Political Turmoil in the Philippines

Reports from the Philippines indicate that 50 armed soldiers have captured an apartment building and shopping complex center in the Makati, the financial center of Manila. This "mutiny" has been provoked by what the soldiers describe as corrupt government practices.

The soldiers are claiming that the government has been under-paying the soldiers and also that they government has an inconsistent pay schedule. In addition, they have made claims that the government has been sending funds to Muslim rebels as a way of winning more support and funding from the United States.

Filipino president Gloria Macapagal Arroyo has been entirely unsympathetic to the demands of the mutineers. She has demanded that they surrender shortly or face grave consequences.

Outsourcing Considerations

While this domestic unrest appears to be politically motivated and not directed towards disrupting business in the Philippines, the actions are very unsettling for business.

The Philippines has had a very checkered political past recently, highlighted by the impeachment of former president Joseph Estrada in 2000 on charges of corruption.

While current president Arroyo has made efforts to win favor with Western businesses, she has had to struggle recently. In particular, the Philippines are viewed as being somewhat unsafe as the result of actions by the Moro Islamic Liberation Front (MILF), a 12,500 strong group located on the Southern Islands of the archipelago.

The bottom line for the government in the Philippines is that investors will not be tempted by the well educated and inexpensive labor force if they feel that their investment could be jeopardized by violent political unrest.