Aquino: 'Culture of integrity' boosts Philippine growth

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President Benigno Aquino III addresses the audience at the Integrity Summit 2015.

Metro Manila (CNN Philippines) — Philippine economic growth since 2010 has been boosted by the "culture of integrity" that the government and the private sector has developed in cooperation with each other.

President Benigno Aquino III stressed this point in his address at the fifth Integrity Summit held on Wednesday (December 9) at the Makati Shangri-la Hotel.

"What we see here is a virtuous cycle, where good governance begets economic expansion," Aquino said. "This fuels our pursuit of inclusivity, and it is that inclusivity that leads to a happy electorate who will keep like-minded people holding the reins of power. All this, I believe, is rooted in a culture of integrity — one that we continue to foster together."

The event, staged by the Integrity Initiative, Inc., was attended by business leaders, anti-corruption and good governance experts, key representatives from the government, church, youth, and the academe.

Among those present were Ambassador Asif Anwar Ahmad of the United Kingdom, Finance Secretary Cesar Purisima, Commissioner Kim Henares of the Bureau of Internal Revenue (BIR), Chairman Richard Amurao of the Presidential Commission on Good Government (PCGG), Cagayan de Oro City Mayor Oscar Moreno, Chairman Ramon del Rosario of Integrity Initiative.

The yearly event aims to highlight the progress of the private sector in promoting ethical standards in business.

This year's theme is "Investing in Integrity."

To back his statement, Aquino noted how the Philippines rose in its ranking in the Global Competitiveness Index of the World Economic Forum — from 85th at the start of his administration in the 2010 to 52nd in 2014 to 47th this year.

"In the past five years, our economy’s growth rate has clocked in 6.2 percent — our fastest in nearly four decades, and one of the fastest in Asia," he said.

He also pointed out that the Philippines, under his administration's Straight Path (Daang Matuwid) governance, earned 22 positive credit ratings from various independent firms.

Government-owned-and-controlled corporations have also performed better.

"The improvement has been stark," Aquino said. "Please look at the numbers: From January 2001 to June 2010, the national government received P84.18 billion in dividends. From July 2010 to June 2015, this increased to P131.86 billion. This means that, counting the dividends for 2016, we have a very realistic chance of doubling — in six years — what our predecessor collected in more than nine years."

"All this progress naturally flows back to your businesses," he added. "Think about it: When our people are employed and are able to bring home greater incomes, that also means they’re empowered consumers, who subsequently have greater capacities to avail of the goods and services you offer."

In ending, he said he was confident that Filipinos would continue to pursue the Straight Path.

"To all those who have worked with us along the Straight Path, I believe the choice is clear,' he said. "I have always believed that our greatest strength is our people, and in the same way that they have made all that we have achieved possible, I have faith that they will choose to tread the Straight Path, not just for the next six years, but for decades and generations to come.

Following is the full text of Aquino's address as posted in the website of the Official Gazette:

Whenever I speak of corruption, I always emphasize the idea that it takes two to tango: Yes, there are always those in a position of power abusing their positions, but there are also those willing to partake in their schemes—or even just stand idly by, while others steal from the nation’s coffers. The only way we can truly end corruption in the Philippines is by taking a holistic approach — one that involves both government and the private sector.

This was the belief that spurred the creation of this summit; it is the belief that continues to drive it today. Over the past few years, this initiative — along with the forces for reform — has grown by leaps and bounds. One example is your Integrity Pledge, which gathers signatories from both the public and private sector, all of whom commit to exercise zero-tolerance for corruption. I am told that you have reached more than 3,000 signatories as of this year, with an eye towards reaching 10,000 by 2017.

This is indeed very good news to me. Over the course of my term, our administration can attest to the effectiveness of our partnership, and we have proven, time and again, that good governance is indeed good economics. You don’t even have to take my word for it. After all, one of the distinguished members of our audience today — Mr. Peter Perfecto — spoke about the transformation of the Philippine economy along the Straight Path during my last State of the Nation Address.

I remember him mentioning how our net foreign direct investments reached $6.2 billion last year, which was our all-time high. He talked about our country’s rise in the World Economic Forum’s Global Competitiveness Index, where, at the time, we went from 85th in 2010 to 52nd in 2014, with that particular organization crediting our anti-corruption agenda.

Let me share even better news: We have once again moved up those rankings to 47th place in the 2015 report, marking a 38-place jump since our administration took office. Mr. Perfecto already gave quite a comprehensive list, but the truth is there are even more reasons to be optimistic on the economic front. In the past five years, our economy’s growth rate has clocked in 6.2 percent — our fastest in nearly four decades, and one of the fastest in Asia.

The necessary macroeconomic elements are definitely in place for us to continue along this trajectory. For instance, during our time in office, we have managed to receive 22 positive credit ratings actions, moving us well within investment grade status, and granting us greater financial flexibility.

