De La Salle University professor and security strategist Renato De Castro presented an important foreign policy challenge before the diplomatic and foreign policy community during the last July 29th Albert Del Rosario Institute roundtable discussions in Makati.
Focused on Philippines-Association of Southeast Asian Nations (ASEAN) relations with China, de Castro set the background for discussing the opportunities and issues that confront the post-Aquino III government.
The context: ASEAN prepares for the 2015 community-building project.
Current chair Malaysian Prime Minister Najib Razak’s statement of the 26th ASEAN Summit in Kuala Lumpur and Langkawi affirmed the progress made by member states in the various sectors of implementing the road map, the Initiative for ASEAN Integration (IAI) and the ASEAN connectivity master plan.
However, current ASEAN integration is taking place against Chinese expansionism in the South China Sea (SCS).
The Diplomat’s associate editor and Asian security expert, Prashanth Parameswaran, probes into the strategic unfolding of China’s “incremental assertiveness” or a “step-by step” process of operationalizing and enforcing its contentious nine dash line policy which began with creeping incursions in the Reed bank in 2009.
Its “reef expansion” activities proceeded with the de facto take over of the Scarborough shoal in 2012; placement of an oil rig in Vietnam’s exclusive economic zone in 2014 and massive land reclamations in 2015.
Centre for Strategic and International Studies senior associate, Bonnie Glaser was more categorical in describing China’s assertiveness in shifting from “rapid island building” in Fiery Cross, Johnson, Subi, Sand cay reefs, etc., to the militarization of reclaimed islands. According to Glaser, islands are now increasingly being equipped with military facilities such as airstrips and materiel for surveillance, monitoring and patrol.
The scale of China’s expansionism is so unprecedented that the transformation of the water features prior and after reclamation is now documented in a dedicated link in the Asia Maritime Transparency Initiative (http://amti.csis.org/island-tracker/).
ASEAN-China relations scholars are in agreement that China’s revisionism of the status quo in the SCS is fast overtaking the ability of ASEAN member states to conclude a Code of Conduct.
Scholars have argued that for the Philippines, the absence of a code may bear negatively on the outcomes of arbitration under the United Nations Convention on the Law of the Sea, especially when submerged islands are reclaimed and “generate” maritime entitlements for the littoral state.
Beyond rules formation, the Code of Conduct will be ASEAN’s “unified position” in dealing with China on the SCS matter. Twice did the ASEAN-Philippines attempt at an immediate passage of a Code of Conduct. First in 1999 as a reaction to Chinese military incursions in the Mischief Reef and second, in 2012, in response to the stand off between Philippines-China naval forces at Scarborough shoal.
History tells us that these failed attempts were reflective of the precarious nature of ASEAN centrality in the face of territorial conflicts with China. On the one hand, it also reveals much of the volatility of China’s commitment to proceed normatively on this issue.
Developments since 2012 have not only indicated the slow pace of ASEAN’s negotiations with China on the code of conduct but they have also ascertained China’s preference for “ambiguity” and dichotomy in approaching politico-security and economic issues and in engaging ASEAN in high and low politics.
Statements of the Chinese Foreign Ministry tell us that China does not see the need to expedite negotiations on the code.
It denies the existence of freedom of navigation issues in the SCS and insists that a regime on dispute settlement will evolve only after many maritime cooperative projects are cultivated between China and ASEAN, as a means of implementing the non binding Declaration on the Code of Conduct (2002). This includes projects on the low politics kind such as seminars/workshops on search and rescue, hotline communication, etc.
Yet, how does one build trust when mistrust has penetrated the high politics side of maritime affairs in the SCS?
A more perplexing question is found in China’s “dual track” approach to the SCS disputes.
China insists that ASEAN cannot assert a regional identity when bilateral conflicts are at stake.
Many ASEAN-China scholars have looked at this as a clearly Machiavellian strategy of divide and conquer. It mirrors a bigger actor’s condescending view of a smaller (regional) actor. In practice, the force behind any regional grouping is a united front. Not to recognize this for ASEAN undermines its role in the construction of a southeast Asian regional infrastructure.
