REMARKS OF AMBASSADOR ENRIQUE A. MANALO AT THE
CONSERVATIVE FOREIGN AND COMMONWEALTH COUNCIL
House of Lords 5 December 2012
“Aquinomics: Moving the Philippines Forward Through Good Governance”
Sir Ronald Halstead,
Ladies and gentlemen,
A pleasant good evening to you all.
It is truly a distinct pleasure to join you this evening.
I would like to thank the Conservative Foreign and Commonwealth Council (CFCC), especially Chairman Sir Ronald Halstead, for giving me this opportunity to share with you the latest developments in the Philippines and how we see ourselves and our role in our region and the global community of nations.
I am very encouraged to see the Council’s interest in my country. The Philippines has had an excellent association with the Conservative Party, especially under this Coalition Government.
In fact, the All-Party Parliamentary Group for the Philippines is led by a Conservative MP, Mr. Mark Pritchard. And we are keen to welcome Foreign Office Minister of State Hugo Swire, another Conservative MP, to the Philippines next week – his first working visit to my country.
These connections are only a small example of the broad high-level exchanges that have happened regularly between the Philippines and Britain, and we are very keen to continue these linkages – including with such renowned groups as the CFCC.
Let me begin my brief talk this evening by giving you a picture of where the Philippines stands now.
THE PHILIPPINES
The Philippines is the 12th most populous country in the world, with a population of about 92 million.
It is an archipelago in a region that is a major cog of the world economy. It is Asia’s first democracy, with a strong tradition of civil society and a vibrant brand of politics.
It has a GDP of about USD 390 Billion and around USD 4,100 per capita. It has a young labor force of 40 million, proficient in the English language, with superb technical skills and known for an excellent work ethic.
The economy is largely driven by exports, agriculture and services, with the latter sector building a base of people and skills needed for the global knowledge sector.
GOVERNANCE
Now midway into his six-year term, President Benigno S. Aquino III has moved the country forward and in the right direction.
Remaining true to his election promise, the President has put forth a program of reforming institutions, fighting corruption, promoting government transparency and accountability, and supporting broad-based growth.
Our economic managers have even created an eponymous term for this platform of governance: “Aquinomics.” The President believes that good governance creates the climate for sustained and broad growth for all Filipinos.
ECONOMIC CLIMATE
And indeed, Aquinomics has been shown to work.
The country’s third quarter GDP growth of 7.1 percent was driven by broad-based improvement across all sectors, going beyond market expectations and making the Philippines Asia’s best performer for this period.
This brings growth for the first three quarters of 2012 to 6.5 percent driven by sustained government and private sector construction and consumption. It is also the 54th consecutive quarter of growth.
Government takes care of fiscal sustainability, macroeconomic stability, and continued business facilitation while the private sector responds with more investment and consumption.
As recently explained by our finance secretary, the Philippines’ economic performance is significant for several reasons. Firstly, the current pace of growth is much higher than the trend growth of 4.7 percent in the past ten years. Secondly, it was accomplished in a very difficult global economic environment. And thirdly, it happened despite a 2.2 percent decline in mining, which shows that mining represents an extra gear for the Philippine economy once the regulatory environment is rationalized.
Half of growth came from very strong household spending, which in turn has been spurred by the steady inflow of remittances from 10 million overseas Filipino workers. Remittances this year are expected to top the USD 20.1 Billion that were sent back to the Philippines in 2011.
The Filipino diaspora in Britain – all 250,000 of them – represent the biggest Filipino community in Europe. They remit about USD 800 Million every year, making them the fourth largest source of remittances for the country.
Exports of goods and of services have also been on the rebound. The latter, most especially, as the sector has grown by over 10 percent over the past year, firmly placing the Philippines among the top three offshoring destinations in the world.
The Philippines has already surpassed India in the voice segment of the USD 120 Billion global business process outsourcing industry.
Finally, construction is also a leading light of the economy, as both public and private construction continue to increase. Related to this is the ongoing implementation of the President’s public-private partnership program (PPP). Only recently, another 11 projects totalling some USD 4.5 Billion have been approved to proceed under the PPP program.
