Speech of President Arroyo during the Investment Roundtable Luncheon sponsored by the Credit Suisse

Her Excellency Gloria Macapagal-Arroyo
President of the Philippines
During the Investment Roundtable Luncheon sponsored by the Credit Suisse

[Delivered at the St. Regis Roof, the St. Regis Hotel, New York City, New York, U.S.A., January 31, 2002]

Thank you very much Vince.

I’d like to greet and thank first of all Brady Dugan for hosting this affair, putting all of this together; and also Mr. Hilley, the member of the Board of Credit Suisse; also to thank Mr. Madrid for always being there to help organize the affairs to promote business credit in the Philippines and the U.S.; Ambassador del Rosario, Ambassador Yuchengco.

And I would like to greet the members of my official my delegation: Senate President Pro-Tempore Manny Villar, Senator Ralph Recto, Congressman Badelles who chairs the house panel on the implementing rules for the power sector reform, Congressman Plaridel Abaya, Congresswoman Villar, Congressman Reyes; then you are quite familiar with my economic team Lito Camacho who spoke earlier; Dante Canlas, my economic planning minister; Sonny Alvarez, my environment Secretary, Central Bank Governor Buenaventura; I rudely interrupted Board of Investments managing head Gregory Domingo.

I would like to greet all of you, distinguished guests, ladies and gentlemen, a good afternoon.

And I hope that you found the previous briefings were useful. This is a good time to expand our trade and investment relations.

I am sure most of you heard President Bush in his State of the Union Address. And I can say as a response, that the Philippines will continue to be a partner of the United States in the war-to-the-end of terrorism. American troops are training side-by-side with ours in Basilan, the isolated island in Southwestern Philippines where the terrorist group Abu Sayyaf has its lair. The anti-terrorism partnership will continue until the whole world is secure against terrorists.

I also welcome President Bush’s strong pitch to pull out America from recession. This will help in a big way to pull out the global economy from lethargy. We all anticipate this effort with great confidence and faith in the American people — to surmount crisis, to obtain security, and to have more jobs.

The drive against terrorism and poverty is now driven by a widening global consensus. A new kind of war needs a new kind of peace. As we shift from war to peacekeeping and nation-building in Afghanistan, nations are gearing their resources for a big push against poverty that will decisively strike at the breeding grounds for terrorism’s recruits.

My battle plan for the war against poverty in the Philippines continues to revolve around four components:

Free enterprise appropriate to the 21st century, that’s the first;

Second, modernized agricultural sector founded on social equity;

Third, a bias toward the disadvantaged to spread out the fruits of economic development to many and;

Fourth, a commitment to high moral standards in government and society.

Development is in full swing in the Philippines. Our stock market for the last two weeks say that.

Since I assumed the Presidency a year ago, we have made progress. Where bigger and richer economies failed, ours has moved forward. Gross Domestic Product grew 3.4 percent in 2001 and gross national product grew 3.7 percent, one of the highest growth rates in a world where many countries are suffering from recession.

Where bigger and stronger currencies collapsed, ours has held firm, even though, as the IMF acknowledges, I am the only president who assumed office following a period of political turmoil who did not ask for an IMF program. So we kept our currency stable without an IMF program and without instituting capital controls.

Indeed, we have gone a long way to bringing our country back on the radar screens of the world. A new Cabinet — many of whom you’ve met — picked as much for their integrity as for their competence and qualifications, has brought professionalism in public service to new heights. This professionalism is illustrated by the fact that in my Cabinet there are seven Harvard graduates including Lito Camacho, there are three Wharton Alumni including Vince Perez and even the BOI head Gregory Domingo, another Harvard graduate is Sonny Alvarez, my Secretary of Environment, there are four veterans of Wall street Lito and Vince, there are two Phds in economics, one is my secretary of planning and the other one is the President of the Philippines.

Much of what the world’s investment community has asked of us, we have thus far delivered. The Power 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 and Lito told you about that.

Well, let me tell you also about a story that we had when we we’re discussing with the IMF the Philippine economic performance — and this has being discussed oh sometime in the last quarter of last year — and the IMF admitted to me that they had been betting against the Philippines. They bet I could not pass the Power Sector Reform Law. Thanks to our Congressmen and Senators here, we did so they lost that bet. They bet we could not do our Money Laundering Law before September 30th and they lost that bet. So, he said, “we were also betting that you won’t make your fiscal deficit ceiling. And I’m afraid they’re going to strike out.” And they did strike out at the end.

So, we have tamed our deficit. We have passed important structural reforms legislatively. Results: interest rates and inflation rates have declined. Interest rates are at their lowest in the last 15 years — I must acknowledge the work of the Central Bank there.

And recent unemployment rates have also shown decline. From 11.6 percent when I assumed the presidency, in nine months we were able to bring it down to 9.8 percent and counting, I hope.

Foreign direct investment levels as you have seen from Gregory’s interrupted presentation exceeded targets in 2001.

Leading international credit rating agencies and multilateral bodies such as NEXI, JBIC, the World Bank, and the Asian Development Bank have all responded to our economic performance by endorsing our enhanced credit worthiness. Sorry about this Credit Suisse but i’ll just talked about everybody else J.P. Morgan reports that the prevailing decline in risk aversion has allowed the continuous improvement in economic fundamentals in the Philippines to finally shine through.

Even the less complimentary Salomon Smith Barney in its January-February 2002 credit research says: “increasing risk appetite in 2002 should favor the Philippines among Asian sovereigns.

