Philippine business sees economic boost

Former Philippine President Joseph Estrada has been arrested for economic plunder

In this story: Estrada blames business 'conspiracy' Negative outlook Globalization Gov't to dispute findings RELATED SITES

By CNN's Amabelle Layug

CNN -- The Philippine business community is optimistic that the arrest of former president Joseph Estrada will resuscitate the business climate and lift the country's economy.

Industrialist Raul Concepcion believes the political uncertainty that has been weighing on the country's business sector is beginning to clear.

"Elements of uncertainty have been resolved. Now we can move forward," Concepcion said.

Concepcion, chief executive of diversified conglomerate Concepcion Industries, believes the arrest of Estrada will restore confidence within the business community and stimulate the investment climate.

QUOTE "This is a signal to the international community that the Philippines now has a strong and firm leadership that adheres to the rule of law. " - Finance Secretary Alberto Romulo

Estrada was arrested on a charge of economic plunder, which carries the death penalty. He also faced charges of corruption, one of which involves his alleged participation in a stock market scandal for insider trading.

Philippines Finance Secretary Alberto Romulo echoed Concepcion's view, saying Estrada's arrest should boost the economy and help restore the confidence of foreign investors and creditors.

"This is a signal to the international community that the Philippines now has a strong and firm leadership that adheres to the rule of law," he said.

Estrada blames business 'conspiracy'

After his arrest, Estrada blasted the country's influential business community, saying his downfall was the culmination of a long-running "conspiracy" waged against him by Philippine big business.

On Wednesday, the day of the ex-president's arrest, a last-minute buying splurge lifted the sluggish stock market by 1.3 percent.

Traders said investors snapped up blue-chip stocks as soon as they heard the news that an arrest warrant had been issued against Estrada.

While the actual arrest did not happen until after the market's close, the main-share Philippine Stock Exchange composite index rose 18 points to close at 1,462.18.

It closed down slightly lower on Thursday, with the PSE shedding 24 points to 1437.50.

Concepcion noted that the peso is not likely to be affected by the "Estrada factor" because it is already hounded by external problems.

On Thursday, the peso fell to P50.55 to the US dollar, from P50.415 the previous day. Traders attributed this to the weakness of the Japanese yen and fears of an impending debt moratorium by Argentina.

Negative outlook

Earlier, Moody's Investor Service gave a negative outlook for the Philippines saying it saw no significant growth and immediate recovery in the fiscal position, and no dramatic rebound in investor confidence in the country.

The credit-rating firm pointed to "political uncertainties and declining economic fundamentals" for the bleak forecast.

Even after Estrada's arrest, investors are likely to remain cautious on fears that pro-Estrada supporters may launch a civil disobedience campaign that further rocks the country's shaky economy.

But Concepcion downplayed this fear.

"It's obvious that the former president's supporters cannot come up with a meaningful demonstration. So I believe that would not cause damage."

Late Wednesday night, some 8,000 supporters of the disgraced leader staged a rally at a religious shrine in Manila, demanding that their "president" be released from detention. But the crowd eventually dwindled Thursday morning.

Concepcion said Estrada's arrest underscored that the judicial process of the country was at work.

Instead, he said investors should watch the outcome of the elections since this would determine the extent of support for the Arroyo administration.

"After the elections, then they will see the full support of the people. Foreign investors will now see there is a level-playing field," he said.

The Philippine national election will be held on May 14. It is perceived as a proxy war between Arroyo and Estrada.

Globalization

Now that the dust has settled, Concepcion said, the government should gear up for globalization, which is the main concern of the international business community .

"I'm more concerned now about the global economy. We must be able to sustain our growth and development."

He said the Philippines could not compete with other developing countries like China and Vietnam. Instead it should first focus on its own market and meet its own needs and demands.

Gov't to dispute findings

In a related development, the Arroyo administration earlier said it would formally ask Moody's to reconsider its negative outlook for the Philippines.

Arroyo said the firm should consider the country's achievements in restoring political and economic stability in the country.

Particularly, she cited her administration's implementation of measures to meet its full-year budget deficit.

The government has set this year's budget deficit ceiling at about $72 billion (P145 billion). The budget shortfall, so far, stood at P38.913 billion in the first quarter, lower compared to the P48.882-billion target for the period.

Earlier, Romulo decried the Moody's rating as unfair and baseless.

"They could be misinformed because there is political stability and confidence in the government as recognized by all countries. We would advise them to change their opinion," the finance chief said.

The negative outlook for the Philippines in a recent Moody's annual report was seen to affect investor confidence and the pricing of impending foreign loans by the national government.

Standard & Poor's was the first to downgrade its outlook for the Philippines to negative in October last year, following the corruption scandal that undermined the ability of the Estrada administration to pursue reforms and fast-track growth.

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