Dr. Bernado Villegas, Economist
Pedro Daniel Oliveira
The Southeast Asian economy will surpass that of the Western powers in the next ten years, forecasts Bernardo Villegas, a Harvard-trained Filipino economist who says that China might explode like a social volcano. Talking to O CLARIM, he doesn’t fear the maritime disputes of the East and South China Seas and adds that Americans are nervous with the establishment of the Asian Infrastructure Investment Bank.
As for Macau, Mr. Villegas sees a big role as a worldwide entertainment center and as an important Asian centre for languages. For that, he stresses that it is needed to hire the best professors in the world, Nobel prizes included. Moreover, the University of Macau facilities are better than what he could find in Harvard.
How do you see the economies of Southeast Asia?
The most important thing is that if we look back to the last century, the global economy was dominated by three powers: the United States, the European Union (EU) and Japan. That was very clear. Now, we very well know that in the 21st century all of those three economies are tired and slow-growing. Probably, the US can grow the most at 3%, but will never reach the growth level of the last century. So, the 21st century will be dominated by three new powers: China, India and ASEAN. And ASEAN is going to be equivalent to the EU.
When is that going to happen?
This will happen in the next ten years. The growth of ASEAN will be faster than the EU, which is now disintegrating because it was too ambitious to try to establish the United States of Europe. Only because the EU has member States with common roots, it had the illusion that can put together a political union, but the ASEAN is a very practical union and it knows that will never ever have a political union and it will never ever have a common currency.
China is a leading power of ASEAN, but it’s also having maritime disputes in the East and South China Seas …
Those are very insignificant disputes. China will not do anything foolish, because it has still about 800 million poor Chinese people to bring up at the level of the 500 million people who are the beneficiaries from the high growth of the last 20 years and are floating in wealth and showing all sorts of expenditure that causes tremendous tension. China may explode like a social volcano.
How about the war scenario?
China will not waste resources in fighting a war. From time to time, China just wants to remind the world that it will not take this matter for granted, but at the same time it will never do anything that would lead to war in the East and South China Seas. ASEAN leaders are not afraid of what China is going to do on maritime disputes.
Some experts claim that China is already the world largest economy, while others sustain that it is not yet there, but will become one by 2050…
It will lead in terms of absolute GDP, but its per capita income would be very low in comparison to the US or to other countries like Singapore.
The Yuan is now the world’s fifth payments currency. Do you think it will gain more and more importance in terms of international transactions?
It will be more accepted. In fact the Southeast Asian countries want to accept more of this currency because we no longer want the US dollar monopoly. Definitely it will reach more and more parity with the US dollar.
What is the importance of the Asian Infrastructure Investment Bank (AIIB) led by China?
Infrastructures, infrastructures, infrastructures, because ADB (Asian Development Bank), with great Japanese influence, is quite the same.
Do you see AIIB as a counter power to the International Monetary Fund and to the World Bank?
To the World Bank it is definitely. That’s why the Americans are very nervous. Most of us now disregard the American interests. We are very much interested in the Chinese investment on our infrastructures because that’s the greatest lead in Southeast Asia. We also want the balance of power to not be completely in the hands of the Americans.
Aren’t the Americans the good guys?
They are not necessarily good. They do so many stupid things that they are trying to push, such as abortion, same-sex marriage and so on. I am afraid that if a person like Hillary Clinton becomes President of the United States it will become worse.
Is Catholicism losing ground to capitalism?
I don’t think so. In the Philippines we obviously fight tooth and nail against any wrong interpretation of capitalism. Of course, unfortunately some European countries like Spain, Italy and Portugal [have fallen into] secularism and relativism. That’s to be blamed.
The Filipino migrant workers play a great role in your country’s economy….
They are the number one source of growth. There were 28 billion dollars sent last year to the Philippines from more than ten million workers. The world is facing a demographic winter and there is no way to reverse that. Filipino workers are the most desirable labor force in developed countries. They are always the first to be hired and the last to be fired in every country where they are, especially in the services of care-giving, nursing, tourism and so on.
Some Macau legislators are against migrant workers…
As long as Macau wants Filipino workers there will always be a supply because our population continues to grow. We have not reached the level of population decline.
You are the co-founder and professor-emeritus of the University of Asia and the Pacific, in Manila. What do you recommend as a valuable way of teaching Economics in high schools and in the tertiary education system of Macau?
Like in all developed counties the high school and tertiary education students need an introduction to both macroeconomics and microeconomics to be good citizens and to understand what are monetary, fiscal and trade policies. Any intelligent citizen today has to understand these theories in order to be able to read the newspapers.
Would this awareness increase the competitiveness of Macau?
With no doubt, because Macau, being such a small territory, will have to take a look at what are the very specialized tasks that it can perform. For example, Singapore knows it has always a small population and therefore it’s investing a lot in Education to play the role that other countries cannot play.
In which direction should Macau go?
I think Macau should look for a certain niche which would give higher and higher education to the students. Nevertheless, Macau has to identify what are those types of skills. My view from outside: casinos will always be in Macau, but what can they do now to become the Broadway of Asia?
Are you talking about a kind of integrated diversification of the local economy where it is the strongest?
That’s correct. Macau has already attracted a lot of people to the casino business, even if the gaming revenues decline. The diversification into entertainment means that it should have one of the best schools of music, of ballet and of dancing in Asia. Macau can host a lot of actors and actresses that will attract the world to come in the same way the world is attracted to London.
Sands China is somehow playing that role already, but it’s a private company. It takes quite a lot of time for public sector to be efficient. How to balance?
I would suggest attracting a lot of foreign investments in entertainment. I think China is very open to foreign investments. It’s one of the greatest accomplishments of China. Macau can just ask itself: who, from Hollywood, from London and from New York can be attracted to invest in the best entertainers to come here? You know, Simon Cowell… We have the X-Factor! If beyond casinos, Macau can be an entertainment center, that would be one of the possible roles.
What are the others?
I went to the University of Macau and the facilities are even better than those in Harvard University. I studied in Harvard and the last time I’ve been there was two years ago. The ones constructed [in Hengqin Island] are the most modern. Macau should attract Nobel Prize winners to be professors there. Macau can be a university center and also a major language centre for Asia. It can develop a lot of language centers here to teach Asians in English, in Portuguese, in Mandarin and so on. But for that it is needed to attract the best ones in the world to teach.
How can small and medium enterprises succeed in a petty environment like Macau?
Entertainment doesn’t require a huge enterprise because it can be a one–man operation, especially in arts if digital technology is combined. Macau artists can design all sort of cartoons for the world. Small is beautiful in entertainment.
There might be a problem of quality…
Precisely, Macau must bring the best educators to teach the youth. Macau is too small to teach youth to be carpenters or electricians. It must make sure that more and more young people will go all the way to the highest education and become knowledge workers and not manual workers.
You have refused several invitations to take part in the Philippine Government. Why was that?
I am convinced that my training and experience are better used in the private sector to promote the common good of society. I often find those who work at the highest levels of the government in the Philippines have to waste a lot of time just counteracting the undesirable behaviors of other officials. By working for NGOs and businesses that are socially responsible, I think I have contributed more to national development.