Estrada's real battle is just about to begin

By Luz Baguioro, The Straits Times, 27 May 1998

Manila— WINNING the Philippine presidency may have been easy for Mr Joseph Estrada, but the real battle will be fought in the economic arena, admittedly his Achilles heel.

Citing few specific policies, he has set forth an ambitious programme that, if realised, could make him more than just a reel champion of the masses.

Riding high on his celluloid Robin Hood image, the former film star has pledged growth with equity and economic democracy.

He has also vowed to rid the government of corrupt officials, pursue criminals to their doorsteps and continue the reforms that have helped transform Asia's perennial sick man into a rising economic star.

So far, he has made the right moves, reassuring corporate titans and investors that he would protect their interests as much as those of the more than one-third of the population who are considered poor.

My duty is to make sure there is no minority interest on the national balance sheet.

Our equity in the national enterprise is held in common, he said.

Criticised during the campaign for being ill-suited to manage the economy, he has chosen respected banker Edgardo Espiritu, his close friend for 29 years, to head his economic team and economist Benjamin Diokno to be the budget chief.

A throng of 31 advisers, including academics, bankers and businessmen, make up the supporting cast.

Still, the big question is: Can he deliver the change that he promised during the campaign?

Mr Estrada, who is headed for a landslide victory, may not have the congressional support crucial for him to pursue the legacy of reform of outgoing President Fidel Ramos, who is to step down on June 30 after a six-year term.

Mr Ramos himself won with less than 26 per cent of the vote in 1992, but loyal ally and administration bet Jose de Venecia cobbled a rainbow coalition in Congress which helped pass market-opening reforms.

Unless there are huge defections, Mr Estrada is likely to be derailed by a Lower House of Congress dominated by the Lakas party of rival Mr de Venecia.

His Fight of the Nationalist Filipino Masses party appears set to gain control of the 24-seat Senate.

Given his popular mandate, he can harness public opinion cleverly to prod legislators to pass his pet measures.

He did just that last week, when he suggested scrapping the so-called pork barrel—the billions of pesos allocated to congressmen for infrastructure and social projects.

About 40 per cent of the funds are pocketed, exposing politicians opposed to the move to bitter public censure.

Apart from widening his political base, the country's next leader must also contend with the higher interest rates and weaker peso resulting from the Asian financial crisis, which had forced many companies to shut down and lay off their workers.

By end-September, when Mr Estrada would have completed his first 100 days in office, Mr Espiritu reckons that the new administration would have succeeded in taming interest rates and stabilising the local currency.

He said the quickest way to do that was for Congress to remove the 5-per-cent gross receipts tax levied on a number of bank transactions, which only jacks up intermediate costs.

To boost revenue collection, a genuine and sustained drive against tax cheats would be launched, and tax Gestapos posted to major corporations.

State-run companies and assets such as the Bataan Nuclear Power Plant, Manila Electric Company, and National Power Corp would be auctioned, with foreign bidders welcome.

Capitalisation requirements for banks would be raised further to weed out weaker players, and to encourage mergers as well as the entry of foreign investors.

The new team has also pledged to honour commitments to the International Monetary Fund but will appeal for some changes to certain demands, like the scrapping of the Bank Secrecy Act.

Some of the proposed measures reflect Mr Estrada's populist leanings.

Family-owned corporations would be encouraged to go public, enabling even lowly jeepney drivers to invest in the stock market.

The pace of tariff cuts will be slowed, though still within the time frame committed under international trade pacts.

He also promised to reduce further the tax burden of wage-earners, and to open a World Bank-backed facility guaranteeing low-cost housing loans.

Although laudable, Mr Estrada's economic platform does not guarantee there would be no added pain.

Mr Espiritu said the President-in-waiting intends to appeal for public support and patience for the belt-tightening that lies ahead.

We have to appeal to everyone to participate and share in the burden ... What is needed here is two to three years of sacrifice, he said in an interview.

If Mr Estrada's deeds match his words, he could prove all his critics wrong and realise the long-held aspirations of the masses who voted him into office.

However, there is no guarantee his dreams will not fizzle out amid red tape and corruption.

Also, there is the question of political will.

One of his backers is Chinese-Filipino tycoon Lucio Tan, who faces a 25.8-billion-peso (S$1.2 billion) tax-evasion charge.

We heard it is really an issue of persecution ... He has a lot of money and he can really go into legitimate business, Mr Espiritu said.

Certainly, in the future, if he violates the law, we will have to enforce it equally.