Speech
of
His Excellency Fidel V. Ramos
President of the Philippines
On Ulat sa Bayan
[Delivered in Malacañang, Manila, January 6, 1998]
The spirit of
independence
I SPEAK TO YOU at a historic time of commemoration for our country—but in a period of uncertainty for Asia and the world. This year, we mark the first centennial of our proclamation of independence in Kawit, Cavite, on June 12, 1898. For this event, we have long prepared ourselves—for celebrating and remembering the people, the places and the events on our road to nationhood.
A time of testing
This year also—on May 11—we will hold our last elections in this century, and on June 30 a new President, a new Congress and a new set of local executives will take over the duties of office throughout this archipelago.
These events by themselves should suffice to engage our attention, but a shadow has fallen upon the scene that has brought uncertainty to our region and the world. For six months now, nearly all of Asia has been in the grip of financial turmoil: as currencies and stock prices have dropped to levels unknown in a quarter century. And we ourselves—our currency, our stock market and our hard-earned incomes—have been caught in this loop of decline.
The turmoil remains even with the advent of the new year. In this situation, clearly our best policy is to look the crisis in the eye—to know where we really stand, and then to take all measures necessary to surmount it. It will profit us nothing to lull ourselves into a false sense of optimism. But neither should we give in to panic and pessimism—which will only delay our recovery and put us in further difficulties.
The crisis in perspective
The first thing that must be said is that this period of uncertainty constitutes no reversal of the gains we have made over the past five and a half years, or a failure of our growth strategy and program of governance. Our country is a victim—not an author—of the storm now engulfing Asia. Although at home we have been resolute and diligent in carrying out the reforms necessary to build a strong economic edifice, we have been hit by the gales of crisis just the same.
The currency crisis in Asia underscores the lack of transparency and supervision in financial systems of many of our neighbor economies. Following market deregulation and the rising flow of foreign capital into the region, a disproportionate share of capital went into speculative investments and unsound real-estate projects in many countries. When property markets weakened and currencies depreciated last year, banks were hit by both nonperforming loans and massive dollar debts.
Across Asia we see the spectacle of banks and other financial institutions buried in bankruptcy and forced to close. But, here in our country, it merits repeating that no financial institution has been closed down. Although some enterprises have had to retrench and some projects had to be abandoned, our financial system remains sound and stable.
Moreover, most of the medicine now being prescribed to end the crisis is precisely what we have zealously and effectively put in place in our country after the long years of dictatorship—transparency in finance and economic affairs; safeguards against crony capitalism and other practices injurious to a market economy; and the institution of democracy and the rule of law.
The cure can work
The Asian Wall Street Journal of December 23, 1997, asserted that “to judge by the health of the IMF’s oldest Asian patient, the Philippines, the answer is that the cure can work, at least in some countries and under certain conditions. . . . but the IMF’s cure set in over time in the Philippines and played a major part in pushing the nation away from the crony capitalism of the late dictator Ferdinand E. Marcos and toward a vibrant free market. The fund also is credited with helping the Philippines avoid economic excesses that have toppled neighboring economies.”
In fact, the global financial prescription adopted to reverse the downspin is based on what is now well known as the “Manila Framework,” which calls for internal reforms within the severely affected economies and tighter cooperation worldwide.
Many of us will rightly wonder why—given our record of good housekeeping and sound fundamentals—our peso has lost 40 percent of its value and shared the travail of other Asian currencies.
Shaky investor confidence
One simple answer is that we too are vulnerable to the nervous flight of investor confidence from the region. As The Economist of London has noted, in a time of financial panic, fundamentals become momentarily irrelevant.
Another explanation is that in the face of competitive devaluations in the region, our currency cannot afford to stand still—because it would lead to our exports being priced out of the world market.
This is the painful lesson brought home to us by Asia’s present troubles.
Amid our distress, however, there is a silver lining. When the turmoil settles down—as we believe it will in 1998—our record of good housekeeping and strong economic fundamentals should serve us well. Our recovery will be steady and sure.
On this prospect, foreign financial institutions and analysts share the reading of our own managers and economies. To cite a few:
- A ranking of nine key Asian economies published in The International Herald Tribune on September 17 last year placed the Philippines as the fifth best economy in the region—next to China, Hong Kong, Singapore and Japan. The ranking assessed “their prospects of overcoming the turmoil; grappling with loan losses in financial and property sectors, and recovering or maintaining their economic growth potential.”
- In its latest economic outlook “Asianomic infofax,” Credit Lyonnais Securities Asia observed that the Philippines “remains our firm bet . . . as the country most likely to emerge from the current difficulties in Southeast Asia intact and with an even brighter future ahead.”
