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An Independent and Principled

Philippine Foreign Policy
for Economic Growth
V6.3

STRATBASE RESEARCH INSTITUTE

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QUARTERLY

An Independent and Principled

Philippine Foreign Policy
for Economic Growth
In 2012, I touched upon the DFA transformation that I felt was needed then, namely:
(1) restoring morale by limiting the number of political appointees; (2) upgrading economic
diplomacy skills through a partnership with AIM; (3) placing merit over seniority in the
promotion process; (4) bringing our services closer to the people by moving
Regional Consular Offices to retail malls; (5) rationalizing our Foreign Service Posts resulting in a
closure of ten Foreign Service establishments; and (6) encouraging all my
colleagues to reach beyond their grasp.
We continue to do as much as possible in making the Department
smarter, leaner and meaner.
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Promoting Excellence in Philippine Management

l would like to share with you, perspectives on our Philippine Foreign
Policy one that is independent and principled, focused and
forward-looking. In this context, I will also provide updates on
Philippines-US relations, Philippines-China relations,
the West Philippine Sea and other developments
in our region, in particular, ASEAN and APEC.

Good Governance is Good Economics

Let me begin by recalling President Aquinos concluding statement
in his State of the Nation Address last July when he proclaimed, loud
and clear, How wonderful it is to be a Filipino in these times!
The Aquino Administration firmly maintains that Good governance
is good economics. From day one, President Aquino has worked
to restore confidence in our country by making the difficult political
decisions necessary to root out corruption and institutionalize
good governance at all levels and layers.
In addition to achieving a better than 7% growth for the last four
quarters, the Philippines received investment grade sovereign debt
ratings from major credit rating agencies: Fitch, Standard & Poors,
Japan Credit Rating Agency, and just this month, from Moodys.
Standard & Poors, moreover, labels the Philippines as Southeast Asias
main economic engine, fueled by strong domestic demand to
lead the rest of the region ahead of Asia in 2013.

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The Philippines is becoming even more globally competitive. In just the last
three years, we have moved up 26 places in the World Economic Forum (WEF)
Global Competitiveness Report. In the ethics and corruption category, the
country has jumped from 135th in 2010 to 87th this year. Should we
preserve these gains, we can expect to move into the top
third of the global rankings by 2016.
Recently, the Economic Freedom of the World 2013 Report issued by the
Fraser Institute, Canadas leading think tank, recognized the Philippines
as the second best performer in ASEAN, next to Singapore.
The Asian Business Cycle Report of the OECD Development Center also
cited the Philippines as the only emerging Asian nation with strong
business cycle momentum highlighting its economic resilience.
Furthermore, the latest study conducted by KPMG International and Oxford
Economics for the 2013 Change Readiness Index positioned the Philippines in
18th place in terms of the capability of the country to deal with change.
All of these developments represent a resounding affirmation of
global and domestic confidence in the Philippines.
There are, however, remaining challenges. And as we continue to tackle with
resolve the remnants of the culture of corruption and impunity, we seek at the
same time to institutionalize and sustain the reform agenda beyond the Aquino
administration. It is our conviction that the Filipino people deserve no less.

The Three Pillars of Philippine Foreign Policy

Our steadfast commitment towards a principled foreign policy
serves as the bedrock of our foreign relations.
Our foreign policy is not only about managing our relations with the global
community. It is about nurturing a safe and secure environment in accordance
with the rule of law that is conducive to inclusive growth in order to benefit our
people. It is intended to harness the newfound business confidence and
renewed optimism on the Philippines to stimulate greater trade, investment
and tourism. It is meant to generate employment and reduce poverty in line
with President Aquinos goal to create more jobs at home so that
working abroad will be a matter of choice rather than a need.
With the President as its principal architect, Philippine Foreign Policy is
anchored on three pillars: (1) preservation and enhancement of national security;
(2) protection of the rights and promotion of the welfare of overseas
Filipinos; and (3) promotion and attainment of economic security.
Let me quickly summarize these pillars just to place my remarks in context.
Under the pillar of promoting national security, our goal is to help create and
sustain a strong and safe regional neighborhood under the rule of law. On
our own, and in concert with international partners, we have
pursued mutually beneficial security arrangements.

