APEC SOM3 to focus on inclusive economies

CEBU, Philippines - The building of inclusive economies will be the center of discussions during the third Senior Officers’ Meeting (SOM3) of the Asia Pacific Economic Cooperation (APEC) in Cebu on August 24 to September 8.

Department of Finance Undersecretary for Policy Development and Management Service Gil Beltran, presented the Cebu Action Plan 2.1 of the APEC Substantive Core Team, which focuses on “Building Inclusive Economies, the Road to Financial Resilience” during the 4th U.S. Embassy Seminar for Regional Media, which focused on the country’s hosting of the 2015 APEC.

Beltran said the plan will provide stepping stones toward a financially integrated, transparent and resilient economy for the APEC community. Among the key issues included in the Cebu Action plan are promoting financial integration, advocating financial transparency, enhancing financial resiliency and supporting infrastructure development and financing.

According to the World Bank, inclusive growth is a “rapid and sustained poverty reduction that allows people to contribute to and benefit from economic growth.”

World Bank statistics show that from 2010 up to the present, the Philippines has one of the highest growth in Asia, with a real GDP growth of 6.8 percent in 2012, 7.2 percent in 2013 and 6.1 percent in 2014.

However, despite the so-called healthy economy in the country, poverty incidence remains very high.

National Economic and Development Authority director general Arsenio Balisacan, who was also one of the speakers during the U.S. Embassy seminar, said that the country needs structural transformation to succeed in poverty reduction.

“The lackluster performance in poverty reduction has something to do with the country’s macroeconomic performance for the last three to four decades,” he said, adding that for people to benefit from the healthy economy, there must be rapid and sustained economic growth of at least 5 to 6 percent for the next three to four decades.

US senior official for APEC Robert Wang, meanwhile, said that it is about time for APEC member economies to focus on inclusive growth.

He said that it is unfortunate that for some economies like the Philippines, growth meant an increase in inequality. He, however, stressed that the Philippines is not the only one experiencing this, adding that this is also true for Hong Kong and China.

“The inequality is quite amazing. We need to look at these issues not just in terms of morals but also in terms of sustainable growth,” he said.

Included in the action plan target to promote financial integration is to liberalize trade and cross-border investments across APEC economies, as well as to create an enabling environment to integrate low-income households and MSMEs into the financial mainstream.

In terms of advocating financial transparency, the Cebu Action Plan includes establishing linkages between investor ID systems, exchange of information by tax authorities and the avoidance of tax leakages that could arise from cross-border flows.

“If people know where their taxes are going, they will trust the government,” Beltran said.

In matters of enhancing financial resiliency, the action plan includes improving the public sector resource mobilization, promoting investment flows and creating buffers against shocks to fiscal resources such as natural disasters, global market volatilities and economic contagion effects.

The APEC Senior Officials’ Meetings have started with SOM1 last January 26 to February 7 in Clark. The SOM2 will be held in Boracay in May. The SOMs are meetings in preparation for the APEC Economic Leaders’ Meeting in Manila on November. (FREEMAN)