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."