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treatment. More on our top stories at nine. Now | :00:00. | :00:00. | |
on BBC News it's time for Talking Business with Linda Yeuh. | :00:00. | :00:08. | |
Six months on from a devastating typhoon, the effects are still being | :00:09. | :00:14. | |
felt. Yet, why is the Philippines rivaling China as the | :00:15. | :00:18. | |
fastest`growing economy in Asia? Here in Manila, we are talking | :00:19. | :00:21. | |
business. A warm welcome to the programme. The | :00:22. | :00:50. | |
Philippines has seemingly turned a corner and is the fastest`growing | :00:51. | :00:54. | |
economy in South East Asia. It is why big global businesses have | :00:55. | :00:58. | |
gathered in Manila for the world economic forum. Ike came to find out | :00:59. | :01:03. | |
what has caused this dramatic change. `` I have come to find out. | :01:04. | :01:09. | |
A familiar scene on the streets of Manila, and seeking work overseas. | :01:10. | :01:15. | |
Filipinos used to leave in droves, but now, more are staying put. It is | :01:16. | :01:20. | |
hard to find people. People in the Philippines are finding better | :01:21. | :01:29. | |
jobs. Better jobs here? This man is feeling better. The country rivals | :01:30. | :01:35. | |
can't `` China for the title of the fastest`growing economy in the | :01:36. | :01:38. | |
region. Any fracturing syrup, reforms have encouraged companies to | :01:39. | :01:49. | |
sell overseas. The Philippines has not in a successful part of the | :01:50. | :01:53. | |
export machine, but it is changing, and that is boosting growth. There | :01:54. | :01:58. | |
are a lot of challenges that are going to come across, but true to | :01:59. | :02:03. | |
the Filipino spirit, we will face those challenges head on. We are no | :02:04. | :02:07. | |
longer going to just be a country that is sitting on the sidelines. | :02:08. | :02:10. | |
With its young, English`speaking population, the Philippines has had | :02:11. | :02:16. | |
the potential to be a new Tiger economy for some time. Is the cotton | :02:17. | :02:23. | |
growing up? There are more big malls like this one in the Philippines | :02:24. | :02:28. | |
then even in the US or China. With faster economic growth, there is | :02:29. | :02:33. | |
more income for the people in the country to spend. But not everyone | :02:34. | :02:37. | |
is moving up. There are still those who are left behind. | :02:38. | :02:43. | |
In a shanty town literally built on trash, I need slum drillers who | :02:44. | :02:48. | |
collect herbage for a living. `` I meet slum wellies. They called | :02:49. | :02:56. | |
themselves, today traders. It is hardly the typical image of a city | :02:57. | :03:01. | |
trader. A former congressman tells me that the problems are deeply | :03:02. | :03:05. | |
ingrained. It has been a problem in the Philippines for a long time will | :03:06. | :03:11. | |
stop when we read the papers, people always see 7% growth, looks nice, | :03:12. | :03:16. | |
looks good, but in terms of him playmate and in terms of reducing | :03:17. | :03:23. | |
poverty, it is not felt. People are wondering where all the money goes. | :03:24. | :03:28. | |
A quarter of the population lives in poverty. The gap between the rich | :03:29. | :03:32. | |
and poor is the widest in Southeast Asia, so it will be hard for the | :03:33. | :03:38. | |
Philippines to shine in the world's standout region for growth. | :03:39. | :03:42. | |
The turnaround in the economy is you in part two reforms, but much more | :03:43. | :03:53. | |
`` the turnaround in the economy is due in part to reforms, and six | :03:54. | :03:56. | |
months on from the Tyson, there are still those without homes and | :03:57. | :04:05. | |
livelihoods. `` the typhoon. Icon up with the finance minister of the | :04:06. | :04:09. | |
Philippines. `` I caught up with. It is about the comeback of a country. | :04:10. | :04:18. | |
Since the president took office, our group has averaged 6.2%, with 7.2% | :04:19. | :04:25. | |
steer. This year we are projecting between 6.5% and 7.5%. We are | :04:26. | :04:30. | |
building the foundation so that we can sustain this for long periods of | :04:31. | :04:35. | |
time, because that is our goal, to make sure that we give every | :04:36. | :04:40. | |
Filipino opportunity to realise that their potential. What specific | :04:41. | :04:43. | |
policies are you implementing to make sure that growth translates | :04:44. | :04:47. | |
into growth for the people? As you know, the agenda of the president is | :04:48. | :04:53. | |
that her governance as a foundation for a better economy. We need | :04:54. | :05:01. | |
institutionalized infrastructure and investment. Moving from Singapore to | :05:02. | :05:05. | |
hear, you need to be connected by good airports to stop not `` | :05:06. | :05:12. | |