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We designed defense and security relationships to manage new realities.
In lieu of traditional ideas of balance of power, we have emphasized
engagement in new challenges, including transnational crime, terrorism,
and maritime security and cooperation, as well as,
cooperation on humanitarian emergencies.
In addition to our treaty alliance with the United States, we expanded our
defense and security engagements with other countries such as South
Korea, New Zealand, Italy, Spain and France. More significantly, our Senate
ratified a Status of Visiting Forces Agreement with Australia in June 2012.
The Philippines is also working with Japan in enhancing maritime security in
the region. As one of two Strategic Partners aside from the US, Japan
has been supporting our Philippine Coast Guard in training
its personnel and upgrading its equipment.
From 2012 to July of this year, we successfully facilitated the conclusion
of 40 agreements on political and security matters.
Under the pillar of protecting Filipino nationals overseas, we continue to
be guided by the Presidents call to be even more responsive to
the needs and welfare of our overseas Filipino workers.
Since 2011, we have repatriated nearly 20,000 Filipinos in countries torn
by civil strife and devastated by natural and other disasters. We continue to
repatriate our compatriots from Syria and Egypt, where violence
continues. Adhering to a policy that no one gets left behind, we have also
had the good fortune of not losing a single life that was within our control.
We additionally are addressing the challenges of Saudization and have so
far repatriated a total of over 4,000 undocumented Filipinos and assisted
several thousand others in meeting regularization requirements.

counseling, shelter, and labor mediation. They undertake jail visitations, administer overseas absentee
registration and voting, and help Filipinos organize themselves into communities. They network
with local organizations whose purposes are aligned with our policy objectives.
Taking care of our 10 million migrants in 174 countries over 40 time zones has earned
us the reputation as the Department that never sleeps.
Finally, let me discuss the economic security pillar in greater detail.

From 2012 until the first semester of 2013, we extended assistance to more
than 34,000 overseas Filipinos and members of their families. Our Foreign
Service personnel provide round-the-clock legal and consular assistance,

The Department has worked tirelessly to support the Presidents twin goals of poverty alleviation and
job creation. As a result, we have made significant progress in economic cooperation with other countries.

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In 2012 alone, we were able to finalize 43 agreements involving economic cooperation in the areas of investment, tourism,
development assistance, education, and air services agreements.
At the same time, we assisted in developing more than 700
inbound and outbound trade and business missions.
With Europe, the 2012 Philippines-EU Partnership and
Cooperation Agreement, which is in the process of ratification,
will allow both sides to address new challenges on issues such
as customs and trade facilitation, energy and migration.
Indeed, European countries are now looking at
the Philippines with invigorated interest.
In grants and loans, we have helped secure over three billion
dollars from Japan in official development assistance for, among
others, infrastructure projects, disaster risk reduction and peace
and development for Mindanao. In addition to a five-year
grant amounting to 434 million dollars from the Millennium
Challenge Corporation for poverty reduction and
infrastructure projects, the US, in the past year, has provided
over 400 million dollars in aid. We have also secured approval
in the last twelve months of nearly half a billion dollars from
the Republic of Korea in loans and grants and close to
141 million dollars in grants from Australia in 2013.
Meanwhile, the Philippine hosting of the 23rd World
Economic Forum on East Asia in 2014 and the Asia-Pacific
Economic Cooperation in 2015 provides invaluable
opportunities for the Philippines to promote itself
as a business and investment destination.

Developments in APEC and ASEAN

The Philippines looks forward indeed to chairing APEC in
2015, the second since 1996. Our leadership in APEC can be an
excellent platform to perpetuate the domestic reform agenda of
the President, based on the principles of sound economic
governance, regulatory reform, and inclusive economic
integration, towards a post-2015 development
agenda for the Philippines.
Three weeks ago, in Bali, the assembled APEC Economic
Leaders renewed their commitment towards achieving a Free
Trade Area of the Asia-Pacific (FTAAP), and to continue
supporting the multilateral trading system consistent with the
WTO framework including the Doha Development Agenda.
To encourage more efficient flow of goods, services, capital,
and people throughout the Asia-Pacific region, the Leaders
adopted the APEC Framework on Connectivity. This plan involves
the elimination of trade barriers; the strengthening of regional
transportation networks; the implementation of good regulatory
practices; the enhancement of people-to-people connectivity
through greater cross-border education and service flows;
and the implementation of a multi-year plan on
infrastructure development and investment.
Among these, infrastructure development has been given special
priority, and as such, the Leaders have committed to take several
steps, such as fostering a business-friendly environment for
infrastructure investment and development.