- The American Express Bank in October last year observed that among the world’s rapidly modernizing countries, the Philippines has grown the fastest.
- The Economic Freedom Network—a consortium of 47 research institutions worldwide—ranked the Philippines as the tenth freest economy in the world—owing to its recent economic policy reforms and trade liberalization moves. The ranking is an improvement from the country’s 25th position from 1990 to 1995.
- And, in an article entitled “Last Laugh for the Philippines” and published last December 11, The New York Times noted that the “onetime joke economy [the Philippines] has avoided much of Asia’s turmoil . . . avoiding the more damaging banking and real-estate chaos that has afflicted countries in East Asia.”
In sum, there is widely shared confidence—here and abroad—that our financial woes are temporary, manageable and fully surmountable; and that we can turn the situation into an opportunity for further growth and expansion.
And this setback serves only to highlight the importance of completing our program of reforms and of reinforcing the foundations of our economy. If we move boldly now, we can ensure that our economy will be better positioned to grow and to compete once the turmoil is over.
Highlights of economic performance
A review of our economic performance underscores this positive assessment of the economy—and why we have avoided the overheating that has built up in other parts of East Asia.
- The Asian financial turmoil notwithstanding, our economy continued to grow. Our gross national product grew by 6.0 percent in real terms for the first three quarters of 1997 compared with the same period in 1996.
- Output here at home, as measured by the gross domestic product, grew by 5.2 percent in real terms over the first three quarters of 1997, led by the services sector with a strong 6.1 percent growth.
- In spite of the initial effects of El Niño on rice and sugar production during the third quarter, the agriculture, fishery and forestry sections grew by 2.7 percent during the first three quarters. The gross value of agricultural production, at constant prices, reached P127.7 billion, compared with P124. 2 billion posted in 1996.
- Overall industrial growth remained robust at 5.6 percent. Construction led overall industry growth with a 15.2 percent expansion for the first three quarters of the last year, despite the currency turmoil. Manufacturing and utilities both grew at 4.1 percent and 4.9 percent, while mining output declined by 5.9 percent.
- Our merchandise exports grew by 23 percent during the first three quarters of 1997, second only to China’s in our region, and surpassing our average of 16-to-18 percent export growth over the past four years. Over the period from January to September, we also reduced our trade deficit by 6.4 percent. As a consequence, our debt-service payments are down to 12 percent of total exports; our credit ratings have remained stable.
- While we may not reach the record budget surpluses of the past four years after almost 20 years of deficit, the completion of the Comprehensive Tax Reform Program through the enactment of R.A. 8424 last December 11th signifies that, despite the present fiscal difficulties, our fiscal position will be more sustainable in the long run. With efforts to maximize fiscal savings by increasing tax revenues, cutting expenditures and by a determined effort to improve our national savings rate, our outlook for 1998 is cautiously optimistic. We hope to achieve a respectable budget surplus by the year-end 1997.
- As the country least affected by the currency turmoil, the Philippines has remained high in investor confidence. Investments generated by the country’s four investment generating agencies—the Board of Investments, the Philippine Economic Zone Authority (PEZA), the Subic Bay Metropolitan Authority and Clark Development Corporation—dramatically increased by more than four times—from P144 billion during the first nine months of 1996 to P613 billion during the same period in 1997.
- Tourism sustained its strong performance in 1997 and remained one of the country’s fastest growing sectors. For the first 10 months of 1997, visitor arrivals reached 1.7 million, representing a 9.7 percent increase over the 1.6 million registered during the same period in 1996. When the figures are fully in, we should comfortably achieve, for the first time ever, more than 2 million foreign tourists for the entire year.
- Countryside development has grown tremendously with easier access to credit made available to small and medium enterprises. P120 billion, or 12 percent of the total loan portfolio of commercial rural and savings banks, has been lent to our small-business people and cooperatives over the past five and a half years. Opportunities for spreading the benefits of growth have been created by the opening up of 65 growth centers throughout our 16 administrative regions under the PEZA law.
- With respect to inflation—which arouses anxiety among our people—the depreciation of our currency and the subsequent rise in interest rates have had only mild effects on prices of basic goods and services. The average monthly inflation rate for all of 1997 reached only 5.1 percent compared with 8.4 percent in 1996. This was well below the targeted range of 6.0 to 6.5 percent.
Our banking system is stable
This was brought about by our decisive fiscal and monetary policy responses to global challenges; our timely interventions in the El Niño problem; the development of critical infrastructure which improved agricultural supply and pricing; and the continuous monitoring of market price movements of basic commodities to check against unscrupulous traders.
