PGMA's Speech during the 8th International Conference on the Future of Asia |
Tsuru-Nishi Room, Hotel New Otani Tokyo, Japan (21 May 2002) |
| THANK YOU VERY MUCH. FIRST OF ALL, I WOULD TO GREET MY COLLEAGUE FROM LAOS, PRIME MINISTER VORACHITH, WHO WAS MY RECENT VISITOR IN MANILA; MR. TSURUTA, PRESIDENT OF NIKKEI. THANK YOU FOR INVITING ME HERE; MR. SUGITA, EXECUTIVE VICE PRESIDENT; PARTICIPANTS OF THE 8th INTERNATIONAL CONFERENCE ON ÒTHE FUTURE OF ASIA;Ó MEMBERS OF THE PHILIPPINE DELEGATION; DISTINGUISHED GUESTS; LADIES AND GENTLEMEN: I WOULD LIKE TO THANK NIKKEI FOR INVITING ME TO THIS CONFERENCE, WHICH IS A WELLSPRING OF LEADERSHIP, COMPETENCE AND COMMITMENT. THE INSIGHTS WE SHALL GAIN WILL SERVE WELL OUR RESPECTIVE NATIONS AND PEOPLES, AS WELL AS OUR COLLECTIVE INTERESTS. THE YEAR 2001 MAY BE A YEAR MANY COUNTRIES WOULD WANT TO FORGET. WITH THE SHARP CONTRACTION OF THE GLOBAL ICT INDUSTRY, MANY ECONOMIES UNDERWENT RECESSION OR STAGNATION. THEN, JUST AS THE PROSPECTS FOR GLOBAL RECOVERY WERE IMPROVING, THE SEPTEMBER 11 TERRORIST ATTACKS CAME AND CHANGED THE WORLD ALTOGETHER. ON TOP OF THESE EXTERNAL SHOCKS, WE, IN THE PHILIPPINES HAD TO CONTEND WITH INTERNAL PROBLEMS. WHEN I ASSUMED OFFICE IN JANUARY 2001, BUSINESS CONFIDENCE WAS AT ITS LOWEST EBB. THE POLITICAL SCANDAL INVOLVING MY PREDECESSOR HAD INDUCED CAPITAL FLIGHT, RAISING UP INTEREST RATES AND THE INFLATION RATE AND SINKING THE VALUE OF THE PESO TO HISTORIC LOWS. UPON ASSUMING THE PRESIDENCY, MY URGENT TASK WAS THE RESTORATION OF THE COUNTRY'S FINANCIAL HEALTH. I TOLD THE FILIPINO PEOPLE THAT WE MUST BE BOLD IN OUR NATIONAL AMBITIONS SO THAT OUR CHALLENGE MUST BE THAT WITHIN THIS DECADE, WE WILL WIN THE FIGHT AGAINST POVERTY. I TOLD OUR POLICYMAKERS THAT TO SUCCEED, OUR NATIONAL AGENDA MUST REVOLVE AROUND FOUR COMPONENTS: FIRST, AN ECONOMIC PHILOSOPHY OF FREE ENTERPRISE APPROPRIATE TO THE 21st CENTURY; SECOND, A MODERNIZED AGRICULTURAL SECTOR FOUNDED ON SOCIAL EQUITY; THIRD, A SOCIAL BIAS TOWARD THE DISADVANTAGED TO BALANCE OUR ECONOMIC DEVELOPMENT PLAN; AND FOURTH, TO RAISE THE STANDARDS OF MORALITY IN GOVERNMENT AND SOCIETY. MY ECONOMIC TEAM -- SOME OF WHOM ARE HERE WITH US TODAY -- INITIATED A BUDGET DEFICIT REDUCTION PROGRAM IN ORDER TO PREVENT GOVERNMENT FROM CROWDING OUT THE PRIVATE SECTOR FOR INVESTMENT FUNDS. ON THE MONETARY SIDE, MY ADMINISTRATION FOCUSED ON PRICE STABILITY