Bernardo M. Villegas
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Northbound Policy (Part 1)

          The economic strategy of the Duterte Administration of significantly improving our infrastructures (Build, Build, Build), raising the productivity of our agribusiness sector, accelerating the growth of exports and upgrading our educational system (especially tertiary education) should lead us to mirror the Southbound policy of Taiwan with our own Northbound policy.  Taiwan, one of the Asian tigers of the last century, was the one economy that succeeded on all four fronts.  Whereas the other three (Singapore, Hong Kong, and South Korea also had impressive gains in infrastructures and export promotion, the first two had no agriculture to develop while South Korea, although a much bigger territory, had poor natural resources in agriculture.  Among the four, Taiwan had the greatest success in developing its tertiary educational sector, achieving the highest percentages of   those holding a tertiary education degree.  Some 45% of Taiwanese citizens 25 to 64 years of age have bachelor’s degree or higher compared to 33% average of all OECD countries.  It has a literacy rate of 97.15%, one of the highest in the world.  With the appropriate investments in the educational sector, both public and private, we can aspire to replicate the Taiwanese model, especially if we send more of our university graduates for further studies in Taiwan.

         The Taiwanese economic model is worth emulating in the Philippines in the next ten to twenty years.  Among the Asian economies, we have most to learn from closer relations with our neighbor immediately to the north.  Over forty years ago, when Taiwan was a third world country with little over $100 per capita, then President Chiang Ching-kuo (son of the founder of modern Taiwan, Chiang Kai Sek) implemented what was then called the Ten Major Construction Projects, laying the foundations that helped Taiwan transform into an export-driven economy.  Before him, his father implemented one of the most successful agrarian reform programs in recent memory, a program that made sure that the small farmers were provided with all the necessary infrastructures and support services that made them highly productive (in great contrast to our failed Comprehensive Reform Program that redistributed land to small farmers but failed to follow up with the indispensable infrastructures).

  Taiwan, like the other three tiger economies, limited the period of the indispensable stage of import substitution by adopting policies that encouraged their industrialists to graduate sooner than later to an export-oriented industrialization strategy, making wise use of the baby boom that all of them had after the Second World War.  From labor-intensive industries, they then upscaled to heavy industries and finally to high-tech industries.  Today, Taiwan is famous for such high-tech enterprises as Acer, Inc. and Asus, producers of personal computers; mobile phone maker HTC, electronics manufacturing giant FoxCom which makes products for Apple, Amazon and Microsoft.  In the last century the GDP of Taiwan grew at an average of 8% annually for three consecutive decades (something that we can replicate in the next twenty years if we follow the same route Taiwan took).

         As Representative Gary Song-Huann Lin said in his address during the 106th National Day Reception of the Republic of China last October 9,2017, Taiwan and the Philippines have a long history of close relations, a history that dates back to the 17th century when the Dutch and the Spaniards ruled Taiwan.  Four hundred years ago, Taiwan and the Philippines already enjoyed strong bilateral ties.  Trade between the two economies was brisk.   There were many sailors from the Cagayan region who worked in Taiwan, already among the first Filipino overseas workers.  Culturally, the two share longstanding historical connections in that both the people of Batanes and the people of Taiwan’s Lanyu Island originated from tribes with Austronesian culture, speaking similar languages.  The indigenous people of Taiwan also share the same culture as the indigenous people in the north of Luzon.

            As Representative Song Huann Lin said in his address, a Northbound policy for the Philippines already stands on solid foundation.  In 2016, Taiwan and the Philippines increased their two-way trade by 17%, amounting to $10.87 billion, as compared to $9.28 billion in 2015.  In terms of people to people contacts, Taiwan is the home to 144,439 Filipino workers who enjoy all the benefits of the nationals of the Republic of China (Taiwan), such as the legal minimum wage and national health insurance coverage.  This number can be expected to increase because Taiwan has one of the lowest fertility rates, not only in Asia but in the world.  Our young, growing and English speaking population will always have some premium in Taiwan that is increasingly home to global corporations.  Intermarriages between Filipinos and Taiwanese are on the rise, with 8,000 Filipinos already married to Taiwanese.  Two-way tourism is also on the rise with visitor arrivals form the Philippines in 2016 reaching 172, 475, an increase of 23.89% from 2015 (139, 217) while visitor arrivals from Taiwan to the Philippines numbered 196,617 in 2016, an increase of 30.62% as compared with 2015.  In the first eight months of 2017, there was a 70% increase of Filipino tourists to Taiwan.  The more Filipinos travel to Taiwan, the more they will realize how we can benefit significantly from Taiwanese participation in our Build, Build, Build Program because they will be impressed with the infrastructures (airports, railways including bullet trains, toll ways, bridges, dams, etc.) that the Taiwanese have built over the last twenty to thirty years.  Investors and technology from Taiwan would be among the best that we can attract to help us also take a quantum leap in our infrastructures in the next decade or so.  (To be continued).