President Aquino Previews 2015 APEC Economic Leaders’ Week

Our mantra is “inclusive growth.” The only way to be able to achieve inclusive growth is if we invest in the human capital, which we think is the greatest single resource.

Philippine President Benigno S. Aquino III will chair the 2015 APEC Economic Leaders’ Meeting in Manila. He and fellow Leaders of the 21 APEC member economies will convene on 18-19 November to decide the future of policy cooperation in the Pacific Rim, building on actions put forward over the course of the year to boost trade and inclusive, sustainable growth.

In an interview with the APEC Secretariat, President Aquino discussed trade and development in the Philippines and across the Asia-Pacific, and partnership among the region’s economies to support it. President Aquino went on to describe his views on ensuring that the benefits of greater regional integration and growth are widely felt and secure. He also discussed his expectations for his last APEC Economic Leaders’ Meeting before his Administration concludes.

APEC: Please describe the economic picture in the Philippines today and your views on conditions around the Asia-Pacific.

President Aquino: On the average, from the time we started, growth has been pegged at about 6.2 per cent and we’re hoping that we will maintain that; even increase that number.

There’ve been massive investments, first in the social services; multiplied budget for health, for education, in particular. Our mantra is “inclusive growth.” The only way to be able to achieve inclusive growth is if we invest in the human capital, which we think is the greatest single resource.

There’s still tumult in the global economic sphere. The question of refugees is also in the forefront of everybody’s minds; stability, terrorism, pandemics. But, that is where fora like APEC come into the picture – a platform where we can really concentrate on synergies and complementarities between the various economies, leading to positive changes in each of our individual societies.

Whereas, absent that fora, you will all be relegated to parochial concerns. You now have a venue that you can actually see commonality of problems and, a lot of times, synergies and solutions proposed so that everybody takes care of their parochial concerns while expanding their own capabilities to do so by growing their own respective economies.

APEC: What is your take on the direction of cooperation between the Philippines and other economies across the APEC region?

President Aquino: Perhaps I should highlight our relationships in this part of the world with member economies in Latin America. Just travelling from one to another is a major, major effort. I think from the Philippines to South America is something like two-day travel by air. Of course, that needn’t be the case. But again, the chicken and egg question: could there be direct flights? Yes, if there is demand. The demand comes from increased economic activity between the two economies.

I’d like to highlight the synergies. For instance, Chile and Peru want to grow their geothermal energy resources. I understand the Philippines is second only to America in terms of exploiting geothermal resources; so there is expertise. There’s a Filipino company called Energy Development Corporation that’s actually embarked on joint ventures with Chile to exploit their geothermal resources. And the reverse – the product I can think of right away is Chilean sea bass – and their expertise in aquaculture, in particular, for a country like us that is an archipelago, is very, very inviting.

APEC facilitated this movement of trade and also movement of services in terms of getting the professionals. There’s a request, for instance, for English instructors from a lot of these markets – both within Asia and the ASEAN group, and also with the Latin American economies.

The distance actually hampered trade. This fora seeks to minimize the effect of that distance and thereby create, in a specific sense, shorter avenues for interaction between all of our economies brought about by the increasing trade aspects amongst us.

APEC: Why has the Philippines chosen to chair APEC again in 2015?

President Aquino: We hosted it in 1996. When we were offered the opportunity to do so, supported amongst the APEC economies, we believed that at the time that it was being offered to us, by 2015, we should already show the fruits of our mantra of “good governance is good economics.” The turnaround in the economy is, I think, very, very apparent; the vibrancy and change in attitude of our people also. 

We go back to the central core duty of every government which is, the way we phrase it, every government is set up to improve the lot of the people—of their people, their constituencies – and that only happens in a period of stability.

Hosting it at this particular time, showing the fruits of the work that we started in 2010 might serve as an example that can be copied by other countries, thereby also improving their economies, which makes for a better partner. We believe that it is the right time to show the positive changes that have happened in a relatively short period of time; that saw us from being the “sick man of Asia” to, some have quoted, “Asia’s rising star.”

APEC: How have the Philippines’ economic priorities changed since the last time it chaired APEC almost 20 years ago?

President Aquino: In a sense, the priorities haven’t changed but the population has doubled. In 1986, there were about 50 million Filipinos. We hit a hundred million about two years ago. The basics for the economy are food, clothing and shelter for double the population.