AS THE MAIN OBJECTIVE. THE RESULTS OF THESE POLICIES HAVE BEEN GRATIFYING. IN A BLEAK GLOBAL LANDSCAPE, OUR ECONOMY REGISTERED A REAL GNP GROWTH RATE OF 3.7 PERCENT. INFLATION AND INTEREST RATES FELL, REACHING HISTORIC LOWS THIS TIME. THE SPREADS OF THE COUNTRY'S SOVEREIGN ISSUANCES HAVE BECOME NARROWER, MAKING FUTURE GOVERNMENT BORROWINGS CHEAPER. THE MAJOR CREDIT RATING AGENCIES HAVE UPGRADED OUR COUNTRY'S CREDIT RATING OUTLOOK FROM NEGATIVE TO STABLE. THE PESO-DOLLAR EXCHANGE RATE HAS STABILIZED DESPITE THE DECLINE IN EXPORTS DUE TO THE SLOWDOWN OF OUR MAJOR MARKETS. IN FACT, GROSS INTERNATIONAL RESERVES NOW STAND AT AN ALL TIME HIGH. THE EXPLANATION FOR OUR ECONOMIC PERFORMANCE IS THE HARD WORK OF THE FILIPINO PEOPLE, THE GOOD POLICIES AND THE ASSISTANCE OF FRIENDLY COUNTRIES SUCH AS JAPAN. PRIVATE ANALYSTS AND MULTILATERAL AGENCIES, SUCH AS THE ASIAN DEVELOPMENT BANK AND THE INTERNATIONAL MONETARY FUND, ATTEST THAT THE PHILIPPINES HAS THE STRENGTH AND CAPACITY TO BUILD ON OUR ACHIEVEMENT. CENTRAL TO OUR FUTURE IS JAPAN. AS THE LARGEST ECONOMY IN THE REGION, JAPAN LED EAST ASIA'S ECONOMIC TRANSFORMATION DURING THE LATTER PART OF THE 20th CENTURY. AS THE PHILIPPINES' LARGEST SOURCE OF OFFICIAL DEVELOPMENT ASSISTANCE, JAPAN ENABLED THE PHILIPPINES' RAPID RECOVERY DURING THIS PAST DIFFICULT YEAR. TODAY, JAPAN IS EMBARKING ON MAJOR INDUSTRIAL REFORMS AND FISCAL RESTRUCTURING. THE SUCCESS OF JAPAN'S EFFORTS IN REVIVING ITS ECONOMY IS CRUCIAL TO THE REGIONAL AND GLOBAL ECONOMY OF THE 21st CENTURY. I PRAISE JAPAN FOR ITS CONTINUING ECONOMIC LEADERSHIP AND I HAVE FULL CONFIDENCE IN JAPAN'S ECONOMIC RECOVERY. THE PHILIPPINES IS OPTIMISTIC ABOUT JAPAN. I HOLD THE VIEW THAT JAPAN WILL CONTINUE TO BE THE REGION'S ECONOMIC LEADER BECAUSE OF ITS TECHNOLOGICAL AND FINANCIAL CAPITAL. JAPAN IS FAR AHEAD OF OTHER COUNTRIES IN THE REGION. I AM INFORMED THAT THE WORLD'S FASTEST COMPUTER HAS BEEN MADE OPERATIONAL BY JAPAN. THIS IS CLEAR PROOF OF A SHARP COMPETITIVE EDGE IN TECHNOLOGY. THE MACRO-ECONOMIC POLICIES ADAPTED BY MY GOVERNMENT IN THE PHILIPPINES POSITIONED US WELL IN TAKING ADVANTAGE OF THE EXPECTED RECOVERY OF JAPAN AND THE U.S. AND OTHER POSITIVE EXTERNAL DEVELOPMENTS, FOREMOST OF WHICH IS THE RESULTING REBOUND IN EXPORTS AND INVESTMENTS. THEIR EXPECTED REBOUND WILL HOPEFULLY ACCELERATE OUR GDP GROWTH. WE ARE COMMITTED TO FOSTER DEVELOPMENT TO UPLIFT