APEC Cebu Action Plan Highlights Resilience in Financial Crisis, Natural Disasters

The Asia-Pacific Economic Cooperation (APEC) has laid out a roadmap for the Cebu Action Plan (CAP), giving special emphasis on ensuring the 21 member economies can adapt to economic shock caused by financial crisis and natural disasters.

During the Senior Finance Ministers’ Meeting here Wednesday, Philippine Finance Undersecretary Gil Beltran and Peru’s Ministry of Finance and the Economy Director Fabier Roca Fabianis identified four pillars of the action plan: financial integration, fiscal reforms and transparency, financial resilience, and infrastructure development and financing.

Financial resilience seeks to make households, communities, enterprises, and governments resilient to various shocks, including natural disasters.

One of the key features of the third pillar is the promotion of accessible and affordable insurance products.

Fabianis said both the Philippines and Peru have faced many natural disasters and “we need to cooperate and work on that issue”.

Peru is next year’s APEC host.

On November 8, 2013, super typhoon ‘Yolanda’ (international name Haiyan), one of the strongest tropical cyclones ever recorded, left almost 10,000 people dead and flattened towns mostly across the Visayas region.

And while the death toll remained massive, the Philippine peso dropped by 0.3 percent against the US dollar and the Philippine stock market fell by 2.2 percent immediately after the weekend onslaught of Yolanda.

The agricultural sector, the backbone of Philippine economy, suffered the most, as Leyte region, one of the most badly hit, produces a high volume of rice and sugar.

Analysts said carryover effects of the super typhoon would cut about eight to 10 percent of the Eastern Visayas’ gross domestic product (GDP) in the next year, and about one percent from its overall growth.

Beltran, for his part, said that while all the pillars received broad support from the APEC ministers “because these are necessary to make APEC a rapidly growing and very resilient, inclusive region”, another aspect of the action plan is to make economies “more resilient to economic shocks (due to) natural disasters”.

“The measures that are included in this pillar will try to soften the impact of volatilities in the economies of the members,” he added.

Doing so would “hasten the flow of investments across the economies”, Beltran said during the press conference.

Philippine entrepreneurs to have easier access to foreign loans

Aside from financial resiliency, the APEC also seeks, in its first pillar, to ease trade and investment by rationalizing the rules on cross-border flow of funds.

This means Philippine entrepreneurs would have easier access to cross-border financing like loans or letters of credit issued by foreign lenders.

“The Cebu Action Plan is a very comprehensive action against not only (a) volatile market, but also to foster capital market development, to exchange information, to promote trade and investment through financial integration,” Fabianis said.

In its second pillar, the plan is also pushing for fiscal reforms and transparency by promoting sound fiscal policy and accessibility of data on state revenues and expenditures.

Once there is higher accountability and transparency in the APEC economies, the action plan said governments “will be forced to improve the efficiency of public spending”.

The fourth pillar refers to improving the mobility and connectivity in the region by developing the country’s infrastructure through the promotion of more public-private partnerships (PPP) for public infrastructure projects.

Multi-year actions

Peru’s Fabianis said that although the CAP is a roadmap for the next 20 years, not all APEC members are ready to implement these in the short term, which is why the action plan has three timetables — a one-year action, a five-year action, and a 10-year action.

Senior officials of the 21 member economies gathered on Wednesday at the Mactan Shangri-La for a whole-day session to produce the final draft of the CAP before it is formally launched on Friday.

The CAP is a development roadmap for the Asia-Pacific region that was drafted by the Philippines, with inputs from other APEC member economies, multilateral organizations, and the private sector through the APEC Business Advisory Council (ABAC).

The Philippines believes that the launch of the action plan is timely because of the pressing global economic challenges that raise the need to safeguard sustainability of growth in the region. (PNA) RMA/PND/RSM