ARANGKADA PHILIPPINES FORUM JOINT FOREIGN CHAMBERS OF THE PHILIPPINES (JFCP)

RIZAL BALLROOM, MAKATI SHANGRI-LA 26 FEBRUARY, TUESDAY, 8:50-9:00 A.M.

“TRENDS AND KEY REFORMS IN TRADE AND INDUSTRY IN THE PHILIPPINE ECONOMY”

OPENING REMARKS

SECRETARY GREGORY L. DOMINGO DEPARTMENT OF TRADE AND INDUSTRY

(ACKNOWLEDGMENTS)

MR. MICHAEL RAUEBER, PRESIDENT OF THE EUROPEAN CHAMBER OF COMMERCE,

MR. RHYCK JENNINGS, PRESIDNET OF THE AMERCIAN CHAMBER

MY FRIEND AMBASSADOR HARRY THOMAS

AMBASSADOR BILL TWEDDLE

MS. GLORIA STEELE, MISSION DIRECTOR OF USAID

AND JOHN FORBES, SENIOR ADVISOR OF THE AMERICAN CHAMBER

GOOD MORNING AND CONGRATULATIONS ON THE SECOND ANNIVERSARY OF

ARANGKADA UNDER A MORE ROBUST PHILIPPINE ECONOMY.

PRESIDENT AQUINO’S STRAIGHT PATH LEADERSHIP HAS RESULTED IN A DRAMATIC RISE

IN THE CONFIDENCE OF LOCAL AND FOREIGN INVESTORS MAKING 2012 THE

PHILIPPINES’ BANNER YEAR SO FAR.

I REITERATE WHAT OTHERS HAVE BEEN SAYING THAT WE HAVE A STABLE AND

PERFORMING ECONOMY, WHICH IS THE NEW NORMAL FOR THE PHILIPPINES.

THE ECONOMY EXPANDED BY 6.6% IN 2012, AMONG THE FASTEST IN ASIA, WHILE

KEEPING ONE OF THE LOWEST INFLATION RATES IN THE REGION AT 3.2%. THE

PAIRING ACTUALLY IS WHAT IS PHENOMENAL, HIGH GROWTH, LOW INFLATION RATE

WHICH SELDOM HAPPENS.

I WILL NOT FORECAST ANYMORE OVER 7% GROWTH THIS YEAR BECAUSE I MISSED

LAST YEAR BY .4%. BUT I WILL FORECAST 7%. THE GROWTH BY THE WAY IS

SUSTAINABLE, IT’S NOT A FLUKE. IT’S BASED ON DIVERSE ACHIEVEMENTS IN DIFFERENT

SECTORS.

ALSO IF YOU LOOK AT THE NUMBERS CLOSELY, THE 3RD AND 4TH QUARTERS GDP

GROWTH RATES SHOWED A SLIGHTLY DIFFERENT PATTERN, IN THAT THE

MANUFACTURING SECTOR EXHIBITED THE HIGHEST GROWTH RATES, HIGHER THAN

SERVICES. FOR THOSE WHO HAVE NOT BEEN HERE FOR THE LAST TEN YEARS, SERVICES

HAS BEEN THE FASTEST GROWING SECTOR IN THE PHILIPPINE ECONOMY, EXCEPT IN

THE LAST TWO QUARTERS OF LAST YEAR.

THAT’S A VERY GOOD INDICATION THAT MANUFACTURING IS BACK AND YOU’LL SEE, IF

YOU GO TO LAGUNA, BATANGAS AND CEBU, YOU’LL SEE ALL THE MANUFACTURING

PLANTS, HUGE ONES, THAT ARE BEING BUILT. SOME OF THEM HAVE STARTED

OPERATIONS ALREADY.

WE ALSO ENDED THE YEAR WITH A PER CAPITA GDP OF US$2,600, SURPASSING FOR

THE FIRST TIME THE CRITICAL THRESHOLD OF US$2,500 WHICH IS CONSIDERED BY

MANY ECONOMISTS AS THE JUMP-OFF POINT FOR EXPONENTIAL GROWTH IN

CONSUMER SPENDING.

