Reboot: The Philippines as strategic global player

my Trade Tripper column in the 24-25 September 2016 issue of BusinessWorld:

From the looks of it, indeed the Philippines seems like a gateway or staging point depending on how one views the map. Yet, the thinking seems based on the idea of transport vis-à-vis military mobility, of the need for air and naval bases. Unfortunately, technology seemingly diminished that aspect of the Philippines, what with missiles moving warfare away from the traditional kind and hence not necessarily tied to a location.

And yet the Philippines retains options that could keep it relevant. And interestingly, location has nothing much to do with them.

We presently have around 2 to 2.4 million Filipinos working abroad as OFW’s in various locations around the world. And while indeed, the same represents around P1.2 trillion annually in remittances, nevertheless the huge potential of OFWs remain untapped.

As a marketing avenue, political lobby force, and information network, the OFW population represents an opportunity to push the Philippines forward strategically. Not only do they represent a huge diaspora, the same is virtually a cost-cutting resource in terms of people and equipment that can be relied upon whenever the Philippine government or businesses has a need to move around in or know about other countries.

Another unexploited avenue that could elevate the Philippines’ importance is its peculiar history and culture. This was something that Singapore unfortunately took away from us. But the Philippines -- with its English speaking population and quite remarkably cosmopolitan outlook -- should have been the natural gateway of the West to Asia and vice versa.

And I’m not talking here merely of tourism but rather in terms of political and foreign relations clout. Had we played it right, we could have served as the deciding vote in any international gathering, and the natural guide and partner whenever a Western country is seeking trade, security, or international agreement with a (at the least) Southeast Asian country.

Then, there is trade.

Looking at 2015 figures, one sees the following: Japan, China, the US, Singapore, and Hong Kong (in that order) remain our top trading partners. They account for more than half (53.8%) of our trade. If one also considers the rest of the top ten partners, including the EU, South Korea, ASEAN, the level of trade would reach 78.5%.

If that doesn’t give a clear enough picture, the top ten exports account for 83.5%, while the top ten imports 74%. They revolve around electronics and other manufactured goods, transport, furniture, wiring sets, chemicals, apparel, and mineral and metal components.

A narrow bench on trade if there ever was one.

And while increase in FDI for the past few years has been lauded, the same is still lower than the major ASEAN countries and, ironically, lower than that of the 1980’s and 1990’s (OECD Investment Policy Review: Philippines, 2016)

The huge missed opportunity was the inability to transform the Philippines into an air transport and maritime hub, particularly after 9/11 and definitely during the first decade of 2000.

The Philippines could have made itself a vital and necessary player in the Asian supply chain, particularly as our islands constitute natural (and suitably secure) processing zones.

Another should have been the bulking up of the workforce of the Department of Trade and Industry, as well as Customs, as preparation for the various necessary free trade agreements that the Philippines could have contemplated joining in.

Longtime readers of this column are quite familiar already with the wary stance we take regarding FTAs (free-trade agreement).

But that wariness rests on three things: the resources with which brings the ability to negotiate a trade deal beneficial to the Philippines (and not merely wishing that merely opening up of industries will magically transform the Philippine economy), the resources with which to execute the agreement (including the bureaucracy to catch violations of the rules of origin), and third was the hope that the World Trade Organization could still finagle a deal revitalizing the multilateral trading system (an eventuality that now appears to need considerable time to happen).

Fast-forward a decade later and we still haven’t moved beyond those three factors. And yet, we now are faced with around 11 FTAs that are already effective, signed but awaiting implementation, or to be negotiated (i.e., ASEAN-Hong Kong, China FTA, Philippines-EU FTA, Regional Comprehensive Economic Partnership, Philippines-European FTA, ASEAN FTA, ASEAN-Australia and New Zealand FTA, ASEAN-India Comprehensive Economic Cooperation Agreement, ASEAN-Japan Comprehensive Economic Partnership, ASEAN-People’s Republic of China Comprehensive Economic Cooperation Agreement, ASEAN-[Republic of] Korea Comprehensive Economic Cooperation Agreement, Japan-Philippines Economic Partnership Agreement).

And the forgoing doesn’t even yet include the massive Trans-Pacific Partnership.

Compare our attitude, flexibility, and sophistication on this matter with China, which currently is the top trade partner of around 120 countries. And we wonder why we have difficulty in getting traction on our West Philippine claim!

To paraphrase one foreign affairs thinker: the Philippines should mentally rearrange the world and determine its own place in it, rather than obediently see the world as international law tells it to.