 Good morning, everyone. I'm Karen Davila, and I'm coming to you live from the Makati Shangri-La Hotel. This is the World Economic Forum on East Asia, and we are hosting right now the sessions. This is the first televised session of the first day of the World Economic Forum. Is the Philippines the next Asian miracle? This couldn't have come at a more auspicious time, with the Philippines experiencing a 7.2% growth rate in the last year. Three international credit rating agencies are putting the country's credit ratings notches up. The stock market beating its own record high 71 times since 2010. The country has a better debt position. The question is, is this all sustainable? Can the country keep on, specifically with the ASEAN integration happening in 2015? And this session will be televised in English. It will also be translated into Japanese and Chinese. My panelists this morning, I'd like to start with the Secretary of Tourism in the Philippines. Secretary Ramon Jimenez Jr. will be talking about soft power as part of the economy. We have with us Kevin Liu, he was the former head of the Private Arm of the World Bank, distinguished fellow of Ansead, young global leader and global agenda counsel on China. We have with us Manuel Pangilina, he is the chairman of the PLDT or Philippine Long Distance Telephone Company from the Philippines. Karim Razlan is the group chief executive officer of the KRA Group of Malaysia Global Agenda Council on Southeast Asia. And we have with us as well Marifes Zamora, she's the chairman of the Converges Corporation, the largest BPO in the country. And the youngest panelist joining us this morning is Cheri Ateliano. She'll be talking about inclusive growth, especially with agriculture. She's the co-founder and president of the social and social entrepreneur of Gawad Kalina. Good morning to all of you and later on, the audience will also be asking questions to our panelists. We have some experts in the audience as well. So I'd like to start first from the point of view of the outsiders. How do you see the Philippines in terms not just of numbers, but in terms of genuine growth? Kevin? Yeah, I think, Karim, as you mentioned, as we just see that introduction video as well, we do have a very positive momentum here for the Philippines over the last, I would say, two to four years. And you see a number of incremental improvements in terms of the perception of the economy, in terms of how the country is positioned, in terms of trade and other flows. So I think that's my first point. I think the positive scene is widely shared. It's not a view by the minorities. But I would say the second point, especially from a foreign investment perspective, as Karim mentioned, I used to run the World Bank's private investment guarantee business, particularly look at the perception of risk. I think there is still a fairly strong sense by the foreign investors that there is regulatory uncertainty. There is policy actions which they may or may not be able to predict. So I think those perception of risk, those perception of uncertainty is still a hurdle. Because as we can see from the Asia experience, many economies have gone through this particular development stage. FDI and other foreign flows typically play a very important role. My last point I would mention, Karim, in my first intervention is that, again, if you look at the experience in Asia, whether it's the tigers several decades ago, or the Chinas or the other countries in terms of development, when we talk about a miracle, if we want something that is significantly improving people's lives and really push the country forward, you need a long sustained period of growth. I think a couple of years of good years are very good, but that's not enough. So I think one of the key challenges is how do we make sure things are sustained and what does the government have to do and what does the private sector have to do and what type of perceptions we need to create internationally for Philippines to have a long 10, 15, 20 years of very sustained growth. That's the only way we have that compounding effect to really take the country from here to next level. All right, these are very good points, Kevin. Let me take you first to Karim. I'm choosing to get the perspectives of the outsiders first, okay? Now Karim, foreign direct investments in the Philippines have increased 20% last year, but compared to our Asian neighbors, the numbers aren't as high with FDIs. Well, clearly, I mean, I think I've got a lot of friends who are looking or they bought assets here and generally they do find the Filipino market is quite tricksy. That's always a line that comes. It's quite tricksy, more difficult than Indonesia to be frank, and that's something that has to be borne in mind because of course the size of the market is that much smaller and if it's that much more tricksy, that's important to know. The other thing is I'm also a columnist, so one thing I must stress, which for I think for those who are in the media looking on in Philippines is the consistency of leadership here since President Aquino has been in. I remember interviewing him in 2010 and to be frank, there was a charisma deficit, he was quite dull. What was that? Okay, that's just like got me. No, no, no, but how impressive the man has been in delivering. All right. And I think this is the point that has to be made. This is a man I remember saying, we are going to do this. Good governance. We are going to increase tourism. We are going to increase this and the other. And then in 2014, I remember listening to him in Kuala Lumpur and by God, he's done it. So I think what you've got here is a man who's just delivered and that impresses the markets and that impresses investors and that impresses a hell out of people such as myself, you know, very low key, but it's done. However, more has to be put into education and healthcare here, definitely in terms of infrastructure. I think that still needs a lot more in terms of public, private partnership and everything. But the potential, and I feel this is the most important thing since you are here, sir, tourism, is how wonderful this archipelago is. I've traveled quite extensively over it, Bohol and all these places. I actually interviewed the president when he was on the campaign train in Haklabad and a remarkable place. This is something which is still not sufficiently known outside the Philippines. The islands are beautiful. The water is beautiful. You still need to push that more. Okay, now let's talk about the key drivers of growth since Kevin and Karim have brought up their perspective. Oh, now the outsiders see the Philippines. I'd like to start first with Manny Pangilinan, who is a businessman in the country. Have you experienced and described the growth drivers you've seen in the last few years that made us have these numbers of 7.2 percent? Well, I think first, just to extend the point made by Kevin, there's no reason why the Philippines cannot sustain the growth levels we've seen for the past, say, three or four years. But to really drive the economy on a sustained basis, I think the common view of economists is that the economy must grow by a minimum of 6 percent for about eight to ten years. So we're sort of halfway there, three, four years of growth. But I think the concerns have been well known. It's well trodden ground. What are the concerns? Well, infrastructure, power, the constraint on growth, agriculture. And at the end of the day, the rising inequality of incomes amongst our people is going to be a deterrent to sustain growth because it tends to lead to spasmodic growth patterns. So remember, in 1991, 1992, right after we came out of the power crisis, the Philippines was the new tiger cub. But after a few years, the growth petered out, right? So we have to be mindful of that. And now we're experiencing a bit of a power issue. Yeah. Okay. Let's move on to power since you've stressed it. There wasn't much growth in manufacturing and agriculture, although we did experience a bit of a rise in 2013. Power in the Philippines is the most expensive