All eyes are on Manila as about 600 delegates from 30 countries converge here today for the 23rd World Economic Forum (WEF) to discuss how the rapid East Asian economic growth could distribute its benefits more equitably among its 600 million people.
The three-day meeting of representatives of business, government, civil society and academia convenes against a backdrop of not only impressive growth rates in the economic bloc, but also persistent disparities in competitiveness and development.
President Benigno Aquino 3rd and his team will be joined at the meeting by Nguyen Tan Dung, Prime Minister of Vietnam, Susilo Bambang Yudhoyono, President of Indonesia, and U Nyan Tun, Vice-President of Myanmar.
Under the meeting’s theme, Leveraging Growth for Equitable Progress, participants will discuss the opportunities to promote greater inclusion across East Asia, with a three-point agenda: achieving equitable progress, advancing models for sustainable growth and realizing regional connectivity.
Big buzz phrases like “Asia’s next economic miracle” and “a dream of 600 million fulfilled” will not be in short supply when the 600 thinkers discuss the Asean Economic Community (AEC) during the event.
The AEC, a long cherished dream among 10 Asean countries that is expected to launch next year will be a common market with a combined gross domestic product of about US$2 trillion, according to a report by McClatchy Tribune Information Services (MCT).
By January 1 next year, tariff and non-tariff barriers across South-east Asia will be removed, and restrictions on services, investments and labor mobility eased.
“This brings unprecedented opportunities for partnership, trade and foreign direct investment,” said WEF managing director Philipp Rosler.
On the ground, however, economists and bureaucrats are carefully managing expectations, saying this “dream” is likely to arrive as a “series of little bangs” rather than a seismic shift.
Neither would the AEC upend the way business is conducted.
“Integration is a process. It is not going to be a big bang,” said Philippine Finance Secretary Cesar Purisima. Europe, he pointed out, is still integrating more than three decades since the European Union was formed.
For Philippine Trade Secretary Gregory Domingo, the “big bang” already happened four years ago, when nearly all tariff lines in South-east Asia were rolled back to zero or near-zero.
The big shift will be in non-tariff barriers that could see countries such as the Philippines easing limits on ownership of key industries and opening up more sectors to foreign competition, he said.
Already, big lenders from abroad, including Singapore-based Bridge Financial Services, are anticipating a law that will allow them to own 100 percent of Philippine banks, Edward Garcia, former president of the Rural Bankers Association of the Philippines, told The Straits Times.
While this week’s WEF meeting will focus on the economic promises of Asean 2015, rising geopolitical tension in the region will not be far from the minds of the delegates.
China, which has seen its territorial dispute with the Philippines worsen in recent months, is apparently snubbing the host by sending just a token delegation to the forum this year.
Aquino sent invitations to Chinese President Xi Jinping and Prime Minister Li Keqiang, but both did not even bother to reply.
The closest to a state official that China will have in Manila is an executive dean of Peking University.
Vietnam and China are also locked in a tense stand-off over a giant oil rig the Chinese towed into waters claimed by both countries.
Despite the growing tension, delegates expect the over-arching message from the forum to be one of pragmatism.
“My belief is that pragmatism rules, and a pragmatic view of the situation would suggest that peaceful resolutions of these issues would be made,” said the EU-Asean Business Council’s Donald Kanak.
PH back from the brink
Guillermo Luz, private sector co-chairman of the National Competitiveness Council (NCC) and former executive director of the Makati Business Club (MBC), said the forum could showcase the Philippines as a viable economic, financial, and investment hub for foreign visitors.
Chief market strategist Jonathan Ravelas of BDO Unibank, Inc. said the Philippines, being the host country, has reached an important milestone.
“Our economic ‘back-from-the-brink’ story is one of the best, if not the best, in recent years, being an economy with the youngest population in Asia, and with sustainable growth ranging from 6 to 7 percent,” Ravelas told The Manila Times.
However, aware that the country’s growth rates are high, what the WEF is likely to want to check out during the forum is the sustainability of that growth, said Alvin Ang, economist at the University of Santo Tomas.
“The forum will be an opportunity for the Philippines to say ‘yes, growth will be sustainable,’” Ang said.
The private sector plays a big part in that growth, particularly in job generation.
“We should raise the point that WEF member countries can help the Philippine economy grow by investing in it, in the productive sectors that could create jobs to sustain the current growth path,” Ang said.
Manufacturing offers many possibilities, he said. The sector needs more foreign direct investment so it can be more integrated into the Asean market.
Presenting what the Philippines has to offer to the global investment community with a stronger, broader, deeper participation from the both the private and public sectors will help Filipinos better understand the concerns of the investing community and be able to act on these concerns as soon as possible, said Jun Neri, Bank of the Philippine Islands chief economist.
The country has a big chance of success in vying for a share of the global market in services, but will have a more difficult time competing in agriculture and manufacturing if the current productivity does not improve, Neri said.
Luz underscores the country’s advantage in terms of manpower. “In the area of people, we have an advantage—but only if we educate and train our people,” he said.
“We will also have the largest working-age population [ages 18 to 64]over the next 30 to 40 years. If we educate and train our people for high-value jobs here or across Asean, that places the country in a strong position,” Luz said.
Local private industries and corporations that have been preparing and will continue to prepare for the 2015 target date for AEC will be able to compete better in areas that have not yet been liberalized.
“Those who do not prepare will suffer,” Neri added.
MAY CARABALLO, MADELAINE MIRAFLOR, VOLTAIRE PALAÑA, RITCHIE HORARIO WITH MCT