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The Department of Finance (DoF) and local economists are optimistic that the leadership change in the United States on Wednesday (Washington time) would have a positive impact on the Philippine economy, especially on trade and remittances.
President Joe Biden speaks during the 59th Presidential Inauguration at the U.S. Capitol in Washington, Wednesday, Jan. 20, 2021.(AP Photo/Patrick Semansky, Pool)
In a message to reporters on Thursday, Finance Secretary Carlos Dominguez 3rd quoted part of new US President Joseph “Joe” Biden Jr.’s inaugural speech — “We will repair our alliances and engage with the world once again. Not to meet yesterday’s challenges, but today’s and tomorrow’s challenges. And we’ll lead, not merely by the example of our power, but by the power of our example” — saying this “bodes well for a return openness to international trade and investment, which will undoubtedly redound to our mutual benefit.”
One economist, ING Bank Manila’s Nicholas Antonio Mapa, said Biden’s intention to renew US alliances and its return to prominence on the world stage suggested he “will be looking for increased cooperation with allies, with the Philippines being one of her more longstanding allies in the region.”
“We do also note that he may also favor returning to multilateral, as opposed to bilateral agreements, so it’ll be interesting if the Philippines would follow [his] lead, with the US attempting to reassert its influence on the global stage,” he added.
Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort sees the country’s exports and imports increasing, believing the Biden presidency “would help support increased global trade, especially free-trade agreements, [or] at least [fewer] protectionist policies and possibly less US-China trade [tensions].”
The new US administration would also ease policy on immigration, which would help many Filipinos there and boost overseas Filipino worker (OFW) remittances, he added.
Fewer protectionist policies under Biden would also support further growth in the local business process outsourcing (BPO) industry, with fewer curbs on outsourcing of US jobs, according to the RCBC economist.
A “Biden presidency would also push greater US stimulus and government spending that would lead to faster economic growth [there], which is the world’s biggest economy,” Ricafort said.
Ruben Carlo Asuncion, Union Bank of the Philippines chief economist, said a clearer engagement between Manila and Washington under Biden’s leadership might happen.
“The rise of China as an economic power will be a continuing impetus for the US to restore and ‘re-touch base’ with its many Asian diplomatic relationships. It will be sort of a ‘reset’ or ‘reboot’ for [the Philippines] and US in terms of the status of [their] current bilateral relationship,” he said.
Security Bank Corp. Assistant Vice President and economist Robert Dan Roces highlighted the strong trade and investment relationship between the Philippines and America — which involves nearly $30 billion in goods and services traded — noting that the latter is the former’s third-biggest trading partner and largest source of remittances.
Latest Bangko Sentral ng Pilipinas data showed that of the money sent home by OFWs in the first 11 months of the year, the US had the largest share at 40.1 percent.
Roces also said Biden’s plan to lift the US economy out of its recession with a larger, targeted stimulus package “means demand in the US will recover, and that is expected to improve trade further…”
“The support to businesses from a stimulus should also benefit our BPOs, [which] could get more job orders. And of course, the extra cash will let our OFWs send more money home,” he added.
Business as usual
In a message to The Manila Times, the American Chamber of Commerce of the Philippines expects business relations between the two countries to remain “unchanged,” but said Manila should decide on whether to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) or not.
Signed in 2018, the CPTPP is a free trade agreement (FTA) between 11 countries: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam.
Trade Undersecretary Rodolfo Ceferino earlier said Trade Secretary Ramon Lopez had ordered restarting the study on joining the CPTPP after the Philippines signed the Regional Comprehensive Economic Partnership (RCEP).
The RCEP was signed on November 15 by the 10 members of the Association of Southeast Asian Nations — Brunei Darussalam, Cambodia, Indonesia, the Lao People’s Democratic Republic, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam — as well as Australia, China, Japan, New Zealand and South Korea.
Built upon the existing Asean+1 FTAs, RCEP aims to strengthen economic linkages, enhance trade and investment-related activities, and contribute to minimizing development gaps.
WITH ANNA LEAH E. GONZALES