OBG talks to Hugo Swire MP, UK Minister of State for the Foreign Office

Interview: Hugo Swire

To what extent could the Philippines-UK Joint Plan of Action (JPA) and Air Services Agreement enhance relations between both nations?

HUGO SWIRE: The JPA will help shape the business environment and strengthen trade and investment opportunities between our two countries. At its core is support for our mutual prosperity. That means working together to boost competitiveness, promote free trade and tackle corruption. It will also bring businesses to each other’s markets and help them share experience on public-private partnerships. The Air Services Agreement is one practical example of how productive our relationship now is. Working closely with the UK and the EU, the Philippines made good progress on the Agreement, and the EU ban for Philippine Airlines was lifted in July 2013. Philippine Airlines hopes to resume direct flights between London and Manila in the autumn. This will be good for the UK and the Philippines, making business easier and boosting tourism.

What are the major factors limiting the growth of foreign direct investment (FDI) activity in the Philippines compared to its neighbours?

SWIRE: The Philippines has attracted just 3% of FDI flowing into the ASEAN since 1980. It is the smallest share, but this is something the government is working hard to put right. As in any country, macroeconomic stability will remain a key factor in encouraging investment, but there are other areas of reform that could help. As the IMF has noted, speeding up infrastructure development should be a priority. Addressing economic limitations on foreign ownership and improving the speed and predictability of the legal system are important.

Which export-oriented industries show the most growth potential for increased bilateral trade volumes between the Philippines and the UK?

SWIRE: The Philippines’ most valuable resource is its 98m people – and not just because of their good command of English. This is a key reason why British firms such as Sykes, the FT, HSBC, Standard Chartered and Shell have chosen to invest. The Philippines also has significant potential in its large – and under-exploited – mining and mineral reserves.

Joining the Extractive Industries Transparency Initiative, of which the Philippines is now an official candidate for membership, would be an important practical step in making the most of these precious resources. For the UK, our main exports to the Philippines are high-tech goods and services such as telemetry, energy-related technology and pharmaceuticals, as well as high street brands and high-end luxury goods. Rolls Royce and Bentley join Jaguar Land Rover in opening sales operations in 2013. Iconic British brands Waitrose and T.M. Lewin have recently entered the market, to be followed by River Island later in 2013.

What shortcomings and opportunities does the Philippines face in addressing its peace process and anti-corruption efforts?

SWIRE: To date, conflict and uncertainty in Mindanao has been a barrier to the nation’s economic growth. The Philippines has been unable to take full advantage of its human and natural capital, and areas of the country that could make a significant contribution to its agricultural and mineral wealth are largely disconnected. When the final peace agreement is in place, the opportunities for the people of Mindanao are immense: children will be able to go to school, citizens will be able to access vital services, the conditions for business will improve and more jobs will be created.

On anti-corruption, President Aquino’s focus has caught the mood of a country that knows corruption has been a drag factor for far too long. Corruption is a corrosive force for the citizenry and has been shown to add as much as 10% to the cost of doing business globally. It is therefore difficult to under-estimate the positive impacts of successful anti-corruption work. If the Philippines continues to tackle corruption head-on, its people will reap the benefits for many years to come.