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.