Against what appears as tumultuous relations with China, are foreign policy opportunities in working with ASEAN’s non-claimant yet “interested” states of Singapore and Indonesia. Both have supported an expeditious and early conclusion of the code of conduct.
In addition, they have also argued that the SCS security extends beyond the realm of territorial and maritime disputes and towards non traditional piracy and terrorism that pose a real threat to regional stability.
Managing the outcomes of arbitration, possible joint development of SCS islands, coupled with Enhanced Defense Cooperation Agreement and the Armed Forces of the Philippines’ modernization as “inter-mestic” responses to an expansionist China will occupy the agenda of the next Philippine president. Indeed,the SCS issue shows that it is high time for the next administration to pay more attention to foreign policy.
Alma Maria O. Salvador, is Assistant Professor of political science at Ateneo de Manila University (ADMU).
Daisy See is assistant professor of Chinese Studies at ADMU.
source: Businessworld
Tuesday, August 11, 2015
Wednesday, July 15, 2015
Major Philippine ports ready to meet the challenges and opportunities of Asean economic integration
AS the country’s premier gateways, major ports in the Philippines are vital conduits for the movement of trade and commerce both local and international.
Due to the Philippines’s archipelagic nature, more than 80 percent of the country’s commercial goods are transported via the seas, thus emphasizing the importance of ports in the overall trade picture.
When the Philippines became party to the Asean Free Trade Agreement (Afta) several years ago, it clearly understood the implications, impact and potentials that it will bring to the country’s economy.
Eventually, the Afta was transformed into the more precise Asean Trade in Goods Agreement (Atiga) and Asean Framework Agreement on Services (Afas), which became the heart of the Asean economic community since.
Having outlined a common objective, stakeholders, particularly the Asean member-countries that include the Philippines, needed to adopt a change in their mind-sets or a shift in paradigm in order to take on the needed reforms and meet the requirements on or before the economic-integration deadline set at the end of the year.
While there were initial skepticisms and apprehensions on the capability of the country to adopt the needed reforms and be ready to take on the Asean economic integration, Prof. Federico M. Macaranas, during his presentation to the Center for Futuristics Society at the Asian Institute of Management Conference Center way back in October 2013, believed that the country already has the impetus to make the grade.
Accordingly, some of the strengths of the Philippines going into the Asean Economic Cooperation (AEC) 2015 include governance improvements that resulted in stronger economic fundamentals and investment upgrades; a very strong network of overseas Filipinos which continuously brings information on markets; financing options; transferable technologies, and, most especially, the influx of foreign-exchange remittance.
However, those factors alone, though vital, are still not enough for the Philippines to become contented that it shall be able to meet the seemingly complex, but otherwise basic, requirements of the Asean economic integration.
There are still plenty of things that are needed to be done, including implementing economic agreements committed and signed by the government; dealing with business leaders who seek for protection and preferential treatment, instead of proactively providing solutions to long-term problems; and the Filipino public who must continue to be vigilant with its battle against corruption and inefficiency in the government.
Just the battle against corruption and efficiency alone would be enough to send apprehensions to sky-high levels, given the history of the Philippines and its nearly unending battle with the issue time and again.
The good thing is that the government realizes these perceptions and, thus, knows that the only way to be able to ensure that it is aboveboard in its dealings is to be more transparent, compared to the previous administration; and capitalize on modern technology to move toward computerization of systems and processes.
ENSURING BETTER LEVELS
The lesser government people dealing directly with the public on key transactions, the lesser the opportunities to go the way of corruption. Apart from ensuring better levels of productivity, computerized systems also take out bureaucracy, which has become the bread and butter in the past and the breeding ground of so-called midnight deals or under-the-table arrangements.
Naturally, those who got affected by the modernization and computerization initiatives were the first to complain, disguising it as a crusade for and on behalf of the human work force.
But the Philippine government already knows how to handle the situation, having learned from the countless lessons of the past. It knows and understands that drastic times need drastic measures, although the situation hardly appears to be anything close to drastic actually.
While the conservative and apprehensive businessmen and economists continue to worry about changing comparative advantages, bad environments of doing business, more complex and chaotic global conditions when the Asean economic integration finally materializes, it is obvious that there are also plenty of opportunities in store for the country and the business community. The potentials to tap into the global market without hardly breaking a sweat also lies there. The government understands that, too, that is why it has continuously strived to balance the perception of the key economic players.
