Aquino Touts Successes in Bid to Be Philippines’ 2016 Kingmaker

Benigno Aquino
Philippines president Benigno Aquino. Photographer: Julian Abram Wainwright/Bloomberg

Philippine President Benigno Aquino boasted of record revenue and investment flows and a resurgent manufacturing sector during his administration, as he prepares to endorse a candidate for next year’s election.

In his final state of the nation address to congress on Monday, Aquino, 55, asked lawmakers to pass bills creating a new Muslim autonomous region in Mindanao and ban political dynasties. He also sought approval for the 2016 budget and bills reforming law-enforcement officer pensions and a government incentive program.

“We know corruption was the root of our suffering, that’s why our cry was ‘Nobody will be poor if nobody’s corrupt,’” Aquino, who won on an anti-corruption platform in 2010, said in a speech that lasted more than two hours. “If we return to the crooked path, we will be condemned to wait for nothing.”

The Southeast Asian nation has pursued tax evaders and corrupt officials, giving it more revenue to fund roads and schools and boost cash handouts to the poor, Aquino said. These gains have transformed the Philippines into Asia’s rising tiger under his administration’s “straight-path” agenda, he said.

He has 11 more months in office before stepping down in June 2016. Under Philippine law, he is limited to one term.

Voters will decide in 2016 if the reforms he started will endure, Aquino said, as TV cameras focused on the amused faces in the audience of three possible presidential contenders next May -- Vice President Jejomar Binay, Senator Grace Poe and Interior Secretary Mar Roxas. “The next election is a referendum for the straight and righteous path,” Aquino said.

‘Benchmark’

“Aquino set himself up as a benchmark,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. “He was subtle in putting the burden on people to make sure his reforms continue by choosing the right successor,” he said.

Aquino said revenue collection exceeded 1 trillion pesos ($22 billion) for the first time in 2012, while manufacturing grew 8 percent in the four years through 2014. Net foreign direct investment reached a record $6.2 billion last year, while domestic investment had reached 2.09 trillion pesos, he said.

The jobless rate fell to the lowest in a decade in 2014, while more than 400,000 Filipinos working overseas have returned and found local jobs, Aquino said. As soon as he finished speaking, a group of militant congressmen rose from the audience and booed.

Carrying On

Aquino, who has overseen an economic resurgence for the country once known as the sick man of Asia, has been meeting with potential contenders including Poe and Roxas and is likely to name his preferred candidate this week.

Announcing his pick just days after the state of the nation speech would make sense, said Euben Paracuelles, an economist at Nomura Holdings Inc. “The argument is ‘Look, I’m reminding you that we’ve done well and the reforms have moved ahead. If you can elect somebody that can carry on the progress that we’ve made, then obviously we will improve further.’”

Aquino, who took office in 2010 and is limited to a single six-year term, has led an economy in which growth exceeded 6 percent from 2012 to 2014 and credit ratings have climbed to investment-grade from junk.

Including reinvestments of dividends, the Philippine Stock Exchange Index returned 163 percent from July 1, 2010 through Friday, the second-best performer in the Asia-Pacific region. The gauge fell 1.5% Monday.

Lawmakers at the opening session of parliament earlier Monday pledged to pass the Mindanao peace bill before the session ends next year. Speaker Feliciano Belmonte and Senate President Franklin Drilon said in separate speeches that they would also push measures to curb smuggling and toughen a law to sustain infrastructure programs.

Economic Expansion

Next May’s election will see Filipinos choose a president, vice president, senators and congressmen, and all local officials down to city councilors.

The next government will need to prioritize infrastructure investment and keep tackling graft, according to more than half of economists, bankers and academics surveyed by Bloomberg in June. They predicted economic expansion of at least 6 percent a year will be sustained in the next 10 years.

The popularity of Aquino, the son of ex-President Corazon Aquino, hit a record low in March amid the fallout from a botched terrorism raid, but has recovered, according to polls by Social Weather Stations and Pulse Asia Research Inc. The latter put his approval rating at 54 percent in June.

“Overall you’ve got to give Aquino high marks,” said Edwin Gutierrez, who helps oversee about $13 billion in emerging-market bonds at Aberdeen Asset Management Plc. “The biggest threat to the Philippines is politics, that is, if a populist, non-market-friendly candidate is chosen.”

“We filled the gaps; we brought about positive change and now, our achievements have far surpassed our expectations,” Aquino said in his speech. “Some of the challenges we faced, we have overcome. As for the rest, we have begun taking steps toward a permanent solution.”

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