Speech
of
His Excellency Fidel V. Ramos
President of the Philippines
At the World Economic Forum’s Europe-East Asia Summit on the Occasion of
President Ramos’s Visit to Singapore

Delivered in Singapore, October 13, 1994]

East Asia enters the
zones of peace

I. ECONOMIC INTEGRATION IS MAKING EAST ASIA SAFER

THIS YEAR’S Europe/East Asia Summit takes place in an atmosphere certainly more optimistic than last year’s gathering in Hong Kong.

The signing of the Uruguay Round agreements eases fears of markets closing and regional fortresses rising in the global economy. These fears have been particularly strong in our part of the world—because it is open global markets that have made East Asia grow.

Over this past generation, we have seen how economic growth—together with human development—can make countries not just richer but safer. We have seen how force—which has for so long arbitrated relationships between nations—can give way to the more benign regime of mutual benefit.

In fact, for the richest and most settled portions of the globe—the democracies of Western Europe and the Americas—war has become outmoded as an instrument of competition.

Of course, where there has been little or no growth, and even less development—as in unhappy Africa—”the condition of man” still is “a condition of war of everyone against everyone.”

I would locate East Asia today in the intermediate zone between these “zones of peace” and “zones of turmoil.”

Our peoples have not entirely escaped poverty, the fear of violence or the reach of arbitrary governments. But the vigorous growth and increasing interdependence of our economies enable us to hope the time will soon come when our countries, too, enter the “zones of peace”—when our mutual security will depend no longer on arms and alliances but on peaceful commerce and integration in the East Asian community.

Mass poverty has eased considerably

As it did in the West, sustained economic growth is opening up our political systems. Social equality has released people’s energies for the drive to development. And mass poverty has eased dramatically almost everywhere in the region.

By the World Bank’s estimates, poverty declined from 35 percent to only 10 percent in East Asia overall—despite a 40 percent increase in the region’s population—over the 20 years between 1971 and 1990.

East Asia’s amazing growth is founded on regional stability—which in turn is built on the regionwide emergence of market systems, and the recognition by all our countries of our need for regional peace, if development is to continue.

Growth poles—from Hong Kong-Taiwan and South China; through Singapore-Johore and the Riau Archipelago; to Mindanao-Brunei-Sabah and Sulawesi—are teaching our local peoples the virtues of working together.

And interregional trade now binds our countries all the way from Japan down to Australia.

II. ASEAN A FORCE FOR STABILITY IN EAST ASIA

In this way has the promise of regional peace—which ASEAN, the Association of Southeast Asian Nations, had pursued for 27 years—turned into reality.

As its founders foresaw, ASEAN has become a stabilizing influence most notably in Indochina—and the focal point for security cooperation in East Asia—initially through its Postministerial Conference and, since last July, through its ASEAN Regional Forum.

The ASEAN Regional Forum—ARF for short—is our equivalent of Europe’s Conference on Security and Cooperation. Its 18 members include the European Union and all the other powers interested in the region.

Flexible, informal and consensual, ARF complements our older network of bilateral and subregional security mechanisms in the work of building the architecture for East Asian | security.

And this new security environment we conceptualize in positive terms. We think in terms not of deterrence but of mutual reassurance—not of “containment” but of “constructive engagement.”

Our object is to draw every regional power into the web of collaboration that shapes our common interests, reinforces our common values and regulates our common behavior.

Unifying Southeast Asia

Ultimately, of course, Southeast Asia’s stability will depend on how we manage our collective affairs. And the harsh reality is that, separately, the ten Southeast Asian countries cannot stand up to the intense competition of the emerging global economy, and the multipolar Realpolitik that might yet replace the relatively simple power-configuration of the Cold War period.

Unification alone will give our countries the economic weight, the internal market, the cultural variety and the talent pool they need to become major players in the future world.

As we know, international trade becomes genuinely equitable only when both sides can enforce “reciprocity”—a roughly equal access to each other’s markets and productive capacity. Separately, our countries cannot hope to be strong enough to do so—whether against Japan, the United States, the European Union or even China.

A building block of the global community

Unification will also strengthen Southeast Asia as a whole against strategic uncertainties—particularly since the relationships among the big powers with interests in East Asia are still evolving in ways difficult to predict.

Unification will prevent our countries from once again becoming pawns in the politics of the great powers—as our countries were, during the colonial period.

ASEAN is the obvious core of such a unified Southeast Asia; and unification can begin with Cambodia and Myanmar acceding—as Vietnam and Laos have already done—to the 1976 Bali Treaty, which is ASEAN’s informal constitution.

