Back in business in the heart of Asia

Back in business in the heart of Asia

By President Fidel V. Ramos

As we begin another year, we stand on new ground of confidence
in ourselves and hope for the future.

We can see what is within our capacity to attain higher growth
in the economy, further empowerment of our people through jobs
and livelihood, the spread of peace and prosperity throughout our
land and the vigorous growth of our commerce, as well as rapport
with the world.

We are in better shape -- economically, politically and
socially -- to achieve sustained growth and progress. We are
holding our own as a nation in the most dynamic region of the
world, the Asia-Pacific.

Foreign observers and institutions are saying the same thing.
Asiaweek and the Far Eastern Economic Review reported that 1994's
biggest turnaround story was the Philippines. Forbes Magazine
commented, "The economic reforms brought to much of Southeast
Asia by authoritarian regimes have come to the Philippines via
democracy." Salomon Brothers, in its final report for 1994,
observed that in the Philippines, "Political and economic factors
are now united to produce sustainable growth in 1994 and onward."

These positive endorsements should steel our resolve to work
harder as a national team in order to win the future. Our
achievements must inspire us to accomplish more, in 1995 and
beyond.

Reform undergirds the dynamism of our economy, our society,
and our government today.

We made a commitment to put in place the necessary reforms for
national revival and sustainable growth. We pledged to achieve
our shared vision of Philippines 2000 to bring the country to the
threshold of newly-industrialized country (NIC) status by 1998,
and therefrom to leapfrog into the 21st century.

Our reform efforts involved much sacrifice and fortitude. We
sailed against the authoritarian tide in Asia by striving to
achieve development with democracy as our anchor and guide.

We have forged political stability by initiating an all-
encompassing peace effort to conciliate all disaffected groups,
and a nationwide drive to eliminate insurgency, reduce crime and
keep the peace. We forged political coalitions. We brought
Communist, secessionist and military rebels to the negotiating
table.

We have opened up the economy to competition to level the
playing field of enterprise. We dismantled monopolies and
cartels, starting with telecommunications. In land, water, and
air transportation, we have put in a comprehensive framework for
liberalization. We removed restrictions on foreign exchange
transactions, liberalized banking and our investment rules,
instituted a comprehensive build-operate-transfer scheme and
adopted the flagship system to fast-track the implementation of
strategic public investment projects within and between our
growth centers nationwide.

Economic gains

All of this contributed to a record performance last year that
presages our economic take-off.

The estimated gross national product (GNP) growth of 5.5
percent in real terms surpassed our own target of 4.5 percent in
1994. For the first time in 20 years, the national government
achieved a budget surplus.

Inflation stood at a single-digit level, while our
international reserves continued to build up.

Our problem this year with the exchange rate was an
appreciating peso. We have an oversupply of dollars because of
expanded foreign investments, the attractiveness of Philippine
blue chips and increased remittances from our overseas workers.

Foreign investments have climbed not only in volume but also
in the number of projects and sites throughout the country.

Tourist arrivals exceeded 1.5 million, representing a 20
percent growth.

Besides being the key force in economic expansion, the private
sector generously supported our flagship projects. Of the total
cost of 220 billion pesos, 63 percent or 139 billion pesos was
provided by the private sector.

We completed the construction of major road networks
throughout the country, and reconstructed 24 major bridges.

Our regional growth centers are taking off, creating fresh
opportunities for small and medium-scale enterprises.

The continued development of Subic and Clark bases into
commercial, industrial, recreational, and eco-tourism areas
generated investments amounting to 23.1 billion pesos, providing
employment to more than 50,000 of our countrymen.

Industrial peace

Jobs are a major component of distributing wealth and
preserving social stability. Both industry and services recovered
so strongly in 1994 that the economy generated more than 700,000
quality, productive full-time jobs in the formal sector. The
number of wage and salary workers alone grew by more than half a
million. The number of industrial jobs grew by 839 percent
between 1993 and 1994, which signals our advance towards an
industrializing economy.

The construction and housing sectors grew by 10 percent in
1994. The expansion of infrastructure projects by both the public
and private sectors in 1995 should generate many more new jobs.

As a vital by-product, we attained a record in industrial
peace during 1994. For the first time since 1981, the number of
strikes, 93, was below 100, a record we achieved not under
martial law but as a functioning democracy.

