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PHILIPPINES: Toward a trillion-dollar economy

Article - October 15, 2014
One of Asia’s best economic performers, the Philippines is on its way to becoming a trillion-dollar economy by 2030 due to a revitalized private sector, better governance and strong, sustained growth
Even as it approaches the one-year anniversary of Typhoon Haiyan, one of the most devastating natural disasters in its history, the Philippines has good reason to look forward with hope and optimism. Thanks in large part to the stable and democratic political system led by President Benigno S. Aquino III and his ruling Liberal Party, the Southeast Asian nation of 108 million has emerged as a leader and an example of robust economic growth and sound fiscal management.

A revitalized private sector and improving government performance propelled the Philippines into one of the strongest economic expansions in Asia, with its 7.3% GDP growth in 2013 surpassing every country in the region except China. The progress has been exceptional by the Philippines’ own historical standards as well. During the last quarter of 2013, the country capped its strongest two years of growth since the 1950s, while also benefitting from declining unemployment, rising exports and significant gains in foreign direct investment, private consumption and government revenues, according to International Monetary Fund and World Bank figures.

In July of this year, Jim Yong Kim, the President of the World Bank, declared: “The Philippines can be the next economic miracle in Asia”. Meanwhile analysts at top credit ratings including Standard & Poor’s, Moody’s and the Japan Credit Rating Agency all upgraded the country’s debt further into investment grade territory, a distinction that sets it apart from emerging markets like Brazil and India. Leaders at the East Asian World Economic Forum 2014, held in Manila, expressed optimism that the Philippines would become a trillion-dollar economy by 2030.

“The Philippines continues to gain momentum as good governance invigorates our institutions and deepens public trust,” President Aquino affirmed in an exclusive statement to United World. “Our government has seen our campaign for reform bear fruit in our burgeoning economy, in the promise of lasting peace in the once turbulent southern region, and in our steady rise as an emerging market in the Asia-Pacific.”

Our nations share the goal of achieving greater stability and prosperity in our regions, and hold freedom and the rule of law in the highest regard. Our friendship can only thrive as we uphold the principles of democracy and leverage our citizens’ potential”

President of the Republic of the Philippines
President Aquino made rooting out corruption and improving governance the top priorities of his presidency, taking important steps that have helped to facilitate greater economic development. Thanks in part to this leadership, the government has not run a single deficit in the past 11 years, while its economy has tripled in size during the same time period.

In April of this year, U.S. President Barack Obama made a historic visit to Manila, the first by a U.S. head of state in more than a decade. The two leaders celebrated the signing of the Enhanced Defense Cooperation Agreement (EDCA), a pact that advances the protection of Philippine sovereignty while promoting U.S. interests in the region. The EDCA marks the most substantial defense cooperation between the two countries in decades, and will re-open key military bases in the Philippines to U.S. forces for the first time since the 1990s, while building mutual defense capacities and delivering economic benefits to the host country, leaders on both sides argue.

President Aquino has affirmed that the two countries are continuing to strengthen its links: “Our nations share the goal of achieving greater stability and prosperity in our regions, and hold freedom and the rule of law in the highest regard. We each commit to contributing to a harmonious world, which is the bedrock of true and meaningful development for our peoples. Our friendship can only thrive as we uphold the principles of democracy and leverage our citizens’ potential through capacity-building efforts.”

“The United States is renewing our leadership in the Asia Pacific, and our engagement is rooted in our alliances,” President Obama declared during the April visit. “That includes the Philippines, which is the oldest security treaty alliance that we have in Asia. As a vibrant democracy, the Philippines reflects the desire of citizens in this region to live in freedom and to have their universal rights upheld.”

Under President Aquino’s leadership, the Philippines has fostered closer cooperation with the United States at all levels. Total trade in goods between the two nations approached $18 billion in 2013, in addition to the more than $25 billion that Filipinos living in the United States sent home to friends and family members in their country of birth that year. Almost 4 million Filipinos currently live in the United States, making it the number one foreign destination for Filipinos and a country with which they share strong historical and cultural ties. Overall, foreign direct investment in the Philippines has tripled since 2010, with the United States currently holding a stock of investments in the country worth more than $5 billion.

“The U.S. is one of the two strategic partners of the Philippines, a major trading partner, and a nation with which we have a shared history and common set of values,” says Manuel L. Quezon III, Undersecretary for Presidential Communications Development and Strategic Planning. “Deeper cooperation with them, as reaffirmed by the visit of President Obama to our country in April, only strengthens the many aspects of our relationship.”

President Obama outlined some of the important issues discussed during his visit, which included significant bilateral trade negotiations. “We agreed to keep deepening our economic cooperation,” he said. “I congratulated President Aquino on the reforms that he’s pursued to make the Philippines more competitive. Through our Partnership for Growth and our Millennium Challenge Corporation compact, we’re going to keep working together to support these efforts so that more Filipinos can share in this nation’s economic progress – because growth has to be broad-based and it has to be inclusive.”

According to the Philippine Development Plan, the current government has committed to the goal of inclusive growth through improving gender equality, reducing poverty, achieving universal primary education and improving child and maternal health, while promoting equal access to development opportunities through better education, primary healthcare and nutrition, and other basic social services. Its leaders have worked hand in hand with counterparts in the private sector from across the globe.

“The role of the private sector is very important in sustaining our growth momentum. The public sector cannot do it alone,” says Jose L. Cuisia Jr., Ambassador of the Republic of the Philippines to the United States. “That is why aside from improving overall business environment and competitiveness, the Philippine government is seeking greater private sector involvement through the country’s public-private partnership (PPP) program. The World Bank considers the Philippine PPP center as one of the most globally active in the world.”

The United States has proved to be an indispensable partner in this effort, according to the Ambassador. “We hope to expand our engagement with the U.S. in other aspects of our economic relations,” he says. “There is the Partnership for Growth program that will bring an estimated $139 million over five years, mostly from the U.S. Agency for International Development.”

Like many leaders across the public and private sectors, Mr. Cuisia regards a cooperative relationship with the United States as essential to both countries’ growth, prosperity and security. “I see the opportunities to expand economic relations with the United States in the long run arising first, from the continued high growth performance of the Philippine economy, since nothing attracts foreign investment more than high growth; and secondly, from a smart response to the Trans-Pacific Partnership (TPP) initiative, which from the U.S. point of view is the economic equivalent of its pivot to Asia.”