ARANGKADA PHILIPPINES FORUM JOINT FOREIGN CHAMBERS OF THE PHILIPPINES (JFCP) RIZAL BALLROOM, MAKATI SHANGRI-LA 26 FEBRUARY, TUESDAY,

8:50-9:00 A.M. TRENDS AND KEY REFORMS IN TRADE AND INDUSTRY IN THE PHILIPPINE ECONOMY
OPENING REMARKS SECRETARY GREGORY L. DOMINGO DEPARTMENT OF TRADE AND INDUSTRY

(ACKNOWLEDGMENTS) MR. MICHAEL RAUEBER, PRESIDENT OF THE EUROPEAN CHAMBER OF COMMERCE,

MR. RHYCK JENNINGS, PRESIDNET OF THE AMERCIAN CHAMBER MY FRIEND AMBASSADOR HARRY THOMAS

AMBASSADOR BILL TWEDDLE MS. GLORIA STEELE, MISSION DIRECTOR OF USAID

AND JOHN FORBES, SENIOR ADVISOR OF THE AMERICAN CHAMBER

GOOD MORNING AND CONGRATULATIONS ON THE SECOND ANNIVERSARY OF ARANGKADA UNDER A MORE ROBUST PHILIPPINE ECONOMY.

PRESIDENT AQUINOS STRAIGHT PATH LEADERSHIP HAS RESULTED IN A DRAMATIC RISE IN THE CONFIDENCE OF LOCAL AND FOREIGN INVESTORS MAKING 2012 THE PHILIPPINES BANNER YEAR SO FAR.

I REITERATE WHAT OTHERS HAVE BEEN SAYING THAT WE HAVE A STABLE AND PERFORMING ECONOMY, WHICH IS THE NEW NORMAL FOR THE PHILIPPINES.

THE ECONOMY EXPANDED BY 6.6% IN 2012, AMONG THE FASTEST IN ASIA, WHILE KEEPING ONE OF THE LOWEST INFLATION RATES IN THE REGION AT 3.2%. THE PAIRING ACTUALLY IS WHAT IS PHENOMENAL, HIGH GROWTH, LOW INFLATION RATE WHICH SELDOM HAPPENS.

I WILL NOT FORECAST ANYMORE OVER 7% GROWTH THIS YEAR BECAUSE I MISSED LAST YEAR BY .4%. BUT I WILL FORECAST 7%. THE GROWTH BY THE WAY IS SUSTAINABLE, ITS NOT A FLUKE. ITS BASED ON DIVERSE ACHIEVEMENTS IN DIFFERENT SECTORS.

ALSO IF YOU LOOK AT THE NUMBERS CLOSELY, THE 3RD AND 4TH QUARTERS GDP GROWTH RATES SHOWED A SLIGHTLY DIFFERENT PATTERN, IN THAT THE MANUFACTURING SECTOR EXHIBITED THE HIGHEST GROWTH RATES, HIGHER THAN SERVICES. FOR THOSE WHO HAVE NOT BEEN HERE FOR THE LAST TEN YEARS, SERVICES HAS BEEN THE FASTEST GROWING SECTOR IN THE PHILIPPINE ECONOMY, EXCEPT IN THE LAST TWO QUARTERS OF LAST YEAR.

THATS A VERY GOOD INDICATION THAT MANUFACTURING IS BACK AND YOULL SEE, IF YOU GO TO LAGUNA, BATANGAS AND CEBU, YOULL SEE ALL THE MANUFACTURING PLANTS, HUGE ONES, THAT ARE BEING BUILT. SOME OF THEM HAVE STARTED OPERATIONS ALREADY.

WE ALSO ENDED THE YEAR WITH A PER CAPITA GDP OF US$2,600, SURPASSING FOR THE FIRST TIME THE CRITICAL THRESHOLD OF US$2,500 WHICH IS CONSIDERED BY MANY ECONOMISTS AS THE JUMP-OFF POINT FOR EXPONENTIAL GROWTH IN CONSUMER SPENDING.

