The following are details of an interview with Ambassador Raul S. Hernandez of the Republic of Philippines conducted by The Korea Post as part of its program to introduce the New Year Plan of the different countries on the occasion of the 30th anniversary of founding of The Korea Post Media.?Ed.
Question: We understand that the Philippines has a bright outlook of the economy for this year. What are the indicators of your economy?
Answer: From 2011 to 2014, the Philippines has made advances in seven global competitive reports. Some of the biggest improvements globally over three years are in the World Economic Forum Global Competitiveness Report (+33) and Global Enabling Trade Report (+28), World Bank-International Finance Corporation Doing Business Report (+53), Transparency International Corruption Perceptions Index (+49), and the Heritage Foundation Economic Freedom Index (+26). These are positive indicators that shows that the Philippines is moving forward.
Because of good governance and reforms instituted by the President Benigno S. Aquino III, the Philippines continues to be one of top economic performers in Asia.
This positive sentiment is shared by foreign governments and companies all over the world. In 2013, for the first time, our country was upgraded to investment grade status by Moody’s, Fitch, and Standard and Poor’s?the three major credit ratings agencies in the world.
In May and December 2014, the Philippines was upgraded by one more level by Standard and Poor’s and Moody’s, solidifying the robust outlook on the performance of the Philippine economy. In September 2014, it has received yet another credit rating upgrade, this time from South Korea-based NICE Investors Service Co. Ltd., which has raised our credit rating from BB+ to BBB- with a positive outlook?thus upgrading our status to investment grade. This boosted anew the confidence of the Korean business community to view the Philippines as an investment destination.
Q: What are the indicators for 2015?
A: As we enter 2015, economic planners and financial managershave remained bullish about the Philippine and have set a target of about 7 to 8 % GDP growth rate in 2015. Optimism is sustained due to the continuation of the good governance reforms initiated by the current administration, solid economic fundamentals, efficient financial management, increasing revenue collections, resumption of government spending.
With the government aiming to hike infrastructure spending from 2.5% of GDP to 5% by 2016, emphasis is now given in the implementation of infrastructure projects, particularly those of transport and logistics that will facilitate the movement of goods and people in, out and within the country.
A transport roadmap for Metropolitan Manila and the nearby regions are to be converted into concrete projects while comprehensive master plans are being prepared for the other parts of the Philippines. This presents opportunities for foreign companies to participate in the bidding on numerous big-ticket infrastructure projects- airports, expressways, Road ? RORO (Roll On- Roll Off) terminal systems, expressways, roads and urban transport systems.
Apart from transport infrastructure projects, there would also be major government infrastructure projects to pursue energy and water security, particularly dams, water transmission systems and power plants. As a matter of fact, large Korean companies like Hanjin, Kepco and K-water have participated in the bidding and have won some of these contracts, proving Korea’s expertise and capability in these fields.
Another impetus for the expected increase in government spending in infrastructure is the ongoing rehabilitation and reconstruction of the areas stricken by typhoon Haiyan. Back to back with the reconstruction efforts is the improvement of disaster response and management systems.
In the 2015 Philippine national budget, the following have been identified as priority sector because of their potential for rapid growth and generation of quality employment: agribusiness, manufacturing, construction, logistics, tourism, and information technology ? business process management in Next Wave Cities.
The Next Wave Cities are new locations for ICT businesses outside Metro Manila selected because of ample worker supply, telecom infrastructure and other factors needed to sustain the BPO industry.These cities are Baguio, Davao, Dumaguete, Iloilo, Lipa, Metro Bulacan, Metro Cavite, Metro Laguna, Metro Naga, and Metro Rizal.
In all of these projects and programs, the Philippine government’s overarching goal is to have sustainable and inclusive growth which would also be felt by all segments of the society. In fact, the Philippines, being the host for APEC 2015 (Asia Pacific Economic Cooperation), has adopted the theme: “Building Inclusive Economies, Building a Better World”.
Q: What is the outlook of cooperation between Korea and the Philippines?
A: Bilateral cooperation continues to grow between Korea, the Philippines:
As in the previous years, there have been several people-to-people exchanges which took place in Korea and in the Philippines, some of which were organized and supported by the ASEAN- Korea Center. In 2014, for example, a seminar on investment opportunities was hosted by the Philippine Board of Investments (BOI) for a 15-member delegation from the Republic of Korea.
The delegation was also met by officials of three investment promotion agencies: the Philippine Economic Zone Authority (PEZA); Subic Bay Metropolitan Authority (SBMA); and Clark Development Corporation (CDC). These agencies are managing respective special economic zones where hundreds of Korean companies are located. This year, we will see another investment mission taking place in the Philippines with Korean business leaders meeting face-to-face with government and business leaders in the Philippines to discuss the investment climate, policies and new opportunities. The 2015 ASEAN Connectivity Forum, which will take place in Seoul, is another fine example of people-to-people exchange which would focus on physical infrastructure and Information & Communication Technology (ICT).
It may be recalled that in October 2013, President Park received President Aquino in Seoul in a State Visit, the first ever she hosted since she took office. Fourteen months after, another bilateral meeting between Presidents Park and Aquino took place during the ASEAN-Korea Commemorative Summit in December 2014 held in Busan. In both occasions, new areas of cooperation have been considered and existing ones- on defense, trade, investment, agriculture, energy, official development assistance, labor and consular matters-have beensolidified. The APEC Summit, which will take place towards the end of the year, will be an opportunity for our heads of state to meet again, to follow through on previous commitments; and to bring forth new proposals for collaboration.
We have gone a long way since the participation of the Philippines during the Korean War as we sent troops to help South Korea remain free and democratic. The Republic of Korea is now the Philippines’ 5th largest trading partner; a major source of foreign direct investments alongside US, Japan and the Netherlands; and the number source of tourists.
The complementary nature of the two economies gives rise to an expanding host of business opportunities. Korea’s aging population, the attendant problems of a shrinking labor force, soaring production overheads, declining market and thinning margins will find relief in the Philippines’ 100 million consuming public and a very young, skilled and mobile labor force. Notwithstanding Korea’s progression into the more advanced, less labor-intensive industries, there will be a need to find new markets overseas and attractive manufacturing location.
In 2015 and in the succeeding years, we expect that the bilateral relationship will attain an even higher level,with more projects jointly undertaken for the benefit of both the Korean and Filipino people.