Hail to the new chief

By Sangwon Suh and Antonio Lopez, Asiaweek, 26 June 1998

President-elect Joseph Erap Ejercito Estrada is already beginning to put his own stamp on the nation. Most are pleased about it—but not all

Manila—WINNING THE ELECTION was the easy part. Now President-elect Joseph Erap Ejercito Estrada faces a greater hurdle: quitting smoking. On June 4, he officially adopted a nicotine-free lifestyle, turning his back on a habit he had acquired when he was 17. So far he has stuck to his game plan, but his aides sometimes suffer the consequences. They say that without the ubiquitous cigarettes, Estrada is prone to mood swings, warm and jovial one moment, irritable the next. But it's all for a good cause—his health and that of the country.

Sacrifice and discipline are the buzz-words of the incoming administration of Estrada (who now insists that his family name Ejercito be restored, as Estrada is a stage name from his days as an action star). And the 61-year-old college dropout is determined that everyone—not just himself and his aides—pitches in for the good of the nation. He has vowed to: put an end to the pork-barrel or public-works projects controlled by congressmen; streamline the bureaucracy, which could mean layoffs of state workers; ensure that the moneyed classes pay their share of the taxes; allow greater foreign ownership of banks and real estate; and strip the Supreme Court of the power to review the government's economic decisions.

In addition, Estrada has three main priorities for his first six months in office: putting food on the table of every Filipino family, cracking down on corruption, and bringing peace and order. (Estrada will personally supervise the Philippine National Police and he plans to form an elite group of crime busters.) No one argues with those priorities of course, but there is little doubt Estrada's program will face stiff opposition from vested interests and other groups less keen on sacrifice.

Still, going in Estrada's favor is his huge mandate. He garnered a record 10.7 million votes in the May 11 presidential poll, leaving his closest rival, House Speaker Jose de Venecia of the ruling Lakas-NUCD party, in the dust with just 4.3 million ballots. Estrada admits to feeling the burden of his resounding victory. He says soberly: So much is expected of me so soon.

Indeed. Among the biggest issues is money, or the lack of it—not only among the poor but also on the part of the government. My problem, says Estrada, is the country's debts—foreign debts of $45 billion and domestic debts of $50 billion. The government is bankrupt. This will hamper my program of government, especially my thrust in food security.

Erap will have a tough time in his first year, says Senator Edgardo Angara, his vice-presidential running-mate, who lost his race. The treasury has no more money. The budget deficit will hit $1.5 billion by the end of the year. That's only the beginning of the problem. A total of 17 laws are currently in deep freeze because the country cannot come up with the $9 billion needed for their implementation.

To make up for the deficit, Estrada has ordered a 25% cutback in the government's non-personnel expenses, a crackdown on graft and a vigorous tax-collection drive. Rich individuals and big corporations have been requested to pay every single centavo of taxes due the government—or else face jail time. Says Estrada: If millionaires in the U.S. are sent to prison for tax evasion, I see no reason why it cannot be done here.

Some businessmen think trying to shake unpaid taxes out of them is like squeezing blood out of turnips. Business has been bad, so the big corporations are not able to pay more taxes, says Washington SyCip, founding chairman of the SGV & Co. management services group. Tycoon Alfonso Yuchengco echoes the sentiment: The economic crisis will last for probably five years.

Such arguments do not hold water for Felipe Medalla, soon to be Estrada's socio-economic planning secretary. He says the country's economic performance has been as good as it can be, given the situation, and points to the 2.5% GNP growth in the first quarter. The consensus forecast is we'll have no less than 2% GNP growth for the whole year, he says.

Cutting congressional pork is another of Estrada's strategies to improve the country's finances. Pork has made Congress a den of corruption, maintains the president-elect. He says the practice eats up 20% of the $14 billion national budget and half of that goes to payoffs to congressmen for endorsing funded public-works projects. For their part, congressmen insist pork is an effective way to funnel development funds to the countryside, which cannot otherwise get allocations from Manila. We will not allow Estrada to abolish pork, vows Lakas congressman Sergio Apostol.

For all the resistance, at least Estrada has moral weight behind him, as tax-dodging and pork-barrel politics can hardly be called a virtue. More controversial are some of his proposals that do not quite scale such moral heights. Foremost among them is the plan to bury the corpse of former dictator Ferdinand Marcos at the Libingan ng mga Bayani (Cemetery for Heroes) and allow his family to keep a chunk of his ill-gotten wealth. Konsensyang Pilipino, a coalition of activist organizations, has written Estrada to protest the state burial for Marcos. Such an act, it said, would be tantamount to writing off the crimes of the dictatorship, denying justice to its victims and worst of all, as condoning the crime itself.

Estrada remains firm in his decision. If we can pardon the Japanese who raped our women during the war, why not Marcos? he argues. His incoming administration is now trying to reach a compromise with the Marcos family on their fabled fortune. During Ramos's tenure, the Marcoses had agreed to give 25% of the identified wealth to the government, but the arrangement fizzled out. Yes, a deal is being worked with the Estrada administration, confirms Ilocos Norte governor and ex-congressman Ferdinand Marcos Jr., son of the strongman.