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Further to this, the Leaders stated that they would continue to implement the APEC Investment
Facilitation Action Plan, to encourage government officials to work with the private sector in
enhancing Corporate Social Responsibility practices and sustainable investment.
Facilitating trade and investment within APEC economies will be easier through increased mobility of
business people across borders. This was the reason for the creation of the APEC Business Travel Card
(ABTC), which facilitates the travel of business persons by, among other benefits, granting them
three-year, multiple-entry privileges to participating APEC economies.
It is in this regard that the DFA continues to strengthen its relationship with Certifying Business Organizations
or CBOs1. CBOs are expected to pre-screen applicants to ensure that they are bona fide business persons
with a legitimate need to travel within APEC economies. CBOs also help raise awareness about the
opportunities in APEC and encourage SMEs to expand their presence outside of their traditional markets.
The success of each of these APEC initiatives connectivity, infrastructure development, and more
depends not merely on the government, but also on our close cooperation with the private sector.
We look forward to working with you in promoting the economic development
of the Philippines and the Asia-Pacific region as a whole.
It should be pointed out that 2015 is an important year for the Philippines and for the region. This year
marks the deadline for many international commitments, such as the Millennium Development Goals and the
realization of the ASEAN Community based on the Political-Security, Economic and Socio-Cultural pillars.
In particular, the ASEAN Economic Community envisions a competitive region
with a single market and production base.
Based on the scorecard, ASEAN is viewed to be on track to realize the ASEAN Economic Community (AEC).
The notable developments in the AEC pillar show that the implementation rate of the measures in the AEC
Blueprint has increased from 74.5% in December 2012 to 79.7% as of September 20132.
Based on DTIs July 2013 data, the Philippines has achieved a national implementation rate of 85.54% this
year, accomplishing 182 items out of 213 total AEC measures. For the 2008 to 2013 period, the Philippines
scored 87.2%, accomplishing 392 of 439 measures.

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Building on the commitments on the past ASEAN Summits to realize an ASEAN

Community that is people-centered and socially responsible, the President, along with
the nine other ASEAN Leaders, adopted the ASEAN Declaration on Strengthening
Social Protection. He emphasized that a strong economy is founded on an
At the most recent ASEAN Summit held in Brunei Darussalam last October 9, the
President firmly laid down our advocacies for an ASEAN Community in 2015 and beyond. empowered citizenry and that the government has focused on
improving education, healthcare, and social welfare programs.
He stressed that economic gains are underpinned by a stable and predictable political
environment that is founded on the rule of law. The blessings of a society characterized
We also spoke of the principle of ASEAN centrality and our strong belief that we
by peace and harmony necessarily predict an economic milieu that
must continue to deepen our engagements with our external partners through
promotes even stronger and more inclusive growth.
ASEAN-led mechanisms such as the ASEAN Regional Forum, the ASEAN
Defense Ministers Meeting Plus, and the East Asia Summit.
To this end, the President highlighted our focus on micro, small, and medium
enterprises or MSMEs, which are the backbone of our growing economy. The dynamism
The President, likewise, mentioned the need to enhance mutual cooperation through
of our SME sector pertinent to the establishment of the ASEAN Economic Community
the Regional Comprehensive Economic Partnership or the RCEP, which aims to
serves as our impetus to support the ASEAN-wide Self-Certification Scheme,
achieve a regional free trade area that builds upon the existing free trade areas of
paving the way for their greater participation in regional and global trade.
the region. These avenues promote greater cooperation in terms of human rights
protection, maritime security, and people-to-people connectivity, among many others.
The President also announced the Philippine Tariff Finder mechanism, an online
facility that allows users to quickly search Philippine tariff rates on specific products
The government can work with the business sector and other stakeholders to
and also access the eight existing Philippine tariff schedules such as the Most Favored
realize the ASEAN Economic Community (AEC). Opportunities for the business
Nation, ASEAN-Australia New Zealand FTA, ASEAN-China FTA, ASEAN-India FTA,
sector include wider markets for exports; better supply chain linkages;
ASEAN-Japan Comprehensive Economic Partnership Agreement, ASEAN-Korea FTA,
and enhanced partnerships and joint ventures.
the ASEAN Trade in Goods Agreement, and the Philippines-Japan Economic Partnership
Agreement. This, by the way, is proudly, for us, the first of its kind in ASEAN.
This accomplishment lays the foundation for achieving the ASEAN vision of a
fully functioning and integrated economic community.

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Safeguarding our Sovereignty and National Patrimony

