Philippine Senator Benigno Aquino, whose mother helped oust former dictator Ferdinand Marcos, is heading for victory in yesterday’s presidential elections, according to the latest vote tallies.
Aquino, 50, had 42 percent of votes with 82 percent of precincts counted at noon, the Parish Pastoral Council for Responsible Voting, an election monitor, said on its website. Former President Joseph Estrada had 27 percent and Senator Manuel Villar 11 percent. Stocks, bonds and the peso all rose.
The winner will lead a country that snares less than a quarter of the foreign investment going to its neighbors, holding back growth and forcing more than a million Filipinos abroad every year to look for work. Decades of graft since Marcos took power in 1965 saw the Philippines slump from being Asia’s No. 4 economy to the 13th out of 17 Bloomberg tracks.
“It’s going to be quite a daunting task,” said Vishnu Varathan, an economist at Forecast Ltd. in Singapore. “He needs to tighten the fiscal purse strings at a time the recovery is not coming through at the hoped for pace. He needs to broaden the tax base and take away tax breaks.”
The Philippine Stock Exchange Index rose 3.9 percent at the noon close, its biggest gain in eight months. The peso climbed the most in 6 months, while the January 2020 dollar-denominated government bond advanced, pushing its yield down by the most on record.
The Asian Development Bank forecasts growth of 3.8 percent this year, slower than that of Thailand, Malaysia and Indonesia. Unemployment is 7.3 percent, second to Indonesia’s 7.9 percent.
Aquino had no plans to stand for election until the death of his mother Corazon Aquino in August. His father, Benigno, was jailed by Marcos and assassinated in 1983 on his return from the U.S., where he had heart surgery after falling sick in prison.
Villar and other critics have said Aquino is unqualified for the challenge facing him, having accomplished little in 12 years as a legislator. Villar conceded defeat today. Estrada said while he didn’t plan to protest, he wouldn’t concede until the Congress conducts the official count after its session resumes May 31.
Aquino supporters maintain vice presidential candidate Senator Manuel Roxas would help make up for any deficit in experience. Roxas, a two-time trade secretary, was the Liberal Party’s presidential candidate until he gave way to Aquino.
Roxas knows the “twists and turns of legislation,” former Finance Secretary Ramon del Rosario wrote in an article last week. Roxas was trailing Jejomar Binay, the mayor of Makati business district, by 38 percent to 41 percent, according to the latest results.
Aquino may be able to count on officials who quit Arroyo’s government in 2005 amid allegations she rigged her election the year before. Many of them are supporting Aquino, including former Finance Secretary Cesar Purisima.
Purisima helped spearhead an increase in value-added tax that narrowed the budget deficit, which averaged 200 billion pesos ($4.4 billion) from 2002 to 2004, to 12 billion pesos in 2007. Last year, the deficit was a record 298.5 billion pesos.
Finance Secretary Gary Teves said Arroyo and Congress gave away the 2005 VAT increase with tax breaks. The Department of Finance says it may take six years to balance the budget and proposes another VAT raise to get there.
Higher taxes may help reduce local and overseas borrowing, forecast to reach a record 718.5 billion pesos this year.
Funds are also needed for the roads, ports and airports required to compete for foreign investment. The Philippines received $1.5 billion in foreign direct investment in 2008, against $9.8 billion for Thailand and $7.9 billion for Indonesia, Association of Southeast Asian Nation statistics show.
A reputation for corruption hasn’t helped attract investment. The Philippines was ranked 139th out of 180 by Berlin-based watchdog Transparency International.
Arroyo has faced three impeachment attempts over allegations of graft, human rights violations and vote-rigging. She ousted Estrada, 73, who was later jailed for corruption charges. Arroyo pardoned him.
Villar, 60, was removed as Senate president after a fellow member alleged he used his influence to divert a highway to his property. He has denied any impropriety and the Senate hasn’t voted on the motion laid by 12 of 23 senators, including Aquino.
As a result of underinvestment, one in four Filipinos live on less than $1.25 a day, according to the World Bank. In 2008, 1.2 million left to work abroad.
Poor “governance is affecting economic development,” said Paul Joseph Garcia, chief investment officer at ING Investment Management Ltd. in Manila. “The labor force remains highly skilled. Unfortunately, we’re exporting people.”