ASEAN 2015: Let the dance begin (Part 2)
Philippine Exporters Ready To Compete
“Exporters I believe can compete under AEC because that’s what they’ve been doing. The problem is the agriculture industries because they can compete against imports,” he said.
Philexport President-CEO Sergio Ortiz-Luis Jr. stressed the small and medium enterprises are ill-prepared against the influx of cheap imported products.
There are lots of factors that affect the competitiveness of the domestic industries. Foremost, he said, there is no financing environment that has been developed for SMEs unlike other ASEAN countries.
“Then we have archaic labor laws that do not encourage productivity-oriented workers, our cost of energy, transportation and other inputs of production are substantially higher than other countries. So, there is a need for our agriculture sector to double time,” said Ortiz-Luis.
There is an urgent need to prepare the Philippines’ micro, small, and medium enterprise sector—which comprises 99.6 percent of the country’s economic backbone, employs 69.9 percent of the labor force and contributes 32 percent to the economy.
There is also one fact to remember – our country’s major export partners are mostly non-ASEAN members.
“During the time of President Marcos, we had huge exports because we’re heavily trading with the US and we were enjoying export quotas in a lot of our exports like sugar and garments guaranteeing us of a captive market. But while we concentrate with the US, other countries in ASEAN were developing ties with Europe and also with the US. As a result, we are now left behind because other countries also managed to get quotas and they still have other markets outside of the US, while we stuck it out with the US,” Ortiz-Luis said.
There are some sectors though who feel the Philippines is just right on target for ASEAN 2015.
Jaime Augusto Zobel de Ayala, chairman of the country’s largest conglomerate Ayala Corp., believes the Philippines should play an active role in pursuing the integration of Southeast Asian economies.
Zobel, citing “skilled labor and a strong economy”, said the country actually had comparative advantages that should make integration beneficial to Filipino businesses.
Edilberto De Jesus, director and professor emeritus of Asian Institute of Management, said that instead of looking AEC as a threat, the country should consider the benefits of ASEAN integration.
The AEC aims to transform ASEAN into a single market and production base, integration into the world economy and enable easier movement of capital, investments and people.
“All these are theoretically good for a country. But beyond that, we need to achieve these goals for the AEC so that the Philippine can have this inclusive and sustained growth,” said de Jesus. He, however, said the timing will be a critical element stressing that “policies and strategies should be in place within 2013.”
Trade and Industry Undersecretary Adrian S. Cristobal Jr. also supports a positive view to ASEAN 2015.
“Our industries have been competing intensely since 2010 when all tariffs for agricultural and industrial goods were eliminated except for live swine, live chicken, meat of swine, meat of chicken, manioc (cassava) and sweet potatoes, maiz, rice and sugar,” said Cristobal.
He stressed that the Philippines is competitive in the following products as shown by their export performance: electronics; machinery; vehicles other than railway, tramway; mineral fuels; optical, photo, technical, medical apparatus; copper and articles thereof; tobacco, etc.
“These products are among our top ten exports to ASEAN,” he said.
In services, he pointed out, especially in the IT- Business Process Management/Knowledge Process Management the Philippines has competitive advantage.
For the agriculture and the banking sectors, he said the Department of Agriculture has its own programs and projects to help agricultural sector improve their competitiveness. The Sugar Regulatory Administration, for instance, has spearheaded the sugar industry roadmap to enhance the sector’s capacity to compete.
“Generally, we must strive to continue improving competitiveness in all sectors. Extra effort will be needed in Industries with sensitive products such as sugar and rice and other products that compete with other ASEAN countries,” he added.
But he cannot say for sure if the Philippines is ready for 2015. He, however, went on to cite the country’s sound macroeconomic fundamentals, economic growth, fiscal position and other advantages, the Philippines will benefit from the AEC.
“Some sectors or industries are all ready competing successfully in ASEAN while others will need to prepare more in collaboration with government,” he added..
Cristobal’s optimism for the Philippines’ participation in the AEC must have some bearings.
Despite continuing concerns of corruption, tax structure and infrastructure, the Philippines was the most improved in business environment among ASEAN countries, a new survey of American firms operating in the region revealed.
ASEAN is not only pushing ahead with its economic integration, but has also launched negotiations for the ambitious ‘Regional Comprehensive Economic Partnership’ (RCEP) with the aim to knit together the free trade agreements it has with a variety of partners. So, there is that big promise.
In the meantime, there is no ifs and buts. AEC 2015 is a reality. Let the dance begin.