WEVE SEEN AS WELL ALL THE THREE MAJOR RATINGS AGENCIES, MOODYS, FITCH AND S&PS THAT THEY HAVE ALL RATED THE COUNTRY ONE NOTCH BELOW INVESTMENT GRADE. WE ARE HOPING FOR INVESTMENT GRADE STATUS FROM AT LEAST ONE OF THEM IN THE NEAR FUTURE.

THE LATEST JETRO SURVEY AS WELL WHICH WAS RELEASED ABOUT THREE WEEKS AGO SHOWED THAT AMONG EXPORTERS, THE PHILIPPINES EMERGED AS THE MOST PROFITABLE LOCATION IN 2011. THIS WAS BASED ON SURVEYS ACROSS ASIAN ECONOMIES INCLUDING CHINA, THAILAND, MALAYSIA, MYANMAR, VIETNAM, INDONESIA, AND INDIA. SO WE ARE IN THE GOOD SPOT.

IN TERMS OF GOOD MANAGEMENT, THE SAME SURVEY SHOWED THAT IT IS EASIEST TO RECRUIT GENERAL STAFF IN THE PHILIPPINES.

ALSO, THE PHILIPPINES SHOWED THAT THERE WERE ONLY 2 STRIKES/LOCKOUTS IN 2011 WHILE COMPARING IT TO ONE OF OUR NEIGHBOURS WHICH HAD 857 STRIKES/LOCKOUTS IN THE SAME YEAR.

WHEN IT COMES TO COMPETITIVENESS IN ACCESS TO REASONABLE SALARY, THE PHILIPPINES HAD THE LEAST SALARY INCREASE FOR 2012-2013 AT 5.2%. THE PATTERN HAS BEEN THAT OVER THE LAST 10 YEARS. LABOR COST HERE INCREASED BETWEEN 3-5%, A VERY STABLE AND STEADY INCREASE THAT IS QUITE PREDICTABLE.

LET ME TURN NOW TO SOME OF THE INITIATIVES THAT WE HAVE BEEN DOING AT DTI. AT DTI, WE CONTINUE TO PUSH FOR TECHNOLOGY AND AUTOMATION TO PROVIDE BETTER SERVICE TO THE PUBLIC.

DTI IS LEADING THE WAY IN BRINGING THE ERA OF CLOUD COMPUTING IN ITS MAJOR BUSINESS PROCESSES.

IN FACT, WITH THE ASSISTANCE OF USAID, WE HAVE SUCCESSFULLY MIGRATED THE PHILIPPINE BUSINESS REGISTRY (PBR) AND THE BUSINESS NAME REGISTRATION SYSTEM (BNRS) TO THE CLOUD. IF YOU ACCESS OUR SYSTEM, THAT IS BEING RUN ON THE CLOUD. THIS IS TO ENSURE HIGH AVAILABILITY TO OUR USERS.

LAST YEAR, BOI AND PEZA APPROVED P672.3 B OR ABOUT US$16 B OF INVESTMENTS WHICH INCLUDED US$6.7 B COMMITMENTS FROM FOREIGN SOURCES THAT WILL HAPPEN OVER THE COURSE OF SEVERAL YEARS. THE REALIZATION RATE,

THAT IS ACTUAL INVESTMENTS FROM REGISTERED INVESTMENTS, IS IN EXCESS OF

80%. SO, YOU DO THE MATH.

BASED ON THE FOREIGN INBOUNDS MISSIONS AS WELL, AND BASED ON THE PLANS THAT WE HAVE BEEN INFORMED ABOUT BY THE VARIOUS COMPANIES AND EMBASSIES, 2013 WILL BE A MUCH BETTER YEAR FOR INVESTMENTS THAN THE RECORD SETTING 2012. SO EXPECT MORE GOOD THINGS TO COME THIS YEAR.

