Philippine Coup Attempt Blurs Economic Future : Investment: Corazon Aquino was succeeding in attracting foreign capital. Now, new investors may back off, analysts say.

The attempted coup against Philippine President Corazon Aquino has shattered three years of painstaking efforts to attract U.S. and foreign investment, raising questions on whether the beleaguered nation will lapse into an economic crisis, analysts say.

Foreign investors had just begun to believe Aquino’s boasts that she was in control and nearly quadrupled the value of their investment applications from 1987 to September, 1989, Philippine government figures show. Actual direct foreign investment had skyrocketed from $186 million in 1987 to $986 million in 1988, according to the World Bank.

But after military rebels mounted their sixth and most serious coup attempt in almost four years against Aquino last week, new investors are now likely to think twice, several analysts said this week.

In addition, some experts predicted stock prices would plunge when exchanges reopen Monday and that money might begin to hemorrhage out of the country. If Aquino is forced to impose currency controls, confidence will fall even further, said Paul H. Kreisberg, senior associate of the Carnegie Endowment for International Peace.

Another potential problem is whether the international banking community would make good on pledges for a $1.2-billion loan package, which was expected to be made final in January. In Tokyo, Federation of Bankers Assn. of Japan Chairman Kuniji Miyazaki said Japanese banks would stick to all previous commitments, but other sources said the uprising would make it more difficult to find new banks willing to sign up as lenders.

The challenges amount to a dizzying round of new economic worries for Aquino.

“Confidence in the Philippines was rapidly rising and this coup has squashed it,” said Gerry Atterbury, a Southeast Asian expert with Dataquest Inc. He predicted the mutiny would cause potential investors to wait for 18 months to two years before committing to projects in the Philippines, a collection of about 7,000 islands whose 62 million people suffer from a poverty rate of 45% and an average per-capita income of $550.

“The people already there have very little choice because they have ongoing manufacturing sites in place and all you can do is keep going,” Atterbury said. “The people who are about to make the decision will say, ‘No, we’re not going there.’ ”

So far, Sony Corp. has announced that it might postpone plans to build a $350-million audio equipment plant near Manila. Caltex Petroleum Corp., estimated as the second largest U.S. investor in the Philippines, said it would assess the situation before deciding whether to proceed with new investment in its refinery.

And officials from the Republic of China on Taiwan, which has become the Philippine’s leading new investor in 1989, said most businesses would adopt a wait-and-see attitude before proceeding with their projects.

“We had more investors on the way, but with the trouble now with the coup, I don’t know whether they will continue or not,” said Da Jen Liu, head of Taiwan’s unofficial embassy in Manila, the Pacific Economic & Cultural Center.

The United States still maintains the largest presence in the Philippines, accounting for $1.3 billion, or 35%, of total foreign investment there. Most of its investment is longstanding and entails expansion of existing facilities. U.S. investment in the Philippines had stayed flat for most of the 1980s, with investment growing far faster from Japan, Taiwan and Hong Kong, but had begun to pick up in 1988 and 1989.

Companies such as International Business Machines Corp., Procter & Gamble Co., Texas Instruments, Castle & Cooke Inc., Goodyear Tire & Rubber Co. and Wm. Wrigley Jr. Co. have operated there for decades. Most companies contacted reported minor disruptions in deliveries and some shortages in raw materials. Many with offices in the Makati financial district, center of rebel fighting, closed their offices but were expecting to reopen them in the next day or two.

“We’ve survived martial law implemented by Marcos and the overthrow of the Marcos government, and have always been treated honorably by the Philippine government,” said Jeff Callender, spokesman for Unocal Corp. “Our past experience shows this shouldn’t pose a threat to our investment. The Philippine people understand the contribution we make to their everyday life and their democracy.”

Unocal, which began oil exploration in the Philippines in the 1960s, provides 25% of the electrical needs for the island of Luzon. Its geothermal fields were not disrupted by the military violence.

A few recent investors were more chagrined, however.

“We’re going to, over time, open a third facility and it probably won’t be in the Philippines,” said Tom Makmann, executive vice president of sales and marketing for Kalok Corp. in Sunnyvale. Kalok last year opened a disk-drive plant near Manila, after its investment banker there convinced him that political instability was a “low risk.” Makmann said Kalok would not withdraw, however.

Others predicted Asian investors might not be as stalwart. In the first nine months of 1989, Asian investments approved by the Philippine government outstripped North American investment by nearly four times, led by Taiwan, Japan and Hong Kong.

“Japanese in particular and, in general, almost any new investment, is going to be recalled,” said the president of a prominent foreign bank with an extensive network in the Philippines. The executive said his bank had lost three years of financial progress because of the coup.

But Liu said the Taiwanese would probably hang tough.

“The Chinese are very brave. We’ve had war 40 years with mainland China and in Hong Kong, there’s the 1997 deadline. In the long run, I don’t think it will affect things very much.”

Melito Salazar, governor of the Philippine Board of Investments, said there was no cause for long-term alarm. Salazar was in Chicago on an investment promotion mission throughout the United States when he received a message at his hotel: “Coup going on in Manila.” His reaction: “Oops. This is going to make things more difficult.”

But he said all the companies he met with continued to show interest in investing in a nation where many people speak English and the minimum wage is about $4 a day.

Since assuming power in February, 1986, Aquino has taken a series of actions designed to restore investor confidence in her country. She has begun to break the sugar and coconut monopolies, began privatizing industry, including several banks, and pushed through the legislature a new investment code.

Salazar said the government has begun a massive project to expand its roads, railways, telephone lines and port to foster greater economic growth. Aquino and former President Ronald Reagan also established the U.S.-Philippine Business Committee in 1987 to stimulate economic activity between the two nations.

And Aquino inaugurated the First Philippine Fund in a barnstorming trip through the United States last month, the first head of state to inaugurate a stock issue in the history of the New York Stock Exchange. The fund dropped from $15 a share on Nov. 30, the day before the coup, to $13 on Thursday.

Times Staff Writer Mark Fineman in Manila contributed to this story.