For Vivian Yuchengco, director of a brokerage firm here, business had been so blah under now-ousted President Joseph Estrada that she thought of closing her doors.
Many firms did close up shop. "We've been dead for two years. I was almost going to stop trading because &#8230; it was almost not worth it," groans Ms. Yuchengco, who is also a governor of the Philippine Stock Exchange.
This week, the "open for business" sign is back on the door of the Philippines. But the financial house Mr. Estrada left behind appears so troubled and racked with debt that new President Gloria Macapagal Arroyo may find the job of luring back foreign investment almost as difficult as it was for brokers like Yuchengco.
Last year, the peso fell by 20 percent and the stock market fell 30 percent, making this one of Asia's worst-performing economies. But besides beaten markets and the refusal of the International Monetary Fund to give Manila one more centavos until the political crisis is resolved, Estrada's legacy socks the Philippines with a deficit of 139 billion pesos ($2.85 billion). That is compared with the 16 billion-peso deficit the country had when he became president in 1998.
With not much exaggeration, many here say that perhaps half of that went directly into the pocket of Estrada and a few shady business associates.
Just as Mrs. Arroyo had begun trying to restore economic confidence, concerns here grew that Estrada and his clique would try to make off with the booty unchecked. A few key business figures connected with Estrada have already fled the country. The Bureau of Internal Revenue here issued an order barring a branch of Citibank from allowing withdrawals in the name of Estrada, or his wife, and some 21 other friends and family members. Officials also froze accounts in the names of pseudonyms Estrada allegedly used in a sloppy effort to hide his ill-gotten wealth.
The deficit had mushroomed, observers here say, because Estrada's administration did such an abominable job of tax collection. Estrada's business buddies were allowed to smuggle goods. "Logs, rice, sugar, chicken, drugs, you name it," says Yuchengco, a sort of spokeswoman for reformists in the business community.
Rodolfo V. Cruz, the president of HK Securities, estimates that the informal economy, a free-for-all not subject to taxing or regulation, is about one-third the size of the official economy.
Business leaders complain that Estrada wore down revenues because he slowed the process of privatizing state-run industries. And doubtful investors were chased away by a stock-manipulation scandal in which Estrada personally intervened in the share-price fluctuations of a gambling firm run by a friend.
As the trading floor begins to buzz back to life this week for the first time in months - the market rallied 18 percent Monday - the stock exchange president says things must change. "You might say that Mr. Estrada's behavior has given us a wake-up call and showed more of a need for transparency," says Ramon Garcia.
Better surveillance, he says, will be accompanied by better enforcement in other sectors. The Central Bank governor wants to introduce laws to thwart money laundering: almost no regulation of money flows in and out of the country make this one of the world's favored destinations for recycling questionable cash.
But Arroyo's repair work could force her to make some moves that will be unpopular with some in the business community, which helped the sitting vice president replace Estrada. Big business, which generally supports Arroyo, has benefited from lax tax collection.
Arroyo will also have to open up the Philippines to foreign investors: Protectionist policies make doing business here without a local partner nearly impossible. "Like it or not, we've got to open our economy a little more," says Guillermo Luz, executive director of the Makati Business Club. "We've got to get people accepting the idea of being part of the global arena."
The Philippines, which for a developing nation boasts a highly literate population with strong English language skills, is already attracting high-tech companies. Cheap, competent labor remains one of the best resources the country has to offer. In an interview last month, Arroyo said she wanted to capitalize on those assets to build up the Philippines as a hub for information technology.
Others say that Arroyo should concentrate on the fact that this is still a heavily agricultural country - about 25 percent of domestic product comes from farming. Economists say production is far below what it could be, and that the agricultural sector is enmeshed in problems that have helped keep so many Filipinos in provincial areas in poverty.
Yet the most pressing problem Arroyo inherits is a trash crisis. Garbage is piled up around Manila, landfills are packed to overflowing, and provincial officials have been unwilling to accept the capital's rubbish.
Says Ray David, the vice chairman of the Export and Industry Bank, "Gloria should focus on the basics first, like our waste-disposal program," he says, referring to the president by her first name, as most people here do. "The thing we must do is amend the Clean Air Act, which banned incinerators under the theory that all incinerators were bad."
Clean-up duty begins now.
(c) Copyright 2001. The Christian Science Publishing Society