Trade and Industry Secretary Ramon M. Lopez said the $1.9 trillion “rescue plan” announced by President-elect Joe Biden bodes well not just for the quick recovery of the US economy, but the entire world as well.
“On the surfaces, it should be pretty positive. Definitely, we need America, the biggest economy in the world to really be out there and recovering fast as well. The recovery of America is also a recovery for the world and for other countries of the world,” said Lopez during the CNBC interview.
President Biden will officially assume office on Thursday. He promised the release of $1.9 trillion “rescue plan” comprised mostly of direct cash aid.
The huge stimulus package is expected to prop-up consumer confidence in the US that should translate to global supply chains in the near term.
The presidency of Biden is also expected to lead the US in joining the Comprehensive and Progressive Agreement for Trans-Pacific Pacific (CPTPP). With this possibility, Lopez said, his agency is also now looking into a possible participation in the CPTPP.
“Our intention really is to look into that regional bloc so that we can also benefit from a freer global trade bloc that CPTPP has,” he added.
The Philippines is already a participant of the Regional Comprehensive Economic Partnership (RCEP), which was signed by the 10 ASEAN countries and five economic partners China, Japan, Australia, New Zealand and South Korea.
Lopez said that RCEP will help smoothen the flow of trade among its member countries and help narrow the country’s huge trade deficit.
To narrow down the huge trade gap, estimated at more than $1.7 billion, Lopez said the Philippines will continue to build on its export capacity by strengthening the manufacturing sector to allow exports to catch up with imports.
“But in the meantime, the more we export, the more we manufacture, we simply have to import more. But all we need is for exports to grow faster in the next few years, faster than imports,” he added.
With RCEP, foreign investors that are not from RCEP countries should look at the Philippines as their base and gateway to the world’s largest free trade deal, he said.
The Philippines is also benefiting from the supply chain relocation as it allows imports to come with lesser hindrance.
In fact, he cited that China investments to the Philippines have been growing an average of 18-20 percent in the past years.
“Many of our projects now in the Build, Build, Build, the infrastructure development program of the country, China is a major participant and financier as well. Being part also of this Belt and Road Initiative, working with China, it’s really a good economic relationship with China,” Lopez said. China is also the top export market of the Philippines.
Lopez attributed this to the good relations of the countries’ leaders: President Duterte and President Xi Jinping.
“It ushered great prospects for the Philippines,” he said.