Crunch time as rivals put Estrada to test

Business Asia, March 17, 2000 by Ruben Alabastro

Philippine President Joseph Estrada faces his toughest test to date as a market scandal over a stock that soared thousands of per cent before crashing looks set to sharpen the claws of the political opposition.

Already embattled with a weakening economy, the worst-performing stock market in Asia and declining popularity, Estrada -- the film star president -- has to act swiftly to stem the rot, analysts say.

Without swift action, the passage of reform bills, crucial to gaining international loans, could also be delayed as the president's support in Congress retreats.

"Congress wants blood, the market is bleeding and the central character in this play is a friend (of the President)," said Alex Magno, University of the Philippines political science professor. "This is crunch time for Estrada," he said, adding that the controversy could lead to widespread political demoralisation.

Estrada, a former actor, won a landslide presidential election in 1998.

But his popularity dropped to just 44 per cent in December 1999 from a high of 78 per cent in June 1999, according to a survey by Social Weather Stations.

The Philippine stock market plunged into crisis this month after stock exchange investigators resigned en masse, alleging bourse officials were trying to exonerate brokers that had links to allegations of price fixing in the stock of gaming firm BW Resource Corp. BW soared 5000 per cent in value to 107 pesos last year before crashing just as swiftly.

The investigators had implicated Dante Tan, a friend of the President. Tan has denied any wrongdoing and called the investigation a witch-hunt.

Embroiling the issue into the political arena, the highly regarded Securities and Exchange Commission chairman Perfecto Yasay claimed the President had asked him to stop the investigation into BW and to clear Tan of any wrongdoing. Estrada denies the charges.

"Some people have got to go to jail, whoever they are," said Peter Wallace, president of the Manila affiliate of London-based think-tank Economic Intelligence Unit.

"There has to be prosecution and conviction and we just don't see that in the Philippines. Without seeing that, we can't have faith that the system works," he said.

President Estrada has vowed to douse the fires.

--Reuters