Speech
of
His Excellency Fidel V. Ramos
President of the Philippines
At a Dinner for the European business delegates hosted by the European Commission on the official visit to Brussels, Belgium

[Released on September 15, 1994]

Europe’s gateway to
Asia and the Pacific

ONE OF MY important duties here in Brussels is to talk about the Philippines as your gateway to Asia and the Pacific.

The Philippines was discovered for Europe by the Spaniards in 1521. They liked it so much they stayed for 333 years. Then the Americans ruled us for 45 years, until we regained our freedom in 1946. If we Filipinos seem sometimes unique, it is partly because of this hybrid history: a humorist once said we spent more than three centuries in a Spanish convent and half a century in Hollywood!

The logic of geography cannot be denied. The Philippines was a crossroad of cultures then—it can be the crossroads of trade and business now.

The vital center

Straddling the strategic sea-lanes of the Western Pacific, the South China Sea, and the Indian Ocean, my country is at the vital center of the world’s most dynamic region—the tiger economies of East Asia and the Pacific.

We have adopted a program we call “Philippines 2000″—a strategy for development that should place our country on the road to newly industrialized status by the turn of the century.

Already we have restored the economy to the path of self-sustaining growth.

GNP grew by 5.1 percent in real terms during these last six months, compared with less than 1 percent over the same period last year. And new investments surged by 330 percent in value. Approvals by our Board of Investments are four and a half times what they were last year.

This year our debt-service ratio should decline from 37 percent of export earnings ten years ago to 18 percent—lower than that of any Latin-American country. Last year we formally reentered the world capital markets—after 12 years out in the cold—with a series of Eurobonds that raised some $1.0 billion. Our stock exchange ranked third in the International Finance Corporation’s list of the 25 best developing-country exchanges for 1993, with a 155 percent performance.

Europe-Philippine relations and cooperation

But do not take my word about how well we are starting to do: Talk to your own people who are out there. I often plead with Europeans doing business with us to pass around the good news about the new Philippines. But I half-suspect they prefer to keep it to themselves, like prospectors not wanting to share their gold strike.

I am so certain of our country’s attractiveness as an investment site that all I ask you is to come and see for yourselves.

What you will discover is a friendly, outgoing people whose culture you can be comfortable with. We are East Asia’s only Christian nation.

Even more important, we share your political ideals. Our intellectuals of the nineteenth century were products of the European Enlightenment.

Our national hero, Jose Rizal, translated into Tagalog and Spanish the Declaration of the Rights of Man by France, which in turn his comrades circulated as revolutionary pamphlets in Manila in 1892. And, until now, even ordinary Filipinos are attached to the democratic ideals.

So, if you are thinking of investing in East Asia, I invite you to look to the Philippines under its new business environment.

The first great change we accomplished was to enhance political stability. We are not anymore a land of revolutions and coups d’état—not anymore as Western Europe is today.

In February 1986 we dethroned a dictator. Then, within a year, we moved from a revolutionary government to a democratically elected one. And in 1992, as our Constitution required, our people, represented by 29 million voters, directly voted for a new President out of seven candidates. The winner of that peaceful and democratic election is now before you.

Next year we are electing a new set of senators, congressmen, provincial governors, and city and municipal mayors. In mid-1998 the people will elect another President and I myself shall step down thereafter in a peaceful transfer of power. What could be more stable, more predictable, more democratic than that?

Government’s role in the economy

We face no threat of coups, no threats of insurrection, no armed opposition to State authority. What little is left of the three factions that once fought Government is now being reconciled with the mainstream through a comprehensive peace process. This includes formal negotiations toward a just and enduring peace, and a series of amnesty proclamations and livelihood programs for rebel returnees.

Our industrial work-people are well educated, easily trainable, hard-working, highly proficient in English, engineering and management. Filipinos value the opportunity to work, and there is industrial peace in our country. Our archipelago has rich natural resources, fertile land and a sunny climate good for plantations, agribusiness and tourism.

And you can count on Government’s not interfering in your business affairs.

Our Government’s basic role in the economy is to provide the policy framework within which individual enterprise can flourish.

That framework has four components. Besides political stability and civil order, Government’s role is to enforce the rule of law—which, among other things, assures a level playing field for competition and the security of business contracts.

Sound macroeconomic policies are another Government responsibility—among other things, to guarantee the soundness of the currency and the stability of prices.

Government’s fourth obligation is to provide the physical infrastructure that private industry cannot itself provide. This includes not only roads and electric power plants, ports, airports, water supply and irrigation systems but also investments in human capital—in health care, basic education, skills training and social security.

You may rest assured the Government will intervene only on the side of the free market—not to choose winners and losers, but to nurture competition.

Investors’ rights

Will your rights as investors be protected? And can you take your profits home? Certainly yes.

