Challenges and opportunities in AEC 2015

Thelma Dumpit-Murillo

Thelma Dumpit-Murillo

The Asean Investment Report of 2012 indicates that intra-Asean investment rose by 83% to $26.3 billion in 2011, which accounted for 23% of the region’s total foreign direct investment (FDI) inflows as compared with the annual average of only 10% in 2000-2005 and 14% in 2006-2009.

Among the Asean Member States, Singapore, Malaysia and Thailand remain the largest regional investors with significant intra-regional investment in manufacturing, finance, real estate and telecommunications. The CLMV (Cambodia, Laos, Myanmar, Viet Nam) countries also continued to enjoy a high level of investment from other Asean countries in line with Asean’s efforts to narrow the development gap.

In the case of the Philippines, the country’s overseas investment remains marginal and the number of Philippine companies with overseas investment is limited when compared with the other Asean countries. Prominent Philippine companies with investments in the region include San Miguel Corporation which is now in Vietnam and Laos, Jollibee which opened in Singapore in addition to its Vietnam outlet, and Universal Robina Corporation. Based on the Asean Investment Report 2012, the total intra-Asean investment flow for the Philippines from 1995-2011 (16 years) is $1.6 billion (roughly $100 million/year) of the total $1.1 trillion.

We can expect the figures to go up and increase even more as the AEC goes on full swing. Reckoning date is December 31, 2015, by the way and not January. So effectively, that is already 2016. But as it is, a lot of goods are already zero tariff and for the past two years, the DTI has been going around the regions informing the public of the various benefits and opportunities a company can get from exporting or importing from a free trade area.

“Overall, the role of the Asean Comprehensive Investment Agreement (ACIA) in the implementation of the Asean Economic Integration (AEC) 2015 is crucial as it embodies the key elements that would enable Asean to become an investment destination of choice. To seize the opportunities and challenges ACIA presents, the Philippine business community should understand the spirit and essence of the Agreement, be made aware of its benefits, and how to take advantage of its expansive possibilities,” said Trade and Industry Undersecretary Adrian Cristobal, Jr.

The ACIA, to which the Philippines is a signatory, is Asean’s enabling document in fulfilling free flow of investments within the region.

The ACIA is an integral part of the AEC which will be implemented in 2015. It seeks to realize economic integration in the Asean region characterized by its transformation into a single market and production base, a highly competitive economic region, a regional equitable economic development, and a region fully integrated into the global economy. ACIA combined and improved on the features of its predecessor agreements such as the Asean Investment Area (AIA) and the Asean Investment Agreement (AIG). Its key features include facilitation, promotion, liberalization and protection of investments in the region which are tools seen to encourage and attract more foreign direct investments (FDIs) and intra-Asean investments.

In preparing for the AEC, Undersecretary Cristobal said, the government is implementing several initiatives and programs in preparing the country’s industries and sectors for AEC 2015 such as organizing different forums. Aside from forums, the BOI likewise has an Industry Development Program (IPD) which was launched in January 2012 where BOI forged strategic partnerships with industry stakeholders, particularly, the private sector in crafting sectoral roadmaps that would contain among others, the industry’s vision, goals/targets, and strategies for the short, medium, and long term growth of their industries and the required interventions from government to reach the industry’s goals and targets.To date, 24 roadmaps have been completed, 12 of which have been presented to the public.

Undersecretary Cristobal said another 12 roadmaps will be presented this year.

“These roadmaps, combined, have helped identify the gaps, vertical and horizontal issues being encountered by the firms doing business here in the Philippines. The identification of these issues is important because once addressed, will improve the industries’ productivity and enhance their competitiveness that would eventually allow them to enter, move up or deepen their participation in the global and regional supply chain,” he said. These roadmaps will contribute significantly in the formulation of the Investments Priorities Plan (IPP), the annual listing of economic activities that are encouraged through the grant of fiscal and non-fiscal incentives. Using the value chain approach, the roadmaps will be used in determining the specific industry areas that may need to be listed in the IPP to encourage investments and address supply chain gaps” said Cristobal.

Aside from the industry development program, the DTI has been conducting business education programs on free trade agreements. Dubbed as “Doing Business in Free Trade Areas” or DBFTA, the program aims to inform businesses of the benefits from Free Trade Agreements entered into by the Philippines.

In 2013, 140 DBFTA sessions aimed at preparing the industry towards the integration of Asean IN 2015, were organized and attended by 12,547 participants. It included sessions on Overview on the Asean Economic Community and Philippine FTAs. Further, a total of 15 sectoral info sessions were also conducted covering both goods such as plastics, semiconductor and electronics, food, gifts, decors and housewares, and services such as education, insurance, tourism, and professional services sectors for health and medical allied profession, agricultural engineers and sanitary engineers. Likewise, 20 coaching sessions were organized for individual exporters and importers from the food, industrial manufactures (charcoal, plastics and chemicals), and consumer manufactures (garments, fiber and furniture) sectors. Another 3 info sessions were held on specific FTAs such as the Philippine-Japan Economic Partnership Agreement (PJEPA), Asean -Japan Economic Partnership Agreement (AJCEPA), European Union General System of Preferences (EU-GSP), and the Asean -Korea FTA. Wow, that’s a lot of hours and resources poured into educating and informing the private sector. Now, let’s all hope that they learned from all these info sessions conducted and were effective enough to convince them about the benefits lest it be misconstrued as mere junket!

God is Great!


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