Economic Opportunities in the Philippines

Head Table Guests

Ann Curran, Director, Corporate Development International and 1st Vice-President, The Empire Club of Canada; The Hon. Alipio Cirilo V. Badelles, Member, House of Representatives; The Hon. Ralph Recto, Member, Senate of the Republic of the Philippines; The Hon. Francisco L. Benedicto, Philippine Ambassador to Canada; The Hon. Plaridel M. Abaya, Member, House of Representatives; The Reverend Kim Beard, BA, BEd, MDiv, Rector, Christ Church, Brampton and Director, The Empire Club of Canada; Barbara Hall, Chair, National Strategy on Community Safety and Crime Prevention, Justice Canada and Director, The Canadian Club of Toronto; The Hon. Dante B. Canlas, Secretary of Socio-Economic Planning; The Hon. Edmundo O. Reyes, Jr., Member, House of Representatives; Ambassador Robert L. Collette, Canadian Ambassador to the Republic of the Philippines; The Hon. Cynthia A. Villar, Member, House of Representatives; The Hon. Heherson T. Alvarez, Secretary of Environment and Natural Resources; George R. Laidlaw, Counsel, Ministry of the Attorney General, Toronto; Francis Philipp Portugal, Student, Bayview Glen School, Toronto; The Hon. Maurizio Bevilacqua, Secretary of State, Minister of Science, Research and Development for the Government of Canada; The Hon. Manuel B. Villar, Jr., Senate President Pro-Tempore; Gordon K. McIvor, PhD, President, The Canadian Club of Toronto and Vice-President, Public and Government Affairs, Canada Land Co. Ltd.; Rick Waugh, ViceChairman, International Banking and Wealth Management, Scotiabank; and The Hon. Brenda Elliott, Minister of Governmental Affairs, Government of Ontario.

Introduction by Bill Laidlaw

Canada has had the good fortune of having the people of the Republic of the Philippines as close friends for many years. Many people of the Republic of the Philippines have immigrated to our country and have prospered since arriving on our shores. I see that there are a number of Philippine-Canadians in the audience today.

My first experience with your country came when President Corazon Aquino came to power over 15 years ago. I remember watching her on television standing up to her adversaries.

I had the good fortune of seeing her speak at the Empire Club in 1989. It was a speech that I will not forget as she brought so much life and energy to her job. More recently we had President Fernand Ramos at the club and his speech was also memorable.

Today we are indeed fortunate to have as our guest the current President of the Republic of the Philippines, Gloria MacapagalArroyo. January 20 marks the first-year anniversary of her election victory as President of the Republic of the Philippines.

During her first year in office she faced, and continues to face, many challenges in her role governing a nation of 76 million people. Her impressive political career began in 1992 when she was elected Senator. She was re-elected Senator in 1995 garnering the highest number of votes in Philippine history.

In 1998 she was elected Vice-President with almost 13 million votes--the largest mandate in the history of presidential or vicepresidential elections. She is the second woman to be elected to the presidency.

Ms. Arroyo is the daughter of the late president Diosdado Macapagal. During her father's presidency from 1961 to 1965, the Philippines was second only to Japan in economic progress.

Ms. Arroyo pursued her academic career in the United States. She attended Georgetown University in Washington D.C. where former U.S. President Bill Clinton was a classmate.

She graduated magna cum laude from Assumption College with a Bachelor of Science in Commerce. She later earned a Master of Arts degree in Economics from the Ateneo de Manila University, and a PhD in Economics from the University of the Philippines.

Ms. Arroyo lectured at the U.P. School of Economics before she entered government service as Assistant Secretary of the Department of Trade and Industry during the Corazon Aquino administration.

She then went on to the position of Executive Director of the Garments and Textile Export Board, where she managed the garment industry to become the top net-dollar earner for the country.

As a senator Ms. Arroyo was integral in bringing economic and social reform to the forefront and was named outstanding senator several times.

It is my pleasure to introduce to you Gloria Macapagal-Arroyo.

Gloria Macapagel-Arroyo

Ladies and gentlemen, I had a productive and meaningful day in Ottawa yesterday. Prime Minister Chretien and I agreed that this is a good time to expand our trade and investment relations.

And today, thank you for this opportunity to speak at this prestigious forum with such a long and distinguished history. Many world leaders have had the privilege of addressing the members of both the Empire Club and the Canadian Club of Toronto over the years. Considering the strong and friendly relations between Canada and the Philippines, it is not a surprise that among the world leaders who have spoken before this forum are two Philippine presidents--Corazon Aquino and Fidel Ramos.

