Relaxed and smiling, Philippine President Benigno Aquino, 54, is credited with orchestrating the economic turnaround of the Philippines in his four years in power, even as he has had to face several diplomatic challenges such as tensions with China over territorial claims in the South China Sea. On a visit to Singapore this week, he sat down with The Straits Times' Foreign Editor Ravi Velloor and Philippines Correspondent Raul Dancel to answer a variety of questions, ranging from the way forward with China to his personal life.

Here are the edited excerpts:

ON CHINA

ST: Let's start with China. You said in the past that China gives you sleepless nights. Is there any improvement in your sleep lately?

MR AQUINO: Going to Apec, we didn't have too high expectations... So, we were very pleased when during the tree-planting ceremony we had an opportunity to talk to (Chinese) President Xi Jinping, and there was a reiteration of trying to find a resolution to the disputes. That we think was a very helpful and healthy sign. It lessens a bit the pressure. We were hoping that there'll be a follow-up to this.

ST: You've been quoted as saying as lately as in September that the Chinese 'blow hot and cold'. So, is your optimism well-grounded?

MR AQUINO: If we're closed to the possibility that there will be positive developments, then we guarantee that there will be negative developments. I think it's incumbent upon us to really to push the envelope, to develop a positive outcome.

The message that was sent to us (by the Chinese) said something like: Look for constructive solutions in the same direction. We're hoping we achieve the same direction in this mutuality of not just the intention of resolving it but even the methodology towards a regime wherein everybody's rights and obligations are clearly spelled out and forestall any potentials for disagreements or instability down the line.

ST: Do you see anything concrete on the ground like in the case of the Vietnamese, the rig, they moved the rig away. With the Philippines, do you see anything concrete on the ground?

MR AQUINO: Not yet, but at least we're talking again at that high level.

ST: You've gone for arbitration.

MR AQUINO: Yes, and also the formulation of a code of conduct.

ST: Beijing is not expected to respond. What would you do after that? What's your next move?

MR AQUINO: At the end of the day, again when there's a decision, there's clarity of rights and obligations, and that is what we hope to have as an output. Going this route clarifies again the relationships among the interested parties, not just for the Philippines and China, but in a sense everyone who's interested in this body of water.

ST: Is there really any significant movement towards a code of conduct? Over the past years, you've said yourself that this process has taken already 12 plus years, and we're hoping for a more expeditious movement on this score.

MR AQUINO: In 2002, they tried to come up with a code of conduct, and the only outcome was the declaration of conduct of parties in the South China Sea, or the DOC, which is non-binding. Now, we raised the matter up coincidentally in Phnom Penh where they failed to come up with a code of conduct in 2012. We reiterated that we are basically still there.

There was this promise of coming up with a code of conduct. We reminded everyone that there was this commitment and there was this promise. As a result of that, there has been to my knowledge at least two preliminary meetings before the start of the formal talks.

Now in this latest round, especially the Asean meeting, there was that renewal of the commitment to advance the formulation of the code of conduct. When it will come is anybody's guess, but it is no longer ignored conveniently in the back burner. It has been put in consideration, and everybody has to come up with their particular response, and I'm sure everybody would state publicly that they are after the formulation of it at the soonest possible time.

ST: I think as far as Asean is concerned, everyone agrees that there is a need for a code of conduct. But China itself, is it on the same page as Asean?

MR AQUINO: (Chinese) Premier Li Keqiang did mention the formulation of the code of conduct. Unfortunately, I don't have the exact quote right now.

ST: Were there issues over the ground rules over the formulation of the code of conduct like, say, which area of the South China Sea will be covered by the code of conduct. I understand China wants to exclude a significant portion of the South China Sea from a code of conduct.

MR AQUINO (Turns to Foreign Minister Albert del Rosario): Do we have the details?

MR DEL ROSARIO: Sir, we're not there.

MR AQUINO: The preliminary talks?

DEL ROSARIO: There are no talks regarding that.