so far in the region. Manny, do you see this as a major deterrent in terms of foreign direct investments? Frankly, you have other countries like Indonesia that subsidizing power. That's correct. I think you mentioned that FDI levels in the Philippines is actually quite low compared to our ASEAN neighbors. For the past three years, the level has been around $6 billion US. The next after us is Vietnam with about $23 billion, and the highest is Indonesia with about $50 billion for the past three years. So I think the market factors in the constraints that they see in relation to the good performance of the government for the past three years. And power will be constrained in terms of not only the cost. As you said, it's not subsidized at all. It's a fully priced electricity market in this country. And I think we have to be mindful that we do import at least 50% of our fuel source. Yeah. Mainly coal. So to the extent that that is priced in accordance with say crude oil, then you're at the mercy of crude oil prices. Yeah. Okay. So if you could find indigenous supply of fuel source mainly out of this country, then I think it will help. Okay. Now, manufacturing seems to be the most important among the ASEAN countries in terms of making an economy the numbers more sustainable. But in the Philippines, you have BPOs. It's more of a service sector economy. And OFW remittances converges as 50,000 people in the country. We are known as a BPO economy. And while we celebrate it here in the country, some critics say it's not sustainable enough to actually take us to the next century. Karen, as a matter of fact, I would want to tell you that there is one particular business sector in the country that has been experiencing exponential growth and sustainable growth. The information technology business process management industry is being fueled by enhanced and new investments from large and mid-size foreign providers as well as expansions from the established locators like converges as well as captives that are located in many of the country's delivery locations. You know, the growth has been staggering and aggressive. And this traction is really a result of the focus that has been given by both the industry and its stakeholders, which includes the government, the academe, the business sector, in areas like human capital development, increased infrastructure actions and activities, alleviation of poverty through some of the government programs, focus on a number of educational programs as well as aggressive marketing and advertising campaigns. You know, this industry last year generated $15.5 billion of revenue for the coffers of the Philippines and employed 900,000 Filipinos. But at the end of this year, we are looking at $18 billion of revenue as well as employment for 1,040,000 Filipinos with the operation of the different stakeholders to this industry by 2016. We're looking at $25 billion of revenue and employment for 1,300,000 Filipinos directly as well as direct employment for 3,200,000 Filipinos. Now, clearly the edge of the country is you have an English-speaking nation compared to our Asian neighbors. I mean, Filipinos almost have an American accent without even trying. So they're easy to listen to on the phone, frankly. But I've heard some comments were in, how do you move the BPO sector? How do you expand it? That it goes to related businesses. Are we in the higher end of that sector already? Definitely a lot of movements are happening in the other dimensions of ITBP. For example, last year, the most improved category is game development. It has increased from 3,000 presence or footprint in the country to about 4,000. We're just sizable. Something like a 25% increase. Definitely the voice outsourcing business is just burgeoning. It has been experiencing an average of 30% growth year on year during the last 10 years, for example. By the way, Karen, thank you for promoting me. I'm not chairman of Converges Corporations. Our shareholders would be surprised. I'm chairman of Converges Philippines. And Converges, by the way, is not just the largest BPO, but the largest private employer in the country. That growth is truly exponential and thanks to the quality of talent that we have in this country. Secretary Jimenez, human capital seems to be and it is the strength of the country. Now, in terms of tourism, human capital is the direct edge. But some have felt that the Philippines has not really invested enough when it comes to infrastructure for tourism. Well, the fact remains, Karen, that nobody really invests anymore ahead of the demand. Is that so? I'd like to debate. China does. Whether they will be successful in that remains to be seen. The fact of the matter is generally people want to see the whites of your eyes before they actually make an investment now. But if I may, there's a lot of talk about miracles. And usually I take a bit of an exception to the use of the word because it tends to imply that something happened that is unexplained. I think people refer to the Philippine miracle only because something happened when they weren't looking. But there is a perfectly good explanation for it. And in fact, when you think about the sustainability of growth, what you actually mean in today's paradigm, you know, I agree with what Kevin was saying, but in today's paradigm, what must be sustainable is the sustainability of reform. That is the only guarantee that growth is going to be sustained. And that is fundamentally what happened in the Philippines. The logical explanation is there was a restoration of faith in the leadership. Consequently, there followed a restoration of faith in the system. And what we're seeing today is a restoration of faith in the future. When you go back to people, it only means that people, the Filipino people have begun to believe more in themselves. And that's not exactly new. When people ask me about foreign direct investments, my response is always the Filipino workforce is probably the most direct form of investment in the world. So when you think about it and you take place out of it and you just think of people, we are the most successful foreign direct investment in people for the BPO industry, for the medical care industry, for the maritime industry, for the hospitality industry, and so many other industries. When you think about it, the Filipino is probably one of the biggest foreign direct investment recipients in the world. The Philippines is simply the source. And we're very happy, in fact, that the source is now the focus of a lot of attention. Okay, but I was going to take a point you said, are the Philippines being the biggest source of foreign direct investments? Vietnam, for example, has been very phenomenal in the last year. And manufacturing and agriculture in Vietnam has grown. You have a $3,000 GDP per capita. I want to ask you, Sherry, the words of inclusive growth, 7.2 percent, you work with farmers. Do you really feel it on the ground? As the youngest in the group, I think, Aaron, I would like to say that we cannot really feel it, especially from the farmer's level. That's why we need to wake up Filipinos, because this is our time. The youth are getting more proactive. The youth are getting more innovative. But you don't feel any of the reforms that's been put in place by the government? I really couldn't feel it on the farmer's level, because I really work with them. It's so hard to feel how 7.2 percent is mainstreaming into the grassroots. So I think in the Philippines, we hit rock bottom, and there's no way but up. You know, we just need to build a platform of solidarity that everyone must create wealth in this country. But we need to make sure that once we create wealth, we don't leave people behind us. So right now, a lot of youth are getting more proactive in terms of social entrepreneurship left and right. You know, it's so fabulous to be a social entrepreneur, things like that. There's a lot of innovation ongoing, but most of the time, they forget about inclusion, which is very, very important. All right. Karim, Kevin, talk about inclusion. Does this really