Regionalism of this kind—in which clusters of contiguous states interact primarily—but not exclusively—with one another may well become the framework of the future world.

We in the Philippines see a unified Southeast Asia not as a closed subsystem but as a building block of the global community. We also realize that while unification may be inevitable, it will still take all the political will, all the collective sense of purpose and all the idealism of our leaders.

III. THE PHILIPPINES—DEVELOPING AS A DEMOCRACY

Meanwhile we see our task at home as that of putting our house in order and restoring our economy to the path of growth—so that we can once again pull our weight in regional cooperation, and account for ourselves in the world.

We in the Philippines were left behind East Asia’s growth because we mistakenly tried to protect our industries from foreign competition.

We mistakenly equated political nationalism with economic self-sufficiency.

Now we recognize we must join the global economy—and not shy away from it. We realize we must take an active part in the vigorous life of the East Asian community.

We started by removing the barriers—erected over the last 40 years—against foreign investment and multinational industry. We have pared down our list of 2,720 trade items once restricted—either through tariffs or quotas—to only 183.

We have also begun to liberalize—and simplify—our investment rules and procedures. You may now hold 100 percent equity in all but a very small list of exceptions. You may even lease private land for as long as 75 years.

Foreign exchange we have made freely convertible, and remittances of profits or capital unrestricted. And our accession to the Multilateral Investment Guarantee Agency covers you against all political and noncommercial risks.

BOT projects in infrastructure

In infrastructure, we have initially identified 82 priority projects—worth altogether some US$8.6 billion—that we are inviting private investors to take up, under our new Build-Operate-and-Transfer Law.

They include power, transport and industrial facilities; roads, railways, telecommunications, water systems, industrial estates, tourism projects. The British Airport Authority has already offered to build a BOT terminal for Manila, costing $300 million and accommodating eight million passengers a year.

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 former American naval and air bases of Subic and Clark; and the five provinces immediately south of Metro Manila.

Our work people are adaptable and quick to learn. 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 1992-93. But you wouldn’t have to worry about it. We installed almost 1,000 megawatts of new capacity last year; and we’re adding another 840 megawatts this year. In six more years, we shall have installed a total 20,000 megawatts of new generating capacity.

An economy on the move

Already these first structural reforms are paying off. We expect GNP to grow by 5 percent—more than double that of last year. This kind of growth is modest only by East Asian standards. And our economy’s growth has strong foundations.

Over January to June, for example, new investments rose 330 percent in peso terms, and approvals by our Board of Investments 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 country. For instance, Philips Electronics—which has been with us since 1984—is investing 850 million pesos to expand its semiconductor plant in suburban Manila.

Our stock exchange ranked third on the International Finance Corporation’s list of the 25 best developing-country exchanges for 1993.

The inflow of outside funds has in fact been so large it threatens our efforts to stem inflation. 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.

We should bring inflation down to 7.5 percent by the year-end, and to 5 percent next year.

This year our debt-service ratio should decline from 37 percent of export earnings ten years ago to 18.3 percent-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 nearly US$900 million.

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 issue.

Lingering questions about the Philippines

The Philippines today is virtually a nation reborn. But over these past 48 years since Independence, our country has had so many ups and downs that we Filipinos can easily understand how outsiders can have lingering doubts about the permanence—and the ultimate effectiveness—of our present-day reforms.

Is Philippine political stability the temporary result of the accidental election to the Presidency of a military man? Will stability disappear with Ramos when Ramos goes?

Have the competing interest groups which once dominated the Philippine State been sufficiently tamed for foreign investors to be able to depend on Government’s word once it is given?

My answer would be that there has been a profound change in my country in recent times—a profound change forced on us by our protracted social crisis.

The prospect of being hanged in a fortnight is said to concentrate the mind wonderfully. I can tell you: so does the prospect of being left behind by all your neighbors—on the road to prosperity.

Our time of troubles has convinced us we must change our accustomed ways in the economy and in national politics.

It is true economic policy once depended on which political faction was dominant in Government. Our remedv has been to level the playing field of enterprise—by dismantling the cartels and monopolies from which the political factions draw their power.

Dismantling monopolies and cartels

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

Now we have five new cellular networks and 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 wide-open fixed-lines market.

Recently we also deregulated banking—which has been closed to foreigners since 1948. From Europe, Deutsche Bank, AMRO, Indosuez, and ING Bank have asked to come in.

We have also opened up interisland shipping, insurance and the cement industry; and we are starting on the cartel in agribusiness.

How can we be sure our reforms will take hold?

