(The forum was organized by the Association of Vehicle Importers and Distributors, but the speakers invited appeared to focus on issues related to vehicle manufacturing.—Editor)
ARE we ready for the Asean Economic Community (AEC)?
The Association of Vehicle Importers and Distributors (AVID) recently held a dialogue on the opportunities and directions Philippine businesses— especially the automotive sector—may take to maximize the benefits of the AEC.
AVID is composed of 15 of the top vehicle importers in the Philippines. The group, formed in July 2010, is headed by Fe Perez-Agudo, president and chief operating officer of Hyundai Asia Resources Inc.
Themed “Come Unity, Setting Directions for one Asean,” AVID’s fourth Thought Leadership Forum was led by a panel of experts that included Cielito Habito, chief of party at USAID’s Trade Related Technical Assistance for Development (TRADE) Project, Department of Trade and Industry Assistant Secretary Rafaelita Aldaba and Dr. Federico Macaranas of the Asian Institute of Management.
According to Habito, AEC is not just coming next year but is mostly already here, and it is encouraging Philippine entrepreneurs to focus on attracting the right investments in the right sectors to create value and gain greater participation in the regional production network.
“As of January 2010, 99.6 percent of all the products we trade with Asean were all brought down to zero tariffs,” said Habito, adding that the only products that remain protected are the politically sensitive ones such as rice, sugar and, sometimes, other agricultural produce.
Habito stressed that AEC is more about complementation and less about competition, a program where several countries trade and benefit from one another.
“There’s no such thing as made in a particular country anymore; no ‘Made in China,’ no ‘Made in US.’ Boeing jet planes can already be called ‘Made in the World’ because if you dissect a Boeing airplane you see the whole United Nations in there in terms of different components,” he said.
According to Habito, the overall benefits of the AEC include an exchange of technology, allowing countries to help one another by building business partnerships. But he said there is a downside; if one country shuts down its production, its partner country is also affected.
The USAID official noted that AEC will push the country to bring down trade and investment barriers, which would build competitiveness and bring increased competition. This would lead to lower prices, better quality of products and wider choices for consumers.
According to Macaranas, technology is the driver for growth in countries such as Japan, China, Korea and India. He also encouraged a focus on earth-friendly and safe automotive parts.
“Many of us are talented in the software and hardware industries. The Philippines can focus on this for automotive parts so that we develop technologies related to these,” he said.
One of the things Macaranas also recommended is the building of testing centers that would ensure products are good and safe.
For Aldaba, industry upgrading is the best way to create jobs and to reduce poverty. She cited that only the manufacturing sector can employ a mix of workers, regardless of experience or educational attainment.
The challenge, according to Aldaba, is to create a single market and a single production pace, as well as deepen the country’s participation in regional production networks in order for the Philippines to take advantage of globalization and the AEC.
So, is the domestic auto sector ready for AEC? AVID said; “We are ready, and we should be ready.”