Getting Down to Business

On 30 July 1992, President Ramos delivered his first speech as president before the business community, including the MBC

Having come into office in 1992 in the midst of a serious power supply crisis, one of former president Fidel V. Ramos’s major legacies was the successful building up of the country’s power supply by tapping independent power producers. President Ramos will also be remembered for his deregulation and liberalization policies that withdrew the government from activities where the private sector can do a better job and opened up local industries to foreigners.

On 30 July 1992, President Ramos, fresh from his June inauguration, addressed the Makati Business Club, Management Association of the Philippines, and Financial Executives Institute of the Philippines at the Peninsula Manila Hotel in Makati. In his first speech before the business community as president, Ramos outlined the roles his administration would assume under his economic program prescribing an increased and more active role for the private sector. Following is a summary of that speech prepared at that time by MBC Research.

The heart of President Ramos’s economic program lies in achieving a better interplay of market forces in the economy to improve market competition domestically, with the government intervening only to ensure greater competition, and to enhance the competitiveness of Filipino firms globally.

The President believes that the challenge the government and the private sector needs to address is to improve the people’s welfare by building a larger cake for all to share rather than by slicing a shrinking pie. In taking up the challenge, the Ramos administration’s economic philosophy is to do less in those areas where the private sector can do the job better. At the same time, the government will need to do more in those areas where only it can do the job.

Government’s Role

Creating an environment of political stability, peace, and security
In enhancing the political stability established by a peaceful democratic transition through elections, the government advocates an amnesty proclamation (to be concurred in by Congress) and the repeal of the antisubversion law. To deal with common criminals, a Presidential Anti-Crime Commission was created and a recommendation to Congress to restore the death penalty for heinous crimes was made.

Creating and maintaining a stable macroeconomic environment
Realizing that low inflation and resulting low interest rates are critical key ingredients to sustainable growth, the government is determined to stay the course of prudent fiscal and monetary policy.

The recent debt package signed by Finance Secretary Ramon del Rosario and Central Bank Governor Jose Cuisia Jr. likewise helps preserve financial stability, as it yields the country and government substantial financial savings and restores foreign investor confidence.

Work towards the reduction in the domestic debt burden will also be undertaken, while at the same time improving revenue generation and developing the capital market.

Creating an environment that encourages competition and competitiveness
The Ramos administration aims to consolidate and build on reforms started by the previous government in reducing government involvement in the economy. These measures include:

1. The aggressive implementation of the Foreign Investments Act of 1991;

2. The reorientation of the Board of Investments and the redirection of foreign policy towards trade and investment promotion;

3. The amendment of the condominium law and the liberalization of nationality requirements in the Omnibus Investments Code;

4. The creation of an Export and Investment Devel- opment Council (which the President says he will oversee actively) in support of exporters, the expansion of the one-step duty drawback network, and the establishment of an export financing facility;

5. The acceleration of the trade reform program to hasten the outward orientation of Philippine industry. To this end, an executive order was issued that substitutes tariffs for quantitative restrictions on 138 items;

6. Full implementation of the Central Bank’s foreign exchange deregulation program to reduce costs and improve flexibility of exporters. To safeguard exporters’ competitiveness, the Central Bank will continue its balanced intervention in the foreign exchange market; and

7. The institutional strengthening and financial reha- bilitation of the Central Bank so it may more in dependently pursue monetary and exchange rate policies. Related legislation seeking to widen com- petition in the banking industry and a phasedown in the gross receipts tax are also being sought.

Provision of needed public infrastructure
The highest priority is in the energy sector, starting with the establishment of a Department of Energy. The administration is also working with Congress towards allocating from P1 billion to P5 billion of the OPSF (Oil Price Stabilization Fund) surpluses to fund power projects.

Improved infrastructures are also needed in communications, arterial highways, irrigation, local and national roads, postharvest facilities, water conservation and supply, and flood control. Private-sector participation in the building of these infrastructure projects through B-O-T (Build-Operate-Transfer) and similar schemes are encouraged.

The government’s main thrust in investing in the most important and most productive form of investment, people, is quality basic education for all young Filipinos.