TRANSCRIPT: AFMIS Press Conference in Hong Kong, October 10, 2012
. Purisima: We have to increase spending in education, in health, in CCT programs because that will allow us to make sure we realize the demographic dividend. At the same time, there is a proposed bill in Congress, Responsible Parenthood. Its really empowering our people to have more information and knowledge about parenthood and what their options are and giving them access to this because what weve seen is people whove been better informed, educated and empowered have made better decisions. We want them to make informed decisions. As to what those decisions are, we leave it to the individuals. The experience from other countries is to be observed. Theyve made better decisions as to the future of the families in terms of the sizes, in terms of education and how they treat themselves. Thats our goal.

On PH gaining benefits from smaller families

Purisima: I think we would benefit families if they get to have more informed decision, if they have more information and more empowerment. The country is determined to support whatever our individuals decide in terms of their personal knowledge. Were not talking about family control, family planning. Were talking about responsible parenthood which is really about providing information, empowering people and as you know, depending on your religious belief, there are informed people who end up with many children. There are informed people who end up with less children. We will support both but whats important is that they are empowered and well-informed.

On the conditions for CCTs

Purisima: The conditions are to keep their children in school and bring them to health centers. Thats really to make sure that next generation of Filipinos grow up with the right skills and get to live healthier lives, because thats the way to realize this demographic dividend.

On PH economic growth

Purisima: Its about addressing the constraints to growth. When President Aquino came in, the fiscal situation was a constraint. Now we can say that its no longer the situation and were getting to a situation where were going to hit our medium term fiscal sustainability program. Infrastructure is another constraint to growth; were addressing that. Were not yet there but we have programs to accelerate the investments in public infrastructure, both from the budget and through public-private partnerships. Peace and order is a constraint to growth. The President worked on it and we were able to sign a framework agreement and were going to continue to work on the details so a formal signing can be attained so we can then attain an enabling legislation. The referendum so the people can choose. That should create for a better environment in the part of the Philippines. That should allow us to move another notch in terms of growth. On mining, were coming up with better proposals for new legislation to allow us to have responsible mining. And once were able to do that then mining should provide another gear for our economy. All of these, I think will allow us to build an economy that can sustain it at 7-8% over longer periods of time. Obviously, assuming the global economic environment will cooperate. But despite the challenges in the global economic environment for the first half of the year, we grew 6.1%. Exports are up 7.7%. In fact, even Europe is an opportunity because in terms of our export mix, Europe is underrepresented. We were focused on the US, China Japan and the rest of Asia. By being able to increase the exports to the worlds largest economic zone, even though theyre facing challenges themselves, theyre still going to be there. Theyre still going to operate. That still creates opportunities for us.

On dependence on remittances

Purisima: If you look at the reports of many banks, the ADB the Philippines together with Indonesia are the least vulnerable among the Asean countries because we have large domestic markets and we have a large population. Thats why, even through the global economic crisis, we continue to grow. Weve grown consistently since the Asean crisis.

On trend growth

Purisima: We grew in 2010, 7.6%. Over the past 10 years, the trend growth is 4.7%. We believe weve done enough to bring the trend growth between 5 and 6. The next stage is to bring it between 6 and 7, then 7 and 8. So, its like building a skyscraper. You need to dig a foundation and make sure that those foundations are strong enough so you can attain your aspirations.

On the strengthening of the Peso

Purisima: Unfortunately, the deputy governor is not here but they do track the peso vis a vis a range of currency that they consider a competitor or peer country. They make sure that we are within a reasonable band on the movement of the currencies. So far I think theyre comfortable. They do try to intervene once in a while when the changes are disruptive but thats rare. Basically, its a market-determined..(trails off)

On cutting interest rates vis a vis inflation

Purisima: We work closely together. I completely support the central bank of the Philippines. I sit in the Monetary Board, Im one vote there of 7 members. Im happy with the situation where we are right now. We work closely with each other. We coordinate fiscal and monetary policy closely.

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On PPP

Purisima: Â Its slow compared to our aspirations but when you look at the Marcos administration, it took us 16 months to launch a PPP project. The administration of Mrs. Arroyo took 2 years and it was just a computerization of a particular department. The previous administration to that, President Estradas was not able to launch PPP programs. President Ramos, if you put aside power, took 5 years for his non-power PPP. But because of the brownouts during his time, he was given special powers that allowed him to cut short the rules on power so thats why they were able to launch a power project within a year. Yes, compared to our ambitious goal, we fell short last year. This year, we have a good chance of hitting our stated goal of about 8 projects that will be launched. The challenge is that with the approach that we preferred, of solicited projects, you need to do feasibility studies. You have to make sure that you prepare the project properly so it can be bidded out properly. When we took over, we thought there was this pipeline of feasibility studies. Unfortunately, for us, there were a bit dated. We needed to update them. Secondly, we needed to consolidate the departments; now its all in the PPP center. So now, weve consolidated it, weve rationalized the process. More importantly, weve established a pipeline of over 22 projects and we continue to increase that number. That allows us now to continuously launch our projects.

