PGMA's Speech during the Philippine Trade and Investment Business Briefing organized by the Trade Partners UK and the International Financial Services of London (IFSL)

PGMA's Speech during the Philippine Trade and Investment Business Briefing organized by the Trade Partners UK and the International Financial Services of London (IFSL)

1, Great George Street, London, U.K. (28 Jan 2002)

THANK YOU VERY MUCH SIR ANTHONY CLEAVER.

SECRETARY VINCE PEREZ; AMBASSADOR BAUTISTA; AMBASSADOR COLLINS; MR. POTTER; MR. GUEST; MS. CLARK; PETER; OTHER DISTINGUISHED PARTICIPANTS OF THIS SEMINAR; LADIES AND GENTLEMEN:

I AM PLEASED TO BE HERE WITH YOU THIS AFTERNOON. AND I HOPE THAT YOU FIND THIS BRIEFING USEFUL IN PROVIDING A PICTURE OF THE PHILIPPINE ECONOMY.

MY ADMINISTRATION IS DETERMINED TO PROVIDE GOOD BUSINESS CONDITIONS BY MAINTAINING THE BEDROCK OF ANY COUNTRY'S COMPETITIVENESS: AN ADHERENCE TO A LONG-TERM VISION, PREDICTABLE AND STABLE RULES OF THE GAME, AND MOST OF ALL, POLICIES THAT ARE REFORM-ORIENTED.

I PRESENTED MY VISION FOR THE NATION A YEAR AGO. ON JANUARY 20th 2001, AFTER TAKING MY OATH OF OFFICE AS PRESIDENT OF THE PHILIPPINES AT HIGH NOON, I SAID:

WE MUST BE BOLD IN OUR NATIONAL AMBITIONS, SO THAT OUR CHALLENGE MUST BE THAT WITHIN THE DECADE, WE WILL WIN THE BATTLE AGAINST POVERTY.

I SAID I WOULD FOCUS MY ENERGY ON MAKING THE ECONOMY GROW DESPITE THE HARSH ECONOMIC ENVIRONMENT OF 2001. I CREATED A PLAN AND I HAVE MADE A SUBSTANTIAL DOWN PAYMENT TO ACHIEVE THAT RESULT IN MY FIRST 12 MONTHS.

THE PLAN CONSISTS OF FOUR COMPONENTS: THE FIRST IS AN ECONOMIC PHILOSOPHY OF FREE ENTERPRISE APPROPRIATE TO THE 21st CENTURY. THE SECOND IS AGRICULTURAL MODERNIZATION FOUNDED ON SOCIAL EQUITY. THE THIRD IS A SECTORAL AND SOCIAL BIAS TOWARD THE DISADVANTAGED IN OUR ECONOMIC DEVELOPMENT PLAN. AND THE FOURTH COMPONENT IS TO RAISE THE MORAL STANDARDS OF GOVERNMENT AND SOCIETY.

THE PRESENTATIONS HERE BY SECRETARY PEREZ UNDERSCORE THE FACT, I HOPE, THAT IN 2001, WE WERE SUCCESSFUL IN PUTTING THE ECONOMY BACK ON TRACK.

WHERE BIGGER AND RICHER ECONOMIES FAILED, OURS MOVED FORWARD.

WHERE BIGGER AND STRONGER CURRENCIES COLLAPSED, OURS HELD FIRM. INDEED, WE HAVE GONE A LONG WAY TO BRINGING OUR COUNTRY BACK ON THE RADAR SCREENS OF THE WORLD. A NEW CABINET, PICKED AS MUCH FOR THEIR INTEGRITY AS FOR THEIR COMPETENCE AND QUALIFICATIONS, HAS BROUGHT PROFESSIONALISM IN PUBLIC SERVICE TO NEW HEIGHTS. MUCH OF WHAT THE WORLD'S INVESTMENT COMMUNITY HAS ASKED OF US, WE HAVE THUS FAR DELIVERED. FOR INSTANCE, THE POWER REFORM BILL AND THE MONEY LAUNDERING ACT, LONG CONSIDERED LITMUS TESTS OF OUR POLITICAL WILL TO LEGISLATE REFORMS, WERE PUT INTO LAW, FIRMLY OVERCOMING YEARS OF DELAY. OUR PUBLIC DEFICIT HAS BEEN PLACED UNDER CONTROL.

INTEREST RATES AND INFLATION RATES HAVE DECLINED.