airports. Many airports and ports so they can connect with the global | :05:13. | :05:15. | |
supply chains and make it easy for tourists to come in and out of the | :05:16. | :05:21. | |
country. Open up the economy for investments from other countries so | :05:22. | :05:25. | |
we can make sure that we have not only capital but access to | :05:26. | :05:30. | |
management skills and new talent and technology into the country. We are | :05:31. | :05:35. | |
also addressing certain sectors that have been problematic for us. | :05:36. | :05:40. | |
Education has been an area that has been lagging. 30% of our people are | :05:41. | :05:47. | |
engaged and they only produce 12% of our GDP. The intervention is the | :05:48. | :05:52. | |
same old structural reform more investment on the give them better | :05:53. | :05:57. | |
access to technology and financing, give them more access to the market, | :05:58. | :06:03. | |
because if we are able to improve the productivity in the Philippines, | :06:04. | :06:06. | |
we become more competitive, because food prices will tend to be lower as | :06:07. | :06:10. | |
the demand for higher wages will be less, and that gets you deeper into | :06:11. | :06:19. | |
a productive cycle. I want to talk about increases growth, poverty and | :06:20. | :06:27. | |
inequality. The poverty rate has not come down. It has gone down 3%. | :06:28. | :06:33. | |
That's 3% is over 2.6 million people, about half the population of | :06:34. | :06:40. | |
Singapore. The president says that if there is one person in poverty it | :06:41. | :06:44. | |
is too much, but you cannot remove it overnight, so what are we doing? | :06:45. | :06:48. | |
We have doubled the education budget, more than doubled the health | :06:49. | :06:52. | |
care budget, increased the condition of cash programmes, he being the | :06:53. | :07:00. | |
poorest of the poor, keeping their children in school, starting a | :07:01. | :07:08. | |
programme so that we can have an apprenticeship system said there is | :07:09. | :07:10. | |
a better matching and the skills to produce and the skills needed. All | :07:11. | :07:15. | |
of this is crucial in fighting poverty. Education is the weight | :07:16. | :07:20. | |
equaliser. If we can talk specifically `` the great equaliser. | :07:21. | :07:26. | |
If we can talk physically about the typhoon. I spoke to the people who | :07:27. | :07:33. | |
work displaced and they say they are being relocated from the slums into | :07:34. | :07:37. | |
places that are too far for them to get to their jobs. The area that was | :07:38. | :07:44. | |
affected has been divided into 24 sections, and we ask the private | :07:45. | :07:49. | |
sector in each of those sections to adapt them. 21 so far have been | :07:50. | :07:54. | |
adept at. Why the private sector? The area affected by the typhoon is | :07:55. | :08:01. | |
a port part of the country `` a poor part of the country. Coconuts were | :08:02. | :08:06. | |
destroyed and it takes a long time to get them to be productive, so the | :08:07. | :08:13. | |
key is to get them connected to businesses. Businesses here tend to | :08:14. | :08:18. | |
be controlled by a small number of families. It is cronyism among which | :08:19. | :08:23. | |
has been an issue for this country and other countries. Doesn't that | :08:24. | :08:27. | |
need to be tackled? That can ensure good governance. The best way to | :08:28. | :08:35. | |
share with other people who are not familiar with the Philippines is | :08:36. | :08:38. | |
share the experience of companies who have been in the Philippines for | :08:39. | :08:46. | |
a long, long time. Coca`Cola, Texas Instruments, now we are among the | :08:47. | :08:51. | |
five largest shipbuilding countries in the world will stop mainly | :08:52. | :08:59. | |
because of the people. More and more people are discovering the | :09:00. | :09:01. | |
Philippines because, as you know, economies are about people come a | :09:02. | :09:07. | |
and... Is there a focus on tackling corruption? That is at the heart of | :09:08. | :09:15. | |
the reason for the turnaround. I ask you, how many countries have | :09:16. | :09:21. | |
impeached their chief justice? This is a war against corruption. We want | :09:22. | :09:27. | |
to make sure that this is something that is very clear to our | :09:28. | :09:31. | |
population, because without corruption there should be no | :09:32. | :09:35. | |
poverty and that they go hand in hand, but there are no magic wands, | :09:36. | :09:44. | |
there are no big equalizers in the fight against corruption, but this | :09:45. | :09:47. | |
is going to be a journey and an investment. An investment in | :09:48. | :09:55. | |
institution. We have to have the government translated into a | :09:56. | :09:58. | |
meritocracy. We have launched incentive `based compensation 's and | :09:59. | :10:02. | |
