Speech
of
His Excellency Fidel V. Ramos
President of the Philippines
At the 26th annual meeting of the board of governors of the Asian Development Bank
[Delivered on May 4, 1993]
The expanded
role of the ADB
ON BEHALF of the Philippine Government, I am pleased to welcome the board of governors and their guests to this 26th annual meeting of the Asian Development Bank.
When the Bank was founded more than two decades ago, Asia was just beginning to emerge from the destruction of the Pacific War—and years of colonial rule. In many of our countries, the concept of nationhood was just taking root—and economic development merely a distant dream.
But since then nationality has become established and the beginnings of regional cooperation laid down. Governments, entrepreneurs and managers have buckled down to work—producing in East and Southeast Asia the most successful experiments in economic transformation and growth the world has ever seen.
The ADB’S role in regional growth
Taken as a whole, the member countries of this Bank have turned in the fastest growth rates ever known in economic history. They achieved in the span of a generation what took the mature countries many decades to accomplish.
Today, the first set of Asian newly industrialized countries, which emerged in the sixties and seventies, has joined the ranks of the industrialized countries. A second set is following the trail the first ones blazed, and still other Asian aspirants to newly industrialized country status are not too far behind.
In perspective, the Bank has been a major investor in the region’s growth—an investor not only of financial capital but, even more important, of faith in the will—and in the capability—of Asian peoples to lift themselves up.
But the Bank’s job is far from over. Now it faces the challenge of pushing the rest of Asia into the forefront of growth in the twenty-first century.
To a meaningful extent, the sterling performance of this region’s economies can be attributed to the financial support, management expertise and moral encouragement provided by the Bank. Through its support for poverty-reducing programs, the Bank was able to free many countries from the shackles of underdevelopment—and to tap their people’s potentials to the fullest extent.
The Bank’s lendings in various areas—from infrastructure and small-scale industries to agriculture and human-resource development—sparked growth and widened the access of the masses of Asians to livelihood opportunities in which agricultural productivity, rapid industrialization and vigorous export activities are rooted.
Modifying development strategies
The strategies of development pioneered by the first wave of newly industrialized countries can be replicated in the other countries. But those strategies must first be modified—to suit local cultures and unique national circumstances. And they must conform to changed conditions in the larger world economy.
By and large, the first Asian newly industrialized countries developed their economies under political systems which restrained opposition and concentrated state power in the government leadership.
But in our time this kind of political hegemony is no longer available—at reasonable cost—to any Asian government. And the reason is that ordinary people everywhere have awakened to their political entitlements. They have become acutely aware of their democratic rights.
The Asian middle class—the initial beneficiaries of economic growth—leads this popular demand for more equitable participation in national decision making.
Today no Asian government can continue to make policies in secret. Public policies must be discussed—and carried out—openly, transparently and thoroughly if they are to become accepted by electorates and constituencies, and by foreign economic partners. This process not only requires more and better information; it also requires that such information become widely available to the people. Those groups adversely affected by reforms must be made to understand that the negative effects are temporary; and the benefits significant and far-reaching.
The costs of competitiveness
As Asian countries enhance their competitiveness and open themselves to increased cooperation in trade, investment, technology transfer and tourism, the Bank may find itself increasingly financing the costs of achieving greater competitiveness.
Besides its usual portfolio of project loans, the Bank must involve itself increasingly in structural reform programs—which are necessary as countries shed trade barriers, reduce subsidies, dismantle monopolies and abolish cumbersome regulations. Equally important, the ADB must also support increased national, regional and global concerns for the protection of the environment under the principle of sustainable development.
Indeed, the role of the Bank will have to expand—and accordingly, its available resources should also expand. For this enhanced role, the Bank will surely have to look into ways of raising its resources more and more. This expanded role and its corresponding increased requirements, I trust, will be among your priority concerns at this meeting.
Before this forum, I must express my country’s deep gratitude for the help that the Bank has extended to the Philippines in so many ways.
As you all know, we recently emerged from the economic ruin brought about by a predatory dictatorship, whose downfall was attended by a spate of both natural and man-made disasters. That prolonged crisis was considerably eased for us by the Bank’s generous help. It provided the Philippines with an increased level of program support and quick-disbursing facilities, special financing packages and a higher allocation of concessional financing.
The Philippine situation
Today our economy is ready to return to the ways of growth. A stabilization program, begun in 1991, has reversed the macroeconomic imbalances which had sent inflation and interest rates soaring beyond 20 percent.
