While pragmatism may have driven President Duterte’s efforts to win China’s goodwill, despite the country’s maritime disputes with its giant neighbor, it is also pragmatism that underpins his calibrated strategy to prod the United States to treat the Philippines better while safeguarding undeniable gains from Philippines-US ties.
Senators agree that nowhere are those advantages more apparent than in the economic bonanza from substantial US investments and the formidable financial muscle of nearly 4 millionFilipino-Americans.
Asked if they see the same pragmatism at work in the President’s cozying up to Beijing while professing to keep close ties with Washington, despite his tirades against the US, Senate Majority Leader Vicente C. Sotto III said: “Of course. He apparently calculates his directions.”
In the view of Senate Economic Affairs Committee Chairman Sen. Sherwin T. Gatchalian, “US BPOs [business-process outsourcing] and foreign direct investments [FDI] will not be affected by the separation because these are purely private-initiated.”
Gatchalian said “we can have an independent foreign policy, yet a balanced one, wherein we keep our good relationship with all countries, especially old friends,” apparently referring to America, which accounts for substantialFDI, trade and hosts nearly 4 million Filipinos whose remittances make up a huge chunk of the annual dollar inflows that keep the economy stable.
The President’s Cabinet, led by Trade Secretary Ramon M. Lopez, also underscored the trade ties by way of quickly clarifying what Mr. Duterte meant by “separation” from the US at a business forum in Beijing last Thursday. Hours later, President Duterte clarified at his arrival remarks in Davao airport that, by separation, he did not mean a “severance” or cutting of ties, but only a recalibration to ensure that his “independent foreign policy” is given substance. Analysts pointed to the other stakes: The BPO sector, sugar and other exports.
But the Filipinos in the US are pulling in weight, as well, by way of remittances, which account for a big fraction of dollar inflows.
During a Washington forum in 2014, then-Ambassador to the US Jose Cuisia Jr. and his guests underscored such remittances.
Cuisia reported that the economy is performing well as a result of a stronger industry and services sector, and robust remittances from overseas Filipinos. He said: “This should make the Philippines more competitive and more attractive to investors, particularly those in the US.”
One of the guests at that same forum with Cuisia was Samish Kumar, CEO of Transfast, a leading international money-transfer company with a network of over 200,000 payment points across more than 100 countries in four continents.
Kumar underscored the key role of US-based Filipinos in the remittance sector in the Philippines. “The 3.5 million Filipinos in the US and the 850,000 in Canada send nearly $13 billion—or more than half of the approximately $25 billion—of global, cross-border remittances sent annually to the Philippines,” Kumar said.
Mr. Duterte himself remarked, in clarifying what he meant at the October 20 investment forum in Beijing, that he would never think of “severing” ties with the US lest the 4 million “Filipinos in the US would kill me.”
Fil-Ams’ higher incomes
Their remittance power is not surprising, given that Fil-Ams had a median annual household income of $80,000 a year, compared to the Asian-American households’ $71,709 and the average American household’s $53,046, according to the independent, nonprofit think tank Center for American Progress, in a 2015 study.
The center said the Fil-Ams were among the fastest-growing ethnic group. The Filipino-American population grew significantly faster than the US average between 2000 and 2013 (growing at 4.5 percent versus the US average of 2.4 percent). The Filipino-Americans are much more likely to be first-generation immigrants than the US average, the center added.
The higher-than-average incomes of Fil-Ams may partly owe to their better educational attainment: 4 percent of the Fil-Ams had a bachelor’s degree or higher, compared to the American percentage of 29.6 percent, according to data cited by the Center.
The average population of Fil-Americans between 2010 and 2013 was tallied at 3.6 million, versus 19.2 million Asian-Americans, and a total 31 6million Americans. Of the 3.6 million Fil-Ams, 2.3 million are concentrated in just five states: California, Hawaii, Texas, Illinois and Nevada.
The BPO power
Equities analysts earlier raised the risk that the Philippines’s BPO sector will take a hit should Duterte’s “separation” mean a substantial downgrade of ties between the former colony and its colonizer.
Most clients of Philippine-based call-center companies are from the United States, the analysts had noted, adding that investors might also put out from property stock, which have benefited from the robust rental revenues from BPO firms.
US banks might also be more reluctant to lend to Philippine firms, they said.
And finally, there is the matter of comparative FDI flows between the old friend America and the newly revived friend China. Bangko Sentral ng Pilipinas data reflected $78.28 million in FDIs from US in the first 7 months of 2016, nearly 25-fold that of China’s $3.3 million in the same period.
However, analysts hope the FDI from China would grow as result of the reported $13-billion investments promised during the visit.
Whichever way it goes, pragmatism as the anchor of the President’s foreign-policy moves will apparently be the norm in the days to come.