A new middle class the motive force of reform

Our reforms are taking hold because they result from a new spirit of cooperation between the legislature and the Presidency. But the motive force for our new politics is a modem middle class that has grown up outside the old patronage system.

Eight years ago this new middle class—of business people, professionals, office workers and university students—made a peaceful revolution which inspired oppressed peoples all over the world to stand up for their civil liberties.

Now it is reshaping the cast of national politics.

Politically, we have stopped defining democracy in terms of checks and balances between the three branches of government. We now define it in terms of shared political power, exercised in concert.

My party has just entered into a European-style coalition with the main opposition party. The coalition should enable us to depoliticize reform measures aimed at opening the economy to competition.

You can be sure we will accede to the Uruguay Round agreements well in time for the World Trade Organization in January.

We have also made social reform the centerpiece of Governments agenda—so that we can pull out the root causes of our endemic political instability.

And I am dedicating the three years and a half that remain of my term to raising the political capacity of the Philippine State—so that it can have a central role in organizing the full modernization of national society.

Developing as a democracy

What we have set out to do—to develop as a democracy—goes 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 myself believe political democracy, social discipline and sustained development are not necessarily incompatible.

We in the Philippines have no illusions about the hardships that 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 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. It means coping with dissent, delays, filibusters—sacrificing instant gratification in exchange for deliberate speed and dialogue.

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 hand, we must also ensure those steps are not too short, too tentative, 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 did not collapse in a vacuum. All over the world, authoritarian and statist 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 worldwide movement—through their “People Power” Revolution of 1986.

IV. ALL OF EAST ASIA ONE GREAT GROWTH AREA

There are those who say Asia is not going to be civilized after the methods of the West—that Asians will prefer to be ruled by authoritarians who make the economy grow rather than by democrats who can’t say “no” to special interests.

But this kind of cultural relativism is being refuted by middle-class activism from Beijing to Yangon. Everywhere in East Asia, people are giving up their tranquility—and sometimes staking their liberty—in the belief that there is something more to life than an unending spiral of individual gratification.

I tend to agree with the political economist Francis Fukuyama, who believes that “as society becomes richer and more secure, people become free to seek nonmaterial goals like recognition of their status and political participation.”

Will East Asia soon outproduce the West?

Right now East Asia is apparently growing at such a pace its output will exceed that of both North America and the European Union early in the new century. Even if this prognosis turns out to be exaggerated, you still cannot afford to be isolated from what should continue to be the world’s fastest-growing region over the next 20-30 years.

ASEAN will make you a fine gateway to East Asia—not only for your trade and your investment but for your diplomacy because its countries are for historical reasons the most familiar to you from Britain, the Netherlands, France, Portugal and Spain.

Through the ASEAN Postministerial Conference and the ASEAN Regional Forum, the European Union can influence the political and security environment of East Asia.

In recent years European businessmen have been turned relatively inward—and for good reason: they have been consolidating their rich markets within the European Union. But, in the process, they have defaulted to the Japanese and the Americans in establishing themselves in East Asia.

Because three legs on a stool are more stable than two, we are as eager to have you come into East Asia—into ASEAN—as we hope you yourselves are.

Increasing pace of economic integration

Over these next few years, regional economic integration should speed up East Asia’s growth even more.

I expect the 18 APEC leaders to make the political decision to start freer trade in the Asia-Pacific region at the Leaders’ Summit in Jakarta this November.

We have also accelerated the time frame for our countries to realize AFTA—the ASEAN Free Trade Area—from 15 years to 10. The key to economic integration—the reduction of tariff schedules within our countries—will now be completed in the year 2003 instead of 2008.

V. LET US BE COOPERATIVE, NOT JUDGMENTAL

Let me say, in closing, that beyond trade and investment, there is a reservoir of admiration for Europe among us—not only for your splendid culture but also for your technology, your economic power and the way you have softened individual enterprise with compassionate social values—in a kind of communitarian capitalism so similar to the family- and clan-based capitalism of East Asia.

In a word, there is a tremendous potential for a fruitful association between our two regions—if we can keep down the mistrust; the misplaced fears; the all-too-human tendency to preach and to judge, which always characterize the initial encounters between peoples of different cultures.

The managers of the World Economic Forum certainly deserve our gratitude for bringing us all together across the Western Hemisphere, in this companionable atmosphere, to talk about our prospects together.

Professor Schwab—let me invite you to consider the Philippines your Summit site sometime soon—so that we can return some of your gracious hospitality here this morning.

Finally—thank you very much for asking me here: and I wish you all a pleasant and fruitful meeting.