Our accession to the Multilateral Investment Guarantee Agency of the World Bank guarantees you coverage for all political and noncommercial risks.

Two years ago we lifted all foreign controls. We have also set up an independent central monetary authority to manage our financial system. As a result, interest rates are down to their lowest level since the late 1970s; and inflation is down to a single digit.

We have also opened up our banking system—which had been restricted for 46 years—initially to ten foreign banks over the next five years.

A tariff-reduction program we started this year is rapidly winding down duties on imported capital equipment, raw materials and spare parts. Tariff rates on capital goods now average only 5 percent.

We also continue to liberalize our investment rules and simplify our procedures. You may now invest in manufacturing or wholesale trading and own 100 percent of the equity—in all but a very short list of exceptions. You may even lease private land for as long as 75 years.

Build, operate and transfer

Our build-operate-transfer program has attracted so many investments in electric-power plants that we have replicated it in other infrastructure sectors. Thirty-seven baseload projects totaling 6,000 megawatts have been contracted to private builders under our Build-Operate-Transfer Law.

Bureaucratic red tape is being drastically reduced and approval times shortened through one-stop shops that allow you to transact all the relevant approvals and permissions in one place.

We are dismantling cartels and monopolies harmful to public welfare—telecommunications, interisland shipping and insurance, to start with—so as to level the playing field of enterprise.

And we are privatizing many State corporations and assets—in steel, liquefied petroleum gas, shipping, communications, land transport, palm oil plantations and fertilizers.

For multinationals locating in the Philippines, we have set up some 40 industrial estates and export zones from Luzon Island to Mindanao in the South. The principal ones are the former American naval and air facilities at Subic and Clark, the CALABARZON provinces south of Metro Manila, Cebu, and the East ASEAN Growth Area sponsored by Brunei, Malaysia, Indonesia and the Philippines.

Subic—once the largest American naval base outside the U.S. mainland—has an area larger than the whole of Singapore. It has an airport that can take 747s, deep-water anchorage for 600 ships, a huge ship-repair yard, and 40,000 skilled workers. Companies already in Subic include Federal Express, Enron and Coastal Petroleum of the United States; SGS of Switzerland; Keppel of Singapore; and various manufacturing companies from Japan, Australia, South Korea, Hong Kong and Taiwan.

Clark Field we are transforming into a world-class aviation center and a modern industrial estate—with 24,000 hectares for light-to-medium industry and agricultural-industrial development.

Like power, communications facilities in the past had been poor. But here also deregulation has vastly improved our telecommunications, and attracted new players—among them America’s AT&T and Bell companies; France’s Alcatel, Italy’s Italtel, Australia’s Telstra and Singapore Telecom.

You might also ask: What else is happening in your part of the world that we could take part in?

The ASEAN market

I suggest you look at the commercial possibilities of the ASEAN Free Trade Area. With integration, our six countries of Brunei, Indonesia, Malaysia, Singapore, Thailand and the Philippines are going to become one ASEAN market of more than 340 million consumers—whose incomes are rising at the world’s fastest rates.

Not just Southeast Asia but the whole of East Asia is coalescing into one great economic unit. Already it accounts for 30 percent of the world GDP; and it is not unlikely that by the year 2020—in 25 years’ time—East Asia’s output will exceed that of both North America and the European Union.

What is certain is that in six years’ time, 110 million East Asians will be living in middle-income households, with incomes per head in excess of US$10,000, at 1986 prices.

The Philippines makes an excellent gateway to this great market—particularly since we have a home-consumer base of 65 million people that understands and welcomes European products and marketing styles.

Now to sum up my message: We Filipinos have had a difficult time in recent years. But we have now put our house in order and regained our unity of purpose. Once again we are ready to account for ourselves and compete in the world— and we are determined to develop as a democracy.

The conventional wisdom is that democracy and economic growth cannot go together—because unrestrained democracy generates disorderly politics harmful to economic growth.

We recognize the power of self-interest and profit in generating social and economic growth. But, like you here, we believe self-interest must be guided by a larger sense of community. We seek economic growth not merely because it enables human beings to accumulate material goods. We recognize economic growth as important because it allows greater human freedom.

We also have an acute sense of the limits to what the State can do by itself. Our first principle is to leave to private initiative the day-to-day workings of the economy.

Pushing and challenging

We see Government’s role as not to help business people avoid competition by awarding them subsidies, protective tariffs, preferential loans, and other economic favors.

We see Government’s proper role as pushing and challenging individual enterprise and national industry to strive, to innovate, to compete with the best in the world.

And we have made basic changes in our economy during the past two years so that it offers a fair, open environment for all business-people.

Business is said to be like a wheelbarrow. Nothing ever happens until you lift it up and start pushing. And that is we in the Philippines and you here in Europe now need to do—to push, to move and benefit together.