‘Suit up and play’

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Tuesday, March 25, 2014


IF exporters want to make the most out of economic integration, they have to study its free trade agreements well, an official of the Department of Trade and Industry (DTI) urged.

Senen Perlada, director of the DTI’s Export Marketing Bureau, explained that free trade agreements (FTAs) can be very technical and that those who want to take advantage of zero-tariff privileges under the FTAs ought to make sure they fill out the correct tariff codes, observe the rules of origin and comply with all the product-specific and cumulative rules surrounding a particular FTA.

For Perlada, it takes a lot of study. But if done right, he said, businesses can become competitive, especially if they look around resources available around Southeast Asia.

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Perlada gave the briefing on the Association of Southeast Asian (Asean) economic integration at the request of exporters yesterday.

He assured that at the end of 2015, there won’t be dramatic changes to the economy, pointing out that most goods have already been traded around the Asean region at zero tariff since 2010. Of the 10 member-nations, only Singapore is trading at 100 percent zero tariffs, but most are at 98 and 99 percent tariff-free.

The Philippines, he showed, has just 13 agriculture products being protected by tariffs.

Beyond 2015, live swine, live chicken, swine meat, chicken meat, turkeys, ducks, geese, guinea fowl, sweet potatoes, cassava and corn will be traded at five percent tariffs. Rice is currently being traded at 40 percent and will be reduced to 35 percent next year, while sugar duties were reduced to 10 percent this year from 18 percent last year. It will further be reduced to five percent next year.

“The AEC (Asean Economic Community) is a process, not an event. It is evolutionary, rather than revolutionary,” he said.

Are your companies ready?

He noted that the top-selling three-in-one coffee mix in the Philippines is Indonesian brand Kopiko while Universal Robina Corp.’s C2 iced tea drinks are the top selling Western-style drinks being sold in Vietnam. He assured that these brands did not make it overnight, but took time to study their market before conquering it.

While governments of member-states adhere to Asean blueprints to track their compliance to prepare for integration, Perlada said the private sector is on its own.

He said that rather than ask if the Philippines is ready for integration, the better question for them is to ask if their own companies are ready for it. He added that they could not sit back and choose to just serve the domestic market because they face stiff competition from foreign entities intent on having a share of the Philippine market.

“You have to suit up and play, otherwise you lose by default,” Perlada said.

Companies, he said, have to be outward-looking and not averse to partnering with other entities to better serve a wider market. He hopes the country’s big players will take in small and medium enterprises and help them become part of the trading activities, even if their participation is indirect.

As for the Philippines’ rating in the Asean Economic Community compliance scorecard, it rates 87.2 percent, which is about the average of Asean-member states.

It has implemented 302 measures, 19 of which were implemented ahead of schedule, 71 of which are ongoing and 47 that are yet to be implemented. Singapore has implemented 89.5 percent of 439 measures the countries have agreed to institute before 2015.

Malaysia, Vietnam and Thailand have 88 percent ratings.

For Cebu Furniture Industries Foundation president Robert Louis Booth, companies have to start planning and protecting themselves but he believes they are their own worst enemy if they fail to do something.

He considers many processes in the country a bit bureaucratic, but is hopeful that as trade becomes freer among countries, government agencies will be forced to streamline their operations so as not to affect the competitiveness of local industries.

Some of the agreements

Under the Asean Trade in Goods Agreement, which was intended to lower business costs, Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand removed intra-Asean import duties on 99.65 percent of their tariff lines. The other member-countries, Cambodia, Lao PDR, Myanmar, and Vietnam have reduced their import duties to 0-5 percent on 98.86 percent of their tariff lines.

The other trade agreements forged to pave the way for an Asean Economic Community are the Asean Framework Agreement on Services, which eases restrictions on services suppliers.

Various Mutual Recognition Arrangements are meant to give professionals and skilled workers greater mobility across the region, particularly in these fields: engineering, nursing, architecture, surveying, dentistry, accountancy, medical professionals and tourism professionals.

Published in the Sun.Star Cebu newspaper on March 26, 2014.

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