WE’VE SEEN AS WELL ALL THE THREE MAJOR RATINGS AGENCIES, MOODY’S, FITCH

AND S&P’S THAT THEY HAVE ALL RATED THE COUNTRY ONE NOTCH BELOW

INVESTMENT GRADE. WE ARE HOPING FOR INVESTMENT GRADE STATUS FROM AT

LEAST ONE OF THEM IN THE NEAR FUTURE.

THE LATEST JETRO SURVEY AS WELL WHICH WAS RELEASED ABOUT THREE WEEKS

AGO SHOWED THAT AMONG EXPORTERS, THE PHILIPPINES EMERGED AS THE MOST

PROFITABLE LOCATION IN 2011. THIS WAS BASED ON SURVEYS ACROSS ASIAN

ECONOMIES INCLUDING CHINA, THAILAND, MALAYSIA, MYANMAR, VIETNAM,

INDONESIA, AND INDIA. SO WE ARE IN THE GOOD SPOT.

IN TERMS OF GOOD MANAGEMENT, THE SAME SURVEY SHOWED THAT IT IS EASIEST TO

RECRUIT GENERAL STAFF IN THE PHILIPPINES.

ALSO, THE PHILIPPINES SHOWED THAT THERE WERE ONLY 2 STRIKES/LOCKOUTS IN

2011 WHILE COMPARING IT TO ONE OF OUR NEIGHBOURS WHICH HAD 857

STRIKES/LOCKOUTS IN THE SAME YEAR.

WHEN IT COMES TO COMPETITIVENESS IN ACCESS TO REASONABLE SALARY, THE

PHILIPPINES HAD THE LEAST SALARY INCREASE FOR 2012-2013 AT 5.2%. THE

PATTERN HAS BEEN THAT OVER THE LAST 10 YEARS. LABOR COST HERE INCREASED

BETWEEN 3-5%, A VERY STABLE AND STEADY INCREASE THAT IS QUITE PREDICTABLE.

LET ME TURN NOW TO SOME OF THE INITIATIVES THAT WE HAVE BEEN DOING AT DTI.

AT DTI, WE CONTINUE TO PUSH FOR TECHNOLOGY AND AUTOMATION TO PROVIDE

BETTER SERVICE TO THE PUBLIC.

DTI IS LEADING THE WAY IN BRINGING THE ERA OF CLOUD COMPUTING IN ITS MAJOR

BUSINESS PROCESSES.

IN FACT, WITH THE ASSISTANCE OF USAID, WE HAVE SUCCESSFULLY MIGRATED THE

PHILIPPINE BUSINESS REGISTRY (PBR) AND THE BUSINESS NAME REGISTRATION

SYSTEM (BNRS) TO THE CLOUD. IF YOU ACCESS OUR SYSTEM, THAT IS BEING RUN ON

THE CLOUD. THIS IS TO ENSURE HIGH AVAILABILITY TO OUR USERS.

LAST YEAR, BOI AND PEZA APPROVED P672.3 B OR ABOUT US$16 B OF

INVESTMENTS WHICH INCLUDED US$6.7 B COMMITMENTS FROM FOREIGN SOURCES

THAT WILL HAPPEN OVER THE COURSE OF SEVERAL YEARS. THE REALIZATION RATE,

THAT IS ACTUAL INVESTMENTS FROM REGISTERED INVESTMENTS, IS IN EXCESS OF

80%. SO, YOU DO THE MATH.

BASED ON THE FOREIGN INBOUNDS MISSIONS AS WELL, AND BASED ON THE PLANS

THAT WE HAVE BEEN INFORMED ABOUT BY THE VARIOUS COMPANIES AND EMBASSIES,

2013 WILL BE A MUCH BETTER YEAR FOR INVESTMENTS THAN THE RECORD SETTING

2012. SO EXPECT MORE GOOD THINGS TO COME THIS YEAR.

ON THE TRADE FRONT, MERCHANDISE EXPORTS REBOUNDED IN 2012 TO REACH A

RECORD US$52 B, THE HIGHEST RECORDED EXPORT EARNINGS IN PHILIPPINE

HISTORY. THIS IS INSPITE OF THE SLUGGISH MARKET IN THE US, ECONOMIC

SLOWDOWN IN CHINA AND JAPAN, AND THE CONTINUING CRISIS IN THE EU. THIS IS

DUE TO THE DIVERSIFIED AND BALANCED GEOGRAPHIC MARKETS WE SERVE, AS WELL

AS THE BIG IMPROVEMENT IN THE NON-ELECTRONICS EXPORTS, WHICH MORE THAN

MADE UP FOR THE WEAKNESS IN CONSUMER ELECTRONICS.

