Business comes out behind Estrada's change of course
Business comes out behind Estrada's change of course
MANILA (AFP): Business leaders on Monday welcomed President Joseph Estrada's decision to shelve proposed changes to the constitution and replace some key advisers, but warned he needs to follow through with results.
Analysts said Philippine share prices greeted Saturday's announcement with a strong rally on Monday, closing 2.3 percent higher.
Estrada appointed former trade secretary Jose Pardo as finance secretary and announced the formation of two new economic councils to harmonize government programs and fast-track specific economic bills.
Former Manila mayor Alfredo Lim was made secretary of interior and local governments.
Estrada also backed off his contentious plan to change the constitution to attract foreign investment by removing certain ownership limits, particularly the 40 percent ceiling in key sectors such as telecommunications.
The policy change announced over the weekend followed an alarming 34 percentage-point drop in the Philippine leader's approval rating in the six months to December.
Business leaders downplayed concerns that dropping the proposed constitutional amendments meant the death of Estrada's economic reform initiatives.
"The proposition assumes that the only avenue for reforms is through constitutional changes," said Guillermo Luz, executive director of the Makati Business Club which groups chief executives of the country's top Filipino and foreign companies.
He told AFP the decision was actually "a good sign", buttressing the argument of Estrada critics that many of the market-opening reforms he seeks can be achieved by passing laws to skirt constitutional obstacles.
"There may be other avenues for reforms which have not been thoroughly explored," he added.
The departure of Edgardo Espiritu, replaced as finance secretary by Jose Pardo, was hailed by British investment bank Barclays Capital.
"Espiritu's resignation reduces the risk of medium-term economic performance in the Philippines being undermined by inappropriate fiscal and monetary policies," the investment bank said in its latest country report.
Espiritu, who had espoused lower interest rates, had admitted to having had policy differences with Central Bank of the Philippines governor Rafael Buenaventura over the issue.
Philippine Chamber of Commerce and Industry president Miguel Varela said the reshuffle was "a significant step in ensuring a more unified, cohesive, and strengthened cabinet that will help the president implement key economic measures".
Putting the unpopular constitutional amendments on hold, in exchange for more specific legislative measures, "signals a change in direction" and a sharpening of focus, said Mike Gotera of DBP-Daiwa Securities.
"The government can be more focused on certain specific goals which it hopes to attain in the short term," he said.
Estrada had argued that "protectionist" provisions should be dropped from the charter to attract foreign capital to sectors such as utilities, the media, resources and education -- which are now restricted to Filipinos.
The idea raised fears that Congress would use the process to curtail civil liberties and lift term limits on the presidency and other elective posts.
But Luz, who described the charter change proposals as the "single most divisive issue" in Estrada's 18 months old presidency, warned that "it is one thing to announce changes. Implementation is another thing."
Employers Confederation of the Philippines president David Dee told the Business World newspaper: "There certainly is a positive attitude toward the changes, but what happens afterwards is another story."