I can report to you that our banking system is stable and well supervised by the completely autonomous Bangko Sentral ng Pilipinas. Morgan Stanley rates Philippine banks as “above average” and in the league of Hong Kong and Singapore, and their lending to property developers, at less than 18 percent average, is much smaller than elsewhere in the region.
Transparency of our financial system
The transparency that many look for among some of our neighbors is a well-established fact in our financial system. If we have adopted tight measures as a response to the crisis, their object is to remove disruptions and quell speculation in the market. This way we can restore order, ensure market discipline and reestablish stability and balance for long-term benefits to the economy.
The upside to this is that we can tap more funds and have more options for trade and growth. The downside—as we East Asians have discovered to our sorrow—is that the freer flow opens us to international market risks and cross border flows that can threaten stability and gains in our economy.
That our own economy went through a very difficult time in the eighties has helped in the long term. We learned our lessons well from the painful bout with crony excesses and protectionist policies. We applied the lessons with firm conviction in doing what is right—and what is good for the longer term.
Our position amid the regionwide turmoil vindicates the economic reforms we have launched and the growth strategy we have pursued. We must not swerve from this path, but it is plain that we cannot just stand smugly satisfied with what we have already done. Further reforms are in order and we must now embark on a resolute effort at institutional strengthening.
Challenges to our democracy
We have coped with the economic crisis positively, just as we firmly tackled other critical issues affecting our people.
We faced the challenges to our political system with the use of democratic institutions and processes. We addressed the debate on constitutional amendments through a series of nationwide consultations and dialogues, and allowed our people the full freedom to express themselves and be involved on matters affecting their lives. We conducted problem-solving sessions at the field through 18 regional Cabinet meetings during 1997. And we brought Government even closer to the people through 69 presidential visits all over the country, or an average of one every five days.
We sustained the implementation of our peace agreements with the Moro National Liberation Front and the military rebels, just as we scored gains in the negotiations with the Moro Islamic Liberation Front, and maintained open lines of communication with the Communist Party of the Philippines, New People’s Army and National Democratic Front.
We responded swiftly to the increasing public outcry over the resurgence of kidnappings and drug trafficking by stepping up our law-enforcement operations and enhancing the role of the Presidential Anticrime Commission against crime syndicates and drug lords. We sought the closer integration of the five pillars of the criminal justice system to keep our people’s confidence in the rule of law by putting behind bars even some of the rich and the powerful.
The successful conduct of the 1997 barangay elections showed once more our capacity to choose our leaders in a democratic, peaceful and orderly manner—a desired quality we will prove anew this coming May.
The other priority programs
We accelerated our efforts to expand and upgrade our infrastructure and energy facilities.
Last year, we completed the construction and upgrading of 3,855 kilometers of national roads and 34,302 lineal meters of bridges. We revived the Pasig River transport service to promote the use of inland waterways as an alternative mode of transportation. We have upgraded our civil aviation safety systems to meet international standards.
With the inauguration of the Leyte-Cebu Power Cable Interconnection last November, we started the interlinking of the major island grids which will allow the pooling of system reserves and the shifting of power in areas where it is deficient. Not only have we increased the country’s energy output to 11,500 megawatts from a mere 6,950 megawatts in 1992, but we have also tapped indigenous sources of energy, such as gas, geothermal, coal and hydro to reduce our dependence on oil-based power plants. We have already launched ocean, wind and solar projects as alternative sources of energy.
We vigorously carried out programs and projects to protect our environment and conserve our natural resources. We are protecting and rehabilitating such critical areas as Boracay Island and the Ifugao Rice Terraces and we are cleaning our bodies of water, such as Laguna de Bay, Taal Lake and Lake Lanao.
Expanding global linkages
We continue to streamline our bureaucracy to have it manned by a fit, productive and creative manpower. We have adopted the widespread use of telecommunications and information technology to improve public service delivery and reduce processing time in government offices.
On the international scene, we expanded our global linkages by building and strengthening partnerships and developing new ones with countries that no Philippine head of state had ever visited. I was happy to receive in 1997 the heads of state or government and other high dignitaries from a dozen countries around the world. The goodwill thus mutually generated will stand us in good stead in the years to come.
We pressed for cooperation within the international community in addressing new and urgent global issues, such as international terrorism and other transnational crimes, especially the illicit global trade in dangerous drugs and the illegal traffic in and criminal exploitation of women and children.
To equitably share the fruits of our development efforts, we sustained the implementation of the Social Reform Agenda by expanding access to quality basic services and facilities, such as shelter, employment, education, health, water and nutrition.
