MANILA (Reuters) - The Philippine election shifts gear on Friday as campaigning for Congressional seats starts, with interest centred on the president's move to run for the lower house and the risks from a new automated voting system.
Local campaigning could change the presidential race if Gilberto "Gibo" Teodoro, the administration candidate running a distant fourth in opinion polls, can tap the national reach of his party organisation to boost support.
Investors are worried about uncertainty if the vote does not produce timely and credible results, but not overly concerned about the anticipated cycle of political killings, fraud and chaos, all regular features of Philippine elections.
"We've priced in the expected violence at the local level as well as potential errors in the electoral process," an economist at a local bank said.
The sovereign 5-year credit default swap spread for the Philippines is around 160 basis points, down from more than 200 in February and level with Indonesia.
The stock market has risen 2.2 percent so far this week, accounting for most of its year-to-date rise of 3.7 percent, and the peso hit 1-½ year highs against the dollar this month, although it has lagged the 2010 gains of most regional peers.
More than 50 million Filipinos across 7,100 islands will vote on May 10 for a president, vice president, about 300 seats in the two-chamber Congress and more than 17,600 local positions.
Among the candidates running for Congress are President Gloria Macapagal Arroyo, Imelda Marcos, the wife of deposed dictator Ferdinand Marcos, and Manny Pacquiao, a seven-times world boxing champion and national hero.
Arroyo, in office since 2001 and not eligible to stand again, will be the first president to seek a seat in the 287-member lower house. She is seen having a strong chance of becoming house speaker, the country's fourth most senior political role.
"The president is just buying a personal insurance plan," said Benito Lim, political science professor at the Jesuit-run Ateneo de Manila University, referring to opponents' pledges to investigate accusations of electoral fraud and corruption.
"She knows she could no longer hold on to power but she believes she could get some form of protection if she becomes speaker of the House of Representatives."
Arroyo has appointed a new head of the military and the Supreme Court has ruled she can appoint a new chief justice. Her opponents say she is looking to extend her term in the event of a disputed vote or failed election.
"...it is now clear that Arroyo is absolutely intent on consolidating and perpetuating her power by shifting it from the executive to legislative branch," Pacific Strategies and Assessments, a political risk consultancy, said in a report.
UNCERTAINTY
An economist at a foreign bank in Manila said markets would not worry too much if a temporary leader was installed due to election failure, as long as the process was constitutional.
"We don't see any massive financial shock in the near-term, you can even have the Pope there as long as it's temporary," said the economist. However, prolonged uncertainty could hurt markets, pushing up interest rates and hitting investor confidence.
Automated voting will be used for the first time. There has been no large-scale test of the system, nor an outline of a clear back-up plan in the event of technical or logistical problems.
"We believe there is a 60 percent chance that some reversion to manual ballot-counting will materialise, resulting in delays," Barclays Capital analysts said in report, adding a close result after a disputed process could lengthen the time taken to form a new government.
"We believe current bond prices are not giving sufficient weight to this prospect," the analysts said, putting the chance of a completely successful election at 30 percent and failure at 10 percent.
The start of local campaigning could test the leads of Benigno "NoyNoy" Aquino, the son of democracy icon Corazon Aquino, and billionaire senator Manuel "Manny" Villar in opinion polls of the nine presidential candidates.
At the moment they have a handy lead over Joseph "Erap" Estrada, the former president who was forced out of office in 2001, while Teodoro is still polling in single figures.
"For politicians seeking national seats, the start of local campaigning will test the strength of their political machinery," Lim said, adding the political fortunes of Teodoro would depend on the unity and cohesion of the ruling coalition party.
thestar.com
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