The Market Monitor Minding the Nation's Business
By Riza Lozada
The Philippines is spearheading the effort of the Association of Southeast Asian Nations (Asean) to improve catastrophic reinsurance initiatives that will help communities across the region recover faster from the impact of natural disasters and other adverse effects of climate change.
Finance Secretary Carlos Dominguez III said the Philippines is also working on improving building standards to ensure that structures are climate-resilient, and is expediting the rehabilitation of existing irrigation systems while constructing new ones, particularly in the northern and southern parts of the archipelago, among other initiatives to mitigate the impact of erratic climate patterns resulting from global warming.
Foreign Affairs Secretary Alan Peter Cayetano, meanwhile, said the Asean needs to further push intra-regional trade and investment to fully benefit its citizens from economic integration, said the country’s top diplomat.
Cayetano said the benefits of Asean Economic Community (AEC) must be felt by its citizens, as the region is now the fifth strongest economic power in the world next to the European Union, United States, China and Japan.
“The Asean economy is thus an important part of the global economy. And through the Asean Economic Community, Asean is able to face a global economy that is more competitive in the future,” Cayetano said in his speech read by Foreign Affairs Assistant Secretary Frank Cimafranca during the recent European Union (EU)-Philippines Business Summit.
Asean’s combined gross domestic product (GDP) stood at $2.55 trillion in 2016 with a robust year-on-year real GDP growth rate of 4.7 percent despite the challenging global environment.
This growth in the region’s economy is expected to accelerate to 4.8 percent in 2017, supported by solid growth of private consumption and investment as well as expansionary fiscal policy.
Asean’s merchandise trade remains resilient at $1.06 trillion in the first half of 2016, of which 24.02 percent was intra-Asean.
“To date, we have made progress in the implementation of trade facilitation measures and initiatives in Asean with a view to reduce cost and time of doing business in the region,” Cayetano said.
He also noted that Asean attracted a total of $52.94 billion foreign direct investment (FDI) inflows, in the first half of 2016, of which 23.36 percent was intra-Asean.
Cayetano said full Asean integration is a work in progress to facilitate a rules-based, people-centered and people-oriented Asean Community..
He added that regional connectivity plays an important role in realizing the Asean Community Vision 2025 to transform the region through the AEC into “one of opportunities for our peoples, our business communities and our external partners.”
“We expect greater and more efficient inter-regional trade, which is a vital component towards realizing the goal of a single market and production base for the benefit of the entire region,” he said.
Climate change concerns urgent
Underscoring the urgency of addressing the impact of climate change on the economy, Dominguez added he has assigned an assistant secretary in his Department to focus primarily on this aspect, specifically on developing mechanisms that would make disaster-prone areas in the country more resilient against calamities..
He was referring to Assistant Secretary and DOF spokesperson Paola Alvarez.
“We are working with the different Asean countries as well as our different agencies to improve the catastrophic reinsurance (programs), to improve the standards for construction of homes and buildings. We are working with [our] Department of Environment and Natural Resources and Department of Agriculture, to mitigate the effects of climate change,” Dominguez said.
Dominguez said the impact of climate change is now being increasingly felt in the Philippines, particularly in Mindanao, which used to be mostly typhoon-proof, but now appears to be on the path of many tropical storms that have occurred recently in the country.
“As you know, [in Mindanao] we never had typhoons there. We had typhoons once every 70 years in Mindanao,” said Dominguez. “However, now we are observing that with climate change, the typhoons seem to be forming further south in the Pacific Ocean, and which brings northern Mindanao directly in the path of the typhoons.”
He said this adverse effect of climate change has, in the recent past, led to flashfloods in Cagayan de Oro and Iligan, two of Mindanao’s highly urbanized cities; and also in the province of Bukidnon, a major food producer in southern Philippines.
The Philippines has recently made available a P1 billion insurance fund under its Parametric Insurance Pilot project to 25 disaster-prone provinces in the country to help them act faster and better respond to the devastating impact of natural calamities.
Unlike the traditional indemnity insurance that takes a long time to assess and process, this Parametric Insurance Pilot will have quick-disbursing payouts whose amounts will depend on the estimated loss triggers determined through the Philippines’ Catastrophic Risk Model developed by the Department of Finance (DOF) in 2014.
Assistant Secretary Alvarez said the project covers 25 local government units (LGUs) that include the provinces of Aurora, Cagayan, Camarines Norte, Camarines Sur, Catanduanes, Cebu, Davao del Sur, Davao Oriental, Dinagat Islands, Eastern Samar, Ilocos Norte, Ilocos Sur, Isabela, Laguna, Northern Samar, Pampanga, Quezon, Rizal, Sorsogon, Surigao del Norte, Surigao del Sur and Zambales.