We passed the National Antipoverty Act to institutionalize the mechanisms for capability building and antipoverty interventions, especially for generating livelihood and jobs. We enacted two other landmark propoor laws—decriminalizing squatting and precluding overseas Filipino workers from being subjected to double income taxation.
In line with our special focus on the rights of the marginalized sectors, we approved into law the Ancestral Domains Act (R.A. 8371), which established mechanisms that will guarantee the realization of the indigenous people’s rights, customs and traditions, as well as protect their claim to ancestral domain.
Along this principle of self-determination, we enacted an improved Cordillera Autonomy Law (R.A. 8438).
Innovations in governance
We were able to achieve all of these because we sought and received the cooperation and counsel of the various sectors of our society. At the same time, we introduced innovations in governance that not only bring the Government closer to our people—thus further empowering them—but also encourage their participation in community decision-making to shape their own future and quality of life.
To ensure our harmonious working relationship with Congress, we created the Legislative-Executive Development Advisory Council in whose meetings we pushed for our common legislative agenda. Between July 1992 and end December 1997, Congress passed—and I approved—175 laws of national significance concerning reforms in the economy (67); in social development (66); and in our political, judicial and electoral institutions (42). Since reforms have been institutionalized in legislative enactments, this ensures the stability and continuity of policies even beyond the Ramos Administration.
Feeling the popular pulse
To ensure that our proposed solutions to problems were attuned to the aspirations of our people, we tapped the participation of the various sectors of society in the drafting and adoption of key development thrusts through various consultations, workshops and summits.
Then there is the matter of my conducting personal visits to our provinces, cities, municipalities and barangays. I have often been criticized for my foreign trips, notwithstanding the urgency of the missions I carried out, but only a few have reported on how often I visited the countryside, even on weekends and holidays. In all of the past five and a half years, I made more than 600 provincial trips, far more than that of any previous administration, bringing Government closer to the people, feeling their pulse, knowing their concerns and solving them right there and then, as well as fast-tracking projects by reducing or removing their bottlenecks.
The gloom that now pervades the Asian scene does not necessarily mean that the Asian economic miracle is over, as some Western analysts have lately been saying. East Asia has overcome far more serious challenges—and will do so again.
Even Paul Krugman—the economist who is credited with questioning the Asian miracle as early as 1994—noted last week in the newspaper U.S.A. Today that “Asia’s growth was real and will resume.” For the Philippines, it is just a matter of time, of good management and of resolute leadership.
The World Bank has forecast an average of GDP growth rate of 7.6 percent for East Asia over 1997-2006. That figure, although lower than those of the early 1990s, will still make East Asia the fastest-growing region over the next 10 years.
Given this prognosis, I say it would be a mistake to simply adopt a policy of waiting for the crisis to blow over, confident that timely measures will be adopted to end the turmoil, and that the region will soon enough return to growth.
A second generation of economic reforms
I say this is the time to position ourselves to benefit the most from the forthcoming recovery—by shoring up weaknesses in our economy and in social equity; by closing the gap between our economy and those of our neighbors; and by taking advantage of our competitive edge and comparative advantages.
I say this is preeminently the time for us to strengthen our economy by launching a second generation of reforms crucial to our economic stability and competitiveness in the world economy.
These key reforms are the following:
First, the completion of the policy environment to make our economy more competitive in the world and more resilient against shocks and crises. These include the enactment of our fisheries and land-use codes, the oil deregulation amendment, the antiracketeer-influenced and corrupt organizations (RICO) bill, and measures to develop and strengthen our capital markets and national savings rate; foster a competitive and stable exchange rate; prevent the further creation of monopolies and cartels, and liberalize the retail trade—all of which will enable the market system to work more effectively.
Modernizing infrastructure
Second, the accelerated modernization of infrastructure that will allow national society to become more productive and function more efficiently. The pace at which we build infrastructure and facilities must be speeded up even more by the next administration.
Third, the improvement of government’s capacity and efficiency across the board. Let us work at streamlining the bureaucracy even more; at pursuing without letup our campaign against graft and corruption; and at continuously improving and innovating systems to make government even more effective and efficient.
Fourth, the improvement of our legal system and the workings of our judiciary. Once and for all, let us not hesitate to correct the shortcomings and the lapses of our judicial system, which often serve as a brake on economic progress and social development.
Fifth, the accelerated improvement of education and training in our country. We must continuously upgrade the quality of training even as we significantly increase the quantity and improve the quality of students and graduates by distance education, dual training systems, informal cooperative methods, and scholarships. This we must do in order to assure ourselves of globally competitive human resources.
