Amando Tetangco: Advancing cooperation in an increasingly
noncooperative world
Speech by Mr Amando M Tetangco, Jr, Governor of Bangko Sentral ng Pilipinas (BSP, the
central bank of the Philippines), at the EU-ASEAN Business Summit, Manila, 10 March 2017.
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For over 250 years, Manila was the port of the Galleon Trade that fostered two-way trade
between Asia and Europe via Mexico. And this year, the 50th anniversary of ASEAN, marks the
Philippines' assumption as Chair of the ASEAN, with the responsibility to promote activities
related to our regional goals. It is fitting therefore that Manila is hosting this year's ASEAN-EU
business summit, the objective of which is to promote trade and further strengthen our economic
relations.
A strong history of friendship
A strong history of friendship for 40 years now, binds the ASEAN and the EU.
This partnership has established many milestones in terms of economic cooperation, enabling
us to enjoy the benefits of robust and dynamic trade and investments , with the accompanying
positive effects on overall growth.
Today, the EU is ASEAN's second largest trading partner, while ASEAN is the EU's third largest
trading partner outside Europe. In 2016, total trade between ASEAN and EU reached over EUR
200 billion (EUR207.89 billion), having been on a consistent uptrend for the past four years.
Opportunities beyond trade
The opportunities for stronger economic relations between the EU and ASEAN abound. Amb.
Jessen and ECCP President Taus mentioned a number of important areas of cooperation. I will
add the following for further cooperation:
The first is on the development of micro, small and medium enterprises (MSME) as a platform
for promoting inclusive and sustainable growth. Both ASEAN and EU give primacy and
importance to MSMEs - in ASEAN, they account from 88 to 99 percent of total establishments,
with the large majority of member countries at high 90%, while in the EU they represent 99% of
establishments. Closer cooperation can expand market access for both our MSMEs, which is
crucial for generating employment and ensuring a competitive and dynamic business
environment. We need to support their integration into the supply and value-chain. On the policy
level, we need to double our efforts to expand their access to finance and other support services.
The second opportunity for cooperation is the development of the digital economy, which has
been tagged as the Fourth Industrial Revolution. We see how digital trends such as social media
and cloud computing are radically changing the business landscape.
With an estimated value of USD19 trillion over the next decade, digitization has the power to
enable countries to boost GDP growth, job creation, and innovation. Through enhanced transfer
of knowledge and technology sharing, the EU and the ASEAN could potentially be transformed
into full-blown digital economies.
The third area for stronger cooperation is human resource development. With EU's population
of 510 million and ASEAN's over 625 million people, we have the potential to develop formidable
pools of talent and productivity. We can harness these through policies that support healthy
exchange and flow of talent, as well as the development of appropriate education and skills.
Ladies and gentlemen, to me these are imperatives for cooperation to make growth in ASEAN
and EU both sustainable and inclusive - the development of MSMEs, the development of a digital
economy and advancing human resource development. This is particularly relevant today when
the global environment remains confronted with certain challenges.
One major risk we face is the growing tendency towards protectionism and populism. Brexit and
the potential shift in US economic policies are manifestations of this trend. If these
inwardoriented sentiments continue to gain traction, this will undermine cooperation and potentially
shrink global trade. This could, in turn, derail the global economy's already protracted path to
recovery.
Another challenge is the re-emergence of monetary policy divergence. In particular, the US Fed
is signaling a continuation of its normalization path through policy rate increases while other
central banks in major economies remain accommodative by keeping a lid on interest rates. This
divergence can result in volatility in financial markets and possibly dampen credit activities in the
near-term and growth in the longer-term.
Given, all these, the challenge is how to achieve economic resilience.
In the Philippines, our thrust over the years has been to focus on ensuring sound
macroeconomic fundamentals and building these as homegrown sources of resilience. Such
focus has yielded considerable gains for us. We have registered 72 consecutive quarters of
uninterrupted GDP growth, propelled by broad-based economic drivers, well-managed inflation
environment, sound external sector dynamics, and a stable banking system.
Headline inflation of 1.8 percent for 2016 reflected the prevailing manageable environment of low
and stable prices. Average inflation for the first 2 months of the year is at 3 percent, exactly at the
midpoint of the government's target range. This is consistent with our expectation that inflation
will settle within the target range of 2 -4 percent in 2017 and 2018.
This environment gives us a sound basis to be optimistic about the Philippine economic outlook.
We believe that the economy can attain its GDP growth target of 6.5-7.5 percent for the year, and
remain a source of strength for the ASEAN region. Moving forward, our fundamentals will serve
as the spring of resilience in the economy amidst the external headwinds. In addition, our young
and dynamic work force is teeming with potential as a source of labor productivity and quality.
Both our fiscal and monetary sectors also have ample policy space to respond to the
materialization of exogenous shocks. We have room to accelerate government spending to build
needed infrastructure, generate jobs and support economic growth. At the same time, the
monetary authorities have the flexibility to adjust policy, if needed, to sustain price and financial
stability without sacrificing economic activity. In other words, investors can expect not only
sources of value but also anchors of stability in investing in the Philippines. Thus, our country will
continue to provide a conducive business environment and outstanding value to investors.
Conclusion
Ladies and gentlemen, in this time of uncertainty, better and stronger global cooperation is the
best way forward. It is up to us to calibrate, adjust and evolve the means by which we connect
our shores and advance our exchanges.
I hope therefore that through this summit, the partnership between the EU and ASEAN will work
toward achieving collective resilience and renewed growth, amidst diversity and asymmetry in
economic conditions.
I wish you all a successful and productive summit. Thank you and Mabuhay!