PGMA's Speech during the Luncheon Hosted by the Foreign Correspondents Club in Japan (FCCJ)

Pen and Quill Dining Room, Yurakucho Denkin Bldg. Tokyo Japan (21 May 2002)
THANK YOU VERY MUCH ABIKO SAN.

OTHER OFFICERS AND MEMBERS OF THE FOREIGN CORRESPONDENTS CLUB OF JAPAN; MEMBERS OF THE PHILIPPINE DELEGATION; PHILIPPINE JOURNALISTS AND CORRESPONDENTS PRESENT; DISTINGUISHED GUESTS; LADIES AND GENTLEMEN:

I AM VERY HONORED TO BE HERE. THIS IS AN ESTEEMED CLUB OF FOREIGN JOURNALISTS AND MEDIA PRACTITIONERS IN JAPAN. HAVING OPENED ITS DOORS TO JOURNALISTS IN THE AFTERMATH OF THE SECOND WORLD WAR, THE FCCJ ENJOYS PREEMINENCE AS AN INSTITUTION OF AUTHORITY IN THE ANALYSES AND REPORTING OF JAPAN'S POST-WAR AND MODERN HISTORY. IT HAS BEEN A REAL-TIME WITNESS TO JAPAN'S TRANSFORMATION. AND ALSO MANY OF WHO YOU ARE BASED HERE ARE ALSO COVERING THE PHILIPPINE BEAT.

A NEW REGIONAL ENVIRONMENT HAS EMERGED IN EAST ASIA, CHARACTERIZED BY GROWING POLITICAL AND ECONOMIC RELATIONS AMONG ITS STATES, BOTH AT THE BILATERAL AND REGIONAL PLANES.

THE 1997 ASIAN FINANCIAL CRISIS AWAKENED COUNTRIES IN EAST ASIA TO THEIR ECONOMIC AND FINANCIAL INTERDEPENDENCE, COMPELLING THEM TO COORDINATE CLOSELY THEIR MONETARY AND FINANCIAL POLICIES. AS A RESULT, THERE HAS BEEN GREATER COMMITMENT TO IDENTIFY NEW OPPORTUNITIES FOR REGIONAL COOPERATION WITHIN THE FRAMEWORK OF ASEAN. THE ASEAN-CHINA, JAPAN AND REPUBLIC OF KOREA DIALOGUE HAS ALSO BEEN TRANSFORMED INTO AN EFFECTIVE INSTRUMENT FOR ECONOMIC AND FINANCIAL COOPERATION. REGIONAL INTEGRATION IS TAKING PLACE, AND A SENSE OF EAST ASIAN REGIONALISM IS EVOLVING.

THE PHILIPPINES WELCOMES THIS TREND. I BELIEVE OUR REGIONAL ECONOMIC INTEGRATION WILL BRING US NOT ONLY MORE ECONOMIC PROSPERITY, BUT ALSO GREATER POLITICAL STABILITY.

CENTRAL TO THIS FUTURE IS JAPAN. WE ARE OPTIMISTIC ABOUT JAPAN. AS THE LARGEST ECONOMY IN THE REGION, JAPAN HAS LED EAST ASIA'S ECONOMIC TRANSFORMATION DURING THE LATTER PART OF THE 20th CENTURY. AND TODAY, JAPAN IS EMBARKING ON MAJOR INDUSTRIAL REFORMS AND FISCAL RESTRUCTURING. THE SUCCESS OF JAPAN'S EFFORTS IN REVIVING ITS ECONOMY IS CRITICAL TO THE REGIONAL AND GLOBAL ECONOMY OF THE 21st CENTURY. AND MAY I SAY THAT I HAVE FULL CONFIDENCE IN THE ECONOMIC RECOVERY OF JAPAN.

THE PHILIPPINES IS CONFIDENT IN THE ABILITY OF JAPAN TO UNDERTAKE REFORMS. 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 RECENTLY BY JAPAN, THIS IS CLEAR PROOF OF A SHARP COMPETITIVE EDGE IN TECHNOLOGY.

WE, TOO, IN THE PHILIPPINES, ARE ENGAGED IN REFORMS. WHEN I TOOK OVER AS PRESIDENT IN JANUARY 2001, THE STATE OF PUBLIC FINANCES WAS MOST PRECARIOUS.

MY NEW GOVERNMENT HAD TO ACT -- QUICKLY -- BEFORE THE WORSENING EXTERNAL ENVIRONMENT AGGRAVATED FURTHER OUR DOMESTIC SITUATION. MY GOVERNMENT INSTITUTED A BUDGET DEFICIT-REDUCTION PROGRAM.