factor in in the long run? Well, I think I have to come back to the secretary's point, and I really believe that this is absolutely fundamental in what's happened in the Philippines, restoration. I think totally right. This goes leadership, system, president. Now, also, and I think this is a problem that is very big in Southeast Asia, bureaucracy. You know, civil servants are there to make life difficult, not just for foreign businessmen, but also for local, you know, that's sorry. I think that's the truth, yeah? Yes. You know, and I think what often happens is that the larger businessmen, they can build a kind of infrastructure to deal with civil servants. But it's really the small businessman. And leaders such as President Aquino and some of the candidates in Indonesia now running for the presidency are very keen on the fact is reforming the bureaucracy benefits the small man in the guy who sells vegetables in the market is a is a entrepreneur and he needs his life to be made easier. So if there's any permissions or agents, they call it in Indonesia, whatever, they should be easier to get. It's the small man who benefits from the reform of the bureaucracy and that is critical. And as their their energies are released, the economy will grow faster and the inclusion that you are craving for will trickle down more. So you don't think the reform of the bureaucracy isn't just for the super huge investors. It's the importance is right on the ground. Yeah. At the village, the desa and the barangay. Yeah. And Kevin, did you want to say something? Sure. I think the way in terms of the ease of doing business, I think it's a major factor in putting the country forward. It's a major factor. If you look at the the World Bank's doing business report, I think Philippines has improved dramatically from 2013 to 2014. I forgot to get that number something like 35 ranking increase, but still Philippines is sort of the middle of the pack. If you look at the countries globally, but I guess the point I want to make here is that this sort of ease of doing business reforms. These are almost an underlying driver for other economic drivers, right? You want sustained growth. The sustained growth has to be driven by certain sectors. And but these sectors, we have to have underlying factors such as the reform, such as the efficiency, such as infrastructure. I think people have talked about infrastructure several times. Let me just maybe spend one more minute on that. I think infrastructure is so important. That's why I don't think it's a driver. It's a driver of other drivers, right? It's underlying everything else, right? If you look at it's not only about a growth driver. It's also about the competitiveness of the industries. If you have good infrastructure, many other industries become more competitive. I mean, a simple number would be, for example, we at the World Bank, we say the the cost of delivered food, right? Actually around 40 to 60% is the cost of transport. It's not the cost of the food itself, right? So it's about the growth. It's about the competitiveness of those industries. It's about frankly also people's quality of life. You know, can you get around easily? Can you get energy? It's also about the job opportunities, right? When you do infrastructure, not only in the short term, you create jobs, but in the long run, you know, maintenance of roads, for example, and other sectors. So I really want to emphasize the importance of infrastructure as an underlying driver of all the other growth drivers in addition to the reform and efficiency and ease of doing business. All right. Later on, I'll ask Bill Luz about just how much the government is doing with infrastructure. That's later on Bill. But in the ease of doing business, I think Manny, Cherie, and Marie-Faye, you could talk about this and I'll have Secretary Monterey act to put up a power plant in the Philippines. You need 165 signatures and a waiting period of four years, considering you have a power problem and you're doing business in Vietnam, Manny, and I want you to be very open. Is it easier to do business in other countries compared to your own country? Well, we bought a 600 megawatt gas-fired plant in Singapore. It took us from soup to nuts about five months to do it. Five months? Yes. Yeah, five months, okay. We have planned on building a 600 megawatt coal-fired plant in Subit and that has been on the burner since 2010. So six years? Not really, four. Give or take, yeah. Okay. All right, let's talk about that, Manny. I think this is very informative. I mean, you've seen the Philippines going up in ranks, 100 to, now number 100 to 189, and Asia 6 to 10. Yeah, it goes to the point that certainly the soft part of development is important, reforms, governance, and perception of the Philippines improving, right? But it must, there are the hard parts of development as well because it can't be all perception. Like for example, you know, you're a CEO, right? And Marifé has very good image and so forth and so on. But then your shareholders will ask you, at the end of each year, where are the profits, right? Where are the profits? And the main reason, I believe, that's why your inclusive growth is not as inclusive as it should be because we're mainly a consumption-driven economy and it's time to switch that to an investment-driven economy. That's why this FDI is very important, right? And Secretary Manus has paid tribute to the Filipino worker. Absolutely correct. I mean, the overseas remittances are probably in the order of 25 billion. And your BPO is called Centres, which is approximately overseas deployment of our people. It's another 15, 40 billion U.S. It's the single largest and most successful industry of this country. That's our people. And the sweet spot of economic development is right now with per capita is $3,000. If you could move it to $5,000, then I think the consumers will move towards the consumables to durable goods. And that's where your manufacturing industry could kick in. At the moment, to promote inclusive growth, we need emphasis on agriculture and the services industries like tourism. Of course, there are prerequisites to those things like infra for people to get directly into, say, Maktan or Boracay, right? We need those. The hard parts of development must be addressed as well. It's not just perception, right? Okay, I'll move to that later. But Karim's point on the ease of doing business is very interesting. What would you suggest? What kind of changes would you want to see? Clearly, the present government, the Aquino Administration, has made major reforms, but it may not be enough. Give me some specifics that you'd want to see. So business is much easier. Oh. Yeah. Don't worry, it's a little bit. Go ahead. He said, yeah, edgy. You have to be edgy. Can I take off my shirt? Yeah. It's the World Economic Forum. So you... Yes. I think at the end of the day, you have to define your overarching ideology. If our role, both business and government, is principally to promote the economic welfare of our people, then that defines the entire... and informs the entire program of government, doesn't it? Because at the end, it's the programs, all of the PPV projects are, for example, commendable, bar none. So I think we just get on with it, right? Okay. As Secretary, you may want to respond to this. I mean, clearly with the ease of doing business, and I'll ask Bill later on. Yes. Again, I think all points, especially when they're directed at speeding up, you know, the hard infrastructure, all points are very well taken. The perspective that I would add, which is very important, and I do not raise this as an excuse, just as a reality that people have to acknowledge is, the Philippines is a very real democracy. And very often, there is a tremendous temptation to dispense with what would be a sustainable, democratic way of doing things and start to run roughshod over local government prerogatives, etc. Now, I come from an industry... But does democratic have to mean long? The answer of course... I mean, does it have to mean that? It means something