WITH firm fundamentals in place for sustainable growth, the Philippine economy could become a driving force for the Association of Southeast Asian Nation (Asean) to develop its full potential and promote lasting peace in the region, the Global Peace Foundation (GPF) said Wednesday.
The GPF, however, called for less government interference in markets but instead, allow more liberal economic principles to work, with universally accepted moral ethics considered.
GPF Founder and Chairman Hyun Jin Preston Moon told delegates of an ongoing international peace convention in Pasay City that for a nation to achieve sustained economic prosperity, it should have a free economic system anchored on innovation and entrepreneurism.
Moon added, that nation must, at the same time, be governed by sufficient regulatory and enforcement mechanisms that compel everybody to behave in alignment with the country’s societal values and levels the playing field for all its citizens.
The government, he stressed, should do away with the so-called “closed system” that only benefits those with influence and social access, while the “little guy” with greater idea and huge dreams never has a shot to participate in any meaningful way.
Moon put forward a reminder to delegates of the four-day convention at Mariott Hotel in Pasay City: There are no shortcuts in life, and for a country to achieve a sustainable, equitable and prosperous economic system, there has to be people of conscience first, whose collective decisions advance the greater good as opposed to benefiting only a few.
“The overarching economic approach of the Global Peace Foundation, hence, calls for less government interference in the marketplace in line with classic liberal economic principles with one very important addition – the development of societies in which the collective ethos is rooted on universally accepted moral ethic that guides the national and global economic systems. Systems, remember, are values-neutral. It is people who infuse those structures with their unique value perspectives that lead to varying outcomes, whether good or bad,” he said.
‘Ripe for a key role’
Moon regards the Philippines ripe for a key role in the region’s affairs, saying it can thrive economically while at the same lead Asean to realize its full potential, leading to peace and stability in Asia.
He cited the Philippines’ strategic location and key ties with prosperous nations such as Korea, Japan, the US, China and India, abundant natural resources and its English-speaking people, among its assets.
“More importantly, I believe the Philippines can become a key trade and economic hub in the larger Pacific Rim region that links East and West as a gateway, whereby it offers distribution, professional services and manufacturing capabilities, among others,” he said.
The Philippines, as chair of this year’s Asean Conference, is urged to set the tone for the 10 member-countries to demonstrate proper moral and innovative leadership.
Moon pointed out that the 10 Asean member nations have a combined gross domestic product (GDP) of more than $2.6 trillion and a population of 622 million in a strategically important part of the world, whose relevance and weight will only increase with the coming years.
Based on the latest Economic Freedom Index published by the Washington D.C.-based Heritage Foundation, the Philippines has moved 12 notches higher in rank.
Moon said that from 2012 to the present, the Philippines has recorded a remarkable growth rate, with GDP growth for 2016 at 6.8 percent, the second best in Asia, next to India.
International agencies have given the Philippines a positive outlook, and with its reasonably low level of total foreign debt to GDP, coupled with good macroeconomic fundamentals and robust economic growth, this economy provides comfort to international markets and rating agencies, Moon said.
On the hand, Moon stressed that the Philippines also faces significant challenges that continue to weigh down the country from reaching its economic potential fully.
Among them are its chronic reliance on foreign consumers and capital goods that result in constant trade deficits, lack of infrastructure and a low rank (95th) among 138 nations in the Global Competitive Index.
Moon pointed out, however, that the greatest challenges are “its insufficient and ineffective government bureaucracy, crony capitalism and corruption.”
“They prevent net value creation and discourage the spirit of innovation and entrepreneurism. Furthermore, they stifle growth of quality jobs and the size of the middle class, which lead to worsening income inequality between the rich and the poor,” he said.
Citing data, he said more than 50 percent of the population earn incomes of less than $2 a day and more than 25 percent of the people live in poverty and over 60 percent of them live in remote areas away from developed cities.
“The combination of these factors leads to crime and violence, social unrest and an increasing number of those without a minimum level of care and education,” he pointed out.
Citing figures from the World Bank and Forbes Magazine, he said the collective personal net worth of the top 50 individuals in the country stood at about $78 billion, which is about 25 percent of the country’s entire GDP.
Their personal wealth increased by about $8 billion year-over-year, representing 50 percent of GDP dollar growth during the same period, he said.
“When a country’s economy grows 7 percent and majority of that wealth increase is captured by less than a thousandth of a percent of the population – that kind of economic phenomenon is not only unsustainable, it is unjust,” he said.
“The growth that the nation enjoys is not trickling down to the broader population because people are not plugged into the growth areas of the economy. There are too many who are shut out from the necessary education and opportunity, and they are locked in a perpetual state of poverty and disadvantage,” he added.
‘Address the problem’
Moon pointed out the problem has to be addressed and resolved by reducing wealth disparity through sustained economic growth and for a robust working middle class to take root and prosper.
“I believe the most effective way to jumpstart such a cycle and reach the desired end is through liberalization of capital and allowing easier financial access to smaller businesses, startups and new ventures,” he said.
It is important, he went on, that Philippine financial institutions deploy more capital toward financing new growth and opportunity so that the brightest and most talented of its people could achieve their dreams beyond the current limited landscape.
“As for the Philippines, it is now in the process of developing itself into a more industrialized country. As it looks for ways to grow economically stronger and become more relevant in the world stage, it needs to envision a new economic paradigm. Learn from those who went before you. With a new mindset it should seek solutions that can unlock the potential of the Philippines and Asean,” he said.
He added: “As observed in Korea’s situation, a country may have all the necessary hardware, such as infrastructure, financial capital and technology, huge corporations, but still stagnate and wither very quickly if the fundamentals aren’t there.”