INTRODUCTION
These days, I am known as my country’s top salesman. I am not, however, the Philippines number one tourist! But I did reach this stage without some help. One of the most invaluable is the support provided by Filipino business organizations like the Makati Business Club.
CROSSROADS OF CULTURES AND COMMERCE
The Philippines — which straddles the strategic sea lanes of the Western Pacific, the South China Sea and the Indian Ocean, and which was once the crossroads of European, Asian and American cultures — is finally living up to the logic of its geography and history. Today it is a crossroads of trade and business in the world’s most dynamic region — East Asia.

We remain, to be sure, the only predominantly Christian country in this part of the world, attuned as much to western as to Asian values. And we retain the key characteristics of a market economy and political democracy.

What is new is that democracy is now working effectively in my country for a change. Peace and stability have been fully returned. The economy is again on the road to growth. And our people, once highly factionalized, are finally learning to work as a national team.
STRATEGY FOR DEVELOPMENT
The key, if I may simplify our story during the past two years and four months, has been patient and persistent reform and redirection of national energies.

We have adopted a program we call “Philippines 2000!!!” — a strategy for development that should place our country on the road to newly industrializing status in six years’ time.

Already these initial structural reforms are paying off. We expect GNP in 1994 to grow by at least 5% — more than double that of last year. This kind of growth is modest only by East Asia’s dynamic standards. And our economy’s growth has strong foundations, being investment- and export-led.

Over January to June 1994, for example, new investments rose 330% in peso terms, and approvals by our Board of Investments (BOI) multiplied four and a half times what they were over the same time last year.

And much of the new investment comes from multinationals already in the Philippines. For instance, Philips Electronics — which has been with us since 1984 — is investing 850 million pesos to expand its semiconductor plant in suburban Manila.

With a performance of 153%, the Philippine Stock Exchange ranked third in the International Finance Corporation’s list of the 25 best developing-country exchanges for 1993, next only to Turkey and Brazil.

The Asian Investment Research Publication, in its “Asian Outlook” issue of September 15, 1994, indicates that the Philippines tops the 1994 year-end forecast of the equity markets at 25.5%, ahead of 8 other Asian countries, with the comment that “… Fundamental structural improvements are showing through in both the Philippines and Indonesia, where the markets are relatively illiquid but with attractive long-term opportunities particularly the Philippines….”

The inflow of outside funds has in fact been so large that it threatens our efforts to normalize the value of the Philippine peso which has gained significantly in terms of the US dollar over the last 12 months. But it does feel good to be having problems of this kind for a change — instead of the problems of scarcity we have been accustomed to.

Inflation has been brought down to 8.6% as of last September, and we should bring it down to 7.5% by year-end, and to 5% by end 1995.

This year our debt-service ratio has declined to 18% of export earnings down from 37% ten years ago, which ratio is lower than that of any Latin-American country. Last year, we re-entered the capital markets — after 12 years out in the cold — with a series of Eurobonds that raised some us$1.0 billion.

Last month — on a working visit to Italy, Spain, France, Belgium, and Germany — my delegation closed 23 business agreements worth US$5.7 billion. Subsequently, a US$115 million Eurobond issue by our largest conglomerate — San Miguel Corporation — got the best rate ever given to any Philippine company.

All these are evidence of renewed confidence in the Philippines on the part of our friends and neighbors.

Some of you will perhaps wonder whether all this is just the familiar spin in a sales talk. I would urge you to consider carefully the verdict of many of the world’s financial and investment houses. All of them so far as i know — Salomon Brothers, Barclays, Merrill Lynch, the Financial Times among others — have been very positive about developments in the Philippines today.

But you need not take my word or their word for it. To really assess our country’s attractiveness as an investment site, you must come to the Philippines and see for yourselves.
THE BUSINESS ENVIRONMENT
Overall, we have built an entirely new business environment where the investor can do business with the minimum of interference from the government and a guarantee of the security of business contract.

We believe wholly in a market economy and privatization. Government’s role is well defined:

It is, first, to provide a rule of law, which among other things means a level playing field for competition.

Second, government must pursue sound macro-economic policies designed to ensure the soundness of the currency and the stability of prices.

And finally, it is to provide the physical infrastructure for the economy — without which private industry cannot do its work. We have begun the modernization of our telecommunications, power, roads, ports and airports, and transport.

I would remind you of our country’s biggest asset — our people. Our industrial work-people are well educated, easily trainable, hard-working. Filipinos value the opportunity to work: last year we had only 68 strikes all over the country.
INVESTORS’ RIGHTS AND OPPORTUNITIES
You are perhaps wondering: will our rights as investors be protected? Can we take our profits home?

Our accession to the Multilateral Investment Guarantee Agency (MIGA) of the World Bank guarantees you coverage for all political and non-commercial risks.

And we have lifted all foreign-exchange controls that had been in place for 40 years. We have also set up an independent central monetary authority to manage the fiscal system. As a result, interest rates are down to their lowest level since the late 1970s; and inflation is down to 8.6%.

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

We are also continuing to liberalize our investment rules and simplify our procedures. You may now invest in manufacturing or wholesale trading and own 100% of the equity — in all but a very small list of exceptions. You may even lease private land for as long as 75 years.
B-O-T PROJECTS AND EXPORT/INDUSTRIAL ZONES
In infrastructure, we have initially identified some 82 priority or “flagship” projects — worth altogether some us$9.0 billion — that we are inviting private investors to take up, under our new, expanded Build-Operate-and-Transfer (B-O-T) Law.

They include electric power, transport, industrial estates and facilities, roads, railways, telecommunications, water systems, tourism projects and other public utilities.

