Speech
of
His Excellency Fidel V. Ramos
President of the Philippines
At the First East ASEAN Business Convention and Exhibits

[Delivered at the Central Bank Building, Davao City, Philippines, November 16, 1994]

Growth without borders

THIS GATHERING, which has been long overdue, is really something of a “family reunion.” And ours is a family that can trace its connections back to a thousand years.

Over that time—and as with any family—some of our members have fared better than others.

But here, today, we meet to reaffirm not only our basic ties in the past, but also—and even more significantly—our shared interests and prospects in what is certain to be a prosperous future for all.

The ASEAN spirit

Your very presence in this conference attests to the vitality of the ASEAN spirit.

The East ASEAN Growth Area (EAGA) was a mere concept which I started discussing with the ASEAN heads of government in October 1992, particularly President Soeharto of Indonesia, when we all met in Brunei on the silver jubilee of His Majesty Sultan Hassanal Bolkiah. But such was our belief in the desirability—and workability of the idea—and such were our commitments to making it happen—that, with this convention, the EAGA has now become a practical reality.

While we all have our individual strengths, it makes sense for those of us within a common geographic and cultural zone to use the complementarities of our economies.

In the global markets for the twenty-first century, the countries that will best survive and prosper are those that cooperate with their logical economic partners in achieving synergistic efficiencies among them.

Thus the governments and peoples of ASEAN have a strategic stake in EAGA’s success. And for EAGA to work as a sound economic concept it must be supported by the political commitment of our national leaders, and of our business sectors.

I must commend you—the business leaders of ASEAN—for exerting maximum efforts to achieve this cherished goal.

The business sector has responded in very concrete terms to the EAGA initiative by expanding cross-border investments and intensifying trade in our subregion.

What EAGA is all about

Your several business agreements and partnerships and the launching of a massive resort development project on Samal Island, a pioneer EAGA project involving substantial Malaysian investments, represent what EAGA is all about.

In strengthening our ties, we see Mindanao to be our main bridge to the rest of the region. Our enthusiasm for a growth area in the Philippine South is consistent with our vision of achieving comprehensive and sustained development throughout the Philippines.

As we approach the new century, we have embarked on the great enterprise of transforming the Philippines into a newly industrializing country by the turn of the century. This vision of ours we have called “Philippines 2000.”

Within this vision, we see Mindanao becoming a crucial and dynamic center of growth. Traditionally, Mindanao has been the country’s leading agricultural exporter and a major consumer market.

With the formation of the EAGA, Mindanao can directly expand its trade with a market of 40 million people in the EAGA, and with the rest of the world. We in the National Government will support Mindanao in this effort by providing the infrastructure, incentives and grown-priming policies.

Our experience over the past two years leads us to view with confidence the prospects of Mindanao, the Philippines and EAGA as a whole.

From near-zero economic growth in the early nineties, our economy grew by more than five percent in real GNP over the first half of this year. This more than doubled last year’s growth.

Exports for the first nine months of 1994 are up 18 percent over the record export level of US$11.9 billion that we registered in 1993.

Most important, foreign and domestic investments in the first semester of 1994 have hit US$3.3 billion. This is a 330 percent increase over the same period last year, and by itself is already 144 percent higher than total investments in the whole year of 1993.

On the rebound

Inflation has been brought down to 7.8 percent as of end October. We should bring it down to 7.5 percent by the year-end, and to 5 percent by the end of 1995.

Our debt-service ratio has declined to 18 percent of export earnings, down from 37 percent just a year ago. Last year we re-entered the international capital market and raised US$1.0 billion through a series of Eurobond flotations.

The Philippine stock market has become one of the region’s strongest and most active, with ordinary citizens investing their savings in our most profitable corporations.

These are all clear signs of an economy on the rebound. And financial institutions, economic analysts and independent observers the world over have given the Philippines high marks for achieving this turnaround.

They also noted that the Philippines has finally managed to achieve political stability as the firm foundation for economic growth. I am pleased to tell you that our political leaders have agreed on a consensus for growth—setting aside partisan differences for the national good.

We believe that we can sustain this momentum by sticking to those policies that have been working very well for us.

We are now committed to pursuing a more open and outward-looking economy. We have repudiated protectionism as an economic philosophy that leads only to inefficiency and stagnation.

Instead, we have embraced the challenges of an open global economy. We realize that this will require difficult adjustments in our ways of thinking and doing things. But we also realize that enduring growth in the twenty-first century can only be achieved on these terms.

