Closer relations between China and the Philippines would be beneficial
Philippine business looks forward to stronger Sino-Philippines relations
MANILA – Against a backdrop of economic uncertainty brought about by COVID-19 and a string of devastating natural calamities across the region, former Ambassador Benedict V. Yujuico, currently Philippine Chamber of Commerce and Industry president said stronger relations between China and the Philippines is “something we need right noew amid the volatile global economic environment.”
“The PCCI has consistently supported the Silk Road and the Belt and Road Initiative because of their vast economic potential not only for the Philippines but also for all the other countries along the path,” he said.
Ambassador Yujuico said although the Philippine government under President Rodrigo Duterte has assured everyone of sufficient fiscal resource to prop up the economy as it recovers from COVID-19, “we are also aware that this is not enough to cover for the massive infrastructure modernization program under the ‘Build, Build, Build,’” which he went to describe as strategic to building resilience and sustainability.
“These are capital-intensive projects. China can bring in that much-needed investment,” he explained. Allaying fears of falling into the reported debt-trap experienced by other economies, the PCCI president said they are confident the government has already made the required assessment of risks while exploring the opportunities.
Asked how the Belt and Road Initiative helped the Philippines of bringing development to the countryside, he said China looms large in the Philippine economy.
“It accounts for 15 percent of our total trade with the world. China investments into the Philippines has likewise been steadily growing,” he said. He added in 2019, China became the second largest foreign investor in the country after Singapore with investments reaching roughly US$1.75 billion.
“In a sense, it is to our interest that China is doing something to develop greater economic cooperation, in trade, services, investments, people-to-people exchange and infrastructure build-up along the Silk Road through the BRI,” he further said.
Speaking of his expectations, Ambassador Yujuico said should the projects be implemented equitably consistent with China’s vision of shared prosperity, the BRI “could open up opportunities that will not only fill the vacuum of protectionist but also allow developing countries to benefit from China’s economic, technological, and financial support for investments, and its vast demand for goods and services.”
When asked of his views about the benefits derived from the Asia Pacific Economic Cooperation (APEC) which will be hosted by Malaysia later this month, he said the inter-governmental forum of 21 countries established in 1989, was a “regional discussion forum” for common interests. It was in 1994, he said that APEC adopted the Bogor Goals to completely open all member-economies to free trade and investment and by 2010 for the developed members of the group and by 2020 for the developing member countries.
“APEC credits the Bogor Goals for inspiring its members to pursue individual and collective action to reduce barriers to trade and investments and these efforts led to a region-wide reduction in average tariffs, which were 17 percent in the 1980a to around 5 percent today,” he added.
Citing APEC figures last year, he said between 1989 and 2018, the total value of APEC exports rose eight times and imports over seven times. The average tariff rates in the region have gone down falling from over 10 percent in 1999 to around five percent in 2018 while the number of free-trade agreement signed by APEC economies rose from 8 to 189 from pre-1990 to 2018.
“In today’s geo-political-economic environment where nationalism is re-emerging, free grade is on the defensive and COVID-19 has shaken supply chains across the globe stirring economies to take a more protectionist stance and look into their own domestic resources instead of relying too much on foreign countries, APEC could continue to provide strategic value with its inter-governmental institution for dialogue and its political commitment to resolve disagreements within the framework of a greater collective,” he added.
While there are no treaty obligations and commitments in APEC and everything is purely voluntary, its capacity-building projects “have helped its members implement APEC initiatives.”
“For the Philippines, APEC has contributed in shaping the business environment to meet global standards and align domestic regulations. These include the adoption of Disaster Risk Reduction Framework, the adoption of the Co-Loading Act of 2015 (also known as Cabotage Law, which now allows foreign ships to transport, import or export cargo directly to and from any local port other than the Port of Manila to help cut logistics costs), Competition Law, the Customs Modernization Act and even the Ease of Doing Business Act,” he said.
Ambassador Yujuico said under the Boracay Action Agenda, the Philippines led the initiative to encourage the participation of MSMEs in global value chains.
However, he noted in terms of trade, services and investments, the Philippines has “not really expanded” beyond its traditional trading partners composed of the United States, China, Japan, Korea and Singapore and beyond countries with which it has trade agreements with (ASEAN and East Asian+ countries covering China, Japan, Korea, Australia-New Zealand and India)
“In these areas, APEC’s contributions have been minimal,” he explained.
President Donald Trump’s “America First” policy remains vague as the US appears to have renewed interest in Asia predicated on the believe that its must counter the rise of China.
He said the country’s vulnerability lies in the Business Process Outsourcing sector where an estimated three quarters of total revenue come from servicing US companies.
“But for as long as we offer highly-skilled workforce at competitive rates, the Philippines will continue to have an edge over its US counterparts,” he concluded.
Ambassador Yujuico served as Presidential Special Envoy with the rank of Ambassador for Trade Relations for Eastern Europe, in North America and Latin America. (Melo M. Acuña)
PCCI President Ambassador Benedicto V. Yujuico in file photo at the recent 46th Philippine Business Conference and Exhibition. (PCCI Photo)