In order to further address the challenges relative to the regional economic initiative, the government has started implementing reforms in investment and trade promotion. More than just knowing and understanding the weaknesses or the flaws in the system, it is important that changes and reforms must be adopted, no matter how difficult or analogous to the proverbial bitter pill it may be.
It is obvious that the Philippine government did well with its history lessons following the automation of business procedures in national government agencies, streamlining of procedures across various offices, and making them more transparent and consistent, too. These initiatives, though taking a long time coming, were vital steps to build confidence to the government by both the public and the business sector.
UNIFY VARIOUS INVESTMENTS
Sustaining further its economic thrusts, the government is now seriously working to unify various investment bodies, as well as striving to adopt Philippine Economic Zone Authority operation practices, harmonize incentives and seriously looking into the possibility of changing the 60-40 rule on foreign equity in the country. The Asean economic integration is expected to bring in a significant number of new investors and investments in the country, but the 60-40 equity rule would certainly shun off many, if not all, of them.
The government understands the economic fundamentals to make the Asean economic initiative work to its favor, so it also knows the needed steps to be done to make it happen. While it recognizes the foreboding of some economic players, it has learned to discern which apprehensions are legitimate and needed attention, and which are merely being propelled by vested interests.
Bureau of Customs
As the Bureau of Customs shall play an important role when the Asean economic integration takes effect, the government also spared no time in changing not only the image of the agency, but also its major systems and procedures in order to make it more efficient. It has been known since practically time immemorial that the bureau is the breeding ground of corruption. The government literally waged war against the department just to make sure that it cleanses its image. While there are still remnants of the bureau’s sordid past, the government remains unperturbed and is all eyes and ears.
Its initiative to make the bureau and its personnel toe the line is getting a big boost with the government’s initial efforts to institute a national single window and linking its databases with that of the Customs department in order to improve risk management. The government is now working on instituting automation in areas of Customs operation which are applicable for modernization, thus preventing personnel in dealing with the public in most cases.
EFFECTIVE GOVERNANCE of PPA
In terms of the country’s ports, the government has done a wonderful job, due primarily to the effective governance of the PPA. During the past administration, the goal of the agency was to turn at least 10 major gateways into world-class international ports within a projected time-frame. It appears that the PPA is well on its way of meeting its target and projection toward such end.
The current port administration complemented the lofty target by introducing automation and streamlining processes in the country’s major ports and outports. The initiatives did not only ensure that these facilities will be serving as gateways for people, trade and commerce, they will actually be serving more people and goods at less the time.
There were previous studies detailing some neglected physical port facilities in some key areas of the country, but the PPA has done wonders in turning things around by resorting to the public-private partnership (PPP) project. One perfect example of such partnership clearly in play is in the Manila North Harbor (MNH), the countrys’ biggest domestic port.
From being nearly a run-of-the-mill domestic port, whose importance has been clearly overlooked in the past, the MNH is now fast becoming a model of how PPP can effectively work in the ports.
Having a success story to speak and be proud of, the PPA, under the directive of the Department of Transportation and Communications (DOTC), is now seriously looking into adopting the same scheme toward the development of other outlying ports.
While the PPA may have sufficient resources to turn a good number of ports in the country into world-class gateways, subscribing to the PPP, instead of working all by itself, would build further resources to develop more ports and venture into new port-infrastructure projects in other areas of the country.
There is also a great possibility that, given the status of the Philippines as a maritime country brimming with potentials, the advent of the Asean economic integration may actually bring forth foreign investments in ports, port infrastructure and port operations. Thus, it is imperative that the Philippines needs to review its cabotage policy and lay down the right framework to pave the way for the entry of foreign investments in the country’s port system.
PPA is ready
So the question now beckons, are ports in the Philippines ready for the Asean economic integration? If the question is asked to the PPA and the DOTC, for sure, the answer is yes. If a similar query is thrown to the stakeholders of the ports, it is likely that the answer would be “yes,” with some minor apprehensions.
