Tuesday, March 3, 2009

Great Speeches: Public- Private Partnership: Looking Forward Together

Governor Casimiro A. Ynares III of the Province of Rizal

Prof. Virgilio Esguerra, Rizal Provincial Administrator

Ambassador William Co, Special Envoy for Agriculture Trade in China

Distinguished guests,

Ladies and gentlemen, good morning.


It is my honor and privilege to speak before you in the 1st Rizal Business Conference. We are holding this Conference at a very crucial moment of our history. Your theme on public private partnership, therefore, is both timely and relevant.

I always believed that we cannot solve the challenges of our times unless we solve them together – unless we cooperate and understand that we may have different stories to tell, but we hold common hopes and dreams.

At this point in our lives, a stronger partnership and unity is what we need. But of course, true unity cannot be so easily won. It starts with a change in attitudes - a broadening of our minds, and a broadening of our hearts.

On the Current Financial Crisis

Over the past few months, things did not turn out as we expected. The global financial crisis compounded the episode of rising oil and food prices that kicked up our inflation rate. Our exports dropped more than expected as our foreign markets shrunk. Investments in our stock markets evaporated. Foreign direct investments fell below target. Not surprisingly bureaucratic tangles delayed the public spending that was supposed to mitigate all these.

Although we have weathered the global financial crisis rather well the past few months, the adverse effects of slower economic growth in most of our main markets cannot be held completely at bay. We do expect a slower pace of growth in the forthcoming period. But recession might be quite another thing.

The commonly-accepted definition of a recession is two consecutive quarters without growth. By that definition, a recession in the Philippine economy is highly unlikely because we have maintained fiscal discipline and we have formulated the necessary monetary policy firewalls to avert whatever impact the crisis may present.

However, the US economy is generally considered to be in a recession even if it has not had two quarters without growth. It is considered to be in recession because of dramatic drops in consumer demand that will inevitably drag down prices, profits and production.

Our own consumer demand has shown signs of flagging. That is significant in our case because our previous growth has been largely consumer demand-driven, fueled by the steady inflow of remittances from our army of overseas workers. The steep rise in the prices of oil products since last year forced consumers to reallocate disposable income from other items of expenditure. People now would rather hold on to their money than spend it on non-essential products. That means producers of non-essentials have seen sales drop and feel the recession-like crunch more than others.

But oil prices are dropping dramatically. When the steep decline in oil prices reflect in a correction in consumer spending, our manufactures are likely to experience a fresh surge in demand.

Our agricultural sector is likely to post a lower growth compared to last year. It seems that the period of high inflation forced our farmers to cut back on fertilizer inputs, leading to lower yields.

In the Philippines, we have not seen any significant enterprise closures so far, despite the global turbulence. That is a good sign that the economy is weathering this storm quite well. Abroad, large companies have either shut down or laid off workers. In the US, unemployment has sharply risen.

The Philippines has, historically, performed beneath the average growth of the region. But a seven percent forecasted growth for our neighboring economies means that there will be enough economic activity around us to keep our economy trudging ahead.

Still, for many corporations, it will still feel like a recession. Credit remains tight, even as monetary authorities hold down interest rates. Demand for some sectors will remain sluggish. After all, no one is certain if the global financial crisis has hit bottom.

The trend towards a more substantial reduction in our economic growth is not without remedy. The important thing is not to be complacent.

As we begin to close the year, we see a deficit figure that could balloon larger than expected if not managed more effectively. The dollar has surged and the peso has weakened.

Year 2009 will be a challenging year, no doubt. Government has to adopt a proactive posture. Every concerned citizen must take cognizance of the challenge as much as the private sector has, and go beyond business-as-usual in proposing more programs that will enhance our efforts to mitigate the ill effects of an economic slowdown.

The night is not entirely black, fortunately. Against the odds, the volume of remittance inflows to the country increased rather than decreased last month. That means we can expect only a marginal decline in domestic consumer demand — or even an increase, to help compensate for the nosedive in our export revenues.

What PCCI is Doing

PCCI has not been a passive observer in all of these. In fact, we have fine-tuned our advocacies to effectively address these crucial matters.

In fact, the PCCI has pledged a P100-billion fund for human capital formation that would spur job creation and growth momentum. It is also a means to pump-prime the economy and shield the country amid the global economic slowdown.

Also, to sustain the country’s growth and global competitiveness, we have to go back to basics and focus on four key areas over the coming years of my Presidency. These critical areas are fundamental to meeting the challenges brought about by globalization and the need for enhanced competition. We have summarized these initiatives under what we call PCCI’s F.I.R.E. Programs for Competitiveness –

1. Food security and sufficiency
2. Infrastructure Development
3. Re-engineering the educational system; and
4. Energy self-sufficiency

Let me delve on them one by one:

Food Security and Sufficiency

Agriculture is considered as the fundamental source of employment and economic growth in the country. The development of this sector is, therefore, essential to any development effort geared towards the alleviation of poverty and enhancing the food security of the country.

Infrastructure Development

Infrastructure is one of the key factors that directly affect the country’s global competitiveness, ability to attract investments, and economic growth. An efficient transport network will reshape the country’s physical and economic configuration. From fragmented and island economies, the country will develop a unified and integrated economy where people and goods can move and trade swiftly and efficiently.

Re-engineering the Educational System

According to the Commission on Higher Education, only 40% college graduates are able to land jobs immediately after graduation. The rest join the increasing number of unemployed. This is caused by a plethora of causes, one of which is the mismatch between the available jobs in the market and skills of the graduates.

PCCI, through the Presidential Task Force on Education, will continue to be the catalyst in the promotion of a closer cooperation between higher education and industry that will generate commitments from both sides to prepare graduates for gainful employment or entrepreneurship. The coverage of this program and the private participation it requires need to be widened, simultaneous to enlarging PCCI’s role in Employment S.T.O.R.E ( or School to Office Response to Employment System) where industry demand for specific openings are matched under a ladderized system of job entry through on-the-job training or apprenticeship.

Energy Self-Sufficiency

PCCI’s main advocacy on energy is to reduce power generation, transmission, and distribution costs to the consumers. Over the long-term, there is the need to advocate for more energy infrastructure projects to meet growing demand, the expansion of oil and gas exploration activities and incentives for investments in renewable energy and alternative fuel development.

Concluding Statement

It may be argued that what we are experiencing right now is the dawn of a new political economy. This is a new milieu that has gone beyond conservatives and liberals. This new world order is about accepting that profound change had happened and it is high time politics, economics, culture, and international institutions reflected it. It is about new realities and old virtues. It will be the era of new rules necessitating the need for new partnerships and rekindling old ones.

Unity is something that we would have to earn through great effort and determination.

So we ask you that we walk together, march together, and join together in one united voice. Even the weak become strong when they are united. Let us become a living testament to what a strong business sector can do by acting in unity.

Together, starting today, let us finish the work that needs to be done.

Thank you very much and I wish you all a successful Conference.

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