With its recently secured investment grade rating from major credit rating agencies and improved ranking on global competitiveness, the Philippines is prepared for the Association of Southeast Asian Nations (Asean) economic integration in 2015, a top government official said.
In the session on “Trade: Lifting Barriers to Growth” during last week’s World Economic Forum on East Asia (WEF-EA) held in Makati City,Trade and Industry Secretary Gregory Domingo said that as early as 2010, the Philippines had opened its doors wider to international trade with the lifting of tariffs on 99 percent of commodities coming from other countries in the region.
Domingo said the liberalization helped improve the competitiveness of local industries and because of this, the Philippines is now well positioned to join an integrated Asean economy next year.
“In general, liberalization has worked very well in the Philippines. It definitely made many of our sectors very competitive not only regionally but also globally,” Domingo said.
The country last year secured an investment grade rating from all three major credit rating agencies—Fitch Ratings, Standard & Poor’s (S&P), and Moody’s Investors Service. The credit watchdogs cited the country’s robust economic growth and favorable macroeconomic fundamentals in deciding to give the Philippines the much-coveted investment grade status.
Earlier this month, S&P further upgraded the country’s credit rating to a notch above the minimum investment grade.
Just before the WEF-EA opened last week, it was reported that the Philippines’ ranking in the World Economic Forum’s Global Competitiveness Index jumped 26 notches from 2010 to 2013.
However, also last week, it was reported that that the Philippines dropped four notches to rank 42nd in the 2014 World Competitiveness Yearbook (WCY), despite overall optimism in the country’s strong economic growth and perceived improvements in the business environment and governance.
Domingo said the task now at hand is to replicate the competitiveness of major players across industries to the small and medium enterprises (SME) sector.
He said SMEs need to be educated on the benefits of Asean integration, which will open up a huge market for their goods and services, noting that together, the 10 countries comprising the region have a population of over 600 million.
One way to boost the competitiveness of SMEs is to simplify regulations so that they can operate in the formal sector and tap a wider customer base, Domingo said.
With merchandise trade almost completely liberalized with the elimination of tariffs, Asean only has to work on removing the non-tariff barriers to fully integrate its member economies.
Lifting non-tariff barriers entails establishment of infrastructure that will improve the physical connectivity of the countries in the region, formation of uniform regulatory standards, and setting up of appropriate information technology for cross-border payments and settlements, among others.
Part of the Asean agenda is to achieve free movement of goods, labor, investments, and capital within the region to boost economic activities, create more jobs, and increase incomes.