The latest growth numbers show that investor and consumer confidence in the Philippines is definitely on an upward momentum.
This is reinforced by the records achieved by our capital markets and sovereign papers. Our stock market is the best performer in Asia in 2012.
In terms of credit ratings, there have been positive actions on our credit ratings since July 2010, and we are now only one notch below investment grade.
Last month, International Monetary Fund (IMF) Managing Director IMF Christine Lagarde visited Manila and praised the “sound policies” being undertaken by the government. She also hailed the Philippines’ transformation into a net creditor nation to the IMF.
According to our finance and monetary officials, the Philippines is contributing about USD 1 Billion into the IMF’s Financial Transactions Plan (FTP) since July 2010. They explained further that the FTP, since January 2012, has largely been used to help distressed European economies.
However, although we have strong economic fundamentals, the Philippines is also acutely aware of the external factors that could underpin the country’s performance over the medium-term. We are closely monitoring the US fiscal challenges and the difficulties in the Eurozone. Let me stress that for the Philippines, a strong, growing Britain – and in a broader context, Europe – is an important part of our economic well-being for the future.
We are also addressing the need to sustain fiscal revenue. Although our fiscal deficit is only at 2.6 percent of GDP, the government is aggressively pursuing ways to bolster revenue, including through improved tax collection and new taxes, that will help fund government services and infrastructure projects.
However, the Philippines continues to deal with major poverty alleviation and social development issues, not least of which is the country’s growing population. The President has made it his priority to pass the Reproductive Health bill that would allow government to provide programs and services helping empower women on maternal and reproductive health issues.
Amidst these challenges, the future nevertheless is bright for the Philippines.
In fact, HSBC, in its “World in 2050” report published in January 2012, projects the Philippines to become the 16th largest economy in the world, with a GDP of USD 1.7 Trillion and a per capita income of over USD 10,000.
PHL-UK ECONOMIC TIES
Of course, playing a role in this robust economic climate are our equally dynamic economic relationships with our most important partners, such as the United Kingdom.
Between 1999 and 2009, Britain was the largest investor in the Philippines. Britain has consistently remained a top net portfolio investor in the country.
Major British firms are in the Philippines, while Philippine banks also have branches in the UK. British investors are expressing strong interest in a variety of areas, and the Embassy’s commercial office is very keen to focus that interest towards our IT services, public-private partnerships, renewable energy, food, furniture, garments and textiles.
In fact, such is the interest in Philippine products that TESCO has decided to open a Philippine food section in many of its larger supermarkets in the UK.
Frequent high-level exchanges and business missions between our two countries have been taking place since 2011.
When President Aquino made his first official visit to Britain last June, commercial agreements worth USD 1 Billion were signed in such areas as traditional and renewable energy sources, and aircraft engine manufacturing and servicing.
Our ministers of trade, finance, transportation and health have met with British companies here in London, while a variety of British business delegations have also immersed themselves in networking and business matching activities in the Philippines.
PEACE AND ORDER
In terms of internal peace and security, a major breakthrough was achieved in the Mindanao conflict with the signing of the Framework Agreement on the Bangsamoro between the Philippine government and the Moro Islamic Liberation Front (MILF).
The two sides are now negotiating the all-important annexes (on power-sharing, wealth-sharing and normalization) that will complete the peace deal and hopefully sign them by 2016.
As you may be aware, the United Kingdom has been an active participant in the International Contact Group (ICG) of the peace process. The ICG has been providing informal advice on how move the negotiations forward when any impasse came about. The United Kingdom has also been generously sharing its lessons and experiences from the Northern Ireland peace process.
The peace agreement once completed and fully implemented represents another extra gear that will unlock the significant potential of the Mindanao region.
The improving state of the peace and order in the country is reflected in the robust tourism numbers. In 2011, we welcomed some 3.917 million foreign visitors, of which around 104,000 tourists were from Britain, which is our largest tourism market in Europe.
There has already been a recognizable increase of British tourists in the first half of 2012 – a steady trend since 2007.
