Economic Planning Secretary Cayetano W. Paderanga Jr. INQUIRER FILE PHOTO
The conflict between China and the Philippines over the resource-rich Scarborough Shoal is likely to derail plans of selected Asian countries to integrate their economies by 2015, a chief economist and a social science expert from the two countries said.
Cayetano Paderanga Jr., economic planning secretary of the Philippines, said the geopolitical conflict could drive potential foreign investments away from the region.
“Yes, there may be an impact—on interest rates, on investments,” Paderanga said on Wednesday evening at one of the forums of the weeklong convention of the Asian Development Bank at the Philippine International Convention Center.
On a similar note, Yu Yong Ding, a professor from the Chinese Academy of Social Sciences and one of China’s delegates to the convention, said it was difficult to ensure stronger economic cooperation among Southeast and East Asian countries by 2015 if the Scarborough conflict would not be solved any time soon.
“My answer to that question is simple: ‘Yes,’” Yu said when asked if he believed that the geopolitical conflict would affect plans of having an integrated economic community in the region three years from now.
Nonetheless, Paderanga and Yu were quick to add that Filipino and Chinese policymakers were expected to resolve the conflict sooner rather than later as they were aware of its adverse consequences.
“History shows that we [Asians] are capable of cooperation,” Paderanga said. “There is no reason why we should stop now [from pursuing economic integration],” he said.
“Policymakers are wise enough to know that the matter must be resolved soon,” Yu said.
Tension between China and the Philippines has escalated as vessels from the two countries refuse to leave Scarborough Shoal, a group of rock formations 220 kilometers west of Zambales province, which the Philippines calls Panatag Shoal or Bajo de Masinloc. The standoff continues as they trade accusations of aggression.
Although the tension is much more pronounced between China and the Philippines, other countries also claim islets and reefs in the South China Sea, which Manila calls the West Philippine Sea.
Zero tariffs on most goods
The proposed economic integration of selected Asian countries—namely, members of the Association of Southeast Asian Nations (Asean), Japan, China and South Korea—is intended to help promote economic development among member-countries.
Stronger economic cooperation among these countries is expected to make them less economically dependent on Western industrialized countries, which continue to struggle with serious sovereign debt and financial sector problems.
Under the proposed economic integration, tariffs on most goods traded among member-countries shall be brought down to zero or near zero, and rules and restrictions on portfolio and direct investments will be relaxed and lifted.