The Philippines and the EU; working together to promote inclusive growth

It was a great pleasure for me in September and October to meet many key players in the economic team – Transportation Secretary Arthur Tugade, Socio-Economic Planning Secretary Ernesto Pernia, Budget Secretary Diokno, Finance Secretary Carlos Sonny Dominguez, Labor Secretary Bello and DTI Secretary Ramon Lopez.

I was impressed by their explanations of concrete plans and actions to ensure a dynamic, sustainable and inclusive economic growth pursuant to the 10 plus 1 point economic agenda of President Duterte. In all meetings, the Secretaries reaffirmed their commitment to deepening cooperation with the EU, a cooperation that is driven by mutual interests.

The Philippines is among the fastest growing economies in the region and the European Union is ready to contribute towards many elements of its economic blueprint such as: through the support to move millions of the current 26 million poor out of poverty and to lift the country to upper middle income level. This is possible with the right policies in place to attract needed investments that provide decent jobs, promote human dignity, sustain development and add value to the Filipino economy.

The EU is also restructuring its economy. The global financial crisis made us realise how important foreign investment is to a competitive economy: President of the European Commission, Mr Jean-Claude Juncker, has announced the establishment of the European Fund for Strategic Investments, which is the centrepiece of the Investment Plan for Europe, to increase itsfinancial firepower and reinforce its economic strengths. The European Fund for Strategic Investments (EFSI) – the heart of the Investment Plan – is expected to mobilise € 315 billion over the next 3 years across the EU member states, benefitting more than 200,000 small and medium-sized enterprises.

This plan provides an exciting economic platform for investors to rediscover the range of investment opportunities existing in Europe through the Project Portal, as well as the efforts to break down barriers to investment through the Capital Markets Union and other EU actions.

Sustainable and inclusive growth are key words in the plan. The EU is taking a lead on the fight against climate change. This is felt even in the Philippines, where one of our flagship programs is in the area of sustainable energy. In addition, ever since its initial construction more than 60 years ago, the EU has been focusing on inclusive growth. How to make sure the small farmers could make a decent living, how to create jobs in developing regions, how to create a better economic basis in countries that were lagging behind. The numbers speak for themselves: in a world-wide comparison the EU stands out with its relatively low income differences. The Gini coefficient in the EU is about 30, much lower than what is seen in many other parts of the world.

The EU is well placed to use trade and investment policy to create new jobs that benefit companies and consumers in the EU and the Philippines alike. The EU is the largest recipient and provider of Foreign Direct Investment with around € 1 trillion worth of investments moving in and out of the EU every year. While EU is the largest provider of FDI to the Philippines – in 2015, P90 billion of total reported investments came from the EU, 37 percent of the total – supporting an estimated 500,000 quality jobs in the country. The Philippines, on the other hand, is increasingly finding its way to the EU and I am happy with the recent investments in the EU for instance by Emperador, Monde Nissin, Ayala IMI, Globetel and PLDT. The International Container Terminal Services Inc. and Luka Rijeka d.d. forged a 30-year strategic partnership for the operation, management and development of the Bradjica Container Terminal in the Port of Rijeka, Croatia’s main seaport. The EU investment plan offers more such opportunities, based on a competitive euro and a strong market.

Together we can further build on these opportunities and this is how:

Free Trade Agreement:  Free trade agreements will certainly and easily double trade and investment figures and support the Philippines’ road to prosperity for all. It will especially provide a comfort level to more EU companies to come into the Philippines, providing there is a level playing field while it will ease the access of SMEs to both markets. The first negotiating round for an FTA  between the EU and the Philippines took place in May in a good atmosphere and with the goal to get clarity on respective approaches, ambitions and expectations in the different negotiating areas.

Generalised System of Preferences (GSP+).  In 2015, trade with the Philippines doubled in the last 7 years to €13 billion for goods and €3.3 billion for services. With thanks to the GSP+ preferences given to the Philippines. Through this preferential tariff scheme, Filipino producers are now able to export more than 6,000 products to any of the 28 member states of the European Union at zero tariffs. Products that may avail of the duty free access include coconut and marine products, processed fruit, prepared food, animal and vegetable fats and oils, textiles, garments, headwear, footwear, furniture, umbrellas, and chemicals. More FDIs can be attracted in the sectors that benefit from these competitive tariffs.

European Union - Philippines Business Summit in the Philippines on March 10, 2017:  Most importantly, bringing business from the EU and the Philippines together will facilitate more investment in each other’s economies. In the end, business depends on relationships, friendships and a shared approach when doing business, I am confident that the Business Summit will facilitate ideas and investments, especially for SMEs.

The Philippine Development Forum in Davao on November 8-9, 2016:  The Development Forum will provide a great opportunity to understand the development priorities of the Duterte government, and to see how the EU’s development assistance to the Philippines is best used to promote a shared agenda between the EU and the Philippines.

The list can go on and on but the conclusion is that with the European External Investment Plan moving in high gear on the EU side and as the economic movers of the Philippines are bent in their pursuit to push for economic reforms (poverty alleviation, building a healthy climate to attract foreign investors, tax reforms and improving the labor force), both parties are in for a classic formula, a win-win situation for economic success.