Discussions on regional integration require that we highlight our national efforts to
safeguard our sovereignty and territorial integrity.
During the Official Working Visit of President Aquino to the US last year, our leaders ushered in a new era of
strategic partnership, with the US Government reaffirming support for Philippine efforts to build the countrys
minimum credible defense posture. This broadening and deepening of the Philippines-US relations
is being positively viewed in the context of the US rebalance toward Asia.
Last month, we began discussions on institutionalizing increased rotational presence (IRP) through a framework
agreement premised on mutuality of benefits and in full accord with the Philippine Constitution.
Increased Rotational Presence is the policy which increases the presence of U.S. forces in Philippine territory. It
is meant to support the development of minimum credible defense posture of the Philippines through capability
building and combined activities and high impact-high value joint exercises focusing on maritime
domain awareness, maritime security, humanitarian assistance and disaster response.
Thus far, we have completed four negotiating rounds with several remaining issues still to be agreed upon.
The US rebalance to Asia is not only limited to defense and security cooperation but also
encompasses economic arrangements and greater people-to-people exchanges.
For instance, under the Partnership for Growth (PFG), the Philippines was selected as one of the 4 pilot countries
and the only country in Asia, in recognition of our track record in partnering with the US government and our
potential for continued economic growth. In this program, the US Government has committed an estimated $170
million to pursue three (3) key areas of policy engagement: (i) improving the regulatory environment;
(ii) strengthening the rule of law and anti-corruption measures; and (iii) improving fiscal space. The Philippine
Government is being assisted, moreover, by 17 different US agencies to achieve the objectives of the program.
There has been no forum where I was not expected to discuss the West Philippine Sea issue. The core issue here
is Chinas claim of indisputable sovereignty over nearly all of the South China Sea under its nine dash
line position. It is a claim that is expansive, excessive and in gross violation of international law,
specifically UNCLOS. Chinas continuous overwhelming naval and maritime presence
in the area is also contributing to the raising of regional tensions.

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We have undertaken many efforts to peacefully engage China and settle these disputes.
However, all of these were unsuccessful. The Philippines has exhausted all reasonable
political and diplomatic avenues for a peaceful negotiated settlement of its
maritime dispute with China. Our last resort is to utilize the legal track
towards the resolution of these disputes.
From the Philippine perspective, the rules-based approach contains two elements:
the first is the third-party arbitration towards resolution of maritime disputes, in
accordance with the universally recognized principles of international law, specifically
UNCLOS; and the second is the expeditious conclusion of a Code of Conduct (COC)
on the South China Sea between ASEAN and China towards the management
of tensions. Those initiatives are anchored on international law.
The Philippines initiated arbitral proceedings in January this year. Upon invitation,
China refused to participate. We see arbitration as an open, friendly, and durable
solution to the dispute. We believe it benefits everyone. For China, arbitration will define
and clarify its maritime entitlements. For the Philippines, arbitration will clarify what is ours,
specifically our fishing rights, rights to resources and rights to enforce laws within our
Exclusive Economic Zone. For the rest of the international community, the
clarification of maritime entitlements will assure peace, security, stability
and freedom of navigation in the South China Sea.
On the status of the arbitration, the Arbitral Tribunal has adopted the rules of procedure
and decided that the Permanent Court of Arbitration in The Hague shall act as the
Registry in the proceedings. Again, China refused to participate in the proceedings.
Nonetheless, the decision of the Arbitral Tribunal will be legally binding on all parties and
will not be appealable. The Philippines will submit its Memorial by 30 March 2014.
The Philippines fully supports ASEANs efforts to work towards the early conclusion of
a substantive and legally binding COC to promote the peaceful management of tensions
in the South China Sea. The Philippines is encouraged by the results of recent meetings
between officials of ASEAN and China where both sides agreed to begin
discussions on the workplan for the COC.
Despite the challenges we face in protecting what is ours, the Philippines endeavors to
maintain a constructive relationship with China, one that is mutually beneficial. We
maintain that our dispute in the West Philippine Sea is not the sum total of our relations.

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The President is firm in his conviction to uphold his agreement with Chinese President Hu
Jintao in 2011 not to let the maritime dispute affect the broader picture of
friendship and cooperation between the two countries.
We acknowledge Chinas role in world affairs and support its peaceful rise. To be truly viewed
as a positive force, China must manifest its adherence to and respect for the rule of law.

Clarion Call
May I, therefore, enjoin every Filipino to fully support our independent and principled Foreign
Policy in advancing our advocacies in all three pillars; to continue fully supporting the
Presidents Daang Matuwid. With you as partners, the Government will be further energized
to work towards inclusive growth, combating corruption, promoting transparency and
accountability, improving global competitiveness, achieving just and lasting peace, and
upholding the rule of law. May I, moreover, enjoin each and every one of you to
continue speaking well of what is happening in the Philippines and to speak
more often and more loudly of our very bright future.
The global spotlight is on us. Let us make the most of this important juncture in our history.

H.E. ALBERT F. DEL ROSARIO

Secretary of Foreign Affairs
The text of this paper was from the Speech of Secretary Albert del Rosario delivered during
the Management Association Of The Philippines (MAP) 2013 General Membership Meeting
last October 24, 2013, at Bahia, Intercontinental Manila. The Theme of the Membership
Meeting was Inclusive Growth and Competitiveness with Integrity. Secretary del Rosario
was the former Chairman of Philippine Stratbase Consultancy Inc.
ENDNOTES:

Makati Business Club, PhilExport, Philippine Chamber of Commerce and Industry

ASEAN Secretary-General Statement, APEC Ministerial Meeting, October 2013

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