Sixth, and finally, the upgrading of our law and order systems. We must pursue the modernization of the National Police and complete the accompanying measures needed to make our law enforcers, supported by our Armed Forces, more capable in combating and preventing crime, and the criminal justice system more efficient and responsive. We must ensure that all five pillars of justice are made uniformly effective and truly coordinated so that law and order will reign supreme in our land.
The point of this new generation of reforms is that the modernization of the economy cannot take place without corresponding reforms in society, politics and governance.
And if, as I believe, we must reexamine the Constitution—to improve qualitatively the State’s capacity to promote the interests of the national community—let us do so without delay during the term of the next President, for sensible reform can neither be too soon nor too much for the nation to attempt.
The importance of the May elections
This brings me finally to the high importance of the coming elections in May. This political exercise will be a watershed for our democracy as the new President, the new Congress and the new set of local executives who will be elected will be the first to hold office in our second century as a competitive and vigorous Republic.
Whatever be one’s party affiliation, whatever be one’s political faith and whoever one supports, it should be our common resolve to ensure honest, orderly and peaceful elections (HOPE), which will be credible to the people. The acronym HOPE is apt because truly a successful election will strengthen the ramparts of democracy in our country.
This, together with the Commission on Elections, I guarantee you as your President.
And if we choose wisely and install effective leadership at the helm of government, we can enter the 21st century in a stronger position to compete effectively in the world.
I fully realize that electoral politics invariably sends us Filipinos into paroxysms of passion because of the intensity with which we pursue our political beliefs and personal agendas. By all means, let us contend and debate our preferences in the coining campaign. But let us not allow our passions to run so high that we cannot come together again as brothers and sisters in a civil democratic society, after the campaign is over.
The gift of democracy
Let us ensure that, at the end, we shall be in a position to receive the true gift of democracy—which is the peaceful turnover of power to the duly elected leaders and representatives of our people.
This, also, I guarantee you as the outgoing President of our Republic.
It is my fervent hope—as I enter the final months of my Presidency—that on June 30, 1998, I shall turn over to my duly elected successor a nation strengthened by our democratic labors of a hundred years since 1898—an economy returned to sustained growth, and a people empowered to effectively respond to what development, modernization, globalization and the national interest demand of them.
In 1898—at the first dawn of our Republic—our forebears could only dimly see what was within their capacity to build in this country. For theirs was the burden of steering the new nation past the ambitions of imperialist powers, and with only a community of six million without any experience of self-government.
The true spirit of our people
Today—one hundred years later—we are a nation 70 million strong—a resilient and united people risen from the vicissitudes of war, rebellion and peace—and a country that has won a position of respect and a measure of progress in the world.
The resilience I speak of is best exemplified today by our four million overseas Filipino workers, whose labors and savings have helped sustain our economic growth and international friendship.
Perhaps more than any other Filipino, I have, as your President, kept in my mind the remembrances of the events of the Philippine revolution of a century ago—because of an extraordinary coincidence.
The first major speech I delivered after assuming the Presidency was on the occasion of the one-hundredth anniversary of the founding of the Katipunan, held at the Tutuban Station in Tondo, near Andres Bonifacio’s secret headquarters, on July 17, 1992. And the last major speech I expect to deliver as President will be on the occasion of the one-hundredth year on June 12th of the declaration in Kawit, Cavite, of Philippine Independence by General Emilio Aguinaldo.
This fortuitous combination of historic landmarks has been my source of inspiration in all my efforts to bring to the fullness of development in our time—during my watch—the hopes of the generation of our heroic forebears of a hundred years ago.
Where we shall take our Republic in the next century and how much farther we can go as a nation is the challenge we must now confront.
It is important that we continue to rekindle the Filipino spirit characterized by resilience, nationalism, pride in our Filipino heritage, courage and sense of unity. These values that made us resilient as a people shall continue to see us through, with enduring success, the challenges of the next millennium.
Into the bosom of progress
Invoking therefore the blessings of Divine Providence—yet knowing that the future is truly ours to win or lose—we can surmount the current economic crisis and ensure the sustainable development of the nation—we can banish the problems of crime, disorder and divisiveness in our land—we can eradicate poverty and bring all our millions into the bosom of progress—we can complete the modernization of our beloved Philippines—and we can compete confidently as a nation in the world of the 21st century.
The urgent call to all of us is to reach down into our reserves of resilience which enabled our race to survive World War II, win our political independence, depose the dictatorship in February 1986 and actualize the peace and development process throughout our land.
We must not short-change ourselves by falling prey to doomsayers and by just throwing up our hands in despair.
Kaya natin ito! Kaya ito ng Pinoy! We have done it before! We can do it again! We can do it enduringly!