PHILIPPINE MONETARY POLICY, MEANWHILE, FOCUSED ON ACHIEVING AND MAINTAINING PRICE STABILITY. EFFORTS WERE MADE TO STRENGTHEN THE BANKING SYSTEM, WHICH HAD ACCUMULATED BURDENSOME, THOUGH RELATIVELY SMALL COMPARED TO OTHERS IN THE REGION, NON-PERFORMING LOANS. FOR THE EQUITY MARKET, STRONGER REGULATIONS AGAINST MANIPULATION AND INSIDER TRADING WERE PUT IN PLACE.

OUR MACROECONOMIC POLICIES FOR STABLE GROWTH HAVE BEEN ACCOMPANIED BY LONG-TERM POLICIES FOR ECONOMIC RESTRUCTURING. WE OPENED MORE OPPORTUNITIES FOR THE PRIVATE SECTOR TO BE THE PRIMARY ENGINE OF GROWTH. THE ELECTRIC POWER INDUSTRY REFORM ACT, BOTTLED UP IN CONGRESS FOR NINE YEARS, WAS FINALLY ENACTED INTO LAW. THIS PAVES THE WAY FOR THE COMPLETE PRIVATIZATION OF POWER GENERATION, TRANSMISSION AND DISTRIBUTION IN THE COUNTRY.

WE ALSO PASSED AN ANTI-MONEY LAUNDERING ACT TO ALLEVIATE UNCERTAINTIES ATTENDANT TO FINANCIAL INTERMEDIATION.

THE MARKET WELCOMED THESE POLICIES. INFLATION DECLINED FROM 7.9 PERCENT IN JANUARY OF 2001 TO 3.4 PERCENT IN FEBRUARY OF 2002. INTEREST RATES EASED AND THE BELLWETHER TREASURY BILL RATE REACHED ITS LOWEST LEVEL ON RECORD. THIS HAS BEEN A BOON TO BUSINESSES, AS IT HAS ALSO REINFORCED THE GOVERNMENT'S DEFICIT REDUCTION PROGRAM.

DESPITE THE DECLINE IN EXPORTS, OCCASIONED BY THE WORLD'S SLOWDOWN AND THE POST SEPTEMBER 11 DECLINE, THE FOREIGN RESERVE ASSET POSITION OF THE CENTRAL BANK HAS BEEN MANAGEABLE. GROSS INTERNATIONAL RESERVES NOW STAND AT A RECORD HIGH ADEQUATE TO ENABLE US TO SERVICE SHORT-TERM OBLIGATIONS, AS WELL AS ABOUT FIVE MONTHS OF IMPORTS. THE PESO-DOLLAR EXCHANGE RATE HAS STABILIZED TO BELOW 50 PESOS TO ONE U.S. DOLLAR.

RECOGNIZING THE TURNAROUND IN PHILIPPINE ECONOMIC PERFORMANCE, THE CREDIT AGENCIES HAVE UPGRADED THE COUNTRY'S SOVEREIGN DEBT RATING OUTLOOK FROM NEGATIVE TO STABLE. THE PHILIPPINES SUCCESSFULLY LAUNCHED SEVERAL GLOBAL BOND OFFERINGS; AND THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM, THE LARGEST PUBLIC PENSION FUND IN THE UNITED STATES, WHICH MADE A VERY MUCH PUBLICIZED RETREAT FROM ASEAN MARKETS, IS BACK NOW IN THE PHILIPPINE MARKET.

THE CREDITABLE PERFORMANCE ACHIEVED DURING THE DIFFICULT YEAR OF 2001 PROVIDES GROUND FOR OPTIMISM ABOUT OUR ECONOMIC PROSPECTS IN 2002 AND BEYOND. RISING BUSINESS AND CONSUMER CONFIDENCE IS INVIGORATING DOMESTIC DEMAND. OUR EXPORTS WENT DOWN BY 40 PERCENT LAST YEAR AND YET OUR GNP GREW BY 3.7 PERCENT BECAUSE OF CONSUMER SPENDING AND, MORE THAN THAT, BECAUSE OF GROSS DOMESTIC CAPITAL FORMATION. ALONG WITH THE EXPECTED ECONOMIC RECOVERY IN OTHER PARTS OF THE WORLD, THIS SETS THE STAGE FOR FURTHER EXPANSION IN THE PHILIPPINE ECONOMY.

MY GOVERNMENT PROJECTS REAL GDP TO GROW FROM FOUR TO 4.5 PERCENT IN 2002. WE SHALL STRIVE HARD TO REALIZE THIS TARGET AND TO IMPROVE ON IT IN THE YEARS AHEAD.