EVEN RECENT UNEMPLOYMENT RATES HAVE SHOWN A DECLINE.

OUR ECONOMIC PLAN RECOGNIZES THAT SOUND MACROECONOMICS MUST BE AN EVER-PRESENT PRECONDITION TO ACHIEVING SUSTAINED GROUND LEVEL RESULTS.

AND SO THIS IS WHAT WE HAVE DONE, AND I SUPPOSE THE BEST PROOF THAT THE WORLD APPLAUDS OUR MACROECONOMICS IS THE GOOD PERFORMANCE WE HAVE BEEN HAVING IN THE INTERNATIONAL FINANCIAL MARKET INCLUDING THE LONDON MARKET.

IN ADDITION TO THE CREDIT-ENHANCED 50 BILLION YEN PASSED THROUGH SHOBOSAI BONDS LATE LAST YEAR, THE LATEST GLOBAL BOND OFFERING IN JANUARY OF THIS YEAR RAISED A TOTAL OF 750 MILLION DOLLARS, ON SUBSCRIPTIONS WORTH 2.5 BILLION DOLLARS, AND ISSUED AT A LOWER RATE THAN GUIDANCE PRICE.

RESPONSIBLE MONETARY MANAGEMENT ALSO CONTRIBUTES TO THE STABILIZATION OF OUR ECONOMIC ENVIRONMENT. STEPS TAKEN BY THE CENTRAL BANK HELPED US REDUCE INFLATION AND SUPPORT A STABLE PESO. THE BANK HAS ALSO EFFECTIVELY STAMPED OUT THE SPECULATIVE ACTIVITY THAT HAS HURT SO MANY OF THE WORLD'S ECONOMIES. OUR STRONG RESERVE POSITION, COMBINED WITH PROJECTED DOLLAR VALUES, SHOULD CONTINUE TO BE SUPPORTIVE OF CURRENT OR EVEN STRONGER PESO VALUATION LEVELS THIS YEAR.

IN SUM, IMPROVING FISCAL OUTLOOK, STRONG FOREIGN RESERVES POSITION, PRICE STABILITY, AND A SUPPORTIVE MONETARY POLICY ALL POINT TO THE FACT THAT WE HAVE CREATED, WE HAVE ACHIEVED A GOOD LEVEL OF MACROECONOMIC STABILITY.

LEADING INTERNATIONAL CREDIT RATING AGENCIES AND MULTILATERAL BODIES SUCH AS NEXI, JBIC, THE WORLD BANK, AND THE ASIAN DEVELOPMENT BANK HAVE ALL RESPONDED BY ENDORSING OUR ENHANCED CREDIT WORTHINESS.

IN ITS JANUARY TO FEBRUARY 2002 CREDIT RESEARCH, SALOMON SMITH BARNEY SAYS: "INCREASING RISK APPETITE IN 2002 SHOULD FAVOR THE PHILIPPINES AMONG ASIAN NATIONS.

"WE EXPECT THE PHILIPPINES' RATINGS TO STAY ON THE BALANCE IN 20O2."

SALOMON CHARACTERIZES THE PHILIPPINES AS "GAINING MOMENTUM."

IT RECOGNIZES THAT "ECONOMIC GROWTH HAS BEEN RESILIENT LARGELY THANKS TO STRONG PERSONAL CONSUMPTION AND SOME WELL-PERFORMING AGRICULTURE AND SERVICE SECTORS ... THIS COULD BE BOLSTERED," IT SAYS, "BY THE GOVERNMENT'S GROWING CREDIBILITY IN THE EYES OF FOREIGN INVESTORS ... GIVEN THE GOVERNMENT'S COMMENDABLE PERFORMANCE IN 2001," IT SAYS, "WE EXPECT IT SHOULD STAY CLOSE TO ITS MORE DIFFICULT TARGETS IN 2002."

THEY FURTHER PREDICT THAT "THE BIGGEST SOURCE OF CREDIT IMPROVEMENT FOR THE SOVEREIGN THIS YEAR WILL BE THE SUCCESS OF ITS POWER PRIVATIZATION PROGRAM, PART OF ITS EFFORTS TO RAISE FOREIGN DIRECT INVESTMENT AND IMPROVE THE PUBLIC SECTOR BALANCE SHEET ... THE GOVERNMENT IS SET TO BEGIN THE SALE OF TRANSMISSION ASSETS IN 2002."