specific, the airport. Everybody went through the airport. Democratic means that the people must agree to it, okay? And like I said, I come from an industry, tourism, where nothing is possible unless the local governments are activists about it first. I cannot step in and actually dictate what their tourism plans will be. I take their plans, I allow the world to see it in its best light. And as much as possible, I try to facilitate the success of that plan, but it is their plan, not mine. And believe me, that will take, and forevermore, that will probably take a little more time than it takes in places where you don't have to do that. And the Philippines has embraced that and accepted it as part of life in a democratic space. Now, can it be done faster? Absolutely. I used to come from the advertising community where we made decisions by the minute, by the hour. And I joined government where the decision process swung all the way to the other side. I have lost my voice screaming over the procurement system more often than any other subject. I do not give in to the temptation to throw the rulebook away. But this is what Manny was saying. The reality is that these are the hard decisions. They're not sexy, but they're the reforms that could be needed. Perception is sexy. It makes great headlines. But the unsexy, un-headlinable decisions are, you've cut signatures from 100 to 30. You've cut permits to five to two. Karim, Kevin, please. And compare it to, I think, the best being right now, the most, I wouldn't want to say threatening, but in terms of competition, is, frankly, Vietnam and Myanmar, when you have local businessmen, Filipino businessmen, putting up businesses in Vietnam. Karen, I really think there's something we are a little bit missing, which I always want to push back a little bit on what Secretary said earlier. You want us to be edgy. Please. I think we talk about the hard infrastructure. I think we need that. We talk about some of the soft issues in terms of efficiency reforms. I really think countries like Philippines additionally need some long-term vision. What does the country stand for in the international marketplace? Vietnam stands for something today. What does Vietnam stand for? I think Vietnam, for the past number of years, stands for low-cost labor that they can get a bigger market share from China, from many other places. It's a skilled labor force at relatively low cost. When you talk about Myanmar, there is an image in the foreign investors that's where you have a wealth of natural resources, large populations strategically located between a number of other important economies. People can immediately come up with a few things. The Philippines, I think there are a couple of things people think of. I don't think they're the coherent story. That's number one. But number two, related to that, I think there's also a vision, which is why I want to push back a little bit. I think, for example, the China model. You can argue for all the problems it has. It has certainly created a miracle, in a sense, in terms of getting 600 million people out of poverty. That is not necessarily unnoticed, but it's certainly something of a very large scale. I don't think China could have done that without a very long-term vision. And the risk-taking. Basically, the government says, here's a blueprint for the next number of years. Let's get on with it, and maybe we will be accused of building ghost towns and highways to nowhere or whatever. But let's see how it goes. I would say that bet has largely paid off for China. And I would argue, in a relative scale, China is probably here, Philippines is probably here. In terms of that long-term planning and risk-taking on the government side, I would think, I'm not arguing the Philippines should move to here, but I think the Philippines should move to probably here from that end. I think first point to make, and I totally agree with the Secretary, you don't throw out the rulebook in terms of democracy. Also, it's worth noting that two of the largest economies in the world, the British and the German, capitals thereof, London and Berlin, as I understand it, are both struggling with their own airport capacity. The British have not made a decision for like 15 or 20 years. Tempelhof has just been postponed again. So, you know, that's a critical problem in democracy. It is slow. And if the Europeans are slow, don't let's think that everyone else can do that much faster, okay? But the airport here is horrendous, yeah? Okay. Hands up, everyone. I think the other thing then is also to remember that democracy is a means, not the end. Therefore, you have to get into the rulebook and change the rules. And you have to use a political capital to do that, to make things faster, yeah? Your point on long-term vision, totally right. But then very tough if you can only have a president for six years and he can't do two terms. I think that's another case of the rulebook. You should have two terms, but a two-term limit. Indonesia is two terms. And generally, once you've won the first term, you will win the second power of incumbency. So, and I think you do need two terms. One term is not enough. 12 years, you can't go long-term. And that's where you need to go. But that's a hard rulebook to change. Well, I mean, you know, do you want... That's like a constitutional change completely. Do you want to move forward? This is the kind of challenge that Mr. Pangolinan is talking about. It's the rulebook you've got to tackle. Democracy is the means to the end. Okay, all right. It's not the end in itself. I'm going to simplify this question. What happens after President Aquino leaves office? I think that's the question on everyone's mind. I'll start with Sherry. Well, I'm confused now. Okay. Because actually I really agree with Kevin. The country needs a long-term vision. So that's all right now. I would represent the youth in this. We've been craving for this. What would be the vision of our country in 10 years and 20 years? We don't know. And, but for me right now, in just putting perspective in the country, I've been traveling around. I enjoy the Philippines so much. I didn't want to get out of my country. But we need to discover that there's beauty in the countryside that we need to develop. You know, I would agree. Develop means spend money. Yes, spend money, but in creating wealth in the countryside, for example, converges. You can really see their offices in Bacolod, in other provinces, not just in Manila. So imagine you decongest Manila. You promote reverse migration. Then just focus on Manila because traffic is horrible. Horrible. And I'd like to acknowledge Accenture is also in the Philippines. Well, I think 35,000 people. Yes. You can really see if these businesses would also focus in bringing their offices in rural places, like in provinces. We have 7,107 islands. So imagine if we bring the wealth in the countryside, you can promote reverse migration. But more than that, people will not go to big cities. Okay. All right. Let's talk about... You wanted to say something, Marifai, very quickly. No, let me do ease of doing business. Yeah, ease of doing business. You know, let me cite one particular government entity that has helped the BPO industry in terms of responding to our clients at the most rapid time scale. You know, when our clients say, we want to do business with you tomorrow, that site in Bacolod or Davao, or Cebu, or Baguio, or Laguna Matsmi, you're ready today or yesterday. So this agency is the Philippine Economic Zone Authority. A PESA. Yes, PESA. PESA, as you know, regulates the entry of investors into the world, the country via the economic zones. They handle end-to-end processing of registration incentives and the like. You know what? This is a one-stop, no-stop agency, no-corruption agency. When I say no-stop, you know, the people in PBO industries are 24-7 business. I would call Ilya Delima two in the morning. Do you feel that it is maximized? PESA is maximized in terms of foreign direct investments very quickly? I think there's still room for improvement and