The takeover of the Makati financial district by rebel soldiers is the eighth military uprising here in 17 years.

So far there has been no bloodshed but there are fears it could follow the script of a 1989 coup attempt when another band of rebels turned the district of high rise luxury hotels, condominiums and shopping malls into a bloody battleground for a week.

"Even now, the business sector is in a state of shock," Trade Secretary Manuel Roxas said. "We must remember the 1989 coup that brought down our economy to nearly zero growth -- it took us several years before our economy began to recover."

After the release of about 300 residents, including the Australian ambassador who was trapped inside the booby-trapped buildings overnight, President Gloria Arroyo declared a "state of rebellion" and gave the mutineers until 5:00 pm (0900 GMT) Sunday to surrender or face attack.

Asian neighbors such as Thailand and South Korea also went through a period of military rebellions before discovering democracy that transformed their economies, Manila-based political analyst Alex Magno of the Foundation for Economic Freedom told AFP.

"We thought we had also gotten over this phase," Magno said. "But this is different."

While the repeated coups in Manila in the late 1980s sought to change the direction of national government policies, "this is a devalued rebellion used to leverage for increased combat pay," he said.

Arroyo met with a group of junior military officers last week and pledged to address their concerns over low pay, inadequate housing, and alleged corruption by top brass. Still.

To put the genie back in the bottle, the government has to "put in enough disincentives for this activity," Magno said, suggesting harsher penalties for mutiny, better pay, and education.

For the time being, the Philippines is left counting the cost.

"The military aspect of it we can handle," Defense Secretary Angelo Reyes said. But "the longer it takes, the more damage to the economy" is expected.

The Philippines was rocked by an unprecedented series of military rebellions in the late 1980s. The government thought it had solved the problem when it signed a peace treaty and amnestied the coup leaders in 1993.

Trade Secretary Roxas said government efforts to create jobs "will become meaningless if we cannot hold our society together.

"Investors locating in the Philippines would want to make sure that peace and order are in place. We should realize that these incidents have long term effects in our economy and society."

Analysts said the crisis would put further pressure on Arroyo as she tried to recapture Indonesian Jemaah Islamiyah bombmaker Fathur Rohman al-Ghozi, who escaped from prison last week, and to revive an economy stuck in low-growth mode.

The crisis also put into question planned peace talks with Muslim separatist guerrillas in Malaysia next week, as well as efforts to tame a resurgent communist insurgency.

Tourism Secretary Richard Gordon said Arroyo's priority now was to end the standoff in the shortest time possible, and to ensure that nobody gets hurt.

"If somebody gets hurt, you know what happened to Bali which has not been able to recover up to this time," Gordon said referring to the terrorist blasts that claimed over 200 lives in the Indonesian resort in October last year.

"If we let this drag on, we will again become the laughing stock of the whole world," he added.

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