By: Representative Arthur Yap
BOAO Forum, Hainan, China. At the recent gathering of the Boao Forum for Asia, the conversations went beyond routine economic cooperation. What emerged was a deeper question about the future architecture of the global economy.
Asia today stands at the center of a historic transition driven by technological competition, shifting supply chains, and the global move toward clean energy.
This year’s forum carried particular significance as it marked its 25th anniversary. In that time, the Forum established itself as Asia’s premier platform for dialogue among political and business leaders on regional economic cooperation.
In remarks delivered during the anniversary gathering, former Philippine President Gloria Macapagal Arroyo captured the magnitude of that transformation in a single comparison: “In 2001, when China entered the WTO and this Forum was founded, China’s GDP was $1.3 trillion. Today, it exceeds $19 trillion.”
In just one generation, China has moved from emerging economy to central engine of global growth.
But as President Arroyo also noted, economic weight carries strategic expectations. With China projected to account for a significant share of global economic expansion in the coming years, many countries increasingly look to it as a stabilizing force in a world facing rising geopolitical tensions.
This strategic context framed the discussions at Boao.
Zhao Leji, chairman of the National People’s Congress, emphasized that Asia’s prosperity has historically been built on openness and economic integration even as global supply chains undergo restructuring.
Meanwhile, Andrew Forrest, executive chairman of Fortescue, pointed to the enormous industrial opportunity emerging from the global energy transition. The shift toward renewable energy will require unprecedented manufacturing capacity for batteries, clean power technologies, and energy infrastructure—capacity that Asia is uniquely positioned to supply.
Together, these discussions reflect the direction of China’s 15th Five-Year Plan, which aims to transform the world’s largest manufacturing economy into the most technologically advanced industrial ecosystem of the coming decade.
For countries like the Philippines, the question is straightforward: How do we position ourselves within this transformation?
Deepening Our Role in Global Supply Chains
China’s industrial upgrading will reshape production networks across Asia. Industries such as electric vehicles, battery systems, renewable energy equipment, and advanced electronics are expected to drive the next wave of global manufacturing.
For the Philippines, the challenge is not simply to participate in these supply chains, but to ensure that we are not left at their margins.
Electronics already account for more than half of Philippine exports, according to the Philippine Statistics Authority. Yet much of the country’s participation remains concentrated in assembly and testing.
Moving gradually into higher-value activities—such as semiconductor packaging, component manufacturing, and advanced electronics services—would allow the Philippines to capture greater value within the global technology ecosystem.
The country also holds some of the world’s largest nickel reserves, a critical input for electric vehicle batteries. The International Energy Agency projects that global demand for battery minerals will expand dramatically as electric vehicles and energy storage systems scale worldwide.
To benefit from these trends, however, the Philippines must address the fundamentals that determine where global investment flows.
Reliable energy, efficient logistics, and skilled human capital remain the decisive factors.
Studies by the World Bank and the International Energy Agency consistently identify electricity costs as one of the Philippines’ most significant competitiveness constraints. Improvements in ports, customs procedures, and domestic transport networks could likewise reduce export costs and strengthen the country’s position in regional supply chains.
Equally important is human capital. The findings of the Second Congressional Commission on Education highlight the urgent need to strengthen foundational learning, expand science and engineering education, and align technical training with industry needs.
These reforms form the foundation of a strategy that would allow the Philippines to deepen its role in global supply chains.
But supply chains alone will not guarantee economic resilience.
In a world increasingly shaped by climate shocks and geopolitical uncertainty, food security remains an equally critical pillar of national stability.
Strengthening Agriculture Through Smart Finance
Agriculture remains one of the most underfinanced sectors of the Philippine economy.
Despite longstanding policy mandates, bank lending to agriculture remains far below targeted levels. Financial institutions consistently cite the same problem: agriculture carries risks—weather shocks, crop failures, price volatility—that conventional lending models struggle to price.
As a result, many farmers rely on informal lenders charging some of the highest credit costs in the region.
This creates a vicious cycle.
Without affordable credit, farmers cannot purchase the correct seeds, fertilizers, and inputs at the right time. Without timely inputs, yields remain low. Low yields then reinforce the perception that agriculture is too risky to finance.
Breaking this cycle requires a different approach.
The Philippines does not have the fiscal capacity to finance rural credit directly on a large scale. But it does not need to.
The role of government is not to replace private finance—it is to de-risk it.
This is how agricultural finance systems operate in many successful agricultural economies.
Farmers must first be protected through insurance programs administered by the Philippine Crop Insurance Corporation, which compensate producers when weather shocks reduce yields.
Banks, in turn, must be protected through credit guarantees provided by the Philippine Guarantee Corporation and the Agricultural Guarantee Fund Pool.
But guarantees alone are often insufficient to mobilize large pools of capital.
This is where catalytic public finance becomes essential.
Through the Agricultural Credit Policy Council, government can establish a pre-funded stop-loss facility that protects rural banks against catastrophic credit losses.
Because the facility is pre-funded and capped, government exposure remains limited.
Yet even relatively small public funds can unlock significantly larger volumes of private lending.
This model—using modest public funds to mobilize private capital—is widely used in development finance systems around the world.
The result is a layered system of protection: farmers protected by insurance , banks protected by guarantees, lenders protected by structured risk-sharing.
With such a framework in place, even modest public resources could mobilize billions of pesos in agricultural investment.
Asia’s Next 25 Years
In closing her remarks at the Boao anniversary gathering, President Arroyo offered a reflection that captures the strategic moment facing the region: “The last 25 years were a miracle of growth. May the next 25 years be a miracle of cooperation and peace.”
With the announcement of President Marcos that the Government is once again open to joint energy exploratory talks in the West Philippine Sea, there is now a fair chance that the Philippines and China can achieve a predictable business environment. That possibility may well determine the Philippines’ role as an active partner in bringing to fruition, this “miracle of cooperation and peace.”
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Representative Yap is former Agriculture Secretary in the Arroyo Cabinet, Bohol Governor, and a Member of the 15th, 16th, 17th and 20th Congresses of the Philippines.