I WOULD LIKE TO NOTE THAT IN THE LAST 5 YEARS, OUR ASEAN AND EAST ASIAN

NEIGHBOURS ACCOUNTED FOR ABOUT 60% OF TOTAL PHILIPPINE EXPORTS,

COMPARED TO 10 YEARS AGO WHEN 50% OF OUR EXPORTS WENT TO THE US AND

EU.

PURSUIT OF ACTIVE TRADE RELATIONS DUE TO THE OPPORTUNITIES THAT RESULTED

FROM ASEAN’S FTAS WITH CHINA, KOREA, AUSTRALIA AND NEW ZEALAND AND

THE PHILIPPINE’S FTA WITH JAPAN HAS RESULTED IN THE IMPROVEMENT OF OUR

TRADE NUMBERS.

THUS, WE ARE FURTHER INTENSIFYING PARTICIPATION IN TRADE NEGOTIATIONS AND

CONSTANTLY ON THE LOOKOUT FOR OPPORTUNITIES BROUGHT ABOUT BY BILATERAL,

REGIONAL AND INTERNATIONAL TRADE AGREEMENTS SUCH AS THE ONE WITH THE EU

AND THE TPP.

WE ARE ALSO LOOKING AT POSSIBLE CHANGES IN LEGISLATION TO INCLUDE REVIEW OF

THE FOREIGN INVESTMENT NEGATIVE LIST, RATIONALIZATION OF INCENTIVES, MINING

ACT AND OTHERS. WE ARE TARGETED TO FILE THE DRAFT BILLS AT THE START OF THE

NEW CONGRESS AND WE HOPE TO PASS SOME OF THESE BY THE END OF THIS YEAR.

TOGETHER WITH THE JFC, THE PHILIPPINE CHAMBER OF COMMERCE AND INDUSTRY,

FEDERATION OF PHILIPPINE INDUSTRIES, AND THE NATIONAL COMPETITIVENESS

COUNCIL, WE HAVE CRAFTED 19 INDUSTRY ROADMAPS AND WORKING ON 9 MORE.

JUST LIKE THE 7 BIG WINNERS THAT THE ARANGKADA STUDY IDENTIFIED, THESE

SECTORS REPRESENT THE GLOBAL COMPETITIVE ADVANTAGE OF THE PHILIPPINES AND

WILL PLAY A CRITICAL ROLE IN THE DEVELOPMENT OF STRATEGIC AND JOB-

GENERATING INDUSTRIES.

INDEED, GOOD NEWS ARE COMING IN FROM MANY FRONTS, FROM TOURISM,

MANUFACTURING, BPO, AGRIBUSINESS, AND OTHERS.

THE ARANGKADA STUDY AIMS TO ACCELERATE INVESTMENTS AND ECONOMIC

GROWTH, AND CREATE JOBS IN THE COUNTRY. GROWTH IS STARTING TO HAPPEN, THE

FRUIT OF THE CONTINUOUS AND PAINSTAKING WORK OF THE GOVERNMENT, THE

PRIVATE SECTOR, AND DEVELOPMENT PARTNERS.

I CALL ON YOU TO SHARE OUR OPTIMISM AND LEAD IN SENDING THE SIGNAL TO THE

WORLD THAT NOTHING IS GETTING IN THE WAY OF GROWTH IN THE PHILIPPINES. NO

ONE CAN BE BETTER AMBASSADORS OF GOODWILL AND PROMOTE THE COUNTRY

THAN YOU, WHO HAVE, OVER THE YEARS, HELPED US REALIZE OUR FULL POTENTIAL.

LET US ALL WORK HAND IN HAND FOR A BETTER PHILIPPINES.

THANK YOU AND GOOD MORNING!