Philippine financial markets could be upset following the arrest of former President Rodrigo Duterte, but this could only be a temporary risk, as foreign investments could bloat in the long run, according to an economic expert.

The International Criminal Court (ICC) arrested ex-president Duterte for allegedly violating human rights during his war on drugs.

“Maybe the financial markets will be disturbed; it can be upset in the short run. But over time, people will realize that something can be done here in the Philippines. We don’t tolerate these kinds of offenses—if we can call it an offense,” Diwa C. Guinigundo, GlobalSource Partners Philippines country analyst, told reporters on the sidelines of a Management Association of the Philippines (MAP) economic briefing on Wednesday, March 12.

In the long run, Guinigundo said the arrest of the strongman and drug war executor “will encourage people to invest here because such kind of extrajudicial killing is not something that we tolerate. There is rule of law, and when there is rule of law, there is stability of investment and production.”

Guinigundo also commented on the intensifying political tensions between the occupant of the Malacañang Palace and the Dutertes, noting that the split of the political tandem “Uniteam was fragile from the very beginning.”

“They [Marcos and Duterte] had their own agenda. And if the agenda does not conform to them, then there’s a breakup—and it happened,” the former BSP deputy governor further said.

He also noted that there have been issues of corruption that concern both the Offices of the President and Vice-President. While President Marcos faces the controversial transfer of PhilHealth’s fund to the national treasury, Vice-President Sara Duterte-Carpio still has not cleared the allegations of fund misuse.

According to Guinigundo, Duterte-support groups such as the Iglesia ni Cristo (INC) and the Quiboloy group could potentially influence the response of the Dutertes, especially now that the former president has been brought to the international court.

Duterte supporters have rallied in the streets to express condemnation of the arrest. As per Guinigundo, if this further attracts a big crowd, “this is something that would upset and disturb the financial markets.”

"And we saw it [happen], and the stock market was still down today. We believe that if this [trend] continues, this is something that we really have to be prepared for,” Guinigundo warned.

However, he believes “the issue of good governance will surface, and people will start realizing that this is something good, because if indeed a crime was committed, it has to be prosecuted.”

While the escalating political noise could temporarily “distort the market,” Guinigundo also believes that “if our macroeconomic fundamentals will continue to hold and that correct public policies will continue to be formulated and implemented by those in authority, I think we can recover.”

He also said that to ease the nerves of investors, “the important point is for the government to continue communicating to the general public.” That means ensuring clarity and understanding among the public regarding the government decisions.

Constant communication with the public, he said, is “something that will really boost the integrity of public policy and the healthy fundamentals of the economy.”