Despite a recent escalation of diplomatic tensions between China and the Philippines over territory in the South China Sea, the Philippines remain a safe and promising destination for foreign investment, the Filipino ambassador to the United States said May 27 in Atlanta.
Speaking to local business leaders at the United Parcel Service Inc. headquarters in Sandy Springs, Ambassador Jose Cuisia, Jr., pointed to a new defense cooperation pact with the United States as a stabilizing force in the region.
Signed by President Barack Obama and Filipino President Benigno Aquino III, the pact gives the U.S. greater access to military bases in the Philippines.
The Philippines government later confirmed that it plans to give the U.S. access to five military bases, including the Subic Bay facility that was the U.S. Seventh Fleet’s forward base during the Vietnam War. The U.S. was forced to withdraw from the base in the early 1990s.
“A stronger American military presence in the Philippines and greater interoperability between our respective armed forces dramatically increases our individual and collective defense capabilities, providing a dramatic deterrent against external aggression,” Mr. Cuisia said. “This in turn will soothe and calm investment confidence in the Philippines, as well as the region.”
The Filipino ambassador said the pact would hopefully help bring China to the table in a pending arbitration case between the two nations under the United Nations Convention on the Law of the Sea. At stake are long-standing claims to territory where large reserves of oil and gas are thought to be held.
The defense pact is just one example of Mr. Obama’s promised “pivot to Asia,” which aims to reassure U.S. allies by placing greater diplomatic and military emphasis on the Pacific as long wars in the Middle East wind down.
But China has grown increasingly bold in asserting itself in the region, most recently sparking widespread protests in Vietnam by parking an oil rig in contested waters, in effect reinforcing China’s longstanding claims to the South China Sea.
Noting that China is still the Philippines’ third largest trading partner, Mr. Cuisia called the Chinese government’s actions “saber rattling” designed to carve out additional negotiating room in legal battles over the disputed areas.
Bernardo Villegas, professor of economics at the University of Asia and the Pacific, generally agreed with the ambassador, noting that China has its own internal challenges and needs resources from Southeast Asia to lift even more of its largely poor population into the middle class.
To offset China’s influence, the 10 countries within the Association of Southeast Asian Nations, have banded closer together and adopted economic reforms to position themselves for more outside investment. Taken together, ASEAN represents a market larger than the EU, with more than 600 million consumers.
After years of slow and painful progress marked by protectionist policies, the Philippines, with a population of more than 90 million, is poised to overtake other ASEAN countries in growth industries like tourism and manufacturing, Dr. Villegas said.
“What is happening in the Philippines is the result of 25 years of little changes,” Dr. Villegas said. “This is not a flash in the pan.”
Besides reforms, Dr. Villegas attributed what he called the current Filipino “renaissance of manufacturing” to a combination of other factors. He said investors are looking away from China and Japan, which face mounting workforce and energy-supply challenges.
Still, members of the investment roadshow didn’t shy away from some of the most serious issues facing the island chain, including how to deal with the aftermath of Typhoon Haiyan, the strongest tropical cyclone ever recorded.
With tsunami-level waves and winds of up to 195 mph, Haiyan smashed the Philippines’ eastern provinces particularly hard, killing more than 6,000 and leaving millions homeless.
Philip Romualdez, president of the Chamber of Mines of the Philippines, encouraged Atlanta businesses and individuals to help with the crisis by reaching out to the Filipino Embassy in Washington, which sponsored the event as part of a larger trade tour reaching several U.S. cities, including Atlanta, Houston, and Philadelphia.
Martin Pascual, a board director at Pascual Laboratories, said public-private partnerships could help multinationals navigate the country’s market. He highlighted growth in biotechnology and pharmaceuticals, areas in which Georgia aims to position itself as an industry hub.
Mr. Pascual also said that from an investment perspective, risks associated with the Philippines as an emerging market should be mitigated by the country’s improved credit ratings and government reforms, including protections for intellectual property.
Despite the devastation left by Haiyan, the Philippines still managed to post the second highest growth rate in all of Asia in 2013 – behind only China at 7.2 percent.