we are using information to help set up her goals and help drive | :10:03. | :10:08. | |
performance. `` proper goals. Businessmen, they do not wait until | :10:09. | :10:13. | |
you get the end result of what you are trying to do, because if they | :10:14. | :10:17. | |
come in late, then they don't get the opportunity of those two come in | :10:18. | :10:23. | |
early, so the important message that is coming out of the Philippines is, | :10:24. | :10:27. | |
we are focused on sustaining this and they should, have a look while | :10:28. | :10:31. | |
it is early so that they can maximise their potential. The | :10:32. | :10:37. | |
economy in the Philippines has been growing quickly over the past couple | :10:38. | :10:42. | |
of years. It is the fastest growth rates in the 1950s, and is set to | :10:43. | :10:46. | |
continue. But how can this be, when the country was struck by | :10:47. | :10:50. | |
devastating typhoon just last winter? Six months ago, the | :10:51. | :10:56. | |
Philippines was struck by one of the worst natural disasters to hit | :10:57. | :11:00. | |
land. The typhoon caused a massive loss of life and had a huge impact | :11:01. | :11:06. | |
on the economy. It is estimated to cut the economic growth of the | :11:07. | :11:10. | |
entire country by a huge one percentage point, let's, the | :11:11. | :11:17. | |
Philippines still had to grow `` is still growing acts 6%, which is the | :11:18. | :11:26. | |
fastest in Asia except for China. Is outcome is due to reconstruction. `` | :11:27. | :11:37. | |
this outcome. So the damage from the Typhoon will be felt, especially | :11:38. | :11:43. | |
towards the front of the year. But with the offset from government and | :11:44. | :11:46. | |
private reconstruction, the economy as a whole will be expected to | :11:47. | :11:54. | |
recover by the end of the year. GDP figures will reassure businesses | :11:55. | :11:58. | |
that the economy will be all right. But for those who have lost their | :11:59. | :12:03. | |
homes and livelihood, rebuilding won't be easy when they don't have | :12:04. | :12:08. | |
private insurance. For them, it doesn't matter what the big headline | :12:09. | :12:12. | |
figures are but rather how quickly that growth can translate into means | :12:13. | :12:18. | |
by which they can reconstruct their lives. What more needs to be done to | :12:19. | :12:24. | |
help people to cook `` help people recover? The bank has offered nearly | :12:25. | :12:41. | |
$1 billion to help. The Philippines is struck by natural disasters more | :12:42. | :12:47. | |
often than other countries are. But a disaster of this scale is a huge | :12:48. | :12:52. | |
challenge for any country. You have to look at it on a national level | :12:53. | :12:59. | |
and a local level. What we have been doing is focusing on trying to help | :13:00. | :13:03. | |
build capacity at local level in supporting the national government. | :13:04. | :13:12. | |
Is it access, roads, having the skills to rebuild, passing along the | :13:13. | :13:21. | |
ability to rebuild a community in terms of jobs? It is a little bit of | :13:22. | :13:27. | |
all of that. In the initial recovery stage, it is looking at clearing out | :13:28. | :13:32. | |
roads and getting access to some of these communities that were | :13:33. | :13:35. | |
devastated by this disaster. But then you move on to getting | :13:36. | :13:41. | |
electricity back into these communities. And then, the biggest | :13:42. | :13:53. | |
challenge is with housing and providing roofs to cover people's | :13:54. | :13:58. | |
heads. Is there something specifically about the Philippines | :13:59. | :14:05. | |
that makes it difficult? People will complain about corruption, the | :14:06. | :14:10. | |
inability to implement the aid which is coming through. These challenges | :14:11. | :14:17. | |
are not unique to the Philippines. They are challenges that many | :14:18. | :14:22. | |
developing countries face, so I don't think the Philippines is | :14:23. | :14:28. | |
unique. It has made a lot of interesting progress respecting | :14:29. | :14:47. | |
transparency. How big a problem is inequality? Inequality is a major | :14:48. | :14:58. | |
challenge for the region as a whole. 80% of the population in Asia | :14:59. | :15:04. | |
lives in countries where a measure of inequality has grown over the | :15:05. | :15:10. | |
last 20 years. This is a problem for the region. We think it could | :15:11. | :15:15. | |
potentially undermine the sustainability of the group we have | :15:16. | :15:20. | |
seen a nation. Any kind of policy that is helping with redistribution | :15:21. | :15:25. | |
and making this growth more inclusive will be more sustainable | :15:26. | :15:30. | |
in the long run. The Philippines has these challenges. This is a big | :15:31. | :15:42. | |
