Brace for more importations

While in Davos, Switzerland attending the various conferences held at the annual World Economic Forum (WEF), President Ferdinand “Bongbong” Marcos Jr. (PBBM) made a number of key policy pronouncements. In many of his speaking activities, PBBM enunciated what could be major shift and reforms in the government’s priorities. However, the extraneous details that actually do not matter drowned out the most significant declarations of PBBM in Davos.

One of the key pronouncements was made during the luncheon reception organized and hosted by the economic team led by Finance Secretary Benjamin Diokno. Apparently, it was part of the “soft launch” of the yet to be created Philippine version of a sovereign wealth fund dubbed as the Maharlika Investment Fund. His audience included the eight richest tycoons in the Philippines who joined the President at the WEF. As the country’s Chief Executive, he impressed upon them the tendency of governments to adopt protectionism, or policies that prioritize the taking care of the local economy and industries.

Thus, he pointed out, these countries end up, or are forced to embrace a “Cold War” mentality, or being made to choose whether to be under the Soviet Union (Russia) or the United States’ (US) spheres of influence. PBBM conceded countries in the Asia Pacific, including the Philippines, are facing pressure to take sides because of such geopolitical tensions.

These became more very evident, PBBM noted, when the entire world was confronted with challenges like the COVID-19 pandemic and the Russian invasion in Ukraine in February last year. Incidentally, the Ukraine-Russia war is now entering its second year without any clear peaceful resolution looming in the horizon. The on-going war in Ukraine ranged Russia against US allies from the European Union (EU) and from the North Atlantic Treaty Organization (NATO).

“Because of these crises, the pandemic, the Ukraine situation, because of these crises, there have been tendencies – as I said – to be towards nationalism, towards closing borders, towards protectionism,” PBBM pointed out. In the particular case of the Philippines, he cited, government was “brought back with a hard thud to basics” after being confronted with supply challenges.

In fact, the Philippine economy shrunk to its lowest at negative 9.5 percent. The country’s gross domestic product (GDP) went down to its lowest level – the first annual contraction since 1998 – a year after the Asian financial crisis. Learning from these hard lessons of this most recent past, PBBM vowed to strengthen the Philippine economy to withstand shocks. Despite these “several big bumps” on the road, countries cannot afford to go back to protectionist policies, President Marcos warned.

“We will start to return to the tendency of globalization,” the President vowed.

PBBM argued that trading with other countries is “the key to wealth for any country.” He reiterated this policy during the panel interview by various local news anchors he sat down with at Malacanang last Monday. Or this was two days after his return from the WEF where he recalled this issue came up in one of the discussions during the three-day conference “held on top of the world” in Davos, he quipped.

“The question that was asked was very – actually thought-provoking. Will geopolitics finally kill globalization? Because geopolitics is pulling people apart and all these aggrupations are being pulled apart,” PBBM narrated. “And the general conclusion is that the people – that countries realized that alliances are important, are in fact they are more than important, they are necessary. Nonetheless, these alliances do not mean that we are again within the sphere of influence of any great power,” he explained.

The Chief Executive told the same panel interview these were some of the world economic views and impressions he gathered during his face-to-face talks in Davos with the respective heads of the World Trade Organization (WTO); the International Monetary Fund (IMF); the World Bank (WB); the Bank of America, among them.

“So that’s why the conference was important because you meet the CEOs (chief executive officers) of the top 100 – Fortune 100 companies here. And you also run into other heads of state and heads of the World Bank, the IMF. It’s all about the economy, the global economy this Davos,” he cited.

Relating this to world history, he argued no country grew wealthy without a very strong trade relationship, not only with one or two other countries but with the rest of the world. As far as he sees it, the world would eventually choose the path of globalization. Countries such as the Philippines must put in place the elements of policy and the necessary laws to be able to adjust to the evolving “new global economy.” Once those elements are in place, PBBM boldly predicted: “I think that the globalization will start.”

“So if we are – they keep saying that we have to position ourselves properly for the new global economy, this is it. That’s what we are doing now,” PBBM pointed out. “We are trying to find – we’re positioning ourselves so that we are ready to respond to the needs of the new economy. Para pagbukas niyan, pag-akyat niyan sabay tayo,” he added.

Asked for specifics, the President pointed to the country’s agriculture as the starting point of this globalized trading regime that started way back to the Philippine accession to the WTO in 1995. He blamed the long years of neglect on the country’s agriculture, not to mention typhoon and effects of the climate change phenomena, as largely been causing our food security problems.

The President admitted losing sleep over the “alarming increase” in the prices of onions, sugar, and other food products. As the concurrent Agriculture Secretary, he justified the importation of onions, sugar and agricultural products as an immediate solution. This is just for now to get us out of the present tight supply problems of the value chain in agriculture.

In short, all he was saying is that we have to brace for the greater trade liberalization.