Chatting with the Philippine finance minister is an odd experience these days. Jose Isidro Camacho is a perfectly normal, pleasant and thoughtful guy. What's unusual is the topic at hand: Security.
Finance bigwigs typically are too busy looking at trends in inflation, tax revenue and currencies to think about peace, order and social stability. Here in the Philippines, economics and security are inexorably linked. In fact, many international investors say security is the single biggest reason they aren't putting much money here.
"Peace and order are among the biggest issues we need to deal with from an economic standpoint," Camacho explains in an interview.
Highly publicized kidnappings and crime here have damaged Manila's reputation with companies that create jobs and investors who provide capital. Worsening violence at the hands of rebels like the Abu Sayyaf, a Muslim kidnap-for-ransom group, in the southern Philippines is slamming tourism across the nation.
More and more, security concerns are spooking markets, which fear high poverty rates make the Philippines a natural breeding ground for terrorist groups. Hence, the recent arrival of US troops. Nowadays, when you tell Americans, Europeans or Japanese you're visiting the Philippines, the advisory "Be careful over there" is almost certain to come up.
Some of President Gloria Macapagal Arroyo's advisers think she should hire former New York City Mayor Rudolph Giuliani to come over and raise some hell. The rationale: If Giuliani could clean up the Big Apple, he could do it anywhere -- even Manila.
"We could recruit him as a consultant on peace and order," Arroyo said, following a recent trip to New York.
Talk about your PR stunts. Getting Time magazine's latest person of the year over here could repair the nation's crime-ridden image. The Philippines, after all, suffers from increasing disorder and lawlessness. Who better to draw attention to Manila's cleanup than a man whose leadership following Sept. 11 won him global acclaim and an honorary British knighthood? The concerns here are valid, if somewhat overblown. To some extent, the Philippines is suffering from what might be called the "CNN effect." If you're relying on the mass media for perspectives, you're not getting the real story. Much of the international television coverage gives the impression Abu Sayyaf-like rebels are terrorizing central Manila. In reality, the problem is 800 miles south of the capital city.
Yet there have been kidnappings in the greater Manila area; many have targeted ethnic Chinese businesspeople. The trend continues to hurt the local economy. And that's why, along with reforming the fragile Philippine economy, it's equally important for Arroyo to restore peace and order to this nation of 77 million.
"This is no longer just a social, quality of life issue, but an economic one," says Jose Cuisia, president of Philippine American Life and General Insurance Corp, a unit of biggest insurer American International Group Inc.
Safety concerns are partially eclipsing Arroyo's accomplishments. In her first 13 months, she's calmed the political and economic instability that prevailed a year ago. The Philippine currency is stable, the stock market is up 21 percent this year, and the nation's credit-rating outlook also has improved.
Yet investors wonder about the government's ability to restore peace and order. Hence Arroyo's controversial decision to welcome US soldiers onto Philippine soil. She's taken considerable flack over the arrival of soldiers from its former colonial master, which packed up military bases in 1991.
Arroyo's calculated risk could pay off over time in the form of foreign investment and vibrant asset markets. That's why economic officials here aren't just concerned with unemployment, privatization and banking-sector reform. They, too, are actively involved in the make-the-Philippines-safe process. "Security is a fundamental problem that has to be addressed," Camacho says.
The stakes are high. Manila wants to attract more multinational companies and hopes a growing number will anchor their headquarters here. The nation hopes its massive and skilled English-speaking population will be enough. Yet bigwigs sitting in London, New York and Tokyo won't be keen on putting their executives in harm's way.
Even if Arroyo can't get Giuliani on board, she's employing some of the former mayor's tactics. Manila is borrowing a page from Giuliani's "zero tolerance" policy on crimes, big and small, and creating an anti-crime commission. It's meant to coordinate efforts between police, the military and the government. Manila also is upgrading its security forces, hiring more college graduates.
Arroyo last week released an additional 200 million pesos (US$3.9 million) for the government's fight against kidnap-for-ransom gangs. The funds will enable the Philippine National Police to step up high-tech surveillance efforts and acquire state-of-the-art weaponry.
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