Tuesday, March 26, 2019

Strong Synergy Seen Between Beijing, Manila
Global Times
2019/3/26 17:53:40

Photo: Carlos G. Dominguez

Editor's Note: With maritime dispute behind them, relations between China and the Philippines are back to a healthy track. At the Philippine Economic Briefing recently held in Beijing, Carlos G. Dominguez III (Dominguez), the Philippine secretary of finance, called on Chinese investors to examine investment opportunities in the Philippines and deepen economic cooperation between the two countries. What's the significance of enhanced bilateral cooperation to the Philippines? How can Manila and Beijing strengthen cooperation under the China-proposed Belt and Road Initiative (BRI) and the Philippines' "Build, Build, Build" program? Global Times (GT) reporter Yu Jincui talked to Dominguez over these issues.

GT: Many economists have warned that the global economy is already on an irreversible path leading to an economic downturn. How will the Philippines seek growth amid global risks? Are you optimistic about the Philippines' economic outlook?

Dominguez: The Philippines is poised to buck the trend of a global slowdown in 2019 with its economy maintaining its ascending trajectory on the back of massive public investments programmed this year for infrastructure and human capital development. The prospects of higher consumer and business spending resulting from the government's headway in taming inflation and improving the ease of doing business are also expected to sustain the momentum of growth.

The massive trends indicate a slowdown in the growth of the global economy. We intend to defy such trends by pulling our economy up by its bootstraps and by using economic investments as leverage to continue raising domestic demand, which, in turn, will stimulate economic activity and create jobs.

GT: What is your take on the current state of China-Philippine economic cooperation?

Dominguez: A strong synergy is now evident between China and the Philippines following renewed vigor in bilateral relations between the countries under the leadership of President Rodrigo Duterte and President Xi Jinping.

China has been extending assistance to the Philippines not only in terms of loans and grants for our infrastructure projects, but also in terms of benefits from numerous investments committed by Chinese enterprises.

To date, China is our fast-growing source of investments and largest trading partner. We also benefit from a larger tourist flow from China.

The establishment of a Peso-Renminbi trading platform recently is an essential first step toward maximizing the gains of bilateral trade between the Philippines and China.

The timing of the initiative couldn't be more urgent as China's rebalancing to a more consumption-driven economy is expected to create plenty of opportunities for Philippine manufacturers and producers to broaden their market base and expand production.

We continue to pursue enhanced trade, economic and infrastructure cooperation, as well as people-to-people exchanges with China.

GT: What role do you think can China play in the Philippines' "Build, Build, Build" infrastructure program?

Dominguez: China plays an important role in ensuring the success of our "Build, Build, Build" program. China has already been contributing significantly to helping fill the Philippines' infrastructure gap.

On April 10, 2018, the Philippines and China signed the $62.09 million loan agreement to help fund the construction of the Chico River Pump Irrigation Project in Northern Luzon.

The Chico river irrigation project will provide a stable supply of water to around 8,700 hectares of agricultural land, benefit 4,350 farmers and their families, and serve 21 barangays in the provinces of Cagayan and Kalinga in Northern Luzon.

On November 20, 2018, during President Xi's visit to Manila, the Philippines and China signed the $211 million loan agreement for the New Centennial Water Source-Kaliwa Dam Project. This will provide water security, reliability and additional supply for Metro Manila.

So far, China has extended a total of $290 million in grants to the Philippines. These were allocated to fund the Pre-Feasibility Study, Feasibility Study and construction/implementation of various infrastructure projects and humanitarian assistance. Some were even allocated for the provision of broadcasting, security and agricultural equipment/materials, among others.

We would also like to point out that China was among the first countries to offer its assistance in helping rebuild the damaged city of Marawi in Mindanao, a gesture that further cements our strong bilateral relations and reflects the warm friendship between our two countries.

GT: President Duterte will attend the second Belt and Road Forum for International Cooperation in Beijing in April. What are the Philippines' expectations on joining BRI?

Dominguez: The Philippines fully supports BRI, which is undoubtedly the most ambitious and expansive development and trade strategy in the 21st century.

We have always seen great potential in cooperation under this initiative, especially in areas that converge with our interests, particularly in infrastructure modernization, as this would bring countless economic benefits to the countries in our region.

The BRI is making concrete the idea of connectivity between economies. It aims not only to foster better relationships among countries taking part in this groundbreaking initiative, but also heightening their competitiveness in the global trade arena.

The BRI, proposed by  President Xi, is the most exciting idea that has come about in the last 40 years. Once the BRI projects are in place, the Philippines will benefit in terms of lower logistics costs and improved market access.

GT: Are you concerned about the China-US trade war? How will it affect the Philippines?

Dominguez: The trade war between the US and China has created much apprehension in the investment community. But despite the challenges, we believe the Philippine economy will continue on its path of comparatively high growth.

Over the past two years, we have set up the conditions for higher and more inclusive growth. At the end of 2017, we were able to pass the first package of the Comprehensive Tax Reform Program. The TRAIN Law achieved what might seem to be contrary goals. Ninety-nine percent of individual taxpayers now enjoy reductions in their personal income tax (PIT) payments.

At the same time, it has improved revenue flows to government, enabling us to invest in our ambitious "Build, Build, Build" program and in expanded social services. The reduction in PIT rates is reflected in the robust double-digit growth in sales and the high-profit margins of many domestic companies ranging from food to retail to property development.

Through 2018, we saw the passage of several reform measures. These include the Ease of doing Business Act, the National ID System, and the Personal Property Security Act.

In the first months of this year, President Duterte signed several laws including an act upgrading our Corporation Code, an act strengthening the Bangko Sentral ng Pilipinas, a law providing for universal healthcare, and a law shifting rice trading to a tariff regime. All of these pieces of legislation add up to reinforce our market-enhancing institutions.

The Philippine economy is strong, resilient, and will continue to grow amid trade disputes or tensions in the region.

GT: The US has warned the Philippines against Huawei 5G gear. Some US allies, such as Australia, under US pressure, have blocked Huawei from building their 5G networks. What's your take on the issue?

Dominguez: This is much ado about nothing. Our telecommunications firms have long been using Huawei's technology to power their businesses.

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