24/05/2014 Talking Business with Linda Yueh


24/05/2014

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treatment. More on our top stories at nine. Now

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on BBC News it's time for Talking Business with Linda Yeuh.

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Six months on from a devastating typhoon, the effects are still being

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felt. Yet, why is the Philippines rivaling China as the

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fastest`growing economy in Asia? Here in Manila, we are talking

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business. A warm welcome to the programme. The

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Philippines has seemingly turned a corner and is the fastest`growing

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economy in South East Asia. It is why big global businesses have

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gathered in Manila for the world economic forum. Ike came to find out

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what has caused this dramatic change. `` I have come to find out.

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A familiar scene on the streets of Manila, and seeking work overseas.

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Filipinos used to leave in droves, but now, more are staying put. It is

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hard to find people. People in the Philippines are finding better

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jobs. Better jobs here? This man is feeling better. The country rivals

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can't `` China for the title of the fastest`growing economy in the

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region. Any fracturing syrup, reforms have encouraged companies to

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sell overseas. The Philippines has not in a successful part of the

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export machine, but it is changing, and that is boosting growth. There

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are a lot of challenges that are going to come across, but true to

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the Filipino spirit, we will face those challenges head on. We are no

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longer going to just be a country that is sitting on the sidelines.

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With its young, English`speaking population, the Philippines has had

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the potential to be a new Tiger economy for some time. Is the cotton

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growing up? There are more big malls like this one in the Philippines

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then even in the US or China. With faster economic growth, there is

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more income for the people in the country to spend. But not everyone

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is moving up. There are still those who are left behind.

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In a shanty town literally built on trash, I need slum drillers who

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collect herbage for a living. `` I meet slum wellies. They called

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themselves, today traders. It is hardly the typical image of a city

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trader. A former congressman tells me that the problems are deeply

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ingrained. It has been a problem in the Philippines for a long time will

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stop when we read the papers, people always see 7% growth, looks nice,

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looks good, but in terms of him playmate and in terms of reducing

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poverty, it is not felt. People are wondering where all the money goes.

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A quarter of the population lives in poverty. The gap between the rich

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and poor is the widest in Southeast Asia, so it will be hard for the

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Philippines to shine in the world's standout region for growth.

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The turnaround in the economy is you in part two reforms, but much more

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`` the turnaround in the economy is due in part to reforms, and six

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months on from the Tyson, there are still those without homes and

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livelihoods. `` the typhoon. Icon up with the finance minister of the

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Philippines. `` I caught up with. It is about the comeback of a country.

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Since the president took office, our group has averaged 6.2%, with 7.2%

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steer. This year we are projecting between 6.5% and 7.5%. We are

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building the foundation so that we can sustain this for long periods of

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time, because that is our goal, to make sure that we give every

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Filipino opportunity to realise that their potential. What specific

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policies are you implementing to make sure that growth translates

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into growth for the people? As you know, the agenda of the president is

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that her governance as a foundation for a better economy. We need

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institutionalized infrastructure and investment. Moving from Singapore to

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hear, you need to be connected by good airports to stop not ``

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airports. Many airports and ports so they can connect with the global

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supply chains and make it easy for tourists to come in and out of the

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country. Open up the economy for investments from other countries so

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we can make sure that we have not only capital but access to

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management skills and new talent and technology into the country. We are

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also addressing certain sectors that have been problematic for us.

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Education has been an area that has been lagging. 30% of our people are

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engaged and they only produce 12% of our GDP. The intervention is the

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same old structural reform more investment on the give them better

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access to technology and financing, give them more access to the market,

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because if we are able to improve the productivity in the Philippines,

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we become more competitive, because food prices will tend to be lower as

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the demand for higher wages will be less, and that gets you deeper into

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a productive cycle. I want to talk about increases growth, poverty and

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inequality. The poverty rate has not come down. It has gone down 3%.

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That's 3% is over 2.6 million people, about half the population of

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Singapore. The president says that if there is one person in poverty it

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is too much, but you cannot remove it overnight, so what are we doing?

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We have doubled the education budget, more than doubled the health

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care budget, increased the condition of cash programmes, he being the

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poorest of the poor, keeping their children in school, starting a

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programme so that we can have an apprenticeship system said there is

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a better matching and the skills to produce and the skills needed. All

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of this is crucial in fighting poverty. Education is the weight

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equaliser. If we can talk specifically `` the great equaliser.

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If we can talk physically about the typhoon. I spoke to the people who

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work displaced and they say they are being relocated from the slums into

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places that are too far for them to get to their jobs. The area that was

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affected has been divided into 24 sections, and we ask the private

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sector in each of those sections to adapt them. 21 so far have been

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adept at. Why the private sector? The area affected by the typhoon is

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a port part of the country `` a poor part of the country. Coconuts were

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destroyed and it takes a long time to get them to be productive, so the

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key is to get them connected to businesses. Businesses here tend to

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be controlled by a small number of families. It is cronyism among which

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has been an issue for this country and other countries. Doesn't that

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need to be tackled? That can ensure good governance. The best way to

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share with other people who are not familiar with the Philippines is

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share the experience of companies who have been in the Philippines for

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a long, long time. Coca`Cola, Texas Instruments, now we are among the

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five largest shipbuilding countries in the world will stop mainly

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because of the people. More and more people are discovering the

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Philippines because, as you know, economies are about people come a

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and... Is there a focus on tackling corruption? That is at the heart of

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the reason for the turnaround. I ask you, how many countries have

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impeached their chief justice? This is a war against corruption. We want

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to make sure that this is something that is very clear to our

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population, because without corruption there should be no

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poverty and that they go hand in hand, but there are no magic wands,

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there are no big equalizers in the fight against corruption, but this

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is going to be a journey and an investment. An investment in

