A COMMON misconception about the Asean Economic Community is that it will be just like the European Union when it takes effect at the end of 2015.
Many expect this to happen, but this will not be the case, said Ceferino Rodolfo, Department of Trade and Industry (DTI) assistant secretary for industry development and trade policy, during yesterday’s Asean integration workshop for retail trade, manufacturing and creative industries.
Unlike the European Union, Rodolfo explained that the Association of Southeast Asian Nations’ (Asean) economic integration will not yet lead to the sharing of a common currency, nor will they adopt common external trade policies.
Its main objective, he said, is just to make the trade of services and goods free and easy. “There will be no drastic changes in the rules. Only in facilitation,” Rodolfo told industry players.
He pointed out that most of the fears about integration have already happened without the public noticing. Aside from the free trade of goods since 2010, Rodolfo noted that investments in manufacturing have occurred even without the AEC.
Rodolfo noted that most expect an influx of products and workers and the exit of the country’s skilled workers when integration occurs. Citing the commitments made by Asean-member countries, Rodolfo said businesses and professionals should not be worried about it.
He showed many phrases in the commitments that demonstrate there is room for flexibility for each country.
Many commitments came with phrases such as “subject to negotiated pre-agreed flexibilities” and “consistent with member countries’ national agenda and readiness of economy.”
He said that if a country finds there are too many workers in one field, it can choose to restrict the entry of foreign professionals. It can also choose to accept more professionals if it has a shortage in a certain field. But Rodolfo said each country will have its own requirements for skilled labor to be able to practice, which is still similar to what is being done today.
What Asean countries committed to do was to facilitate the issuance of visas to make the process easier.
He said professionals should be made aware of the Registry of Asean Professionals to be recognized around Asean as a professional of a specific field.
Of the 439 measures that the Philippines committed to complete by 2015, it has implemented 302. Of all the measures, the Philippines identified 234 that needed to be prioritized. It has yet to deliver on 34 of the prioritized measures and 18 of these cannot be implemented solely on a national level.
Sixteen of the 34 deliverables are in the areas of trade in services liberalization, customs trade facilitation, air transport and protocols and agreements yet to be ratified.
In moving forward, Rodolfo said that what needs to be done is make it easy to do business and not get mired in government regulatory processes.
He also cited the need to improve competitiveness and link industries with trade policies. Among the things the DTI is doing is the crafting of industry road maps. So far, it has completed 21 industry road maps.
The Philippines hopes to sustain existing industries that are doing well and grow small and medium enterprises in the countryside. It also hopes to explore new revenue streams and revisit backbone sectors such as iron, steel and petrochemicals. Another thing they want to do is recover or recapture sectors that used to be strong but were lost years ago such as apparel, footwear and garments.
While there are still several issues affecting the country’s competitiveness such as the quality and cost of power, regulations, costs of transportation and logistics, access to agri-based raw materials and enforcement and product standards, Rodolfo believes the country is in a good position.
With the Asean economic integration initiatives and the region being the fastest growing in the world, Rodolfo said the Philippines will begin 2015 with a demographic sweet spot--majority of its population will be of working age. All this, he said, will happen at the same time, providing “an impetus for all these actions to converge.”
Safety nets
National Economic Development Authority (Neda) 7 officer-in-charge Efren Carreon, who is also vice chairman of the Central Visayas Regional Development Council, said the council’s economic development committee has created a technical working group to study the impact of integration on various sectors and recommend safety nets to cushion the negative impacts.
In partnership with the Cebu Chamber of Commerce and Industry, planning activities and workshops with five sectors have been scheduled, including yesterday’s workshop for manufacturing, retail trade and creative industries.
The information technology and business process management sector held their workshop last month. Three other sectors are expected to hold their workshops within the month—tourism; agri-aqua and food; and logistics.
Carreon said they hope to be able to analyze the different outputs of these workshops by May to put together a draft a road map for the Asean integration. They plan to present the road map in June in time for Cebu Business Month.
CCCI President Ma. Teresa Chan noted a “prevailing sense that the country seems unprepared to meet the challenges” of integration. She cited the need for the business sector to have a “carefully constructed” environment to strengthen it so that efforts to achieve inclusive growth are not wasted.