Gov't plays down talk of 'economic separation'

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Metro Manila (CNN Philippines) — Economic managers are acting fast to defuse investor tension after President Rodrigo Duterte announced a "separation" from the United States.

The country will instead pursue stronger integration with its Asian neighbours, while still maintaining its relations with the world's largest economy, various officials said.

"Not economic separation," Trade Secretary Ramon Lopez said in a text message on Friday.

"The President's statement means just maintaining the relationship [with the U.S.], but breaking too much dependence on one side."

Finance Secretary Sonny Dominguez spoke in the same vein, clarifying that the country would only seek a "separation from the economic and defence dependence of the past."

Trade relations between the Philippines and the U.S. will continue, Lopez said. As for American companies, they can be assured it will be business as usual despite the political furor.

"We protect and honour all investments. Nothing has changed," he said.

Duterte had made the explosive statement after meeting with Chinese leader Xi Jinping on Thursday.

"I announce my separation from the United States... both in military and economics also. America has lost," he told an audience of Filipino and Chinese businessmen to thunderous applause.

Back home, however, the pronouncement was met with strong warnings from lawmakers, industry leaders and analysts alike. While many supported a rekindling of ties with China, they also urged the administration not to abandon its longtime ally.

Angelica Mangahas, deputy executive director of think tank Stratbase ADR Institute, said the Philippine-U.S. relationship was broad and multi-faceted. A complete severance of economic ties would have far-reaching consequences.

"Government-to-government, we have trade agreements and official development assistance. Our businesses import and export with each other. On an individual level, we have overseas Filipinos in the U.S. sending home money."

The U.S. is the Philippines' third largest trade partner, with exports and imports valued at $16.5 billion (about ₱752.4 billion) last year.

More worrying, the U.S. is the largest source of foreign direct investment (FDI) and remittances — both sorely needed by the Philippine economy. American companies brought in $731 million (about ₱33.3 billion) in 2015, 40% of total FDIs. U.S.-based Filipinos sent home $8.4 billion (around ₱383 billion) the past year, a third of total remittances.

"You're standing to lose a great deal and the impact wouldn't be limited to the business sector. It would  reach families as well," Mangahas warned.