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Speech of Manny V. Pangilinan

SALUTATION PRESIDENT FRANK EVARISTO, PAST PRESIDENT RUDY BEDIONES, PRESIDENT ELECT TEDJIE HERBOSA, OFFICERS AND MEMBERS OF MANILA ROTARY, HIS EXCELLENCY AMBASSADOR URABE, BABES ROMUALDEZ – THANK YOU FOR THE OPPORTUNITY TO BE WITH YOU THIS AFTERNOON. JULY HAS BEEN A HECTIC MONTH – TYPHOONS, BROWNOUTS, BIRTHDAY, INTERNET SPEEDS, BASKETBALL NIGHTMARE—AND IT’S ABOUT TO GET EVEN MORE FRENETIC. I WAS ASKED TO TALK TODAY ABOUT OUR ECONOMY, TOUCHING ON ASEAN INTEGRATION. ASEAN INTEGRATION LET ME PLUNGE IN, AND OFFER MY VIEWS: 1) ASEAN INTEGRATION IS A CONCEPT WE MUST CAREFULLY CONSIDER, AND A NOBLE GOAL WE SHOULD PURSUE. 2) THE ASEAN MACRO-ECONOMIC NUMBERS CAN BE COMPELLINGLY PERSUASIVE: TEN MEMBER NATIONS AGGREGATING A MARKET OF 620 MILLION PEOPLE – THE 3RD MOST POPULOUS ECONOMIC ENTITY IN THE WORLD; TOTAL GDP OF 2.3 TRILLION DOLLARS – THE 8TH LARGEST IN THE WORLD; AND TOTAL EXPORT/IMPORT TRADE OF A SIMILAR AMOUNT. 3) THESE GROSS NUMBERS ARE SEDUCTIVE INDEED – BUT THEY CAN BE MISLEADING. ASEAN IS AS DIVERSE AS ONE CAN IMAGINE. ITS POLITICAL VARIETY IS BROAD – THERE IS ONE ABSOLUTE MONARCHY, TWO MILITARY GOVERNMENTS, TWO SOCIALIST STATES OF DIFFERENT PERSUASION, AND FIVE DEMOCRACIES OF DIFFERENT DEGREES OF POLITICAL PARTICIPATION. 4) ECONOMICALLY, ASEAN HAS SOME IMPORTANT SIMILARITIES IN NATURAL RESOURCES AS MINERALS AND AGRICULTURE – BUT CRITICAL DIFFERENCES IN ECONOMIC STRUCTURE, FINANCIAL SYSTEM, AND LEGAL AND REGULATORY ENVIRONMENT. FURTHER, THE STAGES OF ECONOMIC MATURITY VARY WIDELY IN THE REGION. IN TERMS OF PER CAPITA INCOME, THE WEALTHIEST ASEAN COUNTRY IS 60X THE POOREST. AND THIS WEALTHIEST IS 15X THE ASEAN AVERAGE. WHILST EXTERNAL TRADE STANDS AT 2.4 TRILLION DOLLARS, INTRA-ASEAN TRADE AMOUNTS TO 272 BILLION DOLLARS – OR ONLY ABOUT 11%. 5) LET US ALSO REMEMBER THAT ASEAN INTEGRATION HAS 3 – NOT ONLY ONE – PILLARS TO IT: ASEAN ECONOMIC INTEGRATION, ASEAN POLITICAL AND SECURITY INTEGRATION – A TOUGH CHALLENGE GIVEN THE INFLUENCE OF CHINA ON EACH MEMBER STATE; ASEAN CULTURAL AND SOCIAL INTEGRATION, PERHAPS THE SOFTEST AND EASIEST PILLAR TO IMPLEMENT. 6) THE ROAD TO INTEGRATION HAS MANY LAND MINES ON IT – ECONOMIC, GEOGRAPHIC, AND POLITICAL. IT TOOK EUROPE NO LESS THAN 50 YEARS TO ACHIEVE ITS ECONOMIC UNION, AND IT IS ONE LARGE LAND MASS. ASEAN IS ALREADY ON ITS 47TH YEAR, AND IS DISAGGREGATED INTO ISLANDS OR ARCHIPELAGOS. 7) FINALLY, WE HAVE TO LOOK AT THE EXPERIENCE OF EUROPE ITSELF. IT IS SAID THAT POST-UNION UNEMPLOYMENT RATES ARE UP COMPARED WITH ITS PRE-UNION DAYS: FROM 9% TO 12%. SPAIN IS AT 27%; GREECE AT 24%. THE PIIGS COUNTRIES – PORTUGAL, IRELAND, ICELAND, GREECE, SPAIN – HAVE ALL SUFFERED, ALBEIT IRELAND IS SHOWING SIGNS OF RECOVERY. BECAUSE OF A SINGLE CURRENCY, THE EURO, BOTH GREECE AND SPAIN ARE CAUGHT IN THE EXTREMELY PAINFUL ECONOMIC DILEMMA – HOW TO COPE WITH AN ECONOMIC CRISIS WITHOUT CURRENCY DEVALUATION AVAILABLE AS A TOOL. SINCE NEITHER COUNTRY CAN DEVALUE ITS CURRENCY, SPANISH AND GREEK BANKS HAVE SUFFERED TREMENDOUSLY IN ASSET QUALITY AND, MORE CRITICALLY, BROADER ASSETS COUNTRIES HAVE BEEN MATERIALLY MARKED DOWN. MY CONCLUSION IS SIMPLY THIS – WE SHOULD NOT BE SEDUCED BY THE CONCEPTUAL ELEGANCE OF INTEGRATION, WHOSE MERCHANTS SELL THE CONCEPT AS IF IT WERE SNAKE OIL OR A SILVER BULLET—PRODUCING AN

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