Estrada faces tough times in Philippines

Estrada faces tough times in Philippines

By Ruben Alabastro

MANILA (Reuters): Joseph Estrada, the man from tinsel town, has survived the toughest first 100 days in office of any Philippine president, but concerns persist over his ability to lead the country out of its deepening economic gloom.

Since he took office on June 30 after posting the biggest winning margin in a free election in Philippine history, every day has been a struggle for the former movie star to convince skeptics he is the right man for the job.

"What foreign investors want is a clear policy direction," Bruce Gale, regional manager of the Singapore-based Political and Economic Risk Consultancy Ltd (PERC), told Reuters.

One problem relates to "the difficulty President Estrada is having trying to establish a reputation as a credible leader", the business consultancy firm said in its latest survey rating. Estrada himself has said he could not have assumed the presidency at a worse time.

Hammered by Asia's financial turmoil, the peso had lost 37 percent of its value when Estrada took over, the stock market was in a tailspin, thousands had lost their jobs, the treasury was running a huge deficit, and investments were dwindling.

"I am anxious that the steep decline in investments in the last three months might continue and that is the biggest destabilizing factor," said Alex Magno, political science professor at the state run University of the Philippines. "We're facing a very bleak Christmas," he added.

Swamped as the country is with problems, the biggest issue dogging Estrada is his administration's failure to inspire confidence, analysts said.

A lack of clarity on how policy decisions are made, a seemingly laid-back leadership, media reports of cabinet infighting and absence of a core of professional technocrats have created an image of a weak presidency, they said.

"The next 100 days will probably be more critical than the first 100 because... there are no excuses any more," Magno said. "It's a whole battlefield that the president must approach with the attitude of a field marshal."

Robert Sears, executive director of the American Chamber of Commerce, which represents 770 U.S. companies, said Estrada had done "a fair job" considering the economic storm battering the region.

"Give him a chance to prove himself," Sears said. "I think the way the press has ganged up on him, they should back off a little bit, give him a breathing spell."

But Sears agreed Estrada must send clear signals to the business community that the liberalization policy launched by his predecessor, Fidel Ramos, would remain firmly entrenched.

Passing laws that would allow foreigners to enter into the nationalized retail trade and own real estate would send a strong message, he said.

Despite a series of presidential missteps, including embarrassing diplomatic gaffes, Estrada has chalked up some successes which showed he could be decisive when required.

Analysts said these included his intervention in the acrimonious Philippine Airlines dispute, which allowed the financially troubled flag carrier to fly again two weeks after it closed down.

His unprecedented decision to scrap congressional "pork barrel" funds -- a major source of corruption -- also won him plaudits.

But anxieties persist over the possible return of so-called "cronyism" in business as a result of Estrada's links to former allies of late dictator Ferdinand Marcos.

The fear grew when, a week after Estrada took office, his political patron and Marcos ally Eduardo Cojuangco recaptured control of the San Miguel Corp conglomerate.

"With President Estrada in power, the possibility of a return of cronyism has raised concerns about the extent to which the Philippine economy may once again move away from free market principles," the PERC risk rating said.

Still, PERC said, that might be unlikely soon because the Philippines needs the goodwill of the International Monetary Fund, which frowns on cartels and monopolies.

PERC's Gale said that while investors looked at the Philippines more positively than Indonesia or Malaysia, a wrong policy turn by Estrada could have serious economic consequences. The hope of business is that "the new President does not make a misstep somewhere to upset the applecart," he said.