Of course, the threat of global climate change is more pronounced now; is more evident now. The issue of pandemics is more on the forefront of everybody’s mind with MERS, with Ebola, with SARS. In that sense, you have to provide the basics for a lot more and give them a new set of challenges with it. Perhaps the biggest, greatest difference is the degree of cooperation amongst the different economies in addressing what are increasingly less parochial problems and more of global in nature.

APEC: What is your take on the regional trade agreements now emerging in the Asia-Pacific and the implications for the Philippines and the future of APEC?

President Aquino: One has to remember the Doha Round, though for negotiations and the lack of agreement on the Doha Round of negotiations. One would want a global agreement. A global agreement becomes most inclusive, and therefore, the potential for growth for everybody is maximized.

Absent that, we have to participate in all of these regional trade agreements—for obvious benefits: the increase in the market size, access to commodities, services, technology, etc., with the conviction that all of these have to be inclusive rather than exclusive. Driving to make them more inclusive should be a priority for every economy.

APEC: How important is improving inclusiveness for development and what do you see as the engines for greater progress on a policy level?

President Aquino: In one of our early cabinet meetings, perhaps after a year being in office, we were looking at the poverty figures and they had hardly moved. There was a question: the economy is growing, why is the poverty figure hardly moving? That’s why the concept of capacitating our countrymen came to the picture.

For instance, one of our growth industries is so-called business processing management-business processing operations. At the time we started, out of ten applicants, a mere 10 per cent would be accepted. We asked what were the disqualifications– language facility; some basics that were not properly taught, perhaps, in school. We had, and we still have, a web portal called Phil-JobNet – that lists job opportunities and the number of applicants. There was a mismatch between job availability and skills availability.

What we did primarily was get the education sector and the Ministry of Labor to talk with industry and ask them to project what skill sets would you need in a two, four, six-year period, and, thereby, minimize the job and skill mismatch. For instance, in the technical vocational sector, we started out with a placement rate of about 26 per cent, 28 per cent on average. Now, it’s 70 plus per cent, and that actually resulted basically from just talking to the people who would be providing the jobs.

In certain categories where they were most cooperative, the figure is in the high 90s already. Job placement is defined as, once graduated from the program, within six months, did you or did you not get a job? That is something that we are very, very proud of.

We think it’s part of the virtuous cycle. If more and more of your constituents or your people around the sidelines cannot participate because they lack the necessary skills to do so, then they are more and more – how shall I put it? – disillusioned with the system, not connected with society at all. This breeds instability, increases disparity in income level and so on and so forth.

We put in our resources where we believed it would make the most sense. Education is at the forefront. Our constitution actually mandates that the biggest single item in the budget has to be education. Education by itself is not enough. A person who is steadily making his way in this world suddenly gets a catastrophic illness and starts out with zero – so massive investments. I think the budget for our Department of Health has increased something like 300 per cent from the time we started.

We have a Conditional Cash Transfer Program. Education up to the high school level is supposed to be free, but there are certain members of our population who are not even able to afford transportation fare for their children. There is a cash stipend program and the primary requirement – that’s why it’s called Conditional Cash Transfer Program – is to keep their child in school.

Graduating from high school versus somebody who graduated from elementary school—studies already show that there is a 40 per cent increase in income prospects. These people who previously could only do menial jobs suddenly get into skilled; get into the workforce as a skilled member who pays taxes, who enables us to train the next generation. That’s why we say inclusive growth leads to stability within the system and continued growth.

The mantra is “nobody should really be left behind.” That’s why we are focusing and trying to do the holistic approach from education, health, food security, better ability to resist climate change, building back communities better and a whole set of other activities and programs that we have instituted.

APEC: In what areas do you feel regional partnership can play a greater role in building inclusive, sustainable economies and growth?

President Aquino: One of the items on top of my agenda is global climate change. In most countries in the world, communities start out near water—their rivers, near the ocean. We have a lot of our communities situated, especially on the Pacific side, where increasingly more and more violent storms are coming to the forefront.

We’re trying to get away from the cycle of a destruction brought about by typhoons and reconstruction that doesn’t change anything. We get visited by twenty typhoons a year. So, stop the pattern of destruction-reconstruction, destruction again, reconstruction again. Let’s build back the communities better wherein it is not a guarantee that there will be communities that will be destroyed come this impact.

If we make all of our partners even more aware of what happens to us, given, shall we say, sources of energy, for instance, then absent that information, how are they goaded into action to address global climate change? So again, this platform helps us situate economies and the factors of production into a situation where we also cooperate on other topics apart from that of increasing just growth. That’s one aspect.