We have likewise increased our infrastructure spending, from 1.83 percent of GDP in 2010 to 4.10 percent this year. Of course, as I pointed out earlier, this is a GDP that has been experiencing stellar growth. The goal for next year is to reach at least 5 percent of GDP.

I also encourage you to look closely at the performance of our government-owned and -controlled corporations (GOCCs). It seems that, in many countries, when one talks of state enterprises, one always mentions gross inefficiencies. To be honest, at one point, we were no different. We had a system that allowed companies to award disproportionately large bonuses to GOCCs — even those who were perpetually operating at a loss.

This is why one of our first moves was to fix this system. We tasked Finance Secretary Cesar Purisima to study everything that can be done to turn the situation around, and with the help of our friends in the legislature, particularly Senate President Frank Drilon and Congressman Jun Abaya [Secretary of Transportation], we passed a law that truly professionalized how our GOCCs are run.

The improvement has been stark. Please look at the numbers: From January 2001 to June 2010, the national government received P84.18 billion in dividends. From July 2010 to June 2015, this increased to P131.86 billion. This means that, counting the dividends for 2016, we have a very realistic chance of doubling — in six years — what our predecessor collected in more than nine years.

Of course, we have also seen other pieces of legislation that improve our economic landscape. There is of course the Competition Law, which fulfills the twin goals of improving the goods and services available to our people, and incentivizing innovation among companies here. Yesterday, I also signed the Tax Incentives Management and Transparency Act, which will establish a more strategic and deliberate system through which government can offer tax incentives and focus on critical growth areas. These laws passed by our partners in Congress, among many others, will certainly help foster an environment conducive to growth long after I step down from office.

These improvements in our economy, however, are only meaningful if they are felt by all, which is why we have channeled our resources into massive investments in our greatest resource, which is the Filipino people. You may know of our Conditional Cash Transfer (CCT) program, which provides cash grants to the poorest of the poor, as long as they send their children to school and have them vaccinated, amongst other conditions. During our term, we have grown this program almost six-fold, going from around 780,000 household beneficiaries to 4.4 million, or roughly equivalent to 22 million Filipinos.

At this point, even with the studies still ongoing, the DSWD reports that 1.4 million Filipino households have already been raised above the poverty line. Aside from the CCT, another major step we have taken in terms of inclusive growth is the expansion of PhilHealth, which now allows the poorest 40 percent of our population to simply enter any government hospital and receive free treatment.

We likewise wiped out the inherited backlog of classrooms, school seats, and textbooks, while restructuring our education program to be at par with global standards, all with a view of empowering our children to gain the skills they need to succeed later in life. For those of working age, we have granted TESDA greater resources to train our people to take advantage of the growing number of opportunities here. Might I note: We have done this strategically.

By working closely with the private sector, we have increased the 28.5 percent employment rate among TESDA scholars in 2006 to 2008 to around 70 percent employment rate among the TWSP scholars — and even to 96 percent in certain sectors. That of course is defined as finding a job within six months after graduation. This, I believe, is even more reason why we should look for more channels through which government and the private sector can synergize.

All this progress naturally flows back to your businesses. Think about it: When our people are employed and are able to bring home greater incomes, that also means they’re empowered consumers, who subsequently have greater capacities to avail of the goods and services you offer. What we see here is a virtuous cycle, where good governance begets economic expansion; this fuels our pursuit of inclusivity, and it is that inclusivity that leads to a happy electorate who will keep like-minded people holding the reins of power. All this, I believe, is rooted in a culture of integrity — one that we continue to foster together.

There is no doubt: When government and private sector can engage each other in a positive manner, great things can and will happen. It is in these success stories where we find the importance of summits like this. We need to make the most of the opportunity to talk to one another, and expand the horizons of our cooperation. We need to speak and listen to one another to see what we can do better, and to craft even bolder plans for the future.

This year, I am particularly drawn to the theme of your gathering: Investing in integrity. It certainly is accurate to call it an investment. After all, there is always the temptation to pursue the short-sighted benefits of the unethical and the corrupt, but all of us here know: that will only have your companies vying to be the big fish in the increasingly smaller pond. Whereas when we invest in integrity — when we create systems where the hard-working and the innovative are justly rewarded, and when we acknowledge that integrity, along with inclusivity, is a pillar of any working society—then the pond itself grows, and all of us can enjoy greater prosperity. 

Next year, our country once again faces a crossroads. We can continue along the path of integrity and progress, or we can stray from it and backslide into the hopelessness of the past.

To all those who have worked with us along the Straight Path, I believe the choice is clear. I have always believed that our greatest strength is our people, and in the same way that they have made all that we have achieved possible, I have faith that they will choose to tread the Straight Path, not just for the next six years, but for decades and generations to come.

And it is in this spirit that I invite you all to further engage yourself in the process of continuing what we’ve begun together. I am certain that, standing under the banner of solidarity, we can truly show the whole world that despite all that we have accomplished, this is only the beginning; that the Philippines will continue its rise, and you haven’t seen anything yet.

Thank you, good day.