It's like a scene from a rock concert. It's nearly 2 a.m., and thousands of eager fans have been waiting since afternoon in the stifling heat of Dagupan City in the northern Philippines for Presidential candidate Joseph E. Estrada. As Estrada makes his way to the stage, middle-age mothers and teenage daughters titter and clamor to catch a glimpse of the former movie actor with his trademark pompadour. He is introduced by an entourage of celebrities, some of whom literally sing his praises over the loudspeakers. The 61-year-old Estrada, known by the nickname Erap, is comfortable and animated as he jokes with the adoring crowd and asks for their votes on May 11. "Without the poor behind Erap, Erap would not be where he is now," Estrada declares in Bob Dole-like third person.
Once derided by many in the Establishment as a buffoon who knows little about running a country, Estrada is now a political star and the leading candidate to become the next President of the Philippines (table). The business community, critical of the college dropout who once took weekly economics lessons to bone up on the issues, is now bracing itself for an Estrada presidency. Many feel that even though he has served as Vice-President to Fidel V. Ramos for the past six years, he may lack the savvy to keep the country on the path of Ramos' widely praised economic reforms. "There are concerns about the Vice-President's grasp of all the issues," says Guillermo M. Luz, executive director of the influential Makati Business Club, which includes many of the country's top corporate leaders.
Even Estrada's appeals to business leaders are tinged with a populism that makes them nervous about what he might do in office. "I can assure you that our administration is committed to free trade and free-market institutions, but our dedication to the poor and the helpless will be unwavering," he says. Yet Estrada is vague on specifics, with the exception of wanting to increase social programs for the poor and lower interest rates to spark job creation. Foreign investors are waiting to see where he will come out on government spending and pursuing reforms.
FRAGILE STAGE. Economic competency is of special concern in light of Asia's financial crisis. President Ramos is credited with keeping the Philippines from the brunt of the currency and market depreciations that swept the region late last year. He has kept government spending low, emphasized transparency and rule of law, deregulated, and kept foreign investors coming in. While countries such as Thailand and Indonesia are in recession, the Philippines is projecting growth of 3% this year. Ramos told BUSINESS WEEK in a recent interview that he is most concerned that his successor continue what he started. "The reform process must go on," Ramos said. "I hope that wherever he has insufficient expertise, he will be properly advised."
Another big concern is that under Estrada's leadership, the country might slide back into a milder form of the crony capitalism that thrived under former dictator Ferdinand Marcos. The business community has similar concerns about Ramos' endorsed successor, House of Representatives Speaker Jose de Venecia Jr., who is currently fourth in the polls. With bribes and big donations common in Philippine elections, favors will be owed no matter who wins.
Estrada has good reason to continue reforms. In order to deliver on his promises to improve conditions for the poor, he has to promote industrialization. Estrada admits that good corporate relationships would be vital to his success. "They're the engine of growth of our economy, so I'll give them the best climate for running business--lessen the regulation of the government and the restrictions and so forth," he declares. "Without business, where will we get our money to support our projects for the poor? My vision is to narrow the gap between the rich and the poor and to build a strong middle class."
While Estrada's pop status as Mr. Everyman has drawn the lower classes together under one umbrella, the other candidates have fragmented the middle-class vote. There were 11 candidates until Apr. 29, when former First Lady Imelda Marcos dropped out of the race with a mere 2% showing in the polls. To have a shot at beating Estrada, supporters of several candidates would have to join forces behind just one such as de Venecia--which, so far, they have not been eager to do. "The fact that there is no strong movement from business to forge a reconsolidation of the candidates means that they are preparing to reconcile with an Estrada presidency," says University of the Philippines political science professor Alexander R. Magno.
Estrada's supporters say he knows his weaknesses and will not try to micro-manage the way Ramos has. "You will find him very much hands-on with the things in which he has expertise--peace and order, and the running of local government--and I suspect that he will rely on his Cabinet members as far as economic policies are concerned," says Rafael B. Buenaventura, president and CEO of Philippine Commercial International Bank, who has been friends with Estrada since high school. Estrada confirms that he plans to delegate, but so far, he has not made any choices for Cabinet posts or economic advisers.
Questions also remain about Estrada's character. He has weathered accusations of drunkenness, adultery, gambling with a drug lord, involvement in a pyramid scheme, and even plotting to assassinate Ramos. Voters seem not to believe the more serious allegations and not care about his excesses. Estrada says his only vice now is smoking. "Not to condone wine, women, and song, but you've got to put that in context," says Senator Edgardo J. Angara, Estrada's vice-presidential running mate. Angara is badly trailing Senator Gloria Macapagal-Arroyo, who as Vice-President would likely play a strong economic policy role no matter who is elected President.
What Estrada has going for him with the public is that he's a sharp contrast to de Venecia, who is commonly called a trapo--a derisive term for a traditional politician: a corrupt, pork-barrel, let's-make-a-deal type of leader. The speaker denies any corruption but freely admits to brokering back-room compromises in Congress. "You have to wheel and deal to get things done," de Venecia says. He maintains he has a chance of catching up with Estrada, especially since he is backed by President Ramos. "[Estrada] has been campaigning for six years," says de Venecia. "I've been tied up in Congress pushing some of the most complex, difficult, toughest, and unpopular economic and social reform laws."
No matter who wins the election, the business community maintains that the most important aspect is that it be a smooth transition of power. "Business will work with anybody," says Luz. "They're going to hunker down and pull together and do what they can." At a time when investors are casting a wary eye at Southeast Asia's troubled economies, stability and orderly succession are just what the country needs.