Our interaction is even more meaningful today. We are strong allies in the fight against terrorism and poverty. We have a special bond with Canada arising from our over 300,000 Filipinos whom you have welcomed as immigrants.

Our economic relations are deep, solid, and robust. Prime Minister Chretien accompanied his Team Canada business delegation during its visit to the Philippines in January 1997, where $31 million in commercial contracts and $469 million in business agreements were signed. In November of that year, the Team Philippines business delegation visited Canada and a total of $1.4 billion worth of agreements were signed.

Since then, Philippine-Canadian business relations have continued to grow.

Total trade between our two countries reached $1.2 billion in the year 2000 or an increase of 45 per cent over 1997. Last month, S.N.C. Lavalin, one of Canada's leaders in engineering and construction, signed an implementation agreement worth C$1 billion to finance, design and construct a light-rail transit extension to the suburbs of Manila. The deal represents one of the biggest agreements signed in Philippine-Canadian history.

There is more in store for our economic relations. 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 per cent in 2001 and Gross National Product increased 3.7 per cent, one of the highest growth rates in a world where many countries are suffering 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 and economic turmoil who did not ask for an IMF programme.

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. This professionalism is illustrated by the fact that in my cabinet there are seven Harvard graduates, three Wharton alumni, and four veterans of Wall Street.

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. Interest rates and inflation rates have declined. Interest rates are at their lowest in the last 15 years.

Even recent unemployment rates have shown a decline from 11.6 per cent when I assumed the presidency. In nine months we were able to bring it down to 9.8 per cent.

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. 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 favour the Philippines among Asian sovereigns."

Salomon Smith Barney characterises the Philippines as "gaining momentum."

It recognises that "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. I think it would be even more upbeat now that it is clear that our full-year growth was investment-led, with domestic capital formation rising 4.3 per cent amidst a world where there is disinvestment in many economies.

As for its statement regarding well-performing agriculture and service sectors, I agree with the adjective with regards to our agricultural sector, which grew 3.9 per cent in 2001. But I think the word "well-performing" is mild with regard to our service sectors, where there was a 20.5-per-cent growth in telecommunications and 7.9-percent growth in business services, which includes IT services.

The high growth of our human-resource intensive, skills-intensive service sectors demonstrates that the Philippines is the home of the great Filipino worker. We are the third-largest English-speaking country in the world. We have a work force that is IT-literate and multiskilled. We have a large labour pool with an educational sector churning out 400,000 college graduates per year, 40,000 of these being knowledge workers like engineers and IT professionals. Filipino professionals are known for having the fastest learning curve of only eight weeks to learn technical skills.

With its highly skilled and highly trainable labour force, the Philippines is an ideal outsourcing partner for IT services. We have already enacted an e-commerce law, a first in Asia. The law regulates the use of electronic technology and penalises cybercrimes such as hacking, even as more bills are in the pipeline to address other security issues and convergence. I am pleased to announce that the Philippines will be hosting e-services Philippines, a major IT-services fair next month in Manila. I would like to invite our Canadian friends to visit this fair.

To promote urban peace and order, the Philippine national police has increased its visibility by hiring 1,700 new policemen, all college graduates, all highly professional.

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 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.

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

We are promoting fast-growing industries where highvalue 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 centres, 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.

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

Related to agribusiness, my administration is committed to bringing about countryside development through a modernised and socially equitable agricultural sector. Opportunities for technology transfer in animal breeding stocks, food processing equipment, organic products and irrigation technology are available.

Opportunities also lie in the energy sector. We have an omnibus power law enacted last year to privatise the state-owned national power corporation, break the monopoly of power generation and transmission and to develop electricity in rural areas. This offers solid investment opportunities for Canadian firms that have excelled in the power sector.

In the area of infrastructure, we are looking at privatesector development of our mass-transit systems. This is one of the areas where Canadian expertise in engineering and transportation infrastructure would be welcome. We are also expanding and modernising our airports and seaports, creating opportunities for Canadian investments in design, construction, and equipment.

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

This is the time to capitalise on the deepening convergence of Philippine and Canadian interests by strengthening our commercial relations. Together, we can weather the storm of global recession and achieve mutually profitable alliances.

Thank you.

The appreciation of the meeting was expressed by Gordon K. Mclvor, PhD, President, The Canadian Club of Toronto and VicePresident, Public and Government Affairs, Canada Land Co. Ltd.