“We expect the Philippines’ ratings to stay on balance in 1ho2.”

And they further characterize the Philippines the Philippines as, again I quote, “gaining momentum.”

They recognize that, quote again, “economic growth has been resilient largely thanks to strong personal consumption and some well-performing agriculture and services sectors … This could be bolstered by the government’s growing credibility in the eyes of foreign investors … And given the government’s commendable performance in 2001, we expect it should stay close to its more difficult targets in 2002.”

Salomon Smith Barney probably based its evaluation on our first semester growth which was consumption-led. But I think it should be more upbeat now that it is clear that our full-year growth was investment-led, with capital formation rising 4.3 percent amidst a world where there is disinvestment in many economies.

And as for its statement regarding well-performing agriculture and service sectors I agree with the adjective “well-performing” with regard to our agricultural sector, which grew 3.9 percent in 2001. But I think the word “well- performing” is mild with regard to our service sectors, where there was a 20.5 percent growth in telecommunications and 7.9 percent growth in business services, which include I.T. services.

And of course, more than any published evaluation of credit risk, I believe the most practical judgment of our economic viability is expressed in the international financial markets. Some of them have been discussed today in addition to the credit-enhanced 50 billion yen raised in Shobosai bonds last year, the latest bond offering in January this year raised a total of 750 million dollars over subscribed three times over, and issued at a lower rate than the guidance price.

Let us focus now on some examples of trade and investment sectors that offer the brightest opportunities. And also comply with my own priorities as the chief economic manager of the Philippines.

We are promoting fast-growing industries where high-value jobs are most plentiful and which can use our most competitive resource — the great Filipino worker. In the area of telecommunications, we are promoting investments in physical infrastructure for high-speed connectivity at low cost. We are also establishing municipal telecommunications centers, and working with mobile phone producers to disperse cell sites to make their services available all over the country. The Philippines, with its 7,100 islands, certainly offers solid opportunities for wireless telecommunications infrastructure. And so, this is one great area for investment.

The high growth of our human resource-intensive, skills-intensive service sectors demonstrates that the Philippines indeed is the home of the great Filipino worker. We’re the third largest English speaking country in the world. We have a workforce that is I.T.-literate and multi-skilled. We have a large labor pool with an educational sector churning out 400,000 college graduates per year, 40,000 of these being knowledge workers like engineers and I.T. professionals. Filipino professionals are known for having the fastest learning curve of at the most eight weeks to learn technical skills.

With its highly skilled and highly trainable labor force, the Philippines is an ideal outsourcing partner for I.T. services. We’ve already enacted an e-commerce law, a first in Asia. The law regulates the use of electronic technology and penalizes cybercrimes like hacking, and now there are more bills in the pipeline to address other security issues as well as convergence. I am pleased to announce that the Philippines will be hosting e-services Philippines, a major I.T. services fair, next month in Manila. And I hope some of you who are in I.T. will go there.

Tourism is also a growing sector in the Philippines. We are developing eco-tourism and beach tourism sites and projects.

And as we have seen today, opportunities also lie in the energy sector. We have been assisting the National Power Corporation in sourcing funds to carry out its privatization program. We have been refinancing its assets to the tune of 250 million dollars of our most recent 750 million-dollar bond offer, coupled with the Euro 500 million issue this past November. These very successful issues were made possible by the passage of the Power Reform Bill which I mentioned earlier, one of the first and significant milestones of my administration last year.

The privatization of the National Power Corporation will be a major structural reform and it will provide long-term fiscal benefits. The sale of its transmission company, as you have heard from Vince, will begin by June of this year and the generation companies to follow.

We aim to expand the investment opportunities also related to infrastructure required to improve the competitiveness of industries in the form of not only electricity, but also mass transit systems, roads, bridges, telecommunications and ports.

Housing construction also presents business opportunities, as low-cost housing is one of our key priorities. This offers opportunities for American housing technology that is inexpensive, innovative and adaptable to a tropical climate.

In 2002, this year, our reforms will seek to strengthen the banking sector, further unlock bottlenecks to major infrastructure and investment projects that have been stuck in the pipeline for many years. So what we did with the Power Reform Bill which was stuck for so long and we unstuck it, we will be doing that with major infrastructure and investment projects. We will expand our revenue sources. We will also distribute more land to farmers, complemented by agricultural modernization measures, including investments to rehabilitate and expand irrigation, construct post-harvest facilities, and assist with marketing and research and development.

As we implement the Philippine economic plan, I cannot emphasize enough that economic growth is of no value if it is not linked to good governance practices. And that is why we are determined to promote efficient and transparent governance. Under the leadership of my cabinet members, whom I find that you are also impressed with, government agencies are implementing measures to cut in half the number of signatures required for the delivery of services such as licenses, permits, registration and franchises.

Our local governments have likewise agreed to streamline and slash red tape in order to provide seamless efforts between national and local governments to be investor-friendly.

This is the time to capitalize on the deepening convergence of interests by strengthening our commercial relations. And I am very sure that if we continue our long-term partnership, our long-term strategic partnership, in security matters, in economic matters, together, the U.S., the Philippines can weather the storm of the global recession and achieve mutually profitable alliances.

Source: www.op.gov.ph

Macapagal-Arroyo, G. (2002). PGMA’s Speech during the Investment Roundtable Luncheon Sponsored by the Credit Suisse. Retrieved from https://web.archive.org/web/20100412230841/http://www.op.gov.ph/index.php?option=com_content&task=view&id=7581&Itemid=38