Thus we look forward to acceding to the GATT Uruguay Round (GATT-UR) agreements in time for the activation of the World Trade Organization in January 1995.

Liberalization for growth

The direction has clearly been toward free trade even before the GATT-UR. Unilaterally, we have pared down a past list of 2,720 items restricted for import by 95 percent to a much shorter list of only 193 protected items.

Liberalization is the central theme of our economic growth.

Over the past two years we have liberalized and deregulated key industries that were long monopolized and cartelized by vested interests. In the telecommunications industry, for instance, we are witnessing unprecedented investments and growth as a result of deregulation. In Mindanao alone, 1993 saw a 27 percent increase in telephone line capacity and the placing of digital interconnection of telephone services in most major urban centers.

Recently, we also opened up and decartelized interisland shipping and insurance and are moving to more deregulation in land and air transportation. More Filipinos now enjoy better and cheaper services because of the resultant competition.

We have passed laws that provide broad opportunities for the private sector to invest in key public infrastructure projects through expanded build-operate-transfer arrangements with Government.

And I am sure it will be of great interest to you to know that the Philippines recently passed very liberal laws on the entry of foreign investments and the long-term lease of land by foreign entities.

Foreigners may now hold 100 percent equity in practically all areas of investments. They may also lease land for as long as 75 years.

We have also privatized dozens of Government assets and corporations or components thereof.

The Philippines, therefore, is fully prepared and very eager to play its part in EAGA.

A borderless economic region

Having come this far, we should now take a look at what may lie ahead for EAGA as a whole in its second, postplanning and operational phase.

The vision that the Philippines would like to share for EAGA phase II is that of a borderless economic region—a zone of free trade in real and concrete terms.

We view the EAGA in the future as a dynamically growing subregion that doesn’t distinguish between domestic and foreign investments and businesses operating within the growth area.

This is the kind of economic complementation we must seek through EAGA. It reflects very much the globalization of business happening in every corner of the world.

A borderless economic region where the movement of goods, services and people is free and unrestricted should dramatically increase trade, tourism and investment.

The open exchange of raw materials, financial capital, technologies and expertise and labor would allow businesses to seek further comparative advantages in order to enhance their competitiveness in the global market.

What we must strive for is an EAGA tariff regime as liberal as possible. Historically, our forefathers had practiced free trade in this area. If it is to the mutual benefit of all parties, I cannot see why we cannot practice it once again in the EAGA. I challenge our businessmen to master these issues and their complications and exploit all possible opportunities.

We should also be prepared to consider the harmonization of customs policies and procedures as another element of a borderless EAGA. Unnecessary tedious customs procedures serve as barriers which can be more taxing than taxes themselves.

In Asia, it is face-to-face interaction that makes business transactions happen. With existing restrictions on the movement of people, we may lose numerous opportunities for increased trade and investment which could have materialized with greater personal interaction within the private sector.

Promoting investments in EAGA

To ease this problem, I recently lifted the collection of travel taxes on Filipino nationals who travel by sea from Mindanao to EAGA destinations. We are currently studying applying the same policy to air travel.

This is a concrete first step, and this unilateral change in policy reflects the seriousness with which the Philippines believes in EAGA.

Together we must eliminate other obstacles to the free movement of people which block the pursuit of opportunities in business, recreation and tourism, employment, education and cultured exchange.

Finally, we must review and harmonize our policies and incentives with respect to foreign investments, particularly those to be based in EAGA.

We must realize that although intra-EAGA ventures will help fuel growth in the area, we must look toward attracting a larger share of the investments headed for Asia from the developed countries and the newly industrializing countries toward EAGA.

Promoting the EAGA as a consolidated area will improve our chances of capturing a larger share of global investments in Asia.

Our combined resources and natural endowments are attractive and still relatively untapped. Together, they can form a formidable package of investment prospects.

It is time to open our shop and put up our sign—“EAGA is open for business, and we welcome all comers.”

The leading role of the private sector

Exactly how good business will be will depend largely on the response of the private sector in terms of concrete initial investments and trade.

To prove to the rest of the world that EAGA works, we shall have to prove this first among ourselves. And here the private sector—with adequate policy support from all our governments—will take the leading role.

This is why this conference is so significant. And this is also why I am extremely optimistic about the prospects of EAGA.

The entrepreneurs of this part of the world have weathered centuries of war and political vicissitudes. Indeed, they have shown the rest of the world that, in the end, what counts among people everywhere is peace and the prosperity that it makes possible.