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The Silk Belt Road, 21st Century Maritime Silk Road and Regional Connectivity: An Interview With APPFI Vice President Antoinette Raquiza

Dr. Antoinette R. Raquiza, APPFI vice president and associate professor at the University of the Philippines Asian Center, was interviewed by the Fudan Development Institute during the “Building the Belt and Road: Connection, Innovation and Sustainable Development: Dialogue and Silk Road Think Tank Association Conference,” held from 22 to 24 February 2016, in Shenzhen, China. The interview is featured below with permission from the FDI. 

Interviewer: Lu Ting (LT)

 

(LT): Since publication, “the Belt and Road” Initiative has attracted much attention and triggered a heated discussion from all over the world. What is your comment on this initiative?

(ARR): China’s Belt and Road initiative is a welcomed project that would require countries, with different levels of development, to come together, hopefully toward working fora fair, equitable, and sustainable future for all. In the first instance, the Belt and Road initiative is identified with massive infrastructure development aimed at ensuring greater and smoother flow of humanity and commerce halfway around the world. Yet, the bigger challenge is building institutional connectivity and ensuring policy coordination among diverse political communities and cultures. At this early stage, the Belt and Road remains China’s brainchild, and people will be looking at China to see what kind of leadership it will provide in turning this project into a reality. I think countries along the route will be interested to see how their interests will be served by the project, enough for them to have a stake in its success.

(LT): Professor Zheng Yongnian, Director of East Asian Institute in National University of Singapore mentioned the inclusiveness of “the Belt and Road” Initiative. What’s your comment on this view? Do you agree with the inclusiveness? And how should the inclusiveness play its role in practice?

(ARR): As planned, the project will cover some 60 countries in three continents. Given the number of countries that the Belt and Road initiative plans to involve, it is - almost by necessity - inclusive. Inclusiveness can be seen by who and how many are involved throughout the project cycle: from planning and financing to implementation, evaluation, and the sharing of benefits. Inclusiveness should also mean building on the principle of stakeholdership: communities that will be most affected by specific projects need representation in the decision-making processes. Finally, the Belt and Road initiative can promote inclusiveness if it takes as its starting point the different domestic conditions of countries along the route so that the approach to development is not the one-size-fits-all treatment that the donor community has been wont to impose on developing countries, partly out of convenience.

(LT): Some Chinese programs in Sri Lanka bring many job opportunities for local people. From the point of Philippines, what do you think “the Belt and Road” Initiative brings to Philippines ?

(ARR): The Philippines is an archipelagic country and as such connectivity among the different islands and between the country and mainland Asia is a problem, affecting trade and business all around. According to the Asian Development Bank, the country needs more than US$127 billion for infrastructure development from 2010 to 2020. Thus, the Belt and Road initiative, together with the Asian Infrastructure Investment Bank, can help meet the country’s infrastructure gap.

(LT): Some news shows that the Philippines issues the Investment Priorities Plan (IPP) to encourage Chinese investment, what is your comment on this plan? And what challenges will come out when carrying out this kind of plan?

(ARR): The 2014-2016 Philippine Investment Priorities Plan (IPP) has identified manufacturing, agro-industry, information-technology-business process management, tourism, logistics, and construction as strategic sectors. With the Philippine private sector, the Department of Trade and Industry has developed 29 industry plans in order to revitalize the manufacturing sector. Again, the main challenge for the industry plans is how to bring in foreign investors who can partner or work with domestic businesses. There is also the challenge of ensuring that small and medium-scale enterprises are not left behind, but rather participate in and benefit from production and distribution networks in the region. This could include partnering with and learning from their Chinese counterparts.

(LT): Philippines has much cooperation with China, for example´╝ÜChinese foreign ministry spokesman Hong Lei said in 2007, Chinese enterprises participated in bidding for the Philippine national franchise of the transmission grid for 25 years, what kind of new cooperative mechanism do you suggest China and Philippines have under the frame of the Initiative?

(ARR): Definitely, there is much room for the economic relations between the two countries to grow, and the Philippines’ participation as founding member in the AIIB signals the national government’s wish to explore new areas of cooperation with China. There are different agencies involved in Philippine-China relations. In the executive branch, many agencies relate with Chinese policymakers and enterprises. These include the Department of Foreign Affairs that is concerned with diplomatic and security relations and the Department of Trade and Industry that, - through its units, the Board of Investment and Philippine Economic Zone Authority, - provides fiscal and non-fiscal incentives to Chinese investors. Hopefully, a high-level, inter-agency policymaking committee will be set up to undertake policy coordination and Track 1 exchanges with the Chinese government.

(LT): I have read your presentation in the conference, in your report, you mentioned Chinese development, our cooperation with Philippines including trade and investment. I find an interesting number, so could you please explain why Chinese investment in the Philippines is minimal in 2014?

(ARR): I think that, historically, the Philippines has not been as successful as other emerging economies in the region in attracting investors. The reasons given for this apparent low appeal include the relatively high cost of doing business (due partly to steep energy costs and lack of infrastructure) and small domestic market in the Philippines. Given the country’s recent economic turnaround, this situation is changing. Of course, Philippines-China relations are also affected by the two countries’ ongoing maritime dispute, which affects investors’ decisions. Those involved in Track 2 diplomacy hope that the maritime dispute is settled judiciously and peacefully. We would be interested in seeing how China will pursue President Xi Jinping’s win-win problem-solving approach for bilateral relations to this question.

(LT): Recently, Confucius institute in Philippines held the exhibition about “the Belt and Road” Initiative, what do you think this kind of cultural communication?

(ARR): An exhibit on “the Belt and Road” Initiative could be helpful, especially when it provides enough specifics on how planners envision this will unfold from the ground up. On the other hand, since the initiative covers a wide area of land and sea, it may wittingly or unwittingly touch on competing territorial claims and maritime entitlements. In this instance, exhibits can only do so much as they maybe interpreted as an attempt to preempt official discussions and negotiations. The effectiveness of such cultural communication would be limited where history itself is contested.

(LT): Shenzhen, as the first special economic zone in China, has advantages in some fields such as the information technology, smart phones, new energy, new materials, finance and so on. Recently, Shenzhen is seeking overseas cooperation relying on those advantage fields. Can you give us some suggestion about our cooperation with your country?

(ARR): As I see it, Shenzhen is a model from which economic zones in the Philippines and other developing countries can learn. It is impressive that Shenzhen made the leap to a knowledge-based industrial center in a relatively short time and how the municipal government worked with business to promote such high-value economic activities would make for an interesting case study. One area to explore could be the setting up of sister cities, linking Shenzhen’s innovation-based industries and the Philippine high-skilled services industries. Regarding trade and investment, it may help to know the existing platforms for Philippines-China economic relations. Over the last five years, the top Philippine exports to and imports from China included electronics, chemicals, machinery as well as electrical and transport products – suggesting supply chain connectivity.  In the first nine months of 2015, more than half of investments from China that applied for and were granted fiscal and non-fiscal incentives went into manufacturing. After manufacturing came the following: financial and insurance activities; information and communication; wholesale and retail trade and repair of motor vehicles and motorcycles; transportation and storage; administrative and support services; electricity, gas, steam and air-conditioning supply; and, arts, entertainment and recreation. As you can see, there is much room for partnership-building.

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Tags: Interview, Silk Road, Philippines-China Relations