OUR GROWTH PROSPECTS HINGE MUCH ON MAINTAINING A DISCIPLINED MACROECONOMIC PROGRAM THAT LEADS TO GREATER STABILITY AND INVESTMENT. WE ARE VIGOROUSLY PURSUING OUR DEFICIT-REDUCTION PROGRAM. AT THE SAME TIME, FISCAL POLICY WILL PROTECT AND, IN WELL-IDENTIFIED CASES, INCREASE SPENDING FOR AGRICULTURAL MODERNIZATION, EDUCATION AND HEALTH, SOCIALIZED HOUSING, INFRASTRUCTURE, INFORMATION AND COMMUNICATIONS TECHNOLOGY AND TOURISM.

THE DEFICIT-REDUCTION PROGRAM WILL SUSTAIN THE DOWNTREND IN INTEREST RATES. THIS WILL PROPEL THE RECOVERY OF INDUSTRY. THE REVIVAL OF THE BANKING INDUSTRY IS BEING ADDRESSED THROUGH THE SPECIAL PURPOSE ASSET VEHICLE ACT AND RELATED BILLS IN CONGRESS. THESE LAWS AIM TO AID THE BANKING SECTOR UNLOAD ITS NON-PERFORMING LOANS -- AGAIN MAY I SAY THEY ARE SMALLER THAN AROUND THE REGION -- AND STRENGTHEN THE REGULATORY AND SUPERVISORY FUNCTIONS OF THE CENTRAL BANK AND THE PHILIPPINE DEPOSIT INSURANCE CORPORATION.

THE ROAD TO SUSTAINED GROWTH OVER THE MEDIUM-TERM WILL BE SECURED BY EFFORTS TO IMPROVE TOTAL PRODUCTIVITY. WE ARE STARTING WITH AGRICULTURAL MODERNIZATION.

AND TO SHARPEN COMPETITIVENESS, WE ARE COMMITTED TO DEREGULATION, PRIVATIZATION, LIBERALIZATION. WE ARE ON TRACK IN MEETING OUR LIBERALIZATION AND TARIFF REDUCTION TARGETS, PARTICULARLY THOSE FORGED UNDER THE ASEAN FREE TRADE AREA, THE ASIA-PACIFIC ECONOMIC COOPERATION AND THE WORLD TRADE ORGANIZATION.

MY ADMINISTRATION IS CONVINCED THAT THE BEST INVESTMENT FOR SUSTAINED GROWTH AND DEVELOPMENT IS GOOD GOVERNANCE. WE KNOW WE CAN WIN OUR BATTLE AGAINST POVERTY MORE EFFECTIVELY AND SPEEDILY IF WE ADHERE TO WHAT I CALL THE THREE PILLARS OF GOOD GOVERNANCE: FIRST, A SOUND MORAL FOUNDATION TO GUIDE OUR LEADERSHIP AT ALL LEVELS; SECOND, A PHILOSOPHY OF TRANSPARENCY IN ALL GOVERNMENT ACTIONS; THIRD, AN ETHIC OF EFFECTIVE IMPLEMENTATION THROUGHOUT THE BUREAUCRACY.

WE KNOW, TOO, THAT OUR EFFORTS REQUIRE THE PARTICIPATION AND SUPPORT OF ALL SECTORS OF OUR SOCIETY. BUT OUR ACTIONS ARE NOT LIMITED TO THE NATIONAL LEVEL, WE HAVE ALSO PURSUED OUR ECONOMIC REFORMS WITHIN ASEAN.

THESE EFFORTS, IF SUCCESSFUL, WILL FACILITATE THE CONCLUSION OF A FREE TRADE AGREEMENT WITH CHINA AND AN ECONOMIC PARTNERSHIP AGREEMENT WITH JAPAN.

IN RECENT MONTHS, JAPAN DEMONSTRATED AN INNOVATIVE APPROACH IN ACCELERATING INTEGRATION IN EAST ASIA THROUGH ECONOMIC PARTNERSHIP AGREEMENTS, OR E.P.A., WITH ASEAN COUNTRIES. THIS YEAR, JAPAN CONCLUDED ITS FIRST E.P.A. WITH SINGAPORE. WE FIND THE E.P.A. AN ATTRACTIVE INITIATIVE THAT COULD INVOLVE NOT A JUST TRADE AGREEMENT, BUT ALSO OTHER SECTORS OF THE ECONOMY LIKE SCIENCE AND TECHNOLOGY, TOURISM, HUMAN RESOURCE DEVELOPMENT, AND INVESTMENT PROMOTION. WE, IN THE PHILIPPINES, ARE INTERESTED IN THE ESTABLISHMENT OF A JAPAN-PHILIPPINES STUDY GROUP ON A POSSIBLE E.P.A.

THERE IS ALSO A GREATER NEED TO FOCUS ON REGIONAL PEACE AND SECURITY IN EAST ASIA, ESPECIALLY AFTER THE 11th OF SEPTEMBER TERROR EVENT. THIS TRAGIC EVENT REMINDED US OF OUR COLLECTIVE VULNERABILITY.

