All business involves risk, but there is a difference between commercial and political risk. Commercial risk can be gamed out; political risk cannot. The greater the political risk, the higher the incentive to wait and see, restricting plans to those already in the pipeline while conserving resources and risk by refraining from expansion or new ventures.

It took the murder of a foreigner and not a Filipino to stop the war on drugs — temporarily — at least because of the fallout after Jee Ick-joo was strangled in an SUV near the office of the Philippine National Police chief. It was the worst time for bad news, as the last two quarters of 2016 — the first six months of the present government — had already shown a decline of 10.7% in foreign investment commitments.

In June, Kang Chang-ik, president of United Korean Community Association in the Philippines said he expected tourism arrivals to drop because of martial law in Mindanao (arrivals from South Korea, year-on-year in May, had increased 35.84% according to the Department of Tourism). The prediction seems to have an anecdotal basis, with Bohol resorts reporting most cancellations coming from Korea, Japan, and China in May.

Business keeps its head down and does not invite political attention. So decisions are blandly explained away on purely commercial grounds. On Aug. 24, the Philippine Star reported South Korean firms are “packing up” and shifting their manufacturing operations to Vietnam, with Lee Ho-ik of the Korean Chamber of Commerce saying the reason is the “higher cost of doing business as well as lack of incentives in the country.”

These are undeniably liabilities as far as prospects of investments in the country; when you add others of a political nature, the tide of confidence doesn’t just stall, it’s reversed.

Back in April, Cielito Habito in his column pointed to “dark clouds” over the economy, specifying inflation, a renewed rise in the unemployment rate, slowing GDP growth, the peso climbing above 50 to the dollar, and a minimal growth in exports meaning more money was going out than coming in, as well as a slowing down in the deployment of OFWs as causes of concern. In June, a report mentioned BPO investments were down 34.96% amid “fears of political uncertainty.”

In July, he diplomatically pointed out, “Something unique to the Philippines is happening lately that is leading to a net outflow of dollars — hopefully not a diarrhea — that merits close attention from both our economic and political authorities.” As a former chief government economist, he is careful with his words avoiding the term “capital flight,” but surely this is what crossed many readers’ minds.

That same month, S&P cut its growth forecast for the country to 6.4% from 6.6%. In September last year, it had warned that the war on drugs combined with President Duterte’s statements on security and foreign policy meant “that the stability and predictability of policymaking has diminished somewhat.” Meaning, political risk. At the start of August, the IMF cut its growth forecast for the country to 6.6% from 6.8% because of slower-than-expected first quarter numbers.

Last Aug. 25, Habito devoted another column to the peso rate, pointing out its depreciation is mixed news (good for OFWs, bad for importers, for example), but along the way mentioned foreign investments are down by 23%, portfolio investments have been leaving, again diplomatically noting “investor sentiment seems moving the other way, for reasons internal to us.” Something the foreigners had been saying, as clearly as jargon allows, since last year.

To compensate for all this, the government has done two things. It has tried to sustain the policies of the government it replaced, which would hopefully isolate any fallout from its political interventions in business, whether in online gaming, mining, the reclassification of agricultural land, cigarettes, real estate, or ride-sharing services.

The government, as all governments do, trumpeted a new scheme to make people bullish about the prospects of the country. The mantra would be “build, build, build,” with glittering promises of massively ramped-up investments in infrastructure. It would be funded by tax reform. Two days ago, Finance Secretary Carlos Dominguez warned that he would advise the President to veto the very bill the administration had so strongly pushed, putting the blame on the Senate when it was the House that had passed a defective, “watered-down” bill. So much for a massive House majority, apparently incapable of being policed by the Palace. But then blaming the Senate is par for the course though what you’d least expect from supposedly professional economic managers: politics.