Abu Sayyaf guerrillas take Philippines economy hostage

AFP, Wednesday 20 June 2001, 4:03 PM

Tourists are fleeing, investments are on hold and the peso is on the ropes as the Philippines reels from a Muslim guerrilla hostage crisis in the island of Basilan and other kidnappings.

When Abu Sayyaf gunmen raided the upmarket Dos Palmas resort off the western island of Palawan on May 27 and seized 20 tourists and hotel staff, they also kidnapped Palawan tourism and took the entire Philippine economy hostage, President Gloria Arroyo said.

The local currency slipped to a five-month closing low of 52.30 pesos against the dollar on Tuesday and traded below 52 to the greenback on Wednesday.

The stock market recovered partially Wednesday due to bargain-hunting, but Benedict de Borja of Magnum International Securities said: We still have the never-ending Abu Sayyaf story and the thing about that is, it is wreaking havoc on the local currency.

The Dos Palmas raid was only the the latest installment of a recurring nightmare. Last year another faction of the small Muslim guerrilla group raided the Malaysian resort of Sipadan and held for ransom dozens of western captives from its base in the southern island of Jolo.

The new crime wave has deflated the euphoria of the people power revolt that swept Arroyo to the presidency in January.

Press reports say the Abu Sayyaf has raised millions of pesos from its latest batch of captives, with a Chinese-Filipino businessman said to have sold his automotive bushings business to raise money to redeem his teenage daughter from the guerrillas.

The guerrillas are not alone in the kidnapping racket. A Singapore businessman left the country earlier this month after his wife paid a 166,000 US dollar ransom to a Manila gang.

Business thrives only in an environment of peace and stability. All of this criminal activity definitely is not conducive to economic growth, said Benjamin Chua, president of the influential Filipino-Chinese Chamber of Commerce here.

We hope we will get past this particular crime wave very soon and things will go back to normal so that we could be back to business so to speak, he said on ABS-CBN television.

The hostage crisis comes at a bad time for the Philippines, which earlier downgraded its economic prospects amid a slowdown in the United States and Japan, its main export markets.

I would not go to the extent of saying that there has been capital flight, but the general international economic slowdown is also taking its toll on our national economy, Chua said.

The outlook received another hammer blow on Wednesday when US credit rating agency Standard and Poor's warned that Manila risked a sovereign credit rating downgrade because of a shaky fiscal sector and rising government debt.

The government's creditworthiness could decline if the government fails to stabilize and reverse its increasing debt burden, it said, warning that this could also put further pressure on the peso.

Tourism has been one of the main victims of the kidnappings with visitors packing their bags to leave central and southern Philippine resorts after the Palawan raid.

Last weekend a US government travel advisory urged its citizens to exercise great caution throughout the Philippines due to possible Abu Sayyaf attacks, bombings, communist guerrilla ambushes and political violence.

President Arroyo is fighting back, rejecting ransom talks, clamping down on news coverage of the hostage crisis and revealing plans to set up a law enforcement superbody to fight kidnap gangs.

Her government is also trying to reverse the negative sentiment, even resorting to giving all expenses paid overnight trips for journalists to Dos Palmas.

Take away two or three islands in the south which are not visited by tourists anyway, the country still has 7,103 islands for the Japanese to enjoy, Tourism Secretary Richard Gordon told Japanese travel executives here last week.