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institution. We have to have the government translated into a

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meritocracy. We have launched incentive `based compensation 's and

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we are using information to help set up her goals and help drive

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performance. `` proper goals. Businessmen, they do not wait until

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you get the end result of what you are trying to do, because if they

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come in late, then they don't get the opportunity of those two come in

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early, so the important message that is coming out of the Philippines is,

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we are focused on sustaining this and they should, have a look while

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it is early so that they can maximise their potential. The

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economy in the Philippines has been growing quickly over the past couple

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of years. It is the fastest growth rates in the 1950s, and is set to

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continue. But how can this be, when the country was struck by

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devastating typhoon just last winter? Six months ago, the

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Philippines was struck by one of the worst natural disasters to hit

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land. The typhoon caused a massive loss of life and had a huge impact

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on the economy. It is estimated to cut the economic growth of the

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entire country by a huge one percentage point, let's, the

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Philippines still had to grow `` is still growing acts 6%, which is the

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fastest in Asia except for China. Is outcome is due to reconstruction. ``

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this outcome. So the damage from the Typhoon will be felt, especially

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towards the front of the year. But with the offset from government and

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private reconstruction, the economy as a whole will be expected to

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recover by the end of the year. GDP figures will reassure businesses

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that the economy will be all right. But for those who have lost their

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homes and livelihood, rebuilding won't be easy when they don't have

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private insurance. For them, it doesn't matter what the big headline

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figures are but rather how quickly that growth can translate into means

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by which they can reconstruct their lives. What more needs to be done to

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help people to cook `` help people recover? The bank has offered nearly

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$1 billion to help. The Philippines is struck by natural disasters more

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often than other countries are. But a disaster of this scale is a huge

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challenge for any country. You have to look at it on a national level

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and a local level. What we have been doing is focusing on trying to help

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build capacity at local level in supporting the national government.

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Is it access, roads, having the skills to rebuild, passing along the

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ability to rebuild a community in terms of jobs? It is a little bit of

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all of that. In the initial recovery stage, it is looking at clearing out

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roads and getting access to some of these communities that were

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devastated by this disaster. But then you move on to getting

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electricity back into these communities. And then, the biggest

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challenge is with housing and providing roofs to cover people's

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heads. Is there something specifically about the Philippines

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that makes it difficult? People will complain about corruption, the

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inability to implement the aid which is coming through. These challenges

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are not unique to the Philippines. They are challenges that many

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developing countries face, so I don't think the Philippines is

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unique. It has made a lot of interesting progress respecting

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transparency. How big a problem is inequality? Inequality is a major

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challenge for the region as a whole. 80% of the population in Asia

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lives in countries where a measure of inequality has grown over the

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last 20 years. This is a problem for the region. We think it could

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potentially undermine the sustainability of the group we have

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seen a nation. Any kind of policy that is helping with redistribution

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and making this growth more inclusive will be more sustainable

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in the long run. The Philippines has these challenges. This is a big

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challenge for this country but not unique to the Philippines. Do you

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find that receptivity to change? This government is very responsive

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to the notion of change. It has implemented a lot of good policies.

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It is a challenge in any political democracy, but this is a really

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committed said of professionals and politicians. You are based is so you

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have a long`term view of the country and its progress. As the economy

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turned around in a more sustainable way? Yes. There are still challenges

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out there. Our forecast for economic growth is around 6.4%. This is a

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result of a couple of different changes. There has been slow down

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and investment that is bringing this down a little bit. Deceleration in

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China affects the region as a whole. But we think the policies put

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in place, we think this is the great economic team. So no more

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renovation? I don't think so. San Miguel was founded in 1890 and has

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grown to become the largest beverage conglomerate in south`east Asia.

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Six months after this Typhoon, people are still suffering and, in

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our case, we have finally identified some areas which we can help build

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some houses for the people there. Our target is to help build 5000

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houses for the affected victims. Livelihoods are a big part of what

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were help any country. You have been in the Philippines for a very long

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time. You are a very big company. What has enabled you to be a big

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multinational in a country where there are not many multinationals?

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Our company started diversification five years ago because we know if we

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will stay on the food and beverage business, growth is minimal, and

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there is so much opportunity for us to get into infrastructure, telecom,

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mining. So we did diversify into those businesses. I guess that

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coincided with a period of rapid growth of the Philippines. What do

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you see is the role of business in that? So far, we have been quite

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successful in I diversification. Is there in risk of too much

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diversification, especially because you are doing it at a time when

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credit is so cheap? Too much diversification is really dangerous,

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but in our case, we are very conservative. Our diverse

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application `` diversification is or is based on our financial

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capability. We don't over leveraged our company. We are 2.6 times over.

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A lot of outside investors view the country and don't come into the

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Philippines very much. It has one of the lowest rates of investment in

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the region. What are you seeing that they are not seeing? They might be

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worried about corruption or political instability. Political

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instability of the Philippines was a problem for many years. But since

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the President got elected in 2010, he has given a good reputation to

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our country and his government has been doing a lot and was able to

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have a credit rating upgrade and sparked a lot of consumer spending.

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If you see, this country is really good because we have lots of

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overseas workers and we are also doing a lot. What do you think is

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different about running a Filipino company versus how you see that

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company in the West? It is more difficult to run a company in a

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developing country because they keep changing the rules. Unlike a stable

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country, they keep changing the rules. Whether it is the view from

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government, big business or the bank, the Philippines has shed their

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negative label but the gap is the widest in the region. It is one of

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the reasons why the slow recovery and why it may be difficult to

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sustain its recent success. Today was a wet one but at the same

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time, very changeable. From rain to sunshine back to rain again. We get

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a bit of everything. It will always feel warm and the sun comes out.

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This is the satellite

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