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Philippines Votes for President as Aquino Holds Lead in Polls
May 09, 2010, 1:37 PM EDT
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By Francisco Alcuaz Jr.

May 10 (Bloomberg) -- Voters in the Philippines choose a new president today with Benigno Aquino, the son of a former chief executive, holding a 2-1 lead over his closest rivals in the last pre-election poll.

The new president will inherit a government that has run a deficit in all but four of the past 24 years. Aquino, 50, who had no plans to run until the death of his mother and former president Corazon “Cory” Aquino in August, campaigned on a pledge to fight corruption, clamp down on tax cheats and create jobs through infrastructure spending.

Aquino and his main rivals, Manuel Villar, 60, and Joseph Estrada, 73, have focused on combating poverty in a nation where one in four people lives on less than $1.25 a day, according to the World Bank. The Philippines’ $167 billion economy ranks 13th among 17 in Asia tracked by Bloomberg.

“We’re slipping from emerging market to frontier market,” said Paul Joseph Garcia, chief investment officer at ING Investment Management Ltd. in Manila. “We’re now being compared to Vietnam, Sri Lanka, Cambodia and Pakistan; we’re not even in the league of our Southeast Asian peers. The biggest challenge for the next president will be on the fiscal front.”

The deficit rose to a record 298.5 billion pesos ($6.5 billion) last year and the government says balancing the budget could take until 2016, the end of the incoming president’s term.

Finance Secretary Gary Teves has proposed raising the value-added tax to 15 percent from 12 percent to fund the roads, ports and airports needed to compete for foreign investment. The Philippines received $1.5 billion in foreign direct investment in 2008, compared with $7.3 billion for Malaysia, $9.8 billion for Thailand, and $8.05 billion for Vietnam, according to Association of Southeast Asian Nation statistics.

VAT Raise

Raising the VAT is “very necessary,” said Marvin Fausto, who oversees $10.7 billion as chief investment officer at Banco de Oro Unibank Inc. in Manila. Improving collection will be hard because corruption is “institutionalized” at the tax bureau, he said. “I’m not sure they can fix it during their term.”

The Philippines ranked 139th out of 180 by Berlin-based graft watchdog Transparency International. Outgoing President Gloria Arroyo has faced three impeachment attempts over allegations of graft, human rights violations and of rigging her 2004 re-election.

She took office after Estrada, a former movie star, was convicted on corruption charges. He was later freed from jail by a presidential pardon.

Aquino has vowed to prosecute Arroyo when she loses presidential immunity. Villar was ousted as Senate president after a fellow member alleged he used his influence to divert a highway so it ran through his property. He has denied any impropriety and the Senate hasn’t voted on the censure motion laid by 12 of the 23 senators, including Aquino.

Cheats ‘Known’

There is “no point” in raising taxes until the rate of collection can be improved, Aquino has said. He says he can raise more revenue “practically instantly” because he has the will to chase evaders, whose identities he says are known.

About 1.2 million people left the country to work abroad in 2008, 14 percent more than the year before, according to government data. Overseas Filipinos sent home $16.4 billion that year and $17.3 billion last year, accounting for about 10 percent of the economy.

Aquino was supported by 42 percent in a poll conducted by Social Weather Stations, a Quezon City-based research institution, for BusinessWorld newspaper. Estrada had 20 percent and property tycoon Villar 19 percent in the poll, which was conducted May 2-3 and had a margin of error of 2 percentage points.

Aquino had 38 percent in a poll taken April 16-19 by the same institution. Villar had 26 percent, while Estrada was on 17.

The nation this year switched to electronic balloting to reduce the disputes and cheating that went with manual counts. A week ago, voting machines malfunctioned in tests.

The Commission on Elections raced to replace flash memory cards in all of its 76,000 machines, saying some may only be installed and tested today.

--Editor: Ben Richardson.

To contact the reporter on this story: Francisco Alcuaz Jr. in Manila at [email protected]

To contact the editor responsible for this story: Bill Austin at [email protected]


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