THE LIVES OF THE POOR IN THE PHILIPPINES. WE ARE STRENGTHENING THE PILLARS OF OUR HOUSE TO MEET THE CHALLENGES AND OPPORTUNITIES OF THE GLOBAL ENVIRONMENT. THE PHILIPPINES IS FORTUNATE TO BE AT THE CENTER OF THE ACTION BECAUSE EAST ASIA IS PROJECTED TO BE THE HUB OF THE HIGHEST GROWTH IN THE WORLD IN THIS CENTURY. IN THE MAIN, I BELIEVE, JAPANESE ECONOMIC LEADERSHIP, COUPLED WITH CHINA'S EMERGING MARKET AND A REVIVED U.S. ECONOMY WILL BE THE ENGINES OF GROWTH FOR OUR REGION. LET ME NOW TALK ABOUT CHINA'S EMERGING MARKET. WE, IN ASEAN, WELCOMED CHINA'S ACCESSION TO THE WORLD TRADE ORGANIZATION. THIS ACCESSION INDICATED CHINA'S DETERMINATION TO PLAY BY GLOBAL TRADING RULES AND ADDED ANOTHER VENUE WHERE ASEAN CAN ENGAGE WITH CHINA CONSTRUCTIVELY. THERE ARE CONCERNS THAT CHINA WOULD BE A FORMIDABLE COMPETITOR FOR ASEAN. BUT LET ME POINT OUT THAT ASEAN EXPORTERS HAVE BEEN COMPETING WITH CHINA IN MAJOR MARKETS FOR MORE THAN 20 YEARS NOW EVER SINCE CHINA OBTAINED ÔMOST FAVORED STATUS' FROM THE U.S. IN 1980. IN THIS SENSE, CHINA'S ENTRY INTO THE WTO IS TO ASEAN's ADVANTAGE BECAUSE CHINA HAS COME INTO THE AMBIT OF UNIVERSAL NORMS IN EXCHANGE FOR ITS' MOST FAVORED NATION' STATUS. CHINA'S EMERGENCE AS A MARKET ECONOMY HAS NOT BEEN A ZERO-SUM COMPETITION WITH ASEAN. WE MAY HAVE SIMILAR EXPORT POLICIES AND WE BOTH EXPERIENCED AN INCREASE IN COMPARATIVE ADVANTAGE IN LABOR-INTENSIVE MANUFACTURED EXPORTS. HOWEVER, COMPLEMENTARITIES WITHIN MANUFACTURING INDUSTRIES ALONG HORIZONTAL DIVISIONS OF LABOR HAVE ENABLED ASEAN TO TAKE ADVANTAGE OF NICHE MARKETS AND DESIGN DIFFERENTIATION. THIS IS THE REASON WHY ASEAN IS ABLE TO TRADE WITH CHINA. ASEAN-CHINA TRADE TOTALLED 39.5 BILLION U.S. DOLLARS IN THE YEAR 2000. A CASE IN POINT, IN THE SEMICONDUCTOR INDUSTRY OF THE PHILIPPINES. DEMAND FOR THIS COMPONENT IN CHINA HAS LED TO A HUNDREDFOLD INCREASE FROM 1995 TO 2001. INDUSTRIAL MANUFACTURES NOW ACCOUNT FOR 62 PERCENT OF PHILIPPINE EXPORTS TO CHINA. AND ELECTRONICS SUCH AS SEMICONDUCTORS AND OTHER COMPONENTS ACCOUNT FOR 90 PERCENT OF THIS TYPE OF EXPORTS. IN THE SHORT-TERM, CHINA MAY ADD TO COMPETITIVE PRESSURES ON ASEAN ECONOMIES. HOWEVER, IN THE LONG RUN, CHINA'S MARKET WOULD FUNCTION AS A MAGNET FOR PRODUCTS AND SERVICES IN THE REGION. THE AGENDA FOR ASEAN FIRMS IS HOW TO REMAIN EFFICIENT AND MARKET SAVVY. MARKET EFFICIENCY IS THE FUNDAMENTAL LOGIC THAT FUELS ASEAN