MANILA, 7 May — The failed attempt by supporters of former President Joseph Estrada to topple the 100-day old government of President Gloria Macapagal Arroyo on May 1, 2001 may have driven away big investors eyeing the Philippines as an investment site. Certainly, it is difficult to quantify the country’s economic “losses,” including lost business opportunities, as a result of the bloody incident.

The president’s decision to place Metro Manila in a state of rebellion after a bloody dispersal of thousands of demonstrators who stormed the presidential palace, however, was well received by the business sector. Reports said leaders of foreign business chambers also “viewed in a positive light” the government’s decisiveness in rounding up and charging opposition leaders believed to be behind the failed attempt to grab political power.

Certain quarters believe the declaration of a state of rebellion in Metro Manila may send the wrong signal to foreign investors. An economist said “this can impress on foreign investors a picture of political instability hounding the administration.” However, he said that if hoisted only for a limited time, the declaration’s net impact would be positive as far as investors are concerned.

Philippine business leaders unanimously showed support for the government. A statement issued by 19 big business groups read in part: “The government’s action of the last few days clearly indicate its firm intention to uphold the rule of law. We support the move to arrest, within the framework of the constitution and the law, any and all individuals — regardless of who they may be — who instigated, provoked, or participated in the lawlessness and violence of the last few days.”

The stock market staged what observers called a “euphoric rally” the day after the incident. Market players said this showed that things were not as bad as expected. Even the battered peso managed to post a decent recovery against the US dollar at the Philippine Dealing System. Analysts said the local currency was propped up by the bullish sentiments prevailing in the market after the players saw the government’s decisiveness in crushing the rebellion.

“The indicators are looking good and we have reason to be optimistic. We think we could discard the worst-case scenario by now. We don’t see any political crisis looming in the horizon. We have seen that the present administration is in full control,” a trader said.

Issuing a bold prediction, the Bangko Sentral ng Pilipinas (BSP) said it expects the local currency to strengthen further as market players welcomed the government’s decisive action against destabilization agents. The BSP, however, warned that it would not hesitate to intervene in the foreign exchange market if it sees signs of currency speculation.

A big casualty of the incident was the country’s budget for next year. The Department of Budget and Management said preparations of the 2002 national budget have been delayed because of recent political developments. Budget Secretary Emilia Boncodin said the agency has moved the deadline for the submission of budget proposals by half a month due to the prevailing political situation.

The 2002 budget is estimated to reach 763 billion pesos, or 10 percent higher that the present national budget. Boncodin said the proposed 2002 budget is based on a gross national product growth forecast of 4.9 percent to 5.4 percent, and an inflation rate forecast of 5 to 6 percent. Although some economists are predicting a lower GNP growth next year, Boncodin said the agency is not inclined to change its targets because “there are alternative drivers of growth, such as domestic investments.”

The Federation of Philippine Industries (FPI) supports the budget secretary’s pronouncements. The group said the recent mass action by supporters of former President Estrada, which resulted in a bloody encounter with government forces, completely devastated the government’s efforts to bring foreign capital to the country.

The FPI urged government to postpone all foreign investment missions in the near term as “these would all be futile efforts.” The government should not waste money in trying to lure foreign investors to come to the country.

 It should instead focus on the local industries. Government should empower local industries and small and medium businesses to generate more jobs for Filipinos, the FPI said.