Inflation here is down to 7.8 percent and lending rates are settling down steadily toward more comfortable levels. Despite the dampening impact of the power crisis and national elections held last year, investment grew more than 10 percent in real terms—exceeding our most optimistic projections.
The external debt problem has been brought down to manageable proportions. International reserves are at an all-time high, and more and more investors are beginning to see the potentials of Philippine investment. New money continued to come in at higher volumes during this first quarter just passed.
Structural reforms have been put in place in many areas. The most recent ones allow the wider entry and participation of foreign investment, and special powers Congress has granted allow me to deal with our electric power problem once and for all. In our energy needs, we have been encouraged by recent discoveries of oil and gas in our western province of Palawan—in quantities apparently sufficient to assure us of substantially reduced dependence on foreign sources.
Several Administration bills of major economic importance are now awaiting enactment by Congress. These include revenue measures to generate additional collection and to plug leakages in the tax system, as well as a bill that strengthens the Central Bank in its tasks of energizing the economy and controlling inflation. And there is a proposed landmark measure to open more widely the Philippine banking industry to foreign participation.
We are at the same time reviewing regulations that deter economic efficiency and business effectiveness. Those rules that have allowed pockets of inefficiency to thrive in transportation, power generation, telecommunications and financial services, among others, shall be removed. And we are contemplating executive measures that will both expand and speed up the privatization program and generally streamline the public sector.
Development with democracy
Outsiders have often remarked on our national obsession with politics—contrasting so sharply with our oligarchic economy. We are trying to reconcile one with the other. And we are doing so—not by discarding our representative system (as well-meaning outsiders advise us)—but by democratizing our economy.
Authoritarianism we have known. For us it failed miserably; and we are still paying its price until now.
Today we are trying to substitute competition for the mercantilist regulations that have governed for centuries the production and distribution of wealth in this country.
True enough, our democracy has its frailties and its excesses. But these can be restrained by the spirit of self-discipline and the culture of competitiveness we seek to instill in our people.
The key to self-discipline and competitiveness, it seems to me, is for people to take part in the vision—and in the practical tasks—of development. Individuals must have a personal stake in development. And that stake must be defined in material and economic terms because we cannot celebrate a democracy of the poor, the hungry, the ignorant and the sickly. No such democracy would endure.
Practical and achievable goals
We aim to establish a democracy of rights, of opportunities, of means and of competitiveness. This ideal is embodied in my Government’s vision of “Philippines 2000.” “Philippines 2000” is a nationwide strategy for Philippine development over the next seven years. In conjunction with our Medium-term Philippine Development Plan for 1993-98, it is meant to set our country on the road to newly industrializing status by the turn of the century. It has practical and achievable objectives within the Plan period, which include raising the per-capita income to US$1,000, achieving a GNP growth rate of 10 percent and reducing the incidence of poverty from more than 50 percent to 30 percent.
Let me emphasize those two words: practical and achievable. We do not expect to achieve economic miracles within seven years. That would be wishful thinking. But by then we shall have put the foundations in place, prepared the structures and the environment—cleared the underbrush and the debris, as it were—for self-sustaining economic growth and development.
And this we have begun to do by formulating a Medium-term Philippine Development Plan for 1993-98, founded on two principles: competitiveness and total human development, or people empowerment. These two major considerations form the policy framework and implementing programs of my Administration.
We have to learn to increase national competitiveness by our own wits and our own energies; but also, we have to develop the capabilities of each Filipino, Filipino household, Filipino company and Filipino community—so that they may compete successfully, and achieve the fullness of their potentials. By this, the dual interests of development and democracy would have been well served.
The reforms now being carried out in the Philippines are also being done—with varying levels of intensity—in many places in Asia. This is a good trend that the Bank would do well to encourage.
As deregulation, liberalization, privatization and democratization proceed, they will spur our productive potentials even more.
Toward freedom
Given increasing economic interdependence and cooperation, growth in one country will generate growth in neighboring economies. And as growth spills over from country to country, yet more Asians will break free from their bondage to poverty.
Reform is never easy. But temporary reverses should not discourage us. Given greater resolve and more persistence, the goal of sustainable development—which not too long ago was just a distant dream for many Asian countries—should be much clearer, must be nearer than we had thought.
That Asia can look forward confidently to the future it owes in large measure to the ADB’s work during its first quarter century. You have much to be proud of—and high standards to keep up—as you begin your second half-century.
Our people are greatly honored to host this meeting, and equally proud that the Philippines has been the birthplace and has always been the headquarters of this noble international institution.
May you have a most successful conference and may you all enjoy your stay with us.