EFFORTS TO ACCELERATE AND EXPAND THE ASEAN FREE TRADE AREA OR AFTA. STARTING THIS YEAR, THE SIX ORIGINAL SIGNATORIES OF AFTA HAVE REACHED ZERO TO 5 PERCENT TARIFFS IN THEIR TRADE AMONG THEMSELVES AND ARE STEADILY HARMONIZING PRODUCT STANDARDS. ASEAN SUBSCRIBES TO THE BELIEF THAT HEALTHY COMPETITION LEADS TO BETTER ALLOCATION OF RESOURCES. A FREE TRADE AREA BETWEEN ASEAN AND CHINA WOULD UPGRADE MARKET EFFICIENCIES. IT WOULD ALSO HAVE AN EFFECT ON INVESTMENT FLOWS WHICH ARE NOW HEAVILY IN CHINA'S FAVOR. THE STEEP INCREASE IN FOREIGN-DIRECT INVESTMENTS INTO CHINA CANNOT BE EXPLAINED BY CHEAP LABOR OR INCENTIVES ALONE, BECAUSE ASEAN IS ALSO COMPETITIVE IN THESE AREAS. THE RUSH INTO CHINA IS MORE THAN ANYTHING A RACE TO SECURE A FOOTHOLD IN ITS HUGE CONSUMER MARKET. HERE THEN IS ANOTHER INCENTIVE FOR CREATING AN ASEAN-CHINA FREE TRADE AREA. LARGE INTEGRATED MARKETS, NOT SMALL FRAGMENTED ONES ARE WHAT ATTRACTS INVESTORS. INTEGRATING MARKETS MAKE SENSE. ASEAN's POPULATION IS 500 MILLION AS AGAINST CHINA'S 1.3 BILLION. BUT ASEAN's GDP IS ALMOST THE SAME SIZE AS CHINA'S. COMBINING THEM WOULD GIVE BIRTH TO A MARKET OF 1.8 BILLION CONSUMERS OR ALMOST ONE-THIRD OF HUMANITY. THE WIDE VARIETY OF TRADITIONAL STRENGTHS, TALENT AND NATURAL RESOURCES OF THE TWO AREAS WOULD SHAPE THE CONTOURS OF THIS GIANT CONSUMER MARKET. AS IT EVOLVES, INVESTMENT FLOWS WOULD BE REDISTRIBUTED IN THE FUTURE. THE JAPANESE CONSULTANT KIMICHI OMAE HAS POINTED OUT THAT THE CHINA EXPORTING TO JAPAN IS NOT ACTUALLY MADE UP OF CHINESE FIRMS BUT IS PART OF A PRODUCTION SYSTEM CONCEIVED IN JAPAN THAT SIMPLY USES CHINESE LAND AND LABOR. SINCE CHINA BY ITSELF WOULD NOT HAVE BEEN ABLE TO PENETRATE THE JAPANESE MARKET, HE SAID, IT IS BASICALLY STILL A CASE OF JAPAN COMPETING WITH JAPAN. TO BUILD AN AFTA, A NUMBER OF ASEAN MEMBER COUNTRIES HAVE SUGGESTED MULTIPLYING THE JAPAN-SINGAPORE ECONOMIC PARTNERSHIP AGREEMENT OR EPA. THIS EPA PROMOTES NOT ONLY TRADE BUT ALSO SCIENCE AND TECHNOLOGY, TOURISM, HUMAN RESOURCES DEVELOPMENT AND OTHER IMPORTANT SECTORS OF THE ECONOMY. IF REPLICATED ELSEWHERE IN ASEAN, MULTIPLE EPAs WOULD ENABLE JAPAN TO AMPLIFY ITS COMPETITIVE ADVANTAGES IN TECHNOLOGY ESPECIALLY IN ICT, BIOTECHNOLOGY AND ENVIRONMENTAL TECHNOLOGY USING THE COMPETITIVE ADVANTAGES OF ASEAN. REGIONAL AND BILATERAL TRADE AGREEMENTS, AS LONG AS THESE REMAIN AS OPEN ARRANGEMENTS, COMPLEMENT AND STRENGTHEN