President Ferdinand Marcos Jr is actively pursuing tighter defence and economic ties with traditional allies, most notably the US. Bloomberg
President Ferdinand Marcos Jr is actively pursuing tighter defence and economic ties with traditional allies, most notably the US. Bloomberg
President Ferdinand Marcos Jr is actively pursuing tighter defence and economic ties with traditional allies, most notably the US. Bloomberg
President Ferdinand Marcos Jr is actively pursuing tighter defence and economic ties with traditional allies, most notably the US. Bloomberg


Philippines President Ferdinand Marcos Jr has to up his game


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July 21, 2023

“I am here not to talk about the past; I am here to tell you about our future,” declared Ferdinand Marcos Jr during his inauguration as the Philippines’ 17th president last year. “No looking back in anger nor nostalgia, ” he added, emphasising his commitment to transcending some highly polarising elections that tested the very foundations of the country’s democracy.

Eager to strike a conciliatory tone, the namesake son of the former Philippine leader underscored his commitment to “seek, not scorn dialogue” since he is “open to suggestions coming from hard-thinking” Filipinos.

Not too dissimilar from his father, however, Mr Marcos Jr also promised a new era of economic prosperity and food security on the back of a “comprehensive infrastructure plan” and a whole host of ambitious projects. But crucially, he made it clear that “six years could be just about enough time”, ruling out the possibility of extending his tenure beyond the constitutionally mandated single term for Filipino leaders.

In his first year in office, the president consciously pursued a middle course that has defied his staunchest sceptics and his most avid supporters. The upshot is not only a mixed bag of major gains on the foreign policy front and relatively stable macroeconomic management amid difficult global conditions, but also a dearth of initiatives to address the Philippines’ human rights and corruption issues.

After spending decades on the political margins, the Marcoses have orchestrated a significant comeback in recent years. After quietly securing a seat in the Senate during the 2010 election without much fanfare, Mr Marcos Jr came close to winning the vice presidency in the 2016 election.

Mr Marcos Jr and Sara Duterte, daughter of former president Rodrigo Duterte, managed to win the top two offices in the land with the highest margins in contemporary Philippine history. That fateful alliance, however, brought its own set of challenges. Reuters
Mr Marcos Jr and Sara Duterte, daughter of former president Rodrigo Duterte, managed to win the top two offices in the land with the highest margins in contemporary Philippine history. That fateful alliance, however, brought its own set of challenges. Reuters

Over the next six years, he legally challenged his narrow defeat to opposition leader, Leni Robredo, while plotting his presidential bid for 2022. After months of intense negotiations, the Marcoses managed to build a vital alliance with Davao City Mayor Sara Duterte – daughter of Rodrigo Duterte, the president at the time. The result was the “UniTeam” Marcos-Duterte ticket, which won an emphatic victory in last year’s election.

Mr Marcos Jr and Ms Duterte managed to win the top two offices of the land with the highest margins in contemporary Philippine history. That fateful alliance, however, brought its own set of challenges.

Mr Marcos Jr had to share power with key allies through the distribution of top cabinet positions. These figures expected him to also continue former president Duterte’s signature policies, namely an aggressive war on drugs and to improve relations with a rising China. To make matters even more difficult, Mr Marcos Jr also inherited a severely weakened economy, largely thanks to five quarters of recession under the Duterte administration and the fiscal ravages of the Covid-19 pandemic.

Early on, however, the new president exhibited a significant degree of independent-minded leadership. Despite an earlier understanding, he rejected the Dutertes’ request for key cabinet positions, most notably defence. Instead, Mr Marcos Jr appointed highly respected veterans to run the most sensitive departments.

On the economic front, he appointed top technocrats, including those who worked under the liberal-reformist administrations of the past. To help address the country’s food security crisis, he himself took over the Department of Agriculture, which has suffered from decades of neglect and corruption.m

Marcos Jr has ended his first year in office with high approval ratings, while preventing a full-blown confrontation with other major centres of power

Meanwhile, he backed his cousin Martin Romualdez’s bid to become Speaker of the House of Representatives – much to the annoyance of another ally, former president Gloria Macapagal Arroyo.

Just a few months into office, the president upped the ante by radically altering the Philippines’ foreign policy direction. He adopted a more critical stance towards Beijing by emphasising an uncompromising position on South China Sea disputes. Crucially, he is pursuing tighter defence and economic ties with traditional allies, most notably the US. This marked a major departure from the Duterte days, when Manila repeatedly threatened to sever its century-old alliance with Washington.

Mr Marcos Jr, who has vowed to pursue a more independent foreign policy, will also have to navigate intensifying Sino-American rivalry in the region. For instance, he will soon have to decide how much of an American military presence in the Philippines he will allow under the Enhanced Defence Co-operation Agreement with the US.

This is an extremely crucial decision, since China has warned the Philippines against expanded security co-operation with the Pentagon, especially near the South China Sea and Taiwan. And with the Philippine economy slowing down, Mr Marcos Jr will also need to introduce more decisive reforms as well as major development projects to keep unemployment and poverty under check.

Much to the annoyance of the Dutertes, Mr Marcos Jr has also promised to address the country’s drug and crime problems with a more humane approach that emphasises rehabilitation over violent deterrence.

Through a package of policy pivots, he sought to not only “reintroduce” his country to the world, but also fully rehabilitate his controversial family’s image in the eyes of the international community. As for his technocrats, they were largely successful in shepherding the economy over the past year, with inflation and unemployment kept under control in spite of a global commodity crisis.

But Mr Marcos Jr proved less successful on other fronts. He shunned the Philippines’ endemic corruption problem altogether. He has yet to end the country’s culture of impunity, with extrajudicial killings and assassination attempts on top media figures. The president has also opposed efforts by the International Criminal Court to investigate thousands of unexplained deaths during the Duterte-era drug war.

More troublingly, Mr Marcos Jr is also grappling with ugly factionalism that is undermining his governing coalition. Over the past year, the president dismissed more than half a dozen cabinet members, including his former chief of staff. More recently, his top allies were engaged in open conflict, especially after Mr Romualdez, the House Speaker, demoted Ms Arroyo, currently a congresswoman, in the ranks of the congressional leadership. In response, Vice President Duterte resigned from the governing party and began publicly criticising Mr Romualdez, the president’s de facto right-hand man.

Nevertheless, Mr Marcos Jr has ended his first year in office with a high approval rating of 62 per cent, according to a Manila-based firm, while preventing a full-blown confrontation with other major centres of power. Even former president Duterte has praised his successor’s tenure, so far.

If anything, he has also managed to win over more than a few opposition figures, who have welcomed his more moderate and traditional approach. No less than Manuel Roxas, a top reformist politician and once-liberal standard-bearer, could potentially join his cabinet in the future.

While Mr Marcos Jr can look back on his first year in office as a political honeymoon, he will have to significantly up his game if he is to survive and secure a positive legacy. His second year, which sets the stage for 2025 midterm election, may well be his most crucial yet.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Updated: July 21, 2023, 11:30 AM