(Bloomberg Opinion) -- The libel conviction for the head of a Philippine news outlet known for its scrutiny of President Rodrigo Duterte’s administration is a blow to one of Asia’s most vibrant media sectors. It’s also the sort of headline that’s often overlooked by foreign executives and fund managers casting around for fast-growing economies. They would be wrong to gloss over this one.
Duterte’s rule has already seen institutions eroded and top-level opponents targeted. If fewer questions are asked, that will reduce transparency and drive up the risk premium for investing in the Philippines. That’s something the coronavirus-weakened economy can ill afford when inbound investment is already falling.
The case against Maria Ressa — whose Rappler site has been directly denounced by the president and often critical of his war on drugs — was always about more than the allegedly defamatory article on a local businessman, first published in 2012. The verdict, similarly, has ripples far beyond the online publication.
Monday’s conviction is no isolated incident. Ressa and her co-accused, Reynaldo Santos, were sentenced to as long as six years in jail, but she faces seven other criminal charges including for alleged tax evasion. There’s more. A month ago, the country’s largest broadcaster, ABS-CBN Corp., shut TV and radio stations after its license wasn’t renewed — a move repeatedly threatened by Duterte, reportedly because of a disagreement over paid election campaign commercials. Opponents elsewhere, from the human rights commission to the Supreme Court, have fared little better. Meanwhile, lawmakers passed an anti-terrorism bill this month that, while targeting a real problem, could also allow worryingly lengthy detentions without charge.
The presidential spokesman says Duterte upholds free speech and played no role in the Ressa verdict. That should offer little comfort to investors, or to a local population facing the deepest economic contraction in decades. Indeed, it suggests weakened institutions are carrying out the president’s whims without needing to be told. The target is one of the country’s best-known journalists, at home and abroad. Ressa was honored by Time in 2018. With other governments behaving badly, there is little reason to hold back.
To be clear, Duterte isn’t the first occupant of the Malacanang presidential palace to castigate the press, or indeed other institutions, since the end of martial law in the 1980s. While free and outspoken by the region’s standards, the Philippines has also had high rates of violence against journalists. The difference is in what Nicole Curato of the University of Canberra describes as the normalization of attacks on the press, and the sheer volume of vitriol released through spokespeople, political allies, and on social media. Worse, it is done with the language of democracy. At least in openly authoritarian states, as Ressa said Monday, the rules are clear.
The economic context is grim. While the Philippines is young, promising and has been an outperformer in terms of headline expansion, its economy remains highly concentrated, unequal and opaque. Foreign direct investment and local stocks were fading even before the pandemic, despite infrastructure spending plans and tax reform efforts. After the coronavirus, an economy that had been projected to expand 7% this year will instead contract. Unemployment and underemployment are high and remittances, which account for about 10% of gross domestic product, have dropped.
Ressa’s verdict brings more reasons for concern.
The first is the increasingly arbitrary nature of the attacks, in part because of the disparate coalition behind Duterte vying for favor. This leaves investors vulnerable, says Aries Arugay, professor of political science at the University of the Philippines-Diliman. Duterte triggered a more than $2 billion stock rout in December after targeting the Ayala family and another local businessman, demanding the renegotiation of contracts with two concessionaires, Manila Water Co. and Maynilad Water Services Inc., to supply the capital. Companies such as Fraport AG and Suez SA left the Philippines over just such disputes.
While the old guard is under fire, a new, Duterte-friendly oligarchy is being created, tilting an already uneven playing field. Aaron Connelly, research fellow at the International Institute of Strategic Studies, points to telecoms as an example of the change: Duterte ally Dennis Uy, with China Telecom Corp., won the country’s third telecoms license in 2018. Partner risk has always been a problem in Southeast Asia, but the shift away from Manila elites is making this less predictable.
Lastly, there’s the issue of transparency. The simple act of questioning authority, deals and negotiations is becoming more challenging. It could get worse still if, as Arugay posits, the current purge fosters the flourishing of partisan Duterte-friendly media. The Manila Times closed in 1999 after running afoul of then-President Joseph Estrada, only to be bought by one of his close associates.
Duterte’s enduring popular support, and a term that doesn’t end until 2022, create room for plenty more lasting damage. Investors could do worse than to ponder Ressa’s words after her conviction: This is a precipice.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.
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