As for the public, whose general perception of ports is generally based on the facilities it sees in the gateways, as well as the automated systems and streamlined procedures it gets to encounter, it is likely that more than 60 percent would go for the affirmative, with the remaining figures shared among the negative, the undecided and those who could not care less.
For sure, there will be challenges and issues that will also come with the Asean economic integration but with the right systems and infrastructure in place, along with transparent governance, the Philippines will be more than ready to welcome the opportunities that the regional initiative will bring forth to the country and the Filipino people, in general.
source: Business Mirror
Wednesday, June 24, 2015
SM Prime eyes Thailand, Malaysia, other Asean markets for expansion
PROPERTY conglomerate SM Prime Holdings Inc. plans to expand into Southeast Asian markets like Thailand and Malaysia to seize the opportunities offered by the forthcoming Association of Southeast Asian Nations (Asean) economic integration.
SM Prime chief financial officer John Ong announced plans to expand outside the Philippines and China during an investors’ conference organized by the Bank of Philippine Islands (BPI).
APART
from China, because there is certain affiliation in China, but we continue to accept, we continue to receive invitations in other Asean countries like Thailand and Malaysia. So we continue to entertain those opportunities and we look at synergy,” Ong said.
from China, because there is certain affiliation in China, but we continue to accept, we continue to receive invitations in other Asean countries like Thailand and Malaysia. So we continue to entertain those opportunities and we look at synergy,” Ong said.
He said they are looking to expand within the business segments the conglomerate is engaged in, particularly malls and residences.
“We continue to entertain those opportunities. We would definitely entertain [these] and we would be glad to go to other areas in Asean region,” he added.
With the establishment of an Asean Economic Community (AEC), Asean will be characterized by free movement of goods, services and investments as well as freer flow of capital and skills.
Asean groups Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei Darussalam, Vietnam, Laos, Myanmar and Cambodia.
Ong stressed that the expansion plan is not yet factored in SM Prime’s five-year roadmap to double its income to P32 billion by 2018.
The conglomerate allotted P400 billion in capital expenditures until 2018 to grow its office, mall, leisure,HOTEL and residential portfolio by two-fold.
and residential portfolio by two-fold.
It will construct 26 new SM malls and 20 residential projects in the Philippines and six malls in China. SM Prime will also expand its offices,HOTELS and leisure businesses.
and leisure businesses.
Ong said he expects no change in terms of revenue mix from the current levels, as SM Prime works to double its income.
“We expect that we will continue with the 60 percent revenue contribution coming from our malls, 30 percent coming from our residential and the rest should be coming from our commercial and the hotel and convention centers. In the next four years leading to 2018, we are looking at the same trend in terms of revenues,” he added.
source: Manila Times
AEC and foreign direct investment
ASEAN received a total of $122 billion in foreign direct investments (FDI) in 2013. The Philippines received $4 billion, or 3 percent.
The European Chamber of Commerce of the Philippines (ECCP) seeks and promotes open international trade, and the creation of an investor-friendly environment in the Philippines as a means to achieve inclusive growth, more specifically, to move to a higher level of sustainable growth through higher local and foreign investments, create more and better jobs and make growth inclusive.
A sustained, major increase in FDI is needed and can only be achieved through economic liberalization policies, lifting of restrictions on foreign investment with the aim of increasing competition, and measures to make it easier to do business.
In this context, two issues were high on our agenda:
1. A less negative Foreign Investment Negative List (FINL); and
2. Amending the restrictive provisions of the 1978 Philippine
Constitution.
Constitution.
Unfortunately, we were recently defeated twice:
1. Malacañang issued the new FINL and, after two years of debate with the National Economic and Development Authority and the Economic Cluster and making recommendations how and where changes could be introduced, administratively and through legislation, it is disappointing to find out that the new FINL is basically as restrictive as the previous one.