Second, is the ability to make all of our economies more efficient. They have particular skills. I mentioned earlier the geothermal expertise in Chile—that we had the two sharing and their aqua-culture expertise that they might share with us. In ASEAN, one of the first requirements for a new ASEAN head of state is to visit the partner countries in ASEAN. One source of major embarrassment for me is that a lot of their Agricultural Ministers and other officials actually studied in the Philippines. They learned the lessons very well, to the extent that for our staple, rice, we are actually a net importer for the longest time of that which we taught them how to plant.

Movement of people within the economic community enhances the ability of each economy to be able to gain the efficiencies, to be more competitive and actually grow. APEC, in particular, is a unique platform wherein there are no binding agreements; where the discussions, therefore, can be really be free-wheeling; can really explore those that a conservative-minded individual would not want to discuss openly, suddenly is encouraged to do so, which, again lays the groundwork for greater cooperation towards those agreements that are binding.

Perhaps, in a sense, this is the real incubator, especially for the more revolutionary changes that you want to happen.

APEC: Your cabinet has hosted meetings of Ministers and Senior Officials throughout the Philippines’ year as APEC Chair in 2015. What are your views of the results so far and expectations for the APEC Economic Leaders’ Week in Manila that will culminate with the Leaders’ Meeting that you will head?

President Aquino: We’re very happy with the results. Inclusivity of growth is already on the agenda. You have both the Boracay list and the Iloilo list concentrating on the growth of micro, small and medium enterprises. The bulk of economic activity originates from this particular sector – 90s, high 90s. If there is no focus on how to grow this particular segment, then obviously growth for the global economy is limited. We’re very happy that there was the Boracay Action Agenda and the Iloilo initiative on top and then also the Cebu Action Plan for the sustainable future of APEC communities.

Once the Leaders meet, we will encapsulate all of the discussions that have happened in these 200 or so events and we will come up to a realization of the aspirations that each member economy has already expressed throughout these 200 events.

APEC: The upcoming APEC Economic Leaders’ Meeting will be your sixth. Please describe your personal experiences when interacting with the other APEC Leaders and what you look forward to this year?

President Aquino: I can start off from what I expected the first time. A lot of them you meet for the first time. Some of them have been in office and have gathered such media attention, in certain cases, for several years, decades even. You are in awe. You have all these questions of how did you manage such and such a problem, and so on and so forth.

Being at the top of the pyramid sometimes is extremely lonely; there’s no higher office that you can ask help from. When you finally do get a chance to talk to them, you find out that there is commonality of problems; there are sometimes commonality also of situations that happen in the solution of these problems. At the end of the day, you find kindred spirits.

There has been, in all these international fora that I have attended, very little instances where there was not effective communication between and amongst the leaders. That paved the way for more rapid action towards the common needs and wants, or the meeting of these needs.

At the end of the day, I find that when developing the relationship, maturing the relationship amongst all of these leaders, and especially considering the problems in our economies, there is, perhaps, a little difference in detail. But, generally, these problems besetting one sector of humanity are also problems affecting the other sectors of humanity. The recognition of the commonality of problems leads to greater cooperation in trying to come up with a better solution that flows or proceeds from greater cooperation with each other.

APEC: Is there anything particular that you are looking for on a personal level during your final APEC Economic Leaders’ Meeting?

President Aquino: It would be nice to see some of the Leaders. For instance, President Obama and myself will be leaving office. I’ll be leaving by next year; I think he’ll be a little later by something like six months or so. Perhaps the exchange is on what we will do after leaving the office.

This is one of the few opportunities I get to touch base with our Latin American counterparts. In a sense, our growth as nations, being colonies, being people who had to suffer a period of the so-called dirty wars—the background is the same. The problems confronting us are, to a certain extent, also the same, and it does help us to learn from the lessons that each one had to undertake.

We will try to maximize this opportunity also in terms of taking care of the problems of the present and especially of building the future.

This opportunity wherein our focus is to concentrate not on disputes, not on issues that might divide us, but rather how do we actually get to the point to help each other to address this nagging concern common to all of us? So, skills that we have, skills that you have present complementary skill sets that can be used to both of our advantages.

In the two days or so that I’ll be meeting with all of these Leaders, we will try to move that agenda towards making the ‘C’ portion of APEC even more apparent to everybody. And, at the end of the day, hopefully in addressing all of the concerns, all the problems and the issues, perhaps the world Leaders will agree to say solving problems is also more fun in the Philippines.