MANILA, Apr 11: The government and the country’s largest Muslim rebel group have agreed a preliminary deal that may end a 40-year conflict that has killed more than 120,000 and displaced 2 million.
President Benigno Aquino hopes this will pave the way for economic growth and development in the south, a poor region but one that sits on considerable resources.
In March it won its first investment-grade credit rating when Fitch upgraded it, coming after Moody’s raised its rank for the country last October and Standard & Poor’s did in July.
In 2012, the economy grew 6.6 percent, beating expectations and putting its rate of expansion second only to China.
Still, much of the country is dilapidated and vulnerable to natural disaster. Typhoon Bopha killed thousands in the south late last year, and heavy rains in August swamped huge swathes of Manila, killing more than 100 people and leaving hundreds of thousands homeless.
Internationally, by far the greatest concern is the South China Sea, contested waters where the U.S.-backed Philippines are increasingly running up against China.
RATINGS: (Unchanged unless stated:)
S&P: BB+
MOODY’S: Ba1
FITCH: BBB- (Upgraded from BB+ on March 27)
Following is a summary of political risks to watch:
INTERNAL SECURITY
Negotiators from the government and the Muslim rebel group Moro Islamic Liberation Front (MILF) have reached a deal on a roadmap to set up a new autonomous Bangsamoro region in the south of the mainly Roman Catholic state, signalling an end to a long insurgency.
Still, the 11,000-member MILF is not the only active rebel group. Maoist guerrillas have attacked private mining projects on southern island Mindanao, destroying around $70 million worth of equipment, and threatening more attacks. A small al Qaeda-linked Islamist militant group also remains active on remote islands in the southern Philippines, kidnapping foreigners and local traders.
Overall, internal security remains weak, persistently highlighted by foreign embassies in travel advisories, with law enforcement hobbled by corruption, lack of police resources, and easy availability of guns on the street.
What to watch:
– Implementation of the political deal to set up an autonomous region in Muslim-dominated areas in the south. This will include the demobilisation, disarmament and reintegration of former Muslim rebel fighters, imposition of local taxes to cut government subsidies, and revenue-sharing arrangements with oil and gas producers.
– Laws drafted by a 15-member panel of government and rebel representatives that will create a new autonomous government for that region.
– Any more attacks on mines or other businesses, and how investors respond. The Philippine army has said it lacks the resources to contain attacks, so has asked firms to hire private militias to guard their businesses.
– Diplomatic fallout from the peace talks with Muslim rebels after the incursion of 200 Filipinos, belonging to an ancient sultanate, on Malaysia’s eastern state of Sabah, which resulted in a bloody confrontation in early 2013.(agencies)
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