ON THE TRADE FRONT, MERCHANDISE EXPORTS REBOUNDED IN 2012 TO REACH A RECORD US$52 B, THE HIGHEST RECORDED EXPORT EARNINGS IN PHILIPPINE HISTORY. THIS IS INSPITE OF THE SLUGGISH MARKET IN THE US, ECONOMIC SLOWDOWN IN CHINA AND JAPAN, AND THE CONTINUING CRISIS IN THE EU. THIS IS DUE TO THE DIVERSIFIED AND BALANCED GEOGRAPHIC MARKETS WE SERVE, AS WELL AS THE BIG IMPROVEMENT IN THE NON-ELECTRONICS EXPORTS, WHICH MORE THAN MADE UP FOR THE WEAKNESS IN CONSUMER ELECTRONICS.

I WOULD LIKE TO NOTE THAT IN THE LAST 5 YEARS, OUR ASEAN AND EAST ASIAN NEIGHBOURS ACCOUNTED FOR ABOUT 60% OF TOTAL PHILIPPINE EXPORTS, COMPARED TO 10 YEARS AGO WHEN 50% OF OUR EXPORTS WENT TO THE US AND EU.

PURSUIT OF ACTIVE TRADE RELATIONS DUE TO THE OPPORTUNITIES THAT RESULTED FROM ASEANS FTAS WITH CHINA, KOREA, AUSTRALIA AND NEW ZEALAND AND THE PHILIPPINES FTA WITH JAPAN HAS RESULTED IN THE IMPROVEMENT OF OUR TRADE NUMBERS.

THUS, WE ARE FURTHER INTENSIFYING PARTICIPATION IN TRADE NEGOTIATIONS AND CONSTANTLY ON THE LOOKOUT FOR OPPORTUNITIES BROUGHT ABOUT BY BILATERAL, REGIONAL AND INTERNATIONAL TRADE AGREEMENTS SUCH AS THE ONE WITH THE EU AND THE TPP.

WE ARE ALSO LOOKING AT POSSIBLE CHANGES IN LEGISLATION TO INCLUDE REVIEW OF THE FOREIGN INVESTMENT NEGATIVE LIST, RATIONALIZATION OF INCENTIVES, MINING ACT AND OTHERS. WE ARE TARGETED TO FILE THE DRAFT BILLS AT THE START OF THE NEW CONGRESS AND WE HOPE TO PASS SOME OF THESE BY THE END OF THIS YEAR.

TOGETHER WITH THE JFC, THE PHILIPPINE CHAMBER OF COMMERCE AND INDUSTRY, FEDERATION OF PHILIPPINE INDUSTRIES, AND THE NATIONAL COMPETITIVENESS COUNCIL, WE HAVE CRAFTED 19 INDUSTRY ROADMAPS AND WORKING ON 9 MORE.

JUST LIKE THE 7 BIG WINNERS THAT THE ARANGKADA STUDY IDENTIFIED, THESE SECTORS REPRESENT THE GLOBAL COMPETITIVE ADVANTAGE OF THE PHILIPPINES AND WILL PLAY A CRITICAL ROLE IN THE DEVELOPMENT OF STRATEGIC AND JOBGENERATING INDUSTRIES.

INDEED, GOOD NEWS ARE COMING IN FROM MANY FRONTS, FROM TOURISM, MANUFACTURING, BPO, AGRIBUSINESS, AND OTHERS. THE ARANGKADA STUDY AIMS TO ACCELERATE INVESTMENTS AND ECONOMIC GROWTH, AND CREATE JOBS IN THE COUNTRY. GROWTH IS STARTING TO HAPPEN, THE

FRUIT OF THE CONTINUOUS AND PAINSTAKING WORK OF THE GOVERNMENT, THE PRIVATE SECTOR, AND DEVELOPMENT PARTNERS.

I CALL ON YOU TO SHARE OUR OPTIMISM AND LEAD IN SENDING THE SIGNAL TO THE WORLD THAT NOTHING IS GETTING IN THE WAY OF GROWTH IN THE PHILIPPINES. NO
ONE CAN BE BETTER AMBASSADORS OF GOODWILL AND PROMOTE THE COUNTRY THAN YOU, WHO HAVE, OVER THE YEARS, HELPED US REALIZE OUR FULL POTENTIAL.

LET US ALL WORK HAND IN HAND FOR A BETTER PHILIPPINES.

THANK YOU AND GOOD MORNING!