Social reform

To help the more vulnerable and disadvantaged among us, we
have placed social reform and democratization of wealth at the
center of the national agenda.

In our Social Reform Agenda, we will continue to provide a
package of reform measures to address basic inequities in our
society. Our Social Reform Agenda intends to promote equity in
terms of access to resources, just sharing of the benefits of
growth and effective people's participation in decision-making.

To ensure the meaningful empowerment of ordinary Filipinos, we
pursued efforts to remove the root causes of dissidence and
internal conflict by attending to the basic needs of our
disadvantaged sectors.

The actions taken included increased access to quality
education and technical training, provision of decent and
affordable housing, promotion of employee and worker benefits,
pursuit of primary health and sanitation programs, increased
pensions for veterans and benefits for the elderly.

To top all of this, we have aggressively pursued agrarian
reform. In 1994, this administration distributed close to one
million hectares of land to farmer-beneficiaries, more than half
the total distributed in the 20 years between 1972 and 1992.

Agricultural productivity increased from 3.5 percent in 1993
to 29 percent in 1994 with a growth in rice production, due
mainly to our new Key Production Area approach to agriculture,
and the improved productivity in some 400 Agrarian Reform
Communities.

Our policy is clear. In the economy, we strive for the
greatest degree of enterprise and competition, so that the
fittest will survive and prosper. However, it is the role of the
government to look to the survival and care of the weakest.

To our poor, we have a social debt that is heavier than our
external debt. This is a debt we cannot default. But we can only
pay it through the sustained growth of our economy.

1995 work program

The central challenge of 1995 is to prove that our performance
in 1994 was not just plain luck, the high point of a boom-and-
bust cycle, or a case of ningascogon enthusiasm. This year we
must prove that our gains are sustainable, our policies are
effective for the long term, and the growth we achieve redounds
to the welfare and well-being of our people.

We began our recovery by reversing our inward-looking economy,
turning it outwards to the world in recognition of the reality of
global economic competition. Globalism offers us vast
opportunities for trade, investments, jobs and progress.

On January 1, 1995, we became a founding member of the World
Trade Organization (WTO) which will oversee the new trade regime
negotiated and approved by the Uruguay Round of the General
Agreement on Tariffs and Trade (GATT).

Our 1995 agenda must encompass the need for adjustment,
maintenance, and capacity-building in the world economy.

We will focus our efforts on the following areas:

* To build upon our comparative advantage, which is the
quality and number of our labor force. Total human resource
development will be pursued. We also will avail ourselves of
policy reforms in basic and higher education, vocational-
technical training systems, improved teacher education, and
science and mathematics scholarships.

* To sustain our growth, we will accelerate efforts to promote
further efficiency in agriculture, industry, and the marketplace;
continue to open our economy to global competition. We will also
rationalize, as well as make more progressive, our tax system.
We will aim for a GNP of 6.5 percent, with exports growing
between 17 percent and 25 percent, and investments at 10 percent
to 12 percent.

* We will keep the costs of living and of doing business low,
with an inflation target of 6.5 percent and interest rates of
around 11 percent.

* We will work for a fiscal surplus of P15.5 billion and a
balance-of-payments surplus of $1.2 billion.

* We will exploit our strategic central location at the heart
of the Asia-Pacific by improving our services, particularly in
banking and finance; in port and airport operations; in cargo
handling and distribution; in transport and telecommunications
infrastructure; and in our hi-tech capabilities and knowledge as
a literate, English-speaking nation.

* To address the structural adjustments that we need as we
shift to a freer and more competitive global trade under GATT, we
have allocated P32 billion for GATT-related projects. We will
strive to support all industries, enterprises and sectors that
will be affected by the transition, to make them more productive
and competitive.

We have a few years to adjust to the new trade regime, but the
sooner we banish the words protection, monopolies, cartels and
subsidies from our vocabulary, the faster we will reap the
benefits from the new free trade regime of the world.

We have the chance of a lifetime to attain the progress that
Rizal, Aquinaldo, Bonifacio, and other Filipino heroes envisioned
a century ago for our people and our country. Let us seize this
chance. It will require a lot of hard work, discipline and
commitment, but let us not be daunted. Let us sustain the thrust
and momentum of national growth throughout this year.