challenge for this country but not unique to the Philippines. Do you | :15:43. | :15:54. | |
find that receptivity to change? This government is very responsive | :15:55. | :16:00. | |
to the notion of change. It has implemented a lot of good policies. | :16:01. | :16:10. | |
It is a challenge in any political democracy, but this is a really | :16:11. | :16:18. | |
committed said of professionals and politicians. You are based is so you | :16:19. | :16:25. | |
have a long`term view of the country and its progress. As the economy | :16:26. | :16:27. | |
turned around in a more sustainable way? Yes. There are still challenges | :16:28. | :16:40. | |
out there. Our forecast for economic growth is around 6.4%. This is a | :16:41. | :16:48. | |
result of a couple of different changes. There has been slow down | :16:49. | :16:53. | |
and investment that is bringing this down a little bit. Deceleration in | :16:54. | :16:59. | |
China affects the region as a whole. But we think the policies put | :17:00. | :17:08. | |
in place, we think this is the great economic team. So no more | :17:09. | :17:35. | |
renovation? I don't think so. San Miguel was founded in 1890 and has | :17:36. | :17:41. | |
grown to become the largest beverage conglomerate in south`east Asia. | :17:42. | :17:53. | |
Six months after this Typhoon, people are still suffering and, in | :17:54. | :18:04. | |
our case, we have finally identified some areas which we can help build | :18:05. | :18:12. | |
some houses for the people there. Our target is to help build 5000 | :18:13. | :18:20. | |
houses for the affected victims. Livelihoods are a big part of what | :18:21. | :18:26. | |
were help any country. You have been in the Philippines for a very long | :18:27. | :18:33. | |
time. You are a very big company. What has enabled you to be a big | :18:34. | :18:38. | |
multinational in a country where there are not many multinationals? | :18:39. | :18:44. | |
Our company started diversification five years ago because we know if we | :18:45. | :18:55. | |
will stay on the food and beverage business, growth is minimal, and | :18:56. | :19:00. | |
there is so much opportunity for us to get into infrastructure, telecom, | :19:01. | :19:08. | |
mining. So we did diversify into those businesses. I guess that | :19:09. | :19:15. | |
coincided with a period of rapid growth of the Philippines. What do | :19:16. | :19:18. | |
you see is the role of business in that? So far, we have been quite | :19:19. | :19:34. | |
successful in I diversification. Is there in risk of too much | :19:35. | :19:37. | |
diversification, especially because you are doing it at a time when | :19:38. | :19:45. | |
credit is so cheap? Too much diversification is really dangerous, | :19:46. | :19:48. | |
but in our case, we are very conservative. Our diverse | :19:49. | :19:55. | |
application `` diversification is or is based on our financial | :19:56. | :19:59. | |
capability. We don't over leveraged our company. We are 2.6 times over. | :20:00. | :20:13. | |
A lot of outside investors view the country and don't come into the | :20:14. | :20:19. | |
Philippines very much. It has one of the lowest rates of investment in | :20:20. | :20:24. | |
the region. What are you seeing that they are not seeing? They might be | :20:25. | :20:28. | |
worried about corruption or political instability. Political | :20:29. | :20:36. | |
instability of the Philippines was a problem for many years. But since | :20:37. | :20:46. | |
the President got elected in 2010, he has given a good reputation to | :20:47. | :20:51. | |
our country and his government has been doing a lot and was able to | :20:52. | :21:01. | |
have a credit rating upgrade and sparked a lot of consumer spending. | :21:02. | :21:11. | |
If you see, this country is really good because we have lots of | :21:12. | :21:19. | |
overseas workers and we are also doing a lot. What do you think is | :21:20. | :21:27. | |
different about running a Filipino company versus how you see that | :21:28. | :21:33. | |
company in the West? It is more difficult to run a company in a | :21:34. | :21:38. | |
developing country because they keep changing the rules. Unlike a stable | :21:39. | :21:42. | |
country, they keep changing the rules. Whether it is the view from | :21:43. | :21:49. | |
government, big business or the bank, the Philippines has shed their | :21:50. | :21:58. | |
negative label but the gap is the widest in the region. It is one of | :21:59. | :22:04. | |
the reasons why the slow recovery and why it may be difficult to | :22:05. | :22:06. | |
sustain its recent success. Today was a wet one but at the same | :22:07. | :22:38. | |
time, very changeable. From rain to sunshine back to rain again. We get | :22:39. | :22:45. | |
a bit of everything. It will always feel warm and the sun comes out. | :22:46. | :22:49. | |
This is the satellite | :22:50. | :22:50. |