COUNTERING TERRORISM IS INDISPENSABLE FOR REGIONAL STABILITY. THE PHILIPPINES AND JAPAN WERE ONE OF THE FIRST COUNTRIES -- PRIME MINISTER KOIZUMI AND I TOGETHER, SEPTEMBER 12th BECAUSE I WAS HERE IN TOKYO -- CONDEMNED THE TERROR ATTACKS AND PLEDGED OUR FIRM SUPPORT TO THE INTERNATIONAL COALITION TO COMBAT TERRORISM.

I NOTE JAPAN'S SWIFT PASSAGE OF THE SPECIAL LAW ON ANTI-TERRORISM AND THE AMENDMENTS TO THE SELF-DEFENSE FORCES LAW TO ENABLE JAPAN TO PROCEED WITH HER COMMITMENT TO THE INTERNATIONAL COALITION. I BELIEVE THAT WITH THESE CHANGES IN JAPAN'S DOMESTIC LAWS, JAPAN WILL BE ABLE TO CONTRIBUTE MORE EFFECTIVELY TO EAST ASIA'S REGIONAL SECURITY. A GOOD EXAMPLE IS JAPAN'S PEACEKEEPING TEAM, RECENTLY FIELDED TO EAST TIMOR UNDER THE U.N. FLAG.

MY COUNTRY HAS ALSO BEEN AT THE FOREFRONT OF THE FIGHT AGAINST TERRORISM. PHILIPPINE COOPERATION WITH THE UNITED STATES WITHIN THE FRAMEWORK OF THE VISITING FORCES AGREEMENT HAS IMPROVED PHILIPPINE DEFENSE CAPABILITIES. AT THE SAME TIME, IT HAS CONTRIBUTED TO ENHANCED MUTUAL OPERABILITY BETWEEN THE ARMED FORCES OF THE PHILIPPINES AND THAT OF THE UNITED STATES. THESE SECURITY GAINS HAVE REINVIGORATED PHILIPPINE ECONOMIC ACTIVITIES.

DURING MY VISIT TO MALAYSIA EARLY THIS MONTH, INDONESIA, MALAYSIA AND THE PHILIPPINES SIGNED A TRILATERAL ANTI-TERRORISM AGREEMENT. THE NEXT DAY, DURING MY VISIT TO BANGKOK, THAILAND EXPRESSED ITS WILLINGNESS TO SIGN THE AGREEMENT AS WELL.

WE DID THIS IN THE BELIEF THAT SECURITY HAS TWO FACETS: ONE IS PHYSICAL SECURITY AND THE OTHER IS HUMAN SECURITY.

HUMAN SECURITY RELATES TO BASIC NEEDS LIKE SHELTER, FOOD, EDUCATION, EMPLOYMENT AND SUSTAINABLE DEVELOPMENT. PEOPLE WHO HAVE NO HOPE FOR THE FUTURE TEND TO VENT THEIR FRUSTRATIONS ON ESTABLISHED INSTITUTIONS AND SOCIETIES.

JAPAN'S O.D.A. PROGRAM HAS BEEN TARGETED TO MEET THE HUMAN SECURITY NEEDS OF OUR PEOPLE. IT IS THEREFORE IMPORTANT TO CONSIDER JAPANESE O.D.A. AS A NECESSARY INSTRUMENT TO ELIMINATE POVERTY, AND THUS DIMINISH THE BREEDING GROUNDS FOR POTENTIAL TERRORISTS.

ON THIS OCCASION, I WOULD LIKE TO EXPRESS OUR DEEP APPRECIATION FOR JAPAN'S CONTINUING SUPPORT FOR THE ECONOMIC DEVELOPMENT OF THE PHILIPPINES.

WE LOOK TO THE DEVELOPED WORLD NOT FOR DOLE-OUTS, BUT FOR EQUITABLE COOPERATION. I LOOK TO JAPAN TO LEAD A DIALOGUE THAT CAN IDENTIFY THE PRINCIPAL DEVELOPMENT ISSUES OF OUR REGION IN THE 21st CENTURY. PRIME MINISTER KOIZUMI'S INITIATIVE FOR DEVELOPMENT IN EAST ASIA CONFERENCE THIS YEAR, MAY BE THE APPROPRIATE VENUE TO CONSIDER THESE ISSUES.

FINALLY, LET ME REITERATE OUR COMMITMENT TO WORK WITH JAPAN AND OTHER COUNTRIES TO ENSURE A MORE PROSPEROUS AND PEACEFUL EAST ASIA FOR THE 21st CENTURY.

THANK YOU.

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