ST: How far are you willing to go to make up with China after the positive vibes you're getting. You know the Chinese were very embarrassed by you going for arbitration. Are you prepared to drop it?

MR AQUINO: If there's a formal code of conduct, then probably there's no need for arbitration. But as precondition to formulating something that might happen nebulously somewhere down the line, I think it would be a dereliction of my duty to protect the sovereignty of our country and the rights of our people.

ST: So, it will continue?

MR AQUINO: It has to continue. The outcome is what is being sought to be achieved. If the route can afford that outcome, that outcome is achieved, then it negates the need for the route that was not productive.

ST: You bring up President Xi again and again, and the recent positive vibe you seem to have got from him. There are reports that President Xi is accumulating a lot of power in himself. As he gets more powerful and he is able to possibly control the ultranationalist elements in China, do you think that could be positive for relations in the sense that he will be able to bring down the temperature a little bit so it doesn't have to play to the domestic galleries so much.

MR AQUINO: I guess the fair answer would be the party's direction represents China's direction, their party's direction. We would not want to comment on the dynamics of their party.

But at the end of the day, what we're advocating is not disadvantageous to anybody in the sense that 40 per cent of foreign trade has to traverse this water. The idea of stability is a necessary prerequisite for the continuation of that, and the expansion of it. Uncertainty and instability benefit no one. The ability to marry that with nationalist sentiments or the previous statements that they've issued presents a difficulty. If there is a desire to resolve that difficulty, then that difficulty is resolved.

ST: Did you get the sense that President Xi will now have a softer response to what we are asking?

MR AQUINO: That's speculative on my part. Previous to that, they were saying this indisputable sovereignty, and we are suppose to be free to do what we want in our indisputable rights.

ST: China recently seems to be marrying its military build-up and push with softer forms of diplomacy. It has offered a friendship treaty to Asean, the New Silk Road project, as well as the Asean infrastructure project. Do you see this initiatives as something the Philippines can take advantage of, something that will take the Philippines closer within the sphere of influence of China?

MR AQUINO: (Former Chinese) President Hu Jintao in 2011 stated the be-all and end-all of our relationship should not be settled on disputes. As proof of that, trade between China and the Philippines comparing 2012 to 2013 grew by 17 per cent. In 2011, the facts that were presented to me which we communicated to them over the years, the Philippines has invested something like US$2.5 billion (S$3.13 billion) in the Chinese economy. China invested U$600 million in the Philippine economy. We send 800,000 tourists there (in 2011). They sent 200,000 to us.

This is a very, very beneficial relationship with them, one that we wanted to grow, rather than stymie its progress.

Of course, who would not want to expand the market? Who would not want trade facilitated? Who would not want to be able to deal with a 1.3 billion market?

Again, the price should not be giving up what we believe to be our just rights. The rule of law is the great equaliser among big and small nations. We believe we are in the right by advancing this particular course of action.

It is not seen primarily directed against China. We believe that nobody really benefits from instability, and the question is how do we get, how do we generate the stability to benefit all. The determination of rights and obligations does that.

ON THE US PIVOT TO ASIA

ST: Mr President, can I ask you about that big creator of stability in this region: the United States. How do you see the rebalance to Asia playing up from your point of view?

MR AQUINO: There is that immediate need. It might enhance the idea of stability. There is that attenuation of a balance wherein it will necessitate dialogue, as opposed to unilateral decisions by any singular party.

We keep reiterating that they are not taking sides when it comes to the disputes. But at the same time, one can argue that they are not a disinterested party with what happens in this disputed body of water.

Again, the 40 per cent is made up of trade by so many countries. Should they be excluded from a dialogue as to, for instance, freedom of navigation, the introduction of an air defence identification zone, things that will change the status quo that will hamper the trade, where everybody has such significant interest. Forty per cent I think is a low study or a low number, as to the amount of trade that has to traverse this particular body of water. Even in the context of the recovery of the global economy there's that imperative that there is stability and it has to really be give and take.