For multinationals locating in our country, we have set up 40 industrial estates and export zones all over our archipelago. The principal ones are the five provinces immediately south of Metro Manila or Calabarzon; the former American naval and air bases at Subic and Clark; Cebu (otherwise known as Ce-boom); the Davao-South Cotabato Corridor; and the Northern Mindanao Growth Center.

Our workforce of some 26 million are adaptable, quick to learn and are management-oriented. In education, we have the highest enrollment rate in ASEAN. Close to three-fourths of all our young people of the right age are in secondary school, and close to a third are in colleges and universities.

You may have heard about our electric power crisis of 1991-1993. But you would not have to worry about that now because we have solved it. Over the last 18 months, we installed 1,000 megawatts of new capacity, and we are adding another 900 megawatts this year. In six more years, we shall have installed a total 20,000 megawatts of new generating capacity.

We started out by breaking up the notorious telecommunications monopoly — of which it was memorably said (by Senior Minister Lee Kuan Yew) that 98% of Filipinos are waiting for the installation of telephones and the remaining 2% are waiting for dial tones.

Now we have five new cellular networks and other big players — among them America’s AT&T, Bell Atlantic, and Nynex; Japan’s Nippon Telegraph and Telephone; Thailand’s Telecom Asia; Hong Kong’s First Pacific; and Singapore Telecom — coming into the fully-liberalized fixed-lines market.

Recently we also opened up the banking industry — which has been closed to foreigners since 1948. From Europe, Deutsche Bank, AMRO/ABN, Indosuez, Santander, and ING Bank have asked to come in. So with the likes of Japan’s Fuji Bank and others of that category which are within the top 150 banks of the world.

We have also opened up inter-island shipping, insurance and the cement industry; and we are starting to dismantle the cartels in agri-business and others which are injurious to public welfare.

And we are privatizing the last state assets — liquefied petroleum gas; palm oil and palm-kernel plantations; and a phosphate fertilizer corporation that supplies both the national and the Asian market. Just recently, a Malaysian conglomerate won the bidding for the state-owned National Steel Corporation.
EAST ASIAN BASE
Without question, the Philippines is benefiting from many salutary developments in Asia. The solidarity and growth of our Association of Southeast Asian Nations have aided our bid for modernization. And so have our excellent relations with east Asian neighbors like Japan, South Korea and China.

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

On my initiative, ASEAN is now organizing a new growth area made up of Borneo, Brunei, the Indonesian Spice Islands, and our own southern islands of Mindanao and Sulu.

Not just Southeast Asia but the whole of East Asia is coalescing into one great economic unit. Already it accounts for 30% 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 also have a home-consumer base that understands and accepts European products and marketing styles.
FIRST WORLD, THIRD WORLD
You would think that this demonstration of economic vigor by our countries would be met with encouragement and enthusiasm by Europe and the United States, which once sought to bring us into the modern world.

But ironically, some are greeting this instead with fear — that our growth will be at their expense. In the United States, Ross Perot talks about “the giant sucking sound” of jobs being taken away. In France, no less than the Nobel laureate for economics, Maurice Allais, has raised the alarm about “the insidious effects of free trade”.

This is a pity because it is misguided. And because the West can help itself by helping us.

As “The Economist” has noted in a recent survey of the global economy: “fears that the third world will steal output and jobs are based on the mistaken belief that any increase in one country’s output must be at the expense of another’s. A second’s thought should show that this is a fallacy. Increased exports give developing countries more money to spend on imports. Most developing countries spend all the foreign exchange they can lay their hands on, to buy imports of capital equipment and branded consumer goods — mainly from developed economies. An increase in output in a poor country is more likely to increase than to reduce output in rich countries. Trade is never a zero-sum game.”

Fortunately, there are businessmen in the west like you in this community who see this clearly. You do not fret over our growing success, but rather welcome it — because our success means also business opportunities.
DEVELOPING AS A DEMOCRACY
What we have set out to do — to develop economically and socially as a democracy — may go against the grain of the conventional wisdom in East Asia. And it is true that, in our part of the world, authoritarian governments have brought unprecedented growth to East Asian economies.

But I do believe political democracy, social discipline, and sustained development are neither necessarily incompatible nor mutually exclusive.

We in the Philippines have no illusions about the hardships that still lie ahead of us. We accept as given both the shortcomings of our democracy as practiced, and the ordinary Filipino’s attachment to the democratic ideal.

Experience has taught us we cannot safely dismantle our constitutional institutions and guarantees — even for the briefest period — because suspending these mechanisms makes public administration no more efficient, but only more arbitrary.

We accept that developing as a democracy means reconciling interest groups and broadening consensus towards a shared vision. It means coping with dissent, delays, filibusters — sacrificing instant gratification in exchange for deliberate speed and dialogue — in the search for solutions to our problems.

Developing as a democracy also means balancing reform between two extremes. On the one hand, we need to ensure the steps we take do not go beyond constitutional and legal limits. And, on the other, we must also ensure those steps are not too short, too tentative, or too timid so as to exhaust people’s patience and trust in the process of reform itself.

Reform will be difficult, but it is the only way to go. Authoritarianism is a receding tide we Filipinos cannot ride to development — even if we wanted to.

Communism in Europe did not collapse in a vacuum. All over the world, authoritarian and personalistic systems are being dismantled by peoples who have awakened to their political entitlements. And ordinary Filipinos can never forget they were at the vanguard of this world-wide movement — through their “People Power” Revolution of February 1986.
CLOSING
What I can only tell you now is that democracy is working in the Philippines, that our market economy has never been more dynamic than it is today, and that your help and participation are most welcome.

And if you like the idea of doing business in a country whose culture and politics evolved from your own, then that is our good fortune and our comparative advantage. Come to the Philippines and take a look — it could be to your advantage too.

Thank you and good afternoon.