With our new campaign, “It’s More Fun in the Philippines!”, we fully expect to breach the 4 million visitor target this year.
REGIONAL ISSUES
Beyond its shores, the Philippines has always maintained a policy of open and friendly engagement with the rest of the world. Its foreign policy is guided by its four main pillars: (i) national security; (ii) economic diplomacy; (iii) assistance to nationals; and, (iv) public diplomacy.
The Philippines is an active member of the 10-country Association of Southeast Asian Nations (ASEAN). Our engagement with ASEAN, individually and as an institution, is a cornerstone of Philippine foreign policy.
The Philippines actively participates in multilateral fora, such as the United Nations and other international organizations, especially on issues affecting our core interests, such as international peace and security, economic development, social development, human rights, and migration.
The country is also active in regional fora, such as the Asia-Pacific Economic Cooperation (APEC) forum, Asia-Europe Meeting (ASEM), ASEAN Regional Forum (ARF) and East Asia Summit (EAS).
In ASEAN, the Philippines is committed to the goal of achieving an “ASEAN Community” by 2015. The Philippines firmly believes that ASEAN should be a rules-based regional community that abides by regional security mechanisms (such as the Declaration of the, if not a, Code of Conduct on the South China Sea) and adheres to the primacy of international law.
In ASEAN, the Philippines was the prime mover in the establishment of the ASEAN Intergovernmental Commission on Human Rights (AICHR) and the recent adoption of the ASEAN Declaration on Human Rights.
The Philippines maintains the view that the region’s continued prosperity and economic development is a function of the maintenance of peace and stability in Southeast Asia.
Through ASEAN, the Philippines participates in a regional free trade area, an economy community, a framework to prevent financial crises, and a wider trade network involving China, Japan, Republic of Korea, India, Australia and New Zealand.
For the Philippines, participation in this regional economic integration is immensely beneficial.
Undoubtedly, geography dictates that the Philippines must continue to be an active participant in an increasingly integrating and dynamic Southeast Asian region, and, more broadly, in East Asia.
There is much to be gained by countries in our part of the world to move towards greater trade and investment liberalization, increasing international production networks and multi-faceted economic integration.
REGIONAL SECURITY
Of course, the prosperity of the region will be under threat if the environment necessary for continued growth and development is impeded by rising tensions, instability, or worse, conflict.
One could say that the ASEAN region, and the wider East Asia, is a critical focus of big-power strategic relations, multi-polar configurations, and middle-power engagement of big-powers.
Apart from bilateral issues, one encounters a US-Japan defense nexus, China’s rise as a major power, and the positioning of ASEAN as strategically engaging the bigger powers.
The Philippines values the importance of engagement and peaceful dialogue in dealing with security issues, as these build an atmosphere of trust and confidence among countries, both those directly affected and those at the periphery of disputes, that is necessary for sustained economic dynamism.
The Philippines has a very real stake in the regional institutional security framework, which provide the channels through which countries like the Philippines can affect and influence the direction of the regional security environment and its architecture.
By contributing positively to these institutional processes, especially under the ambit of ASEAN, the Philippines is helping ensure that countries in the region are working together to nurture an environment conducive for all countries to pursue development goals and also to help manage strategic regional security concerns.
Allow me to enumerate a few security concerns.
West Philippine Sea. On the West Philippine Sea (WPS), or as others name it, the South China Sea, the Philippines recognizes that the maintenance of peace and stability in the West Philippine Sea is of paramount importance to regional growth and stability.
China is the Philippines’ neighbor, and we have an extensive, broad and historical relationship with them. Since last year, however, China has been assertively claiming its sovereignty over the Reed Bank and the Scarborough Shoal in the West Philippines Sea – both of which are integral parts of the Philippines and well within our exclusive economic zone (EEZ) and Continental Shelf.
In Bajo de Masinloc (or Scarborough Shoal), China has kept the Philippines from enforcing our own laws and has demanded our exit from our own EEZ on the grounds that they have sovereignty over the entire South China Sea under a 9-dash line concept.
