A report prepared by the Philippine consulate in Japan states that there is a growing apprehension over the lack of political stability in the country, specifically the uncertainties over leadership.
According to Philippine trade representative Mauino Haresco, the apprehension of Japanese investors over the country’s political stability was sparked by the Abu Sayaf incident which, instead of being contained, worsened into a full-blown crisis.
According to Haresco, the question of competent governance became all the more glaring with the subsequent developments that followed, such as the Payatas tragedy as well as questions of personal safety.
Haresco said Japanese businessmen could not believe that even the smallest matters need intervention from the highest officers in order to be resolved and this is seen as an indication of ineffective governance.
"The matter of personal safety is very important to Japanese businessmen," said Haresco. This fear, he said, was confirmed and exacerbated by the kidnapping and subsequent murder of an executive of Mitsumi Co, which employs over 12,000 workers in its facilities in Bataan and Cebu.
Although Japanese investors view the jueteng scandal as a domestic problem that will not have any effect on long-term investments, Haresco said there is concern over how the political instability is affecting cost of doing business in the Philippines.
Haresco said there are concerns over the impact of the crisis on the foreign exchange rate, interest rates and overall costs. "When the problem begins to affect their costs, there will be more noise," he said.
"The Japanese are pragmatic people. If the business is good, they will invest," Haresco said. "The only time they will balk is when the safety of their personnel is threatened."
Government is hard pressed to attract move investors into the country but continuing instability had begun threatening even investments that are already in the country.
According to Haresco, the crisis is affecting not just new investors that are planning to come the Philippines for the first time but also expansion plans that would have to be shelved due to the uncertainties.