THE MULTILATERAL SYSTEM OF THE WTO. THE PHILIPPINES SUPPORTS THE NEW DOHA ROUND UNDER THE WTO, WHICH IS MEANT TO FURTHER STRENGTHEN THE PRINCIPLE OF NON-DISCRIMINATION AND THEREBY ENSURE AN OPEN GLOBAL TRADING SYSTEM. DEVELOPING COUNTRIES HAVE DEVOTED THEIR COLLECTIVE ENERGIES TO ENSURE THAT THE DOHA ROUND OF THE WTO WOULD BE A TRULY DEVELOPMENTAL ROUND AND THAT IT WOULD BRING ABOUT A MORE EQUITABLE OUTCOME. ECONOMIES THAT HAVE ADOPTED MARKET-DRIVEN POLICIES SHOULD BE REWARDED BY MORE OPEN MARKETS ESPECIALLY FOR PRODUCTS THAT ARE PARTICULARLY IMPORTANT TO US. REGIONAL AND BILATERAL TRADE AREAS ARE HUBS OF OPEN REGIONALISM. THE TASK BEFORE US IS HOW TO EXPAND OUR COOPERATION TO OTHER AREAS TO CREATE INTERLOCKING LINKAGES. ASEAN SHOULD FOSTER MULTIPLE LINKAGES IN SUCH AREAS AS FINANCE, ENERGY, ENVIRONMENT, AND PEACE AND SECURITY IN THIS PART OF THE WORLD. AS THE 1997 ASIAN FINANCIAL CRISIS SHOWED THE LANDSCAPE OF GLOBALIZATION IS LITTERED WITH QUICKSAND. GLOBAL CAPITAL IS SUSPECT. TO SHELTER OURSELVES FROM DESTABILIZING FLAWS, WE HAVE SET UP A NETWORK OF BILATERAL SWAP ARRANGEMENTS UNDER THE CHIANG MAI INITIATIVE WITHIN THE ASEAN PLUS THREE FRAMEWORK. WE WELCOME THE ADDITIONAL PROTECTION OFFERED RECENTLY BY THE ARRANGEMENT BETWEEN THE CENTRAL BANKS OF CHINA AND JAPAN. SINCE CHINA AND JAPAN HAVE THE LARGEST FOREIGN EXCHANGE RESERVES IN THE WORLD, THIS AGREEMENT FORTIFIES THE REGION'S FIREWALL AGAINST SPECULATIVE ATTACKS. THE NETWORK OF CURRENCY SWAP ARRANGEMENT IS THE FIRST STEP TOWARD MUCH DEEPER FINANCIAL AND MONETARY COOPERATION IN EAST ASIA. IN THE FUTURE, WE CAN FURTHER EXPLORE THE FEASIBILITY OF HAVING A COMMON BASKET OF CURRENCIES. ASIDE FROM FINANCE, THE TIME IS RIPE FOR COOPERATION IN THE ENERGY SECTOR. THE CONTINUED GROWTH OF OUR ECONOMIES WOULD DEPEND ON A STABLE SUPPLY OF ENERGY AT A COMPETITIVE PRICE RELATIVE TO OTHER REGIONS. THE EUROPEAN UNION HAS DEMONSTRATED, FROM ITS BEGINNINGS AS THE EUROPEAN COAL AND STEEL COMMUNITY, THAT ENERGY CAN BE A CATALYST FOR REGIONAL COOPERATION. THE REGION CAN, FOR EXAMPLE, EXPLORE COOPERATION IN COMMON STOCKPILES OF OIL, ENVIRONMENTAL QUALITY CONTROL ON OIL PRODUCTS, INTERCONNECTING POWER SYSTEMS AND UTILIZATION OF NATURAL GAS. ON THE ENVIRONMENT, OUR COOPERATION MUST BE UNDERLINED BY THE ABSENCE OF BORDERS. CHINA'S COOPERATION IS VITAL IN ENVIRONMENTAL ISSUES. IN LAYING THE GROUNDWORK FOR MULTIPLE