that would be in the area of scale. Okay. Additional resources. All right. I'm going to open questions coming from the audience. I'd like to start with Bill Luz. How do you do this, Ethan? Does he have a mic or do you stand up? Oh, the mic. Oh, he's... Okay. All right. Bill Luz is the head of the National Competitiveness Council, and I want him to give the government's perspective in terms of the reforms that this administration has been putting on and even the hard reforms, I think that's been talked about today. Well, thank you, Karen. I work for the National Competitiveness Council as a co-chairman representing the private sector. So my job is to give it private sector perspective on how we can improve processes and other things. So on the ease of doing business, we've worked a lot in the unglamorous side of streamlining and simplifying rules and regulations at the national government level and at the local government level, as Secretary Jimenez mentioned, LGUs are very important. So we made some improvements there, and to Kevin's point, we took a 30-country jump last year in a global ease of doing business ranking of IFC and World Bank, which was the largest jump globally, and it was by dent of hard work. So I completely agree with Secretary Jimenez that I hesitate to use the word miracle because I think it downgrades the efforts that people have put in to make the improvements. It takes hard work, and it's going to take sustainable, long-term hard work to keep it going, and we're determined, absolutely determined to do it. People say the bureaucracy is your enemy, but in this case we've turned to the bureaucracy and challenged them and used benchmarks to tell them what other countries are doing, and I think they've responded beautifully. To the point that we should promote areas outside, we have not only simplified LGU processes and cut the number of signatures and steps to get any simple business permit, but also we started collecting competitiveness data on cities and municipalities because we feel that we should be attracting investments outside. Last year we rated 285 cities and municipalities. This year we're going to rate 550. So now businessmen will have a basis for saying, where do I go? Outside of Mandela, where do we go? Bill, what is the vision of the Aquino Administration in terms of the ease of doing business? Where do you want to take this? If it takes 146 signatures for a power plant, what's the goal? Do you want it down to 50? We're analyzing it. They've asked me to take a look at it, and the first thing I did is I went to industry and I said, tell me, how long does it take? What are the processes? What are the pain points? And what are the recommendations? Give me a recommendation where we can cut. Then we sit down with the government agencies, the Department of Energy, Department of Environment, local governments, because we cannot just dictate what those changes will be, but neither can we expect an agency to suddenly change and become so customer-conscious. So our job at NCC is we get the people, the agencies together, with businessmen, and we tell them, you've got to be more customer-friendly. And I think this is what we're seeing in terms of the way agencies are behaving now. Okay, Manny, I want to ask you, do you agree with that? Do you see it yourself? You blinked. Was the politically correct answer? No, you don't have to. I think at the end, it's a question of creating a nurturing environment for business to lead the development effort. To be a co-parter of government in development effort. Clearly, a business's objective is profits, but I think most of the business groups here realize that part and parcel of that mission of business is to promote society's welfare. We cannot divorce the issues of inclusion and poverty by simply focusing on profits. There's got to be that nurturing situation because, take the case of Tampakan, that's a local government issue to begin with. Can you give them a brief, because we have foreigners in the audience. Well, it's an open-pit mine that I think the Extrata Glencore are trying to develop. It's a world-class mine, and initially, there was resistance against the project because it's an open-pit mine, so there are huge environmental issues that are created by it, but Extrata is a world-renowned mining company, and there are open-pit mines elsewhere in the open. My only point is that if the Canadians can do it, the Australians can do it, the South Africans can do it, what, the Filipino cannot do it? I think I cannot accept that point, right? Okay. Maria Reza, okay. Maria Reza, head of Rappler. The perception is that we've done really well. I mean, reality and perception, right? We've done well, but that's low-hanging fruit, and the feeling of many people now is that the real work of institution-building, you talked about the rulebook, that real work really hasn't been addressed. In fact, it's been used as an excuse to not move forward faster. An example is Haiyan, Typhoon Haiyan. It is an emergency, and yet leadership could push forward further on it. Why are you doing the real nuts-and-bolts work of building from the ground up the institutions that need to maintain democracy? Can I just comment on this? I didn't mean to suggest at all that we should throw away the rulebook. I mean, economies of fright in a very democratic setting and under very tightly regulated environment, like, for example, look at Hong Kong, the securities regulations are very tight. Singapore are the same thing, they are the company in Australia. I was slapped on the wrist for saying something about the offer price that we offered initially. So business can adjust, and the rules have got to be enforced, and there is no contradiction between following the rules and a thriving economy. That's what we have to reconcile. I don't think we reconcile that in this country. Secretary, I think you should take this for Maria and Manny. I think, first, to Manny's point, that's very true. Are we doing the nuts-and-bolts work? Yes, we are. In fact, I think there are days when we get too into the nuts-and-bolts, and this is the perception that we were kind of slugging along. But I share with you an encounter with a friend in Germany. I was exasperated over development, etc., and he looked at me and he said, Mon, how old is the Philippine Republic? And I said, well, it's actually under 70 years old, if you think about it. He said the German Republic is over 400 years old, and we're still quarreling with each other. And in effect, his message was this, momentum-building is at once a recognition of what Manny said. We've got to get our act together. We've got to move faster because there are people going hungry as we speak. But building momentum requires a certain validity of process. Otherwise, as we have seen in other parts of the world, you go back to square one. All this talk about progress is not measured in terms of the gleaming skyscrapers you have. The sustainability of your growth still goes back to whether you actually built valid, sustainable momentum. And we're going through that. When I was asked, I said the Philippines is going through what I would describe as the painfully aware state. I think a simple question would be if President Aquino were no longer president, should a businessman fear that his contract will not be respected, that his contract or winning the bid, he'll end up in court? In other words, your question is... Are the institutions in place? Are the reforms... Are the reforms permanent? Are the reforms irreversible? Absolutely. If you ask the Filipino people, for example, would they accept a dictatorship tomorrow? Irreversible. But not that reform. No, they will not. Not that reform. No, this is the mistake, Karen. And this is my message, because I used to come from the private sector. Our tendency in the private sector is always to define progress in terms of a timeline that includes only our lifetime. When you join government, you realize you can't look at the world that way. You can't look at your country that way. And, well, like I said, it is valid