2. Speaker Feliciano Belmonte Jr. has been driving Resolution of Both Houses 1 (RBH 1) for a long time, and local and foreign businesses have supported this important move to amend the restrictive provisions of the Constitution, and to allow more foreign investment to come into the country, needed to create more competition which is good for Juan de la Cruz who will get better products and services at a better price. However, in the last session of Congress before recess, leaders of the House were able to muster 267 lawmakers to attend—needing 217 affirmative votes to approve RBH 1, or the economic Charter change (economic Cha-cha)—but the vote never happened. The question remains whether there was a Palace hand or a lack of affirmative numbers. What is sure is that Belmonte has given up on the economic Cha-cha.
In other words: A bad week for business, a bad week for potential foreign investment, coming at a time where the FDI numbers for the first quarter of 2015 in terms of actual inflows and registration look pretty bad, both falling by about 50 percent.
Given these defeats, what is business now hoping for?
We sincerely trust that the President will finally sign the following
legislation:
legislation:
• Philippine Competition Act—legislation that will create a level playing field, that is a requirement for potential free-trade agreements with Europe and the Trans-Pacific Cooperation, pushed by the US, and an expected measure for Asean integration;
• Amended cabotage law—we are happy that the Senate version won in the bicam; the legislation will allow foreign ships to transport cargo (containers and bulk) directly to ports in the country, including Cebu, and accept cargo destined for foreign countries;
• Department of Information Communications Technology (DICT)—badly needed to create the required infrastructure for the more and more important BPM/KPM sector, which is also growing fast in Cebu; we are all aware how slow broadband is in this country and how expensive it is compared to competing countries around us; the DICT is also needed to finally get the Data Security Act implemented through the creation of the Data Security Commission, which will create the needed IRR; another task of the DICT will be to raise the level of protection against cybercrime.
• Tax Incentives and Management and Transparency Act—we still have a number of recommendations that will hopefully be accepted by the bicameral committee; we agree that more transparency is needed but—at the same time—do not want fiscal incentives touched which are badly needed by new investors as the cost of doing business in the Philippines is higher than in competing countries.
As ECCP, we will continue to fight for a level playing field and a competitive business environment, following the battle cry of the Philippine Economic Zone Authority: Red Carpet—No Red Tape!
source: Business Mirror
Thursday, June 4, 2015
Regional integration, capital requirements drive insurance mergers
Mergers and consolidations are becoming a key item to consider for senior insurance executives. According to data from the Insurance Commission, the number of life insurance players has decreased to 31 in 2014 from 33 in 2011. In nonlife, the decline is more apparent, with 70 firms last year compared with 83 in 2011.
One of the major reasons why insurance companies pursue such deals is the higher capital requirement imposed by the Insurance Commission. Currently, a domestic insurer is required to have a net worth of P250 million, which is due to be increased to P1.3 billion by 2022.
This higher capitalization requirement is happening against the backdrop of Association of Southeast Asian Nations (ASEAN) economic integration, were barriers to trade and investment are expected to be liberalized to facilitate entry of investment, improve the competitiveness of insurance companies, and boost economic activity within the region. This is in line with the ASEAN Economic Community’s aim to have a semi-integrated financial market by 2020.
As a result, small insurance companies may not be able to compete with the well-established local insurance firms and the foreseeable entry of more foreign insurance companies. Hence, small players are now encouraged to merge and consolidate in order to meet the minimum capitalization requirement and to sustain their respective businesses.
The Insurance Commission issued Circular Letter No. 2015-11 in March to clarify the rules and regulations covering merger deals. The salient features of the circular are provided below:
1. Domestic insurance companies that are planning to merge or consolidate are required to notify the Commission in writing at least 30 days prior to any board action to approve any Plan of Merger/Consolidation. The Plan must be submitted to the stockholders or members for their approval. Once approved, all policyholders and creditors must be notified within 20 days from the execution of the agreement.
2. The company to be dissolved or absorbed must discharge all its accrued liabilities; otherwise, such liabilities (with the consent of creditors) will be assumed by the absorbing or acquiring company. For policies that are subject to cancellation by the company to be absorbed, the same must be cancelled pursuant to the terms of such policies. Such proof of discharge must be in writing and submitted to the Insurance Commission for review.
3. The Commissioner shall approve or deny the Plan and Articles of Merger/Consolidation based on his assessment of the financial condition of the concerned insurance companies. Once approved, the insurance companies must submit the Articles, including the endorsement of the Commissioner, to the Securities and Exchange Commission (SEC).