INDEED, NOT QUOTING ANYMORE, PART OF OUR COMMITMENT TO PRUDENT DEBT MANAGEMENT IS TO ASSIST THE NATIONAL POWER CORPORATION, OR NAPOCOR, IN SOURCING FUNDS TO CARRY OUT THE POWER SECTOR PRIVATIZATION PROGRAM. 250 MILLION DOLLARS OF OUR MOST RECENT 750 MILLION DOLLAR BOND OFFER, COUPLED WITH THE EURO 500 MILLION BOND ISSUE LAST NOVEMBER, IS BEING USED TO REFINANCE THE ASSETS OF NAPOCOR IN PREPARATION FOR THE PRIVATIZATION. THESE VERY SUCCESSFUL ISSUES WERE MADE POSSIBLE BY THE PASSAGE OF THE POWER REFORM BILL THAT I MENTIONED EARLIER, ONE OF THE FIRST AND SIGNIFICANT REFORM MILESTONES OF THIS ADMINISTRATION IN LAST YEAR.

THE PRIVATIZATION OF NAPOCOR WILL UNLOCK A MAJOR BOTTLENECK TO INDUSTRIAL DEVELOPMENT WHILE PROVIDING LONG-TERM FISCAL BENEFITS, NOT ONLY FROM ASSET SALE RECEIPTS BUT ALSO FROM REDUCTION IN THE GOVERNMENT'S ASSOCIATED CONTINGENT AND DIRECT LIABILITIES. AS YOU HAVE HEARD FROM SECRETARY PEREZ, WE ARE PLEASED TO SAY THAT THE SALE OF TRANSMISSION ASSETS WILL BEGIN BY JUNE OF THIS YEAR, AS PLANNED.

FOREIGN DIRECT INVESTMENT LEVELS ALSO EXCEEDED TARGETS DURING 2001. INVESTMENTS REGISTERED WITH THE BOARD OF INVESTMENTS REACHED A TOTAL OF 102 BILLION PESOS AS OF THE END OF LAST YEAR, AGAINST PROJECTIONS OF ONLY 50 BILLION PESOS FOR THE ENTIRE YEAR. THOSE INVESTMENTS WERE PRIMARILY CHANNELED INTO TELECOMMUNICATIONS AND MANUFACTURING. THE SUCCESS IN ATTRACTING THESE NEW INVESTMENTS ALSO CONTRIBUTED TO STEADY EXTERNAL BALANCE LEVELS.

WHILE HISTORICALLY FOREIGN INVESTMENTS IN THE PHILIPPINES HAVE BEEN DOMINATED BY THE AMERICANS AND THE JAPANESE, BRITISH INVESTORS HAVE RECENTLY BEEN AT THE FOREFRONT AS MORE COMPANIES NOW FOLLOW PIONEERS SUCH AS UNILEVER, BRITISH GAS, GLAXO, UNITED BISCUITS, AMONG OTHERS. IN THE YEAR 2000, 47 PERCENT OF TOTAL FOREIGN INVESTMENTS TO THE PHILIPPINES CAME FROM THE U.K., AS THE LARGEST SINGLE PROJECT INVESTMENT BY SHELL EXPLORATION OF 4.5 BILLION DOLLARS WENT INTO THE MALAMPAYA GAS PROJECT.

IT IS OUR GOAL TO FURTHER STRENGTHEN OUR TIES WITH EUROPEAN INVESTORS. IT IS IN THIS LIGHT THAT LATE LAST YEAR, WE WERE HEARTENED BY THE STRONG RECEPTION TO THE 500 MILLION WORTH OF EURO BONDS, PROCEEDS OF WHICH ARE ON LOAN TO NAPOCOR.

EUROPE AS A WHOLE MARKET IS A MAJOR TRADING PARTNER, HAVING OVERTAKEN JAPAN, AND NOW RANKING THE SECOND HIGHEST IN OUR LIST OF TRADING PARTNERS NEXT TO THE U.S. AND IN EUROPE, OUR BIGGEST PARTNER IS THE U.K.

TOTAL TRADE BETWEEN THE PHILIPPINES AND THE U.K. HAS BEEN GROWING AT AN IMPRESSIVE RATE OF 12 PERCENT PER ANNUM FOR THE PAST SIX YEARS. PHILIPPINE GOODS TO THE U.K. HAVE INCREASED BY 18.31 PERCENT PER ANNUM, IN LINE WITH THE INCREASING COMPETITIVENESS OF OUR TECHNOLOGY PRODUCTS.

