is extremely important for further economic recovery.”

Philippine President Rodrigo Duterte and his daughter Sara Duterte may run on a family ticket at 2022 elections. Image: Twitter

For all the chaos since 2016, Duterte remains extremely popular – as high as 90% in certain polls. It’s grand, then, that Duterte claims he has ample time left in his term to loosen restrictions on foreign companies and investment, push ahead with tax reforms and complete big infrastructure projects.

“This is by no means my swan song,” he said Monday. “I shall never cease to implore Congress to pass vital and critical legislation as well as to push the entire government to ensure nothing less than the full recovery and revitalization of our country.”

Yet just as real estate is all about location, location, location, bursts of reformist energy tend to be about timing, timing, timing. It sure would’ve been nice to hear these words from Duterte, say, five years ago. Coming now, it smacks of hollow electioneering.