4. Once the approval of the SEC is secured, the constituent insurance companies must surrender their certificates of authority to transact insurance business, and the surviving entity (or the newly-formed company in case of consolidations) must secure a new certificate of authority to transact insurance business.
5. All proposed mergers and consolidations must be completed within 12 months from the time of notice to the Insurance Commission. However, requests for extension may be granted if filed before the end of the 12-month period.
The circular highlights the responsibility of insurance firms to inform their policyholders and creditors of any merger or consolidation plan. Policyholders and creditors will this be well-informed of developments, thereby ensuring transparency and protection of public interest. Further, a two-tiered review and approval process by the Insurance Commission and SEC must be undertaken before the unification can take effect.
With ASEAN integration and higher capital requirements looming, it makes sense for small insurance players to combine their resources for sustainability, especially since the insurance industry is considered one of the pillars of our financial system and national development. In addition, the prospect of an expanded cross-border market likewise makes mergers and consolidations attractive for insurance companies seeking a competitive position. This approach enhances the competitiveness of the industry and helps to ensure sufficient protections for the insuring public.
In the race to the finish line, insurance companies do understand that synergy of resources is the way to go. Indeed, size does matter.
Diberjohn P. Balinas is an Assistant Manager at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.
source: Businessworld
One of the major reasons why insurance companies pursue such deals is the higher capital requirement imposed by the Insurance Commission. Currently, a domestic insurer is required to have a net worth of P250 million, which is due to be increased to P1.3 billion by 2022.
This higher capitalization requirement is happening against the backdrop of Association of Southeast Asian Nations (ASEAN) economic integration, were barriers to trade and investment are expected to be liberalized to facilitate entry of investment, improve the competitiveness of insurance companies, and boost economic activity within the region. This is in line with the ASEAN Economic Community’s aim to have a semi-integrated financial market by 2020.
As a result, small insurance companies may not be able to compete with the well-established local insurance firms and the foreseeable entry of more foreign insurance companies. Hence, small players are now encouraged to merge and consolidate in order to meet the minimum capitalization requirement and to sustain their respective businesses.
The Insurance Commission issued Circular Letter No. 2015-11 in March to clarify the rules and regulations covering merger deals. The salient features of the circular are provided below:
1. Domestic insurance companies that are planning to merge or consolidate are required to notify the Commission in writing at least 30 days prior to any board action to approve any Plan of Merger/Consolidation. The Plan must be submitted to the stockholders or members for their approval. Once approved, all policyholders and creditors must be notified within 20 days from the execution of the agreement.
2. The company to be dissolved or absorbed must discharge all its accrued liabilities; otherwise, such liabilities (with the consent of creditors) will be assumed by the absorbing or acquiring company. For policies that are subject to cancellation by the company to be absorbed, the same must be cancelled pursuant to the terms of such policies. Such proof of discharge must be in writing and submitted to the Insurance Commission for review.
3. The Commissioner shall approve or deny the Plan and Articles of Merger/Consolidation based on his assessment of the financial condition of the concerned insurance companies. Once approved, the insurance companies must submit the Articles, including the endorsement of the Commissioner, to the Securities and Exchange Commission (SEC).
4. Once the approval of the SEC is secured, the constituent insurance companies must surrender their certificates of authority to transact insurance business, and the surviving entity (or the newly-formed company in case of consolidations) must secure a new certificate of authority to transact insurance business.
5. All proposed mergers and consolidations must be completed within 12 months from the time of notice to the Insurance Commission. However, requests for extension may be granted if filed before the end of the 12-month period.
The circular highlights the responsibility of insurance firms to inform their policyholders and creditors of any merger or consolidation plan. Policyholders and creditors will this be well-informed of developments, thereby ensuring transparency and protection of public interest. Further, a two-tiered review and approval process by the Insurance Commission and SEC must be undertaken before the unification can take effect.
With ASEAN integration and higher capital requirements looming, it makes sense for small insurance players to combine their resources for sustainability, especially since the insurance industry is considered one of the pillars of our financial system and national development. In addition, the prospect of an expanded cross-border market likewise makes mergers and consolidations attractive for insurance companies seeking a competitive position. This approach enhances the competitiveness of the industry and helps to ensure sufficient protections for the insuring public.