Also raising eyebrows is Estrada's favorable treatment of his business backers, some of whom were close to the Marcos regime. Government sequestration of the controlling interest in San Miguel Corp. will be lifted, enabling Marcos crony Eduardo Danding Cojuangco Jr. to get back control of the beer and food giant. Meanwhile, Philippine Airlines owner Lucio Tan, who had been hit with a huge tax bill under Ramos, is expected to benefit from an announced tax amnesty. Estrada also supports Tan's downsizing of the cash-strapped national carrier, which could mean laying off 5,000 employees.

Estrada denies he is making paybacks. I will not horse-trade with anyone, he maintains. I will not compromise national interest with anyone. Before I sleep and when I wake up, I know it's the Filipino masses who brought me to where I am. I don't owe anybody my victory except the masses.

For all his seeming chumminess with his big-business supporters, the foremost concern of Estrada remains the welfare of the poor. A daunting reality he and his government have to grapple with is that over 4 million households are under the poverty line, and 2.5 million workers are out of a job. We'll make the budget more targeted toward alleviating poverty, says Medalla. We may have to provide direct subsidies to the poor.

Vicente Rivera Jr., the incoming transportation and communications secretary, thinks that public-transportation fares should not be increased, while soon-to-be agriculture secretary William Dar says $3 billion will be allocated for irrigation over the next six years to increase food production. Orlando Sacay, designated head of a special commission on poverty alleviation, is mulling over a farmers' bank that would provide loans in the countryside.

Of course such measures, while undoubtedly helpful to rural folk, will be difficult to implement if the economy does not cooperate. The Philippines has not been hit as hard by the regional financial crisis as some other countries, but growth has slowed while inflation and unemployment are up. In addition, external factors like the state of the Japanese and Chinese economies and the Indonesian situation will continue to influence exchange-rate movements, and these we have very little control of, warns current Socio-Economic Planning Secretary Cielito Habito.

The new president is well aware of the challenges and refuses to see the future with rose-tinted glasses. I expect rough sailing, he says. Fortunately, he is backed by a well-received cabinet that includes stalwarts from the previous administration and is a solid blend of competence, maturity and experience.

Pong Salud, president of JVC Philippines, has no doubt Estrada will pull it off: His heart is in the right place. And what about his having been a college dropout and an actor? Says businessman Yuchengco: The Tokyo governor was an actor, and he is doing very well. Ronald Reagan was an actor and he did well too. Adds SyCip: Corazon Aquino built on democracy, Fidel Ramos opened up the economy. Joseph Estrada will lift the bottom up. In the long run, that's a more sustainable basis for growth. Clearly, the hopes of millions of Filipinos rest on the shoulders of Joseph Ejercito Estrada.

ALL THE PRESIDENT'S BUSINESSMEN

Conventional wisdom holds that new President Joseph Ejercito Estrada is against big business because he is for the masses. Not so. Like any shrewd politician, Estrada counts numerous tycoons among his supporters. Here are some of them, plus why they back Estrada:

MANUEL VILLAR, 48, billionaire congressman and property developer. A member of Fidel Ramos's Lakas-NUCD party, Villar shifted support to Estrada in the homestretch of the campaign, reportedly giving a huge contribution. Now Estrada is supporting him as the next speaker of the House of Representatives, the fourth-ranking official in the land after the president, vice president and the Senate president.

EDUARDO DANDING COJUANGCO JR., 63, single largest and controlling stockholder of beer and food giant San Miguel Corp. (company's assets: about $3 billion), whose shares are under government sequestration. Estrada has vowed that the Presidential Commission on Good Government —which sequestered the shares of San Miguel and of other companies tied to former president Ferdinand Marcos—will be abolished. That means Cojuangco regains control.

LUCIO TAN, 64, beer, tobacco and airline tycoon, principal owner of financially ailing Philippine Airlines. Tan backed the wrong candidate in 1992, and winner Fidel Ramos slapped him with a record P25-billion (then about $700 million) tax assessment. Now Estrada says Tan can avail himself of a tax amnesty to close the case.

EDGARDO ESPIRITU, 63, CEO of Westmont Bank (assets: about $517 million). He brokered the partnership between Estrada and his (losing) running-mate Senator Edgardo Angara. Espiritu is the new finance secretary.

JOSE PARDO, 58, owner of the 7-Eleven retail chain and Wendy's fast food franchise. Pardo won the TOYM (Ten Outstanding Young Men) award for business in 1972 when Estrada won his TOYM for government service. Pardo is the new trade and industry secretary.

AMABLE KING AGUILUZ, 52, owner of the AMA chain of computer schools and the ACA chain of video shops. On June 14, Estrada became the godfather of King's only son, Miguel, the senior executive v.p. of the AMA and ACA groups of companies. Says King Aguiluz: If Erap asks me to jump from a building, I will ask him, when?

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