On power costs

Purisima: Our objective is to reduce cost of power. Its all a question of capacity. As we are about to launch our electricity spot market, where certain electric users that I think consume more than 1 megawatt will be able to participate. Then well be able to have access to cheaper, longer term contracted power. Our goal is to continue to increase capacity. With excess capacity, power rates can go down.

On tourism as a major pillar of PH economy

Purisima: A big part of what we need from tourism is God-given. We are blessed to be in the coral triangle, which contains over 60% of the worlds varieties of corals. Were actually right in the middle of the coral triangle. So we have beautiful seas, 7000 beautiful islands. Were blessed to be in close proximity to medium markets of tourists. North Asia, with the increasing prosperity in Korea, of course Japan, then China and the rest of the Asean countries increasing per capita – they become a major tourist market. These are large populations. So what we need to do is build infrastructure. We did the most important thing: opened up the skies outside Metro Manila. Any airline can fly in. Were building airports. Were planning to put up an airport in Northern Mindanao. Were upgrading 5 tourist airports as we speak. Well also bid it out for PPP, the operation and maintenance of these airports. Our tag line is Its More Fun in the Philippines. Our tourism secretary was once asked about our airports and he said, “Well, we have the best airport in the world.” The reporters asked why. “Well, we have Changi Aiport. Because if you look at the number of frequencies between the Philippines and Changi, its practically every hour, on the hour.” Just on Manila, we have over 180 flights a week. Outside Manila, international airlines have increased their frequencies. Thats a way to go. I think with this, we will be in a good position to hit our target goal of 10 million tourists by 2016. Were going to hit 4.6 million this year. From 3 million when we started.

On the coral triangle being under serious threat

Purisima: Well, discipline is whats needed. Better governance is whats needed. In some of the key areas, they monitor the number of tourists allowed. They monitor what they do so some are not allowed to stay there. There are NGOs and social groups that actually are replanting corals, cleaning up the environment. My lady staff was just in Anilao, another dive spot in the Philippines, where they had a cleaning day. The hotels for a day gave them free accommodations for the to help clean up. Youre now seeing more social consciousness among Filipinos. Even among the communities that live amongst these assets. Thats why giving tourism more visibility gives them this consciousness because they realize that if they do a good job doing it, then they are doing themselves a favour.

On the HK kidnapping incidence

Purisima: The latest number shows that theres a pick up. In fact, you can now fly from here directly to Boracay. So, I think that was a very unfortunate incident but I think we need to learn from there. We sympathize with the families but that was an exception rather than the rule in the Philippines. Filipinos are generally peace loving. If you compare the experience in the Philippines over the past 10 years against other countries, I think we will be at par if not better in these mass events. We dont have people burning themselves or trying to explode themselves so they kill. Thats not a Filipino mentality. Filipinos are basically friendly. Filipinos keep coming to Hong Kong. Theyre very nice and peace loving. Weve moved forward and we will continue to learn from that. And we really sympathize to the 20 families.

I think our relations have started to pick up again. Thats why we as hosts of the Asean Finance Ministers Investors Seminar decided to host it in Hong Kong. What other better way to prove that we have confidence in the robustness of our relationship.

On the Scarborough Shoal

Purisima: From my side of the equation, I look at relationship among countries as multi-dimensional. There are investment relations, trade relations, people to people relations. If youre neighbours, then you have a typical neighbour relations. I think in todays global and flat environment, relationship of countries are increasing in dimension. There will be areas where you will have a disagreement but I think there will be more areas where you can move forward on the relationship. Our exports to China year on year is higher than what it was the previous year. Our tourism arrivals are still there. Not as high as we would like to be, but clearly there are so much to gain by working together. All countries – Japan and China- all benefit from each other. Were now all interdependent and I think even the best of marriages have issues and the moment you have disagreements doesnt mean you should divorce. You should continue to look for solutions to these and agree to disagree and continue to work on the other side of it. From the finance and economic standpoint, Filipinos continue to invest in China. The president recently opened a project that was financed by China. The Chinese ambassador was there. It was a water project and I think the whole thing was overblown by the press.