Speech of President Arroyo during a Luncheon hosted by the Economic Club of Chicago

Her Excellency Gloria Macapagal-Arroyo
President of the Philippines
During a Luncheon hosted by the Economic Club of Chicago

[Delivered at The Peninsula, Chicago, U.S.A., February 3, 2002]

Thank you very much Mr. Moskow.

And I would just like to tell our journalists, inform them that you are the Chairman of the Economic Club of Chicago and the President of the Federal Reserve Bank of Chicago.

May I also like to greet Ms. Gradier, representing Mayor Daly; Mr. Hanon, the Managing Director of the Illinois Trade Office.

And I would like to introduce to our friends from Chicago not only our Ambassador, Ambassador Del Rosario but also the other members of my delegation our Senate President Pro Tempore, Senator Manny Villar; Congresswoman Cynthia Villar; Congressman Alipio Badilles and Congressman Plaridel Abaya; as well as the Governor of the Autonomous Region of Muslim Mindanao; and we have members of my Cabinet Secretary Perez of Energy and my Presidential Spokesman, Mr. Tiglao; members and guests of the Economic Club of Chicago; ladies and gentlemen:

Good afternoon.

First of all I wish to thank you, Mr. Moskow, the Club Chairman, and Mr. James Mcclung, a very close friend of the Philippine Consulate, for bringing us together at such short notice and on a Sunday at that. Thank you for bringing your wives over to listen to a female president and it’s a good way to spend Sunday together. And i hope you’ll be … I’m sure you’ll get out in time for the Super Bowl. Am sure most of you heard President Bush in his State of the Union Address. I welcome his strong pitch to pull out America from recession because 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 in your ability to surmount crisis, to obtain security, to have more jobs.

The drive against terrorism, which has been taking most of our attention, and the drive against poverty, these are now driven by a widening global consensus. We could see it in WEF. 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 should decisively strike at the breeding grounds for the recruits of terrorism. In my country my battle plan for the war against poverty revolves around four components: first, free enterprise appropriate to the 21st century; second, modernized agriculture founded on social equity; third, a bias toward the disadvantaged to spread out the fruits of development; and, fourth, a commitment to high moral standards in government and society.

And I am happy and gratified that since I assumed the presidency a year ago, we have made progress. Where bigger and richer economies failed, ours has moved forward. Our gross national product in 2001 grew 3.7 percent of which gross domestic product grew at 3.4 percent, this is now one of the highest growth rates in a world where many countries are suffering recession.

For instance our neighbors, Singapore and Hong Kong, are suffering from negative growth rates.

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 and economic turmoil who did not ask for an IMF program.

Indeed, we have gone a long way to bringing our country back on the radar screens of the world. A new cabinet, two of them are here, 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 eight Harvard graduates — my Spokesman is one of them — three Wharton Alumni — my Energy Secretary is one of them — four veterans of Wall Street — my Energy Secretary is one of them again — and two Phds in economics, including the President of the Philippines.

Much of what the world’s investment community has asked of us, we have thus far delivered. We have opened our retail trade sector to foreign ownership — and Amway has been able to take advantage of that. The Power Reform Bill and the Money Laundering Act, which were long considered litmus tests of our political will to legislate reforms, were put into law during the first months of this administration after many years of delay. Our public deficit has been placed under control. Interest and inflation rates have declined — in fact, interest rates are at their lowest in the last 15 years, and you as bankers — many of you are bankers here — I hope, would appreciate that.

Even recent unemployment rates have 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 inspite of the world’s slow down. And we intend to bring it down some more.

Foreign direct investment levels have also exceeded targets in 2001.

Leading international credit 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. 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 the balance in 1ho2. The Philippines is gaining momentum.

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. 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 if it had based its evaluation on our full year figures which just came out two or three days I think it would even more upbeat. For instance, it said that we grew thanks largely to strong personal consumption. But economies will say that’s not sustainable. Well in the end our growth was investment-led, with domestic capital formation rising 4.3 percent amidst a world where there is dis investment in many economies — and many of your economies and bankers and you know that investment-led growth is more sustainable than consumption-led growth. So our growth is investment-led.

As for its statement regarding well-performing agriculture and service sectors, I agree with the adjective with regards to our agricultural sector because it grew 3.9 percent in 2001, again higher than expectation. And we also thank the Carageenan industry — of which FMC has been contributing — for the 3.9 percent growth. 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 I think Motorola sales will be testament to that. And there was a 7.9 percent growth in business services, which includes information and communication technology services.