LINKAGES, EAST ASIA MUST CULTIVATE AN ENVIRONMENT OF PEACE AND SECURITY. SECURITY PROBLEMS NOW RIDE THE TIDE OF GLOBALIZATION. THUS, IT IS IMPORTANT TO PRESENT A UNITED FRONT AGAINST TERRORISM AND INTERNATIONAL CRIME SUCH AS ILLEGAL TRAFFICKING OF WOMEN AND CHILDREN, AND MONEY LAUNDERING. BUT MUCH FARTHER THAN THAT WE MUST RECOGNIZE THAT BEYOND PHYSICAL SECURITY, THERE IS THE BROADER CONCEPT OF HUMAN SECURITY WHICH RELATES TO BASIC HUMAN NEEDS SUCH AS FOOD, SHELTER, EDUCATION AND EMPLOYMENT. UNLESS, BOTH PHYSICAL AND HUMAN SECURITY ARE EFFECTIVELY ADDRESSED, IMPOVERISHED AND DISILLUSIONED COMMUNITIES WILL CONTINUE TO BE THE RECRUITMENT GROUNDS FOR TERRORISM. JAPAN'S LEADERSHIP IN THE RECONSTRUCTION OF AFGHANISTAN IS A PRIME EXAMPLE OF THE KEEN AWARENESS OF THE PARAMOUNT VALUE OF HUMAN SECURITY. ASEAN HAS DONE ITS SHARE IN MITIGATING DISPUTES IN THE REGION. IT HAS SEEN TO THE SMOOTH TRANSITION TO POLITICAL STABILITY BY CAMBODIA AND EAST TIMOR, AND ACTS AS THE NEXUS OF THE ASEAN REGIONAL FORUM, A MAJOR VENUE OF CONSTANT DIALOGUE AMONG THE POWERS IN THE ASIA PACIFIC. THIS ARF HAS BEEN INSTRUMENTAL IN ENSURING PEACE AND STABILITY IN THE SOUTH CHINA SEA. IN ALL SPHERES OF COOPERATION, FROM CURRENCY SWAP ARRANGEMENTS, TO ENSURING REGIONAL SECURITY, THE ROLE OF JAPAN IS CRUCIAL. IT IS BY ENGAGING IN MULTIPLE LINKAGES WITH THE OTHER ECONOMIES OF ASIA THAT JAPAN CAN GUARANTEE ITS STABILITY AND GROWTH INTO THE FUTURE. AND MAY I SAY ONCE AGAIN, I HAVE FULL FAITH AND CONFIDENCE IN JAPAN'S LEADERSHIP AND IN JAPAN'S ECONOMIC RECOVERY. MORE THAN A CENTURY AGO, IN 1886, A YOUNG JAPANESE AUTHOR NAMED TOKOTOMI SOHO, WROTE A BOOK TITLED ÒTHE FUTURE OF JAPAN.Ó AFTER ANALYZING EUROPEAN GEOPOLITICS IN THE 19th CENTURY, SOHO SAID THAT THE WORLD OF MIGHT WOULD BE REPLACED BY THE WORLD OF WEALTH. AND HE PREDICTED THAT INTERDEPENDENCE ESPECIALLY THROUGH TRADE WILL BECOME THE PATH TO PEACE. THE CHALLENGE BEFORE US, IN EAST AND SOUTH EAST ASIA, IS HOW TO INTEGRATE OUR MULTIPLE LINKAGES INTO A COMMON VISION FOR THE REST OF THE 21st CENTURY. ALL COUNTRIES TODAY ASPIRE FOR PACIFIC SOLUTIONS. WE SHARE THE SAME PRAYERS FOR PEACE, GOOD HEALTH, JUSTICE, DIGNITY AND PROSPERITY FOR OUR PEOPLES. AND MOST OF ALL, WE ALL BELIEVE WE CAN ACHIEVE MUCH MORE BY ACTING TOGETHER. BUILDING PEACE AND ATTAINING PROSPERITY IN EAST ASIA WOULD BE OUR NOBLEST CONTRIBUTION TO THE WORLD. THANK YOU. |