to worry about all these things precisely because that's what makes it sustainable. Okay. Wash CSIP, I believe, is a question. Right beside you, madam. Washington CSIP is the very... It's a 25-year-old sitting there. Morning, sir. I want to take quite a different viewpoint. Okay. I'm an Asian, and I want to speak to other Asians and other foreigners here. We must have confidence in a country through good or bad. We've had bad political leadership until the last President Aquino, I think. But we've survived. The outsourcing industry was started... I started it in 1983, the first outsourcing company, now employing 800,000. So when foreigners asked me, how come foreign investments are so low? I said, it's not the dollars and cents. It's how many people do you employ? Tourism is nature here. I didn't know about tourism in Buhol. Until a German friend of mine told me about it, and I found out there were 200 Germans that married 200 attractive Filipinas. I don't know if that's okay. And that's why I think tourism is the case. Okay. Wash. There are so many things that I see. I've done business in all the Southeast Asian countries and helped business companies everywhere. So in the Philippines, the human resources is the key. Okay. All right. Did you want to ask Madam? Go ahead, ma'am. Thank you. Before I go to my question, I'll just say that changing the rulebook is actually doable. When Ramon del Rosario was finance secretary, they looked at the customs rulebook. Okay. And they restructured it, and they cut down the number of signatures. And for that time, and they used evaluation of imports from Port of Origin. Yeah. So yes, you can do the rulebook within a democracy, but my question is really about inclusive growth. Okay. In the Philippines, for instance, in the autonomous region of Muslim Indanao, where the attention is being focused, more than a third of your labor force are illiterate. In Southeast Asia, we have a huge number of illiterates. Okay. Marlaos, et cetera. We cannot be inclusive if we do not address this particular issue and we're failing the MDGs. Okay. Yeah. Let me... I need a government official to answer that. You want to take this for secretary very quickly? Or Bill, would you want to take? I mean, we did K-12. The Aquino government is spending much more on education, but apparently it's not enough. Do you want to take this Bill just very quickly before I move to the ASEAN integration? Yeah, just on the matter of inclusive growth. You know, when we track global competitiveness reports, we track about 12 of them or we moved up on 10. But what's important is we track those because they're the diagnostic tools for us to say, what do we need to fix in the country? And if we take a look at that now, education we spotted early on was a weakness. Okay. There's been a great deal of investment in public education, change in policy from kindergarten to K-12, tertiary education. And I think an inclusive growth, we're beginning to see the impact of this growth rate. It's not negative here, but poverty dropped last year and among the poorest of the poor it dropped about 7%. Okay. Now we need to continue to sustain that. So we're beginning to see some impact already from all this growth and all these reforms. And this is really just a question, I think, as Mon said, the restoration of faith and leadership in governance has been the key driver behind building up this confidence. Yes. I think there's no doubt that the president's good governance equals good economics works. I think the question now is, is it enough to take us to the whole other level? Now we'll talk about the ASEAN integration as we reach the latter parts already of this session. In 2015, we are facing the ASEAN integration. It could be an opportunity, but it could also be a big challenge for the Philippines. And ASEAN integration would mean that a country would have to specialize on one specific area. Some foreigners have spoken to have said, the Philippines doesn't come to mind first. For example, in the ASEAN integration, the Philippines being an archipelago, they've said is already a minus. The sub-Mekong region, that would mean Vietnam, Cambodia, Laos are all connected by a stretch of land. So the Philippines is 100 million people, but take the sub-Mekong region, it is 650 million. And this is the competition, frankly, not just in this lifetime, next year. It is next year. So is the Philippines set up for the ASEAN integration? Because clearly, all our Asian neighbors are geared up for the battle for 2015. Secretary Monde, then I'll move around the table. Are we ready for the ASEAN integration? We will be. Yes, we are. Is it we will be or yes, we are? You have to choose. Is it we will be or yes, we are? This is how fast we go. All right. Let's just talk about aviation. I say this a lot. The Philippines is not part of a contiguous landmass. So we don't count land arrivals. When you say tourism in the Philippines, you actually mean 98.8% of the tourists arrive by air. Yeah. But even just the cursory inspection of the map tells you, no one in this room traveled more than seven hours to get here. I'm not sure about that. Except for those who came from there. If you're talking about Asia, we are right smack in the middle of everything. So that's the reason. You draw a four-hour circle around the Philippines. That's a fairly good idea of what our opportunities will be for integration. So it's tourism. We are also going to be a beneficiary of a single ASEAN visa concept and Open Skies. We will be. We're used to sending workers abroad. In fact, our approach, as my friend knows, is there's more where it came from. But is that even good in the long run to depend on that? Do you have a brain drain? There's a cost to the... Your people are your best investment. And yes, you have to believe that they are going to be your strength in the short and in the long haul. Karim, can you comment on Kevin and I'll go through the table. On the Sub-Bekong region, frankly, I mean, Secretary talked about the specializing specifically, let's say, in tourism. Even if it's an archipelago. If you're putting up businesses, for example, you put up a factory in Vietnam, low cost, and then just take it by land, you already hit a whole other country. Yeah, but I think... Wash's point is most important. It's about confidence. It's about confidence of investing in the human resource here. Philippines has an enormous advantage with English, with this long-term investment. And as everything gets better here, the environment, you will find more and more Filipinos back in the Philippines servicing abroad. And that is what is inevitably happening. You know, I've been coming to Philippines for 20 years. The amount of people now who have got a foothold in the middle class because of BPO is so enormous. They can buy apartments, little cars. Their lives have transformed. That did not exist. And in the past, all those people would have had to gone abroad. Now they live here. So I think it takes time. But this is my concern politically, you only have a president for one term. And then you have a change. Do you have the same vision going forward, the same ethical viewpoints on things? That's my question. Is this the fear of a foreign investor? Not fear. I think it's a concern. Fear has gone. Fear is something dramatic. But concern is different. Concern goes to, you know, issues of poverty, issues of efficiency. Fear is like a total lockdown, you know, when you say dictatorship, that's gone. It's concerns. Okay. All right. Kevin, the Sub-Macon region, ASEAN integration in 2015. I think generally regional and sub-regional integration is not a zero-sub game. So you used the word battle. I think that's in a good sense. You want to compete for certain things, but I don't think it's a battle for a defined size of a pie. So I think that's my first point. And my second point is, as Secretary mentioned, there are a number of great strengths of this country, right? I think the location is actually very good. English-speaking, you have great nature, great beaches. You know, the key then is