In the race to the finish line, insurance companies do understand that synergy of resources is the way to go. Indeed, size does matter.
Diberjohn P. Balinas is an Assistant Manager at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.
source: Businessworld
Wednesday, March 18, 2015
ASEAN 2015 'losers': Vulnerable sectors
Unless the ASEAN economic integration takes the road of inclusive growth, the vulnerable sectors of society will be left behind.
"Big businesses will swallow up MSMEs [Micro, Small and Medium Enterprises], so kaya po dito sa ASEAN, all ASEAN organs... are encouraged to look at the value chainkung paano po matutulungan itong mga vulnerable sectors of society," Luis Cruz, assistant secretary of the Department of Foreign Affairs' Office of ASEAN Affairs said on Tuesday, March 17.
(Big businesses will swallow up MSMEs, so in ASEAN, all ASEAN organs are encouraged to look at the value chain and see how they can help the vulnerable sectors of society.)
Cruz was speaking at the 33rd anniversary of the Philippine Council for Health Research and Development (PCHRD), where health experts discussed the challenges and opportunities for health research and innovation in view of the upcoming ASEAN economic integration.
By the end of 2015, the ASEAN Economic Community will be established, marking the start of free trade among the organization's 10 member-states allowing free flow of goods and services – health services included. (READ: A united region: The ASEAN Community 2015)
Cruz urged member-countries to focus on the "losers" by providing them assistance in the following: provision of microfinance, research and development, packaging, global marketing, and training.
This is true even in the health sector. (READ: PH 'well situated' to take advantage of ASEAN integration)
"Iyon pong mga malalaking pharmaceutical industries, they know how to move about in ASEAN, ngunit itong magiging losers, ito po ang dapat bigyan ng assistance (The big pharmaceutical industries, they know how to move about in ASEAN, but those who will be losers should be given assistance)," he said.
But Edelina Dela Paz of the Health Action Information Framework said as long as the integration is focused on economic growth, there will really be losers along the way.
"We have to look at the comprehensive overall context of social, economic, political development, and it has to be addressed per country... Trade should not take precedence over health. Trade policy should consider what the impact on health is," she added.
The following, according to Cruz, will challenge health research and innovation in the Philippines during the ASEAN integration:
- Prevalent existence of tropical infectious diseases (malaria and dengue)
- Challenges on MDGs (child mortality, maternal health, HIV/AIDS)
- Knowledge and development gaps among ASEAN member states (human capital, innovation capacity, infrastructure, economic growth)
- Political-security conflicts
- Lack of effective regional cooperation and collaboration
- Investment on research and development
– Rappler.com
Monday, March 2, 2015
A Young ASEAN
DECEMBER this year will be a crucial month as members of the of Association of Southeast Asian Nations (ASEAN) will officially consider themselves as one economic bloc -- by then, without tariff lines amid the free flow investments and skilled labor. But December 2015 is just a beginning, as the route to a full-blown integration is an intricate slow-moving process with economists, businessmen, and political leaders paving and leading the way.
The youth in this region will also play a key role, as second secretary Basriana Basrul of the Indonesian Embassy told this year’s ASEAN Youth Summit in De La Salle University held from Jan. 23 to 25.
Ms. Basrul noted to her audience, which comprised of around 200 delegates from ASEAN colleges and universities, Rizal’s famous saying of the youth as “fair hope of my motherland.” After all, generations do come and go and it is always the youth who’s next in line at the forefront of nation-building.
ASEAN’S YOUTH
The youth in the region are in the limelight, as the ASEAN slowly moves toward integration aiming to operate as a single market and production base.
“The potential of ASEAN is quite large,” Shanaka Jayanath Peiris, International Monetary Fund resident representative to the Philippines, told delegates at the youth summit.
“It’s a very large place, the third most populous region in the world, and a number of countries have a very high youth population,” he said.
According to the World Population Prospects report by the United Nations Population Division, Southeast Asia has 597 million people as of 2012. This is third to South Asia and East Asia with their populations of 1.68 billion and 1