Is PH ready for Asean 2015?

Filipino businessmen believe that, while there's much to be done, the Philippines can still play catch up and be ready for the AEC in 2015

HOPE FOR MANUFACTURING. The country's businessmen are still confident that the Philippines has a fighting chance in successfully integrating into the Asean Economic Community in 2015. Photo by AFP

MANILA, Philippines – Filipino businessmen believe that the country may not yet be out of the race in terms of successfully integrating with other countries in the region under the ambit of the Asean Economic Community by 2015. 

In a general membership meeting on Monday, April 29, Management Association of the Philippines (MAP) President Melito Salazar said, however, that the progress of the Philippines in integrating with other countries in the region will be uneven, with some industries falling behind others. 

Some of the industries that will be ready by 2015 include the tourism sector while industries that may fall behind include manufacturing. There are many reasons for this but the main point of contention is the political will that is needed to push for necessary reforms. 

Salazar said the Philippines already wasted a lot of time under the 9-year term of former President Gloria Macapagal-Arroyo. He blamed Arroyo’s “political indebtedness” as the reason for the inability of the previous administration to push for the necessary policies that will make the country AEC-compliant. 

“[The progress is uneven] because of those wasted 9 years under Gloria Macapagal-Arroyo,” Salazar said. “When you’re fighting for political survival, you don’t include these other things [that are important], you don’t want to use your political capital but the President [Aquino] has used his political capital.”

Salazar said President Aquino’s political capital was used effectively in the tourism sector, which is one of the sectors that would be ready for the AEC. He commended the Department of Public Works and Highways (DPWH) efforts to take over all the bad roads that lead to the country’s tourist destinations and perform maintenance works on them. 

Winners and losers

However, the education and manufacturing sectors, Salazar said, could be included in the areas where the Philippines will not be ready for the AEC.

In terms of education, given that it is only this year that the country implemented the K+12 system, the country’s graduates by 2015 may not be ready for the requirements in a global market place. 

Philippine Automotive Competitiveness Council Inc. (PACCI) Executive Director Ramon Vicente Kabigting said while there’s much business to be gleaned under the AEC, the country does not have strong backward linkages, or supply chain supporting, in the manufacturing sector, for example, for it to benefit from the ASEAN single market. 

Kabigting said seamless trade in the ASEAN involving a network of companies investing in manufacturing and the free flow of goods and services in the region is the dream that is the AEC. He said this cannot be abandoned.

“That’s all very wonderful, I do not think we should throw that dream out the window, we should keep on trying. But if we don’t have the competitiveness, if we don’t have stronger backward linkages, then i think we will always be on the periphery of that dream,” Kabigting said. 

“I’m not saying we’d try to overhaul the ASEAN but there is a lot of good business and I think you can see not only in automotive and the other sectors as well. Let’s fill in the gaps and make our industry have a stronger integration. Let’s tank up and step on the gas,” he stressed.

Money begets money

Philexport President Sergio Ortiz-Luis said what is lacking is the political will to implement the necessary measures. He said that while the Philippines has made the most studies, fora, and meetings on the AEC, no concrete plan of action has ever been implemented. 

Ortiz-Luis noted that the Department of Trade and Industry (DTI) does not have enough funds to carry out extensive export promotion since its budget was only a measly P3 billion. Compared to the Conditional Cash Transfer (CCT) budget of P45 billion, the DTI’s budget doesn’t stand a chance. 

“I’m not so sure if we’re ready for anything. I think that in 2014 (or) toward the end of the year, we’ll be talking about the same thing, asking the same question. We would probably say that we’re not ready and I think we’ve made the most studies, the most fora, the most meetings, on this topics among our ASEAN partners and I think, at the end of the day, the political will to really come up with a comprehensive action is not there. Unless we re-align the budget to really create agencies, perhaps an ASEAN Tsar, we’re not going to get anywhere,” Ortiz-Luis said.

Analysts have said that ASEAN has achieved much in cutting tariff barriers to trade in goods, but still has a lot to do before the end-of-2015 target in opening up the services sector by removing non-tariff hurdles.

Speaking at the ASEAN’s annual summit on Wednesday April 24, President Benigno Aquino III said that Southeast Asia’s efforts to create a single market by 2015 are in their hardest phase owing to protectionist reflexes on sensitive sectors.

“They have finished with the easy parts but the accomplishments will not be as fast as in discussing the hard parts. When you reach that point, there can be some protectionist measures taken by each economy,” Aquino said.

Challenges outlined by Aquino include a framework to open up the services sector such as banking, insurance, telecommunications and retail within ASEAN. –