PRESIDENT Rodrigo Roa Duterte’s independent foreign policy initiative is expanding the playing field for the Philippine economy. In contrast to the past, when our sight was generally restricted to a small part of the world, particularly the western part, we now have a 360-degree view of the global market.
As part of the new policy on dealing with other members of the international community, President Duterte has also adopted a “Look East” policy, which encourages us to take a fresh appreciation of the countries in the same geographical location as the Philippines, like China and Japan, and new markets like Russia.
During the early eighties, then Malaysian Prime Minister Mahathir Mohamad adopted the “Look East” policy to accelerate economic growth by focusing on Japan and South Korea instead of on the developed countries in the West.
Today, Malaysia is classified by the World Bank as an upper middle income economy, with a per capita income of $26,891.00. The Philippines, on the other hand, is categorized as a lower middle income economy, with a per capita income of $7,358.80.
In pursuing an independent foreign policy, the Philippines is keeping, not abandoning, established relations with traditional partners like the United States and Europe, but is forging new or strengthening existing ties – more like enlarging its circle of friends.
For the Philippine economy, in particular, this move is opening new markets for exports and more sources of investments and tourists. The first official trips of the President abroad have already shown some of the benefits coming to the domestic economy.
During the first eight months of 2016, net inflows of foreign direct investments totalled $5.4 billion, coming mainly from Japan, Singapore, Hong Kong, the United States and Taiwan. China, the world’s largest economy, is not even among the top 10 foreign investors in the Philippines.
President Duterte’s recent trip to China should change the investment picture. Actually, China, one of the world’s largest sources of tourists, almost immediately lifted travel restrictions on Chinese travellers to the Philippines while the President was still in Beijing. China is also reportedly planning to import $100 million worth of fruits and other agricultural products from the Philippines.
To strengthen the renewed friendship between China and the Philippines, the DTI is working out the details of a Joint Commission on Economics and Technical Cooperation, which may be organized early next year.
The first meeting between President Duterte and Russian President Vladimir Putin at the sidelines of the recent Asia-Pacific Economic Cooperation (Apec) Leaders Meeting in Peru resulted in a commitment to strengthen bilateral ties.
Russia, according to Trade and Industry Secretary Ramon Lopez, promised to import $2.5 billion worth of fruits and other farm products from the Philippines (current Philippine exports to Russia amount to only $46 million a year) within the next 12 months, and offered trade and investment partnerships in infrastructure, railways, energy and machinery engineering, among others.
Now, we have a more enlightened foreign policy that can, in fact, improve the Philippine economy. Multilateral lenders like the World Bank and the Asian Development Bank, as well as credit rating agencies and international banks are raising their growth forecasts for the Philippines, which is already being hailed as the fastest-growing major economy in Asia.
We must not forget, however, that volatilities in the global economy, like the Brexit, continue to pose risks to growth.
Thus, we should be more aggressive in pushing trade with other countries like Russia and China, without sacrificing the US, which I believe will continue to be a major trade partner of the Philippines.
For the economy, pursuing a more enlightened foreign policy will further strengthen and brighten growth prospects.
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