in that process of integration, can you make the best use of those? And that does take vision, as I mentioned, on the government side. And that also does take the government to be flexible to let private sector to come with their vision if they have one. But my last point here is beyond this region is I think the bigger question here is when you talk about growth drivers, right? We talk about investment versus consumer domestically. I think in my mind, the other big question is you have other much bigger economies in this region, whether it's Japan, whether it's China, whether it's India. How does the Philippines position itself to benefit from the growth elsewhere? Because India's and China's will grow in the next many years. How do this country, a much smaller country from an economic-sized perspective try to position itself to benefit from those growths beyond this immediate neighborhood? Manny, I think you should take this. How should the Philippines benefit from the growth of other bigger nations? Still a mystery to me. I mean, out of the ASEAN integration... Yes, yes. I mean, you've got a good point. You have Japan, China, India, and they will grow. Well, they are trading partners. I think we're talking about the ASEAN integration, am I correct? Which will happen by the end of 2015. Yeah. It's always been a mystery to me. It's an elegant concept, but if you translate it into the particulars, what does it really mean? Does that mean mobility of labor? I don't think so. Can we export our doctors or nurses? Maybe. But I'm sure the host country will require accreditation. So it's... You feel it... Open skies want the domestic carriers to close an absolutely open skies policy? It would take time, I think. Okay. So do you feel, Manny, that... I mean, Malaysia's always been very conservative with any liberal agreements. Do you feel that it won't benefit the Philippines as much? Well, it takes sugar. Our sugar industry has been flat-ish in terms of production of 2.2 million tons. Raw sugar equivalent. We're not competitive against Thailand, whose cost of production is lower because they have bigger mills and their productivity at the farm level is much higher than ours. So does that mean if you push the theory comparative advantage, does that mean the Philippines should get out of the sugar business? What happens to the sugar farmers? So how do you... How does the industry respond to an open market where tariffs will drop from around 18% to around 4%? Do we import our sugar? Yeah. So would that not stifle the growth of the sugar industry? Are we getting out of the industry? If you look at it from a pure agriculture standpoint, we only have one crop that produces export revenues of more than a billion, and that's coconuts. Thailand has got six. Vietnam has got five. So does that mean you close down your coffee, plantations, your fisheries, industries? That's a tough one. Very good. Do you find in Indonesia, for example, people are saying, well, what's in it for us? To be frank, the biggest beneficiaries of Asia and the economic community are the smaller economies, Singapore, Malaysia, and to a degree, Thailand, which are more saturated. And they are all... their businessmen are all looking Indonesia and the Philippines. So at that point, there's a challenge. That's a good one. Just use open skies. Open skies was finally instituted in 2011. There were a lot of misgivings, particularly from the local airlines. Now they're making money hand over fist. And ultimately, at least the experience has been when our corporations, when our people are put in a decidedly more competitive environment, they actually do better. This is what I talk about. A restoration of institutions and trust in itself. The initial resistance was simply a crisis of confidence. It wasn't because they couldn't do it. Now they're ordering new airplanes, they're planning new routes. Okay, good point. Cheri, you wanted to react to Manny. I totally agree with Manny what he said, because in the Philippines in terms of agriculture, in my personal perspective, we're not yet ready. For ASEAN integration, you mean? For ASEAN integration. For example, in rice production alone in the Philippines, how can we compete? Our rice here is 40 pesos per kilo. When you go to Cambodia in India, they're only like 10 to 15 pesos. Yeah, you should say that in English. 40 pesos would be like a dollar per kilo. Yeah, a dollar per kilo. But then when you go to India and Cambodia, they have like half a dollar per kilo. So how can we compete? Do we need to tell our rice farmers to stop farming? Okay, so how can we now work backwards in terms of really of course we have human resources, our greatest wealth, but I do believe that you have 12 million hectares of underproductive land in the Philippines that we need to develop. I mean, the sad irony is that when you speak about inclusive growth, there are two obvious industries that provide immediate employment. One is agriculture, where 70 percent of the poor are located and number two is tourism. The services industry, where the Filipinos are good at. So let's focus on those things first. Yeah. Manufacturing, tell me which industry? Very interesting. Now, tourism, moving on to tourism very quickly, is that 5 minutes or 10 minutes? I can't tell. Okay, so moving on to tourism very quickly, tourism is what many call now as the soft power. There are countries that survive on tourism. If I mean, you have Spain, for instance, at one point was practically leaving off tourism. I want to ask you, Secretary Mon, I know we've had better numbers of tourists coming in, but has the country and as the Aquino Administration really maximized its tourism potential? Have we really put a priority on tourism? I think it's fair to say we've only just begun, but we had a lot of, shall we say, housekeeping to do before we got to speed. And like I said, it is inclusive almost by definition. I always tell people, you want to know how inclusive tourism is? I'll give you a few nouns. Mountain tops, caves, underwater, isolated islands. These are not traditional areas of growth. And yet, you have jobs where jobs did not exist before. Underground river boatman. There was no such job. And you are actually, I exaggerate only slightly, it creates opportunities precisely because it is defined around a market that's still discovering things now. But we acknowledge that there is a whole lot of infrastructure, a whole lot of issues on connectivity that we have to settle. But like I said, if this republic went through life announcing that it wasn't ready, we wouldn't be here today. Mentioning connectivity very quickly, before I go into foreign ownership. Manny Pangilinan, of course, is the chairman of the Philippine Long Distance Company. One of the biggest, also cellular phone companies in the world. Connectivity has been an issue. I mean, for many foreigners, tourists, you go to South Korea, it's practically Wi-Fi country. And frankly, the cost of doing business, if connectivity were very good, would be much cheaper. Sometimes it takes an hour, five hours to download or send heavy material from, let's say, a client abroad. What does the government need to do in terms of connectivity or has the government played its part? Well, I can, speaking of Korea, the government Korea decided that, for example, in the matter of education that in the next, after five years, there would be no more textbooks. So they're educating their people to use the laptops, the tablets, the tablets, et cetera. So that's vision. That's vision. But they built the fiber optic, the backbone within Korea. So the government spent the money and the private sector spent the connectivity, the access or the last mile. So it was a cooperation with the government and the private sector to wire up, effectively, Korea on a broadband basis. Here it's a private sector that's doing that. Yeah. So, you know, there are constraints in terms of the size of the two major telcos in this country. But I think we made much progress in terms of connectivity in this country. We're now, I think, both. The government