WE ARE PROMOTING FAST-GROWING INDUSTRIES WHERE HIGH-VALUE JOBS ARE MOST PLENTIFUL AND WHICH CAN USE OUR MOST COMPETITIVE RESOURCE -- WHICH IS THE GREAT FILIPINO WORKER.

I UNDERSTAND THAT FROM THE U.K. PERSPECTIVE, SOUTHEAST ASIA IS AN IMPORTANT MARKET TOTALING 3.8 BILLION POUNDS. IT IS A BIGGER MARKET THAN JAPAN, OR AUSTRALIA AND NEW ZEALAND COMBINED, AND FOUR TIMES BIGGER THAN CHINA, ALTHOUGH WITH HALF OF ITS POPULATION. AND THE PHILIPPINES ACCOUNTS FOR 10 PERCENT OF THE REGION'S IMPORTS FROM THE U.K.

BUT OF COURSE MUCH WORK REMAINS TO BE DONE. WE MUST WORK WITH THE INTERNATIONAL COMMUNITY TO ROOT OUT TERRORISM. WE MUST RETURN THE REPUTATION OF MANILA AND THE PHILIPPINES AS A WELCOMING AND SAFE PLACE IN WHICH TO LIVE AND DO BUSINESS. WE MUST INCREASE THE BENEFITS FROM OUR NEW GLOBAL RELEVANCE AND ENGAGEMENT AFTER YEARS OF BEING ISOLATED AND ADRIFT.

AND WE WILL CONTINUE, THEREFORE, OUR LONG-TERM STRUCTURAL REFORM.

GOVERNMENT WILL CONTINUE TO DO ITS PART TO MAKE THE ENVIRONMENT MORE CONGENIAL TO BUSINESS AS WE CONTINUE TO PROVIDE MORE PUBLIC INFRASTRUCTURE, MORE RATIONAL POWER COSTS, AND COMPETITIVE INVESTMENT INCENTIVE PACKAGES.

TO ENCOURAGE STRENGTH IN THE DOMESTIC ECONOMY -- WHICH IS WHAT PROPPED US UP OVER THE LAST YEAR -- WE ARE LOOKING TO BRING NEW FINANCING VEHICLES TO SMALL AND MEDIUM-SCALE ENTERPRISES AND THE HOUSING SECTOR.

SMALL AND MEDIUM-SCALE ENTERPRISES ARE TOO SMALL FOR THE ATTENTION OF TRADITIONAL BANKS. THUS WE RECENTLY APPROVED A PROPOSAL BY THE DEVELOPMENT BANK OF THE PHILIPPINES TO USE JAPANESE O.D.A. FUNDS WORTH 200 MILLION DOLLARS FOR CREDIT SCHEMES FOR SMALL AND MEDIUM ENTERPRISES.

ON THE PART OF HOUSING, PRIVATE ASSET MANAGEMENT INITIATIVES WILL TAKE
ON NON-PERFORMING LOANS AND UNLOCK BOTTLENECKS IN THE HOUSING SECTOR.

TO MAKE MANY OF THESE MOVES POSSIBLE, WE ARE HAVING COMBINED INFLATIONS TARGETING AND EMPLOYMENT TARGETING AS A FOCUS OF OUR STRATEGY.

SUSTAINED GROWTH WILL ALSO STRENGTHEN OUR RELATIONSHIP WITH INVESTORS AND OUR ABILITY TO PROVIDE YOU WITH THE OPPORTUNITIES WORTHY OF YOUR CONFIDENCE. ACCORDINGLY, I WOULD LIKE TO INVITE YOU TO COME TO MY COUNTRY AS I AM SURE THAT YOU WILL NOT BE DISAPPOINTED BY THE INITIATIVES WE HAVE TAKEN. WE SHALL CONTINUE TO PURSUE THESE WITH CONSISTENCY AND DETERMINATION.

AND BECAUSE WE HAVE HAD IN THESE PAST FEW YEARS GREAT PARTNERSHIPS -- MALAMPAYA GAS, NUMBER ONE TRADING PARTNER IN EUROPE, NUMBER ONE CURRENT INVESTOR -- I HOPE THAT IN THE YEARS TO COME, THE U.K. AND THE PHILIPPINES WILL BE CLOSER THAN BROTHERS.

THANK YOU.

[HOME]