But 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. The latest bond offering last January, last month, raised a total of 750 million dollars on subscriptions worth over 2.5 billion dollars, and issued at a lower rate than the guidance price. And for the month of January, which was just finished, Bloomberg has just come out with a judgment that the Philippine stock market was the number one performer in the world — a first time for our country.

Let us now focus on some examples of trade and investment sectors that offer the brightest opportunities.

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 — where we grew 10.5 percent last year — we are promoting investments in physical infrastructure for high-speed connectivity at low cost. So I hope that Motorola instead of just selling to us will set-up shop in the Philippines. 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 has 7,100 islands and that certainly offers solid opportunities for wireless telecommunications infrastructure. That’s why we would like to invite you, the Chicago business community, to look into.

The high growth of our human resource-intensive, skills-intensive service sectors demonstrates that the Philippines is indeed, the home of the great Filipino worker. We are 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 that churns out 400,000 college graduates a year, 40,000 of them being knowledge workers like engineers and I.T. professionals. Filipino professionals are known for having the fastest learning curve — about only 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 have already enacted an e-commerce law, which is a first in Asia. It regulates the use of electronic technology and penalizes cybercrimes like hacking, and there are more laws, more bills in the pipeline to address other security issues as well as convergence in ICT, in telecommunications. I am pleased to announce that the Philippines will be hosting an e-services fair, next month in Manila.

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

Opportunities also lie in the energy sector. We are assisting the national power corporation in its privatization program in sourcing funds to refinance its assets to the tune of 250 million dollars out of our most recent 750 million-dollar bond offer, coupled with the Euro 500 million bond issue last November. These very successful issues were made possible by the passage of the Power Reform Bill that I mentioned earlier, which we passed last June — one of the first and significant milestones of my administration. In fact the implementing rules and regulations have just come out for the sale of these assets, chaired by Congressman Badilles who is the chairman of the House Committee on Energy.

The privatization of the national power corporation will be a major structural reform and provide long-term fiscal benefits for country, and it’s worth about five billion dollars all in all — different assets. The first one to go on the block will be the transmission company worth two billion dollars which will be bidded out in June this year.

We also aim to expand the investment opportunities related to infrastructure required to improve the competitiveness of industries in the form of electricity, mass transport systems, roads, bridges, telecoms and ports.

Housing construction also presents business opportunities, as low-cost housing is one of our key priorities. I want to build 100,000 houses for workers a year and 50,000 houses for the poorest of the poor. This offers opportunities for Chicago housing technology that is inexpensive, innovative and adaptable to a tropical climate.

We also need to increase further farm incomes and harvests. And I’m saying this here in Chicago, in the Midwest because the resources, expertise, and market savvy of Midwest agribusiness corporations would be of great value to our economy.

Also our country has already positioned itself as a major player in the air express industry. The air hub of Fedex in Asia is in Subic. Ups also recently announced it would develop its own facility in the Philippines which will open on April 5th this year.

In 2002 our reforms will seek to strengthen the banking sector — that should give more opportunities for some of the bankers who are here today — and we will further unlock bottlenecks to major infrastructure and investment projects that have been stuck in the pipeline for many years. We will also expand our revenue sources.

We are determined to promote efficient and transparent governance. Under the leadership of my cabinet members, government agencies are implementing measures to cut in half the number of signatures required for the delivery of services like licenses, permits, registration and franchises.

Even our local governments have agreed to streamline and slash red tape in order to provide seamless efforts between national and local governments to be investor-friendly. That includes the Autonomous Region of Muslim Mindanao.

And so therefore I’ve come here for a few hours to meet the Philippine community and also to meet the movers and shakers of the Midwest business community and to let you know that this is the time to capitalize on the deepening convergence of interests by strengthening the strategic economic alliance between the United States and the Philippines. Together, we can weather the storm of the aftermath of September 11 and avert a global recession and achieve mutually profitable alliances.

Thank you.

Source: www.op.gov.ph

Macapagal-Arroyo, G. (2002). PGMA’s Speech during a Luncheon hosted by the Economic Club of Chicago. Retrieved from https://web.archive.org/web/20100412230834/http://www.op.gov.ph/index.php?option=com_content&task=view&id=7621&Itemid=38