Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

PK Basu has 34 years experience covering Asia's economies and markets (equities, fixed income and currencies), including 20 years covering the global economy. He was Chief Economist (SE Asia & India) at Credit Suisse First Boston for 5 years, and Chief Asia (x-Jpn) Economist at Daiwa Securities for a similar period. Among other roles, he was global head of research at Maybank Kim Eng, Malaysia equity research head and chief ASEAN economist at Macquarie, Chief Economist at ICICI Securities, ASEAN economist at UBS and the first chief economist at Khazanah Nasional (where he was co-head of research, and led all agri-business initiatives). PK Basu started his career in the Asia Service of WEFA (Wharton Econometrics) in Philadelphia in 1990, rising to be Director of their Asia Service in June 1994. 
PK's book, "Asia Reborn: A continent rises from the ravages of Colonialism and War to a New Dynamism" won the Tata Literature First Book Award (non-fiction) for 2018. It is the first single chronicle of the modern economic and political history of the whole of Asia (from Iraq and Turkey to Korea and Japan, and everything in between), told from an Asian perspective.

Chief Economist & Political Strategist

Philippines: Prepare for a Radical Leftward Shift in Policy

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Thematic (Sector/Industry)

Philippines Stock Exchange PSEi Index (PCOMP INDEX)

After several months of persistent "swarming" of the Philippine-administered Pag-asa (Thitu) Island (the largest of the Spratly islands that the Philippines controls) by 275 separate Chinese vessels, President Duterte finally spoke up in public late last week. China's aggressive tactics dealt a severe setback to Duterte's unilateral tilt to China since he took office 3 years ago, which has seen him make 3 official visits to Beijing (with a fourth planned shortly) -- in contrast to zero trips to the US, a treaty ally of the Philippines. Within a fortnight of Duterte becoming president, the Permanent Court of Arbitration (established under UNCLOS) had ruled  that China had "no historic rights, or other sovereign rights or jurisdiction" over maritime areas of the South China Sea based on China's "Nine-Dash Line" (the basis of which is Zheng He's travels 600 years ago!). But Duterte ignored that favorable ruling, instead choosing to cosy up to China -- in the hope that China would provide financing for Duterte's "Build, Build, Build" infrastructure spending spree. On the first two of the infrastructure projects that China is helping to finance -- Chico River pump irrigation project, and Kalewa Dam -- contract terms are extremely unusual. Unlike loans from any other country, any disputes on the China loans will be decided in China's courts. The Supreme Court's Senior Associate Justice Antonio Caprio has led the way in exposing these unusual contractual features, which allow China to take control of Philippine assets in the event of a default. While the projects together are worth only US$273 million, they are seen as setting a dangerous precedent that could serve as the thin end of a wedge as more projects proliferate. The danger of the Philippines falling into a "debt trap" a la Sri Lanka is regularly highlighted. Additionally, there is a flood of Chinese construction workers, and other immigrants, who are causing much resentment in Manila. The Congressional elections were, until last month, expected to result in a landslide for Duterte's allies (especially the coalition led by his daughter Sara), but "the sell-out to China" is now a hot political issue that is weakening Duterte at the polls. The economy has not deteriorated enough to derail the Duterte presidency, although it has moved in much the same direction as it did under Estrada. The Philippines saw a substantial widening in its twin deficits last year, with the fiscal deficit rising to an 8-year high of 3.2% of GDP, and the current account deficit to 2.4% of GDP (the largest this century). In the 12 years before Duterte became president, the Philippines had current account surpluses, but those have swung into deficits in his 3 years in office -- with a particularly large deterioration in 2018. But despite that, real GDP decelerated to 6.2% growth in 2018 (from 6.7% in 2019). Until a fortnight ago, Duterte's coalition (led by his daughter Sara) was expected to sweep the elections. But with China undermining its self-proclaimed ally, and the economy showing growing signs of deterioration, the Senate and Congressional election is now headed to be much closer. We recommend a cautious stance toward the Philippines, and would be Underweight in an EM or Asian portfolio.

After several months of persistent "swarming" of the Philippine-administered Pag-asa (Thitu) Island (the largest of the Spratly islands that the Philippines controls) by 275 separate Chinese vessels, President Duterte finally spoke up in public late last week. China's aggressive tactics dealt a severe setback to Duterte's unilateral tilt to China since he took office 3 years ago, which has seen him make 3 official visits to Beijing (with a fourth planned shortly) -- in contrast to zero trips to the US, a treaty ally of the Philippines. Within a fortnight of Duterte becoming president, the Permanent Court of Arbitration (established under UNCLOS) had ruled  that China had "no historic rights, or other sovereign rights or jurisdiction" over maritime areas of the South China Sea based on China's "Nine-Dash Line" (the basis of which is Zheng He's travels 600 years ago!). But Duterte ignored that favorable ruling, instead choosing to cosy up to China -- in the hope that China would provide financing for Duterte's "Build, Build, Build" infrastructure spending spree. On the first two of the infrastructure projects that China is helping to finance -- Chico River pump irrigation project, and Kalewa Dam -- contract terms are extremely unusual. Unlike loans from any other country, any disputes on the China loans will be decided in China's courts. The Supreme Court's Senior Associate Justice Antonio Caprio has led the way in exposing these unusual contractual features, which allow China to take control of Philippine assets in the event of a default. While the projects together are worth only US$273 million, they are seen as setting a dangerous precedent that could serve as the thin end of a wedge as more projects proliferate. The danger of the Philippines falling into a "debt trap" a la Sri Lanka is regularly highlighted. Additionally, there is a flood of Chinese construction workers, and other immigrants, who are causing much resentment in Manila. The Congressional elections were, until last month, expected to result in a landslide for Duterte's allies (especially the coalition led by his daughter Sara), but "the sell-out to China" is now a hot political issue that is weakening Duterte at the polls. The economy has not deteriorated enough to derail the Duterte presidency, although it has moved in much the same direction as it did under Estrada. The Philippines saw a substantial widening in its twin deficits last year, with the fiscal deficit rising to an 8-year high of 3.2% of GDP, and the current account deficit to 2.4% of GDP (the largest this century). In the 12 years before Duterte became president, the Philippines had current account surpluses, but those have swung into deficits in his 3 years in office -- with a particularly large deterioration in 2018. But despite that, real GDP decelerated to 6.2% growth in 2018 (from 6.7% in 2019). Until a fortnight ago, Duterte's coalition (led by his daughter Sara) was expected to sweep the elections. But with China undermining its self-proclaimed ally, and the economy showing growing signs of deterioration, the Senate and Congressional election is now headed to be much closer. We recommend a cautious stance toward the Philippines, and would be Underweight in an EM or Asian portfolio.  

Duterte's Pivot to China Isn't Paying Off, as China's Expansionism Continues Unabated