ST: Do you see or do you fear any shaking of that commitment to Asia for the United States?

MR AQUINO: No, no shaking of that.

ST: Do you think they're firm with their commitments here?

MR AQUINO: With the recent elections and the results of the elections, I think the sober perspective is suddenly, we have two co-equal parties of government, different parties who now have 50 per cent of the responsibility for the results. Equal responsibilities.

So, if the results are negative, both will be affected. Hence, the need for both to somehow find a common ground and be positive with each other, to be both fathers of a success. I think there is no choice for either side.

Of course, one side would want to claim more credit but at the end of the day if there's nothing to take credit for because it was a failure both will fully suffer.

ST: So in a sense the mid-term results have been positive for the Philippines and Asia?

MR AQUINO: I believe so. And of course the characteristics for each party, they like to take opportunity for their positive aspects to come to the forefront.

ST: Sir, the Supreme Court just yesterday said as far as the Enhanced Defence Cooperation Agreement (between the Philippines and the US), it may ask the Senate to take a look at it. What do you have to say about that?

MR AQUINO: We believe it's in conformity with all of our laws, specifically the Constitution. We believe it's just an enhancement of previous agreements that were already ratified by the Senate, both the Visiting Forces Agreement and the Mutual Defence Treaty.

Given that, we also believe in transparency. We have no objections to the Senate taking a look at it.

ON THE ISLAMIC STATE THREAT

ST: Can I ask about the rise of the Islamic State in Iraq and Syria (ISIS). How do you view this phenomenon, and how is the Philippines affected by it?

MR AQUINO: We are a democracy. We have a multi-party politics. We have a very feisty media. Everything that recognises human rights.

We have an entity that says, 'Our way is the only way', and does not tolerate any deviation from their only correct path. That should cause alarm, not just because of ISIS but all of the lessons of history. Certain groups have espoused that particular point of view. The brutalities really strike at the heart of the matter.

We have already a significant percentage of our 10 million overseas workers in the Middle East who potentially can be affected, and are already being affected. The virus has affected us. This latest issue also has affected us.

Having said that, I think it's incumbent upon right-thinking individuals, and more importantly nation states, to categorically state this is wrong, and to stop this wrong that is an affront to humanity.

As far as the Philippines is concerned, has the threat profile changed? The short answer of my national security adviser is there are people who go into social networking, who go to the Internet saying they pledge allegiance to the caliphate. These are the same people we've been chasing and trying to arrest. There are no new people, not even new methods. They just rebranded themselves.

There were Filipinos who joined the mujahideen in Afghanistan. One can say that they were not radicalised the the extent that they have engaged in suicide bombing. Currently, the prognosis is, with the exception of lone-wolf attacks coming from the outside, the threat has not increased in the sense that they are the same people that we've been running after.

ST: Do you have an estimate of the number of people who may have left the Philippines to enter the war?

MR AQUINO: No hard and confirmed numbers at this point. In the local group that operates, the Abu Sayyaf, the official figure is about 200, with the potential for another 200 sympathisers that might join them. But the operations have not stopped. The numbers are constantly being reduced.

ST: Singapore this month became the first Asean country to join this fight against the Islamic State. It has also been encouraging other Asean countries to take part in the effort. Do you see your country participating in the effort?

MR AQUINO: Perhaps not to the extent that Singapore has done. Let me explain.

In 1986, our armed forces and police forces numbered about 250,000. Our population was about 50 million. Today, we have 100 million. Our armed forces and police forces are still at 250,000. No change. We are part of peacekeeping missions of the UN in so many areas: the Golan Heights, until recently, Liberia, until recently, South Sudan, so many others.

We're trying to take on commitments, subject to our capacities. If we are requested to go somewhere, we will study exactly, we need a definition of the mission and make sure that the mission assigned to us is a doable mission.

ST: Right now, that hasn't happened yet?