play a bigger role. Should it invest more money, frankly, in connectivity? I think it tried in the last dispensation, right? I think where we are situated is better, I think, for the private sector to do it. Okay. All right. Now, let's talk about the limitations, the restrictions on foreign ownership. There are a lot of foreigners in the audience and foreigners still cannot own land in the Philippines in terms of doing business, regulated industries. They're completely hands-off. I want to ask the foreigners here. Karim, is this a factor? How does Thailand do it? How did Malaysia do it? Actually, land ownership is something which is very tightly controlled in Southeast Asia. I think only Malaysia allows freehold land to be owned by foreigners, yeah. So, frankly, the emotional attachment about land very difficult to overcome. Secondly, I think, you know, perhaps because of 1998 and the financial crisis sweeping across Asia, a lot of ownership rules were changed in many countries that were most impacted by that. Thailand and Indonesia, to be exact. And now the countries and their leaderships are trying to reverse that. So, you know, you've got to prioritize at the end of the day, your own people. You cannot just be listening to the consensus around you saying, sell everything, sell everything. I'm totally against that. And I think, you know, I've got a lot of... Meaning land, that's specifically land. Yeah, but why should you sell, be forced to sell majority states in your banks because banks are a critical kind of channel of directing investments around the country. So, I think you do need to manage that. As a government, as leaders you've got to prioritize your own people and sometimes you have to take these decisions. Agriculture, you've got to make your own mind up. And since you are elected in this country, you know about the needs. How can somebody with shareholders across the globe who would buy and sell the shares every five minutes possibly have your interests of your farmers, your workers at heart. You have to make that life. I think you're very... You know what makes you interesting? You're not a complete liberal. No, of course not. All right, Gavin. Yeah, on that point, I completely agree. I have no more comment on that. What about, okay, what about business? I want to ask you, maybe you can take this on in terms of power, for example. Regulated businesses in the country. Maybe just going to the point. I think sometimes you get lost in the generality of the topic, right? If you look at the specific industries where foreign ownership of land can be I think quite easily addressed. For example, agriculture. If you do engage commercial farming, the best form is to lease the land. It's foreigners, and even local investors would not want to buy 30,000, 100,000. In Thailand, it's... Even in Malaysia, as I understand it. Indonesia leases its farm lands on a long term basis because the money that the private investor puts in is in the development of the land for agriculture and the implements and the tools necessary to develop the land. So do we need reforms in this area? Not particularly. But the problem is that providing the access to land for a long-term lease. Where is it? We've tried mightily, I think, to look at... Right after Typhoon Pablo in Davao Oriental, the governor there invited in the food to invest in agriculture. And we were quite keen to put up a palm oil plantation. But then it turns out that the land is owned by indigenous people. So we've had to deal with several tribes. And then it has to get approvals from the national government. So it became... So there's a red tape issue. Okay. All right, Marifa, do you want to add something very quickly? Oh, definitely. You know, next to labor, power would be the highest expense item of a BPO business. And definitely, if there is some assistance we will be able to address competitiveness. But power is not subsidized in the Philippines. It is in, I think, Indonesia, Nabil. I mean, is that the way to go? Would you want power subsidized? If the government can do it, why not? You guys have to make the change. Yeah, okay. Go ahead, Marifa. But is this the way to go? I mean, in a free market economy, subsidizing doesn't really give you the real cost of doing business, too. Well, if there are other channels to address the power issue, the Philippines being the most expensive in terms of power rates, sure. Okay. All right. We have two minutes to go, actually. And just to wrap up a bit, and I want to ask a closing statement from each of you. So some concerns that were brought up in terms of the Philippines is sustainability. Are the reforms going to stick way after President Aquino Trump leaves office? Power is really a very big issue in terms of doing business. The ease of doing business, is it easier now in the Philippines? Has red tape been cut? This is also it was brought up. You don't throw away the rulebook, but you can make things easier. Is it conducive for business? So these are the issues that were brought up, and are we ready for the ASEAN integration? I'll have Kevin and Karim speak last. Maybe the locals can do this. Is the Philippines the next Asian miracle? Yes, we believe it is. And it is a perfectly explainable miracle, as I said. It's not a complete and total surprise to those of us who have to slug through the gains that you're seeing today. It started with the restoration of trust in leadership. And it's now full-gallop precisely because the people of the Philippines have regained their trust in the future. And are putting themselves out there as a very active option for growth in this part of the world. Secretary Moni Menes, thank you for that. Marife, is the Philippines the next Asian miracle? Definitely. As a matter of fact, I think the miracle is already happening. I think you can see a business that has grown to 55,000 in 10 years. However, I echo what Mr. Washington said. We cannot leave everything to government. The private sector also has to lend a hand in all of this advocacy and initiatives that the government is taking. For example, to curb corruption, there is a private sector initiative called the Integrity Initiative that is policies, ethical standards and kind of helps the government in curbing corruption. So again, let's not wait for government. I think the BPO industry was a collaborative effort between government, between the private sector, the academe, and business. I think the next Asian miracle you have stiff competition this 2015. Are you sounding yes? I believe in my own country. I believe in our own people. And I think we can really do this. As long as we just need to work together, we just need to put our app together, we can do it currently. Now the hard stuff, Manny. What does it take? Really, you're doing business and you are resounding success after this. I believe that the Akina administration has made great strides in the matter of certainly reforms, governance which translates into economic growth. Average about 7% for the past three or four years. I would hope that that would continue because much remains to be done. Even in the matter of gender equality where there is no gender equality with men. Agree? That's a closing statement, sir. You don't want to be quoted saying it's an equality issue. We got to have confidence in ourselves. Unfortunately as much as I want to hear from Karim and Kevin, we don't have enough time and the session is quite strict. But I think our take away from this discussion is it's possible that the hard decisions have to be made and competition is going to be very tough come ASEAN integration in 2015. There are real problems and challenges and frankly the Philippines has to address that and unless we change the constitution on a second term for the president, Karim says we have to make do with what we have today and everything else is up to the country after that. Thank you very much for watching this session and the ANC coverage of the World Economic Forum continues. There are more televised sessions throughout the day. Thank you very much everyone. I'm Karen Davila.