This 9-dash line concept is baseless under the UN Convention on the Law of the Sea (UNCLOS), and is being contested in the UN by Viet Nam, Malaysia, Indonesia, and the Philippines. Even Singapore has asked China to clarify publicly their position.
It has, therefore, been necessary, because of China’s actions, for the Philippines to continue asserting our sovereignty over these issues.
The Philippines is committed to address this dispute through peaceful means. In this regard, we have long advocated a peaceful and rules-based approach in accordance with international law, specifically the UNCLOS. We are also working seriously with our ASEAN colleagues on a Code of Conduct for the West Philippine Sea.
In the last few high-level ASEAN meetings, the Philippines has remained firm in its view that a Code of Conduct, to be effective, must be credible, binding and enforceable.
Agreement has been reached among ASEAN member countries on the key elements of the Code of Conduct on the South China Sea. The COC is meant to encourage the peaceful resolution of disputes in the West Philippine Sea (South China Sea) to enable an environment conducive to negotiation and cooperation.
In this regard, the Philippines has been very encouraged by the strong expression of support from European countries, including Britain, for our position regarding the peaceful resolution of the West Philippine Sea issue.
Korean Peninsula. On the issue of the Korean Peninsula, the Philippines has maintained diplomatic relations with the Democratic People’s Republic of Korea (DPRK) since 2000.
The Philippines continues to underline the importance of peace and security in the Korean Peninsula. We continue to urge the concerned parties to comply with obligations under the relevant UNSC resolutions, and the 2005 UNSC Six-Party Talks Joint Statement.
Taiwan Straits. On the Taiwan Straits issue, the Philippines and ASEAN respect the One China Policy. ASEAN member countries recognize the positive improvement across the Taiwan Straits, including the keen interest and mutual desire shown by both sides to improve their relationship.
Transnational Crime and Terrorism. The Philippines has been fostering cooperation with its various partners to combat transnational crime for more than two decades.
We were initially focused on dealing with the abuse of narcotics and trafficking in illegal drugs. However, with the expansion and diversification of transnational crime to include terrorism, arms smuggling, money laundering, illegal migration, and piracy, and the highly organised nature of such crimes, we have intensified efforts to fight these crimes, including with the establishment of regional training centres in various member countries to improve the capacity of law enforcement authorities to combat these nefarious activities.
Terrorism remains a particular concern, especially in light of the situation in the southwestern tip of Mindanao, where Abu Sayyaff still operates. The Philippines continues to counteract the spread of Islamic extremism in the region.
For the Philippines, the best way to combat terrorism and extremism is to address its root causes, namely poverty and the lack of empowerment.
The recent Framework Agreement is an important step forward to creating a just and lasting peace in the conflict-ridden areas of Mindanao and thereby removing any safe haven for terrorism to flourish in the south.
Climate Change. Also a security concern for us, in a wholistic sense, is the issue of climate change. Being one of the countries most vulnerable to climate change, the Philippines continues to be a staunch advocate of efforts, at the national, regional and international level, to effectively address the effects of climate change. Our National Framework Strategy on Climate seeks to create a climate risk-resilient Philippines, that is able to build its adaptive capacity, increase the resilience of its natural ecosystems and optimize mitigation opportunities.
PCA. Let me also mention that the Philippines signed a Partnership Cooperation Agreement (PCA) with the EU this year. The PCA is a key agreement which provides a coherent and strategic framework to engage with the EU on a broad range of issues. It would also provide the strategic context for a possible Philippines-EU FTA in the future.
CONCLUSION
To conclude, the Philippines is slowly emerging as one of the world’s most vibrant economies. Being in one of the world’s most dynamic regions is a plus too.
The Philippines will continue to strongly advocate the maintenance of peace and stability in the region, through dialogue and rules-based mechanisms, as the right ingredients for nurturing growth, prosperity and social development, for the benefit of the Filipino people.
The Philippines is also committed to open, transparent good governance, promoting and protecting human rights, and maintaining an open, transparent, rules-based international trading system.
Economic development is likewise a priority, and trade and foreign investment, especially with our important partners like Britain, are key in this regard.
Thank you very much. (END)