MR AQUINO (Turns to Foreign Minister Albert del Rosario): There have been direct and specific requests when it comes to ISIS?

DEL ROSARIO: Yes, sir, but we said we would like to limit ourselves for the time being to exchanging information, intelligence.

MR AQUINO: That existed before?

DEL ROSARI0: Yes, sir.

MR AQUINO: There has been this constant push for the exchange of information even before ISIS came to the foreground when it comes to terrorism.

ON RELATIONS WITH SINGAPORE

ST: You're set to begin annual defence dialogues with Singapore. What do you hope to get out of these meetings?

MR AQUINO: Asean becomes one economic community next year. We have common threats. We have common aspirations in a sense. It behooves all of us that whatever cooperation we have, it has to be nurtured, and increased, and strengthened. The stronger it becomes, the more readily it is able to address the changing environment.

ST: Is a Visiting Forces Agreement with Singapore on the cards?

MR AQUINO: Not yet. We have to finish first Edca, the Visiting Forces Agreement with Australia. With the reinterpretation of the Japanese Constitution, there might be a deal also.

ON THE PHILIPPINE ECONOMY

ST: Mr President, one of the highlights of your administration has been your management of the Philippine economy. You have two years left in office. What are your priorities in the next two years?

MR AQUINO: I have so many priorities.

One is the passage of so many laws that will institutionalise the corrections that we've put in place. The Bangsamoro Law comes to mind. In terms of the economy, we have a pending Bill called the fiscal rationalisation programme. There are so many incentives brought up through the years that there are points of conflicts with each other. They are no longer relevant, but they're still in the books.

We want to end the cycle of destruction and reconstruction. Same destruction, same reconstruction. It has to be building back better.

To sum it all up, we want (growth) to be all inclusive, to really be palpable and felt by hopefully everybody in the country. At the end of the day, they conclude that, yes, good governance is good economy. We were the ones who made these all possible, and we will perpetuate what has happened.

ST: Mr President, big regional economies are slowing. Japan has just slid into recession, Indonesia is down to 5.1 per cent, China is slowing significantly. Where will your growth impetus come from? Where will you get your growth?

MR AQUINO: It's all in the investments in the people primarily. They are afforded the skills that will make them maximise the opportunities that are coming up.

Yesterday, in fact, I was told that at least two automotive companies in the Philippines have reported 40 per cent growth year-on-year. We have a very big BPO (business process outsourcing) sector. It reached the 1-million number in direct employees last September. It will be 1.3 million by 2016.

When I was their age a few years back, on my salary, how long will it take to get a car? I was figuring 20 years to buy a second-hand car. Now I'm told, especially for these people in the BPO industry, before they start their shifts, there are seminars on investment planning because the target is to have my own house in three years, my own car or both. These are being conducted not by small banks in the country but major and international institutions.

We think what has happened in the Philippines is but the start. Next year we'll reach a demographic sweet spot: 23. I understand we're the youngest in Asean.

Start of next year, there will be massive investment in infrastructure to address one of the major issues, continuing with improving the electricity issue, changing the business model to have not just in time electricity supplies but reserves before they're actually needed.

In tourism, we were at 3 million in tourist arrivals. We will reach 5 million this year. We expect 10 million foreign tourist arrivals by 2016.

Manufacturing, we do not expect to come back right now because of the price of electricity and so and so forth, but one of the Japanese automotive companies has bought an American factory and is set to produce a minimum of 40,000 units, not just assembly but real manufacturing.

The structural reforms are there. The infrastructure is being built. Investments and education are continuously done. Not sporadic. Year to year, there has been increases in the budgets for education and other social services like health. That is why we think we've planted the seeds, and the harvesting will be in the next term.

ON MARRIAGE

ST: Mr President, talking about family gives me an opportunity to ask my final question to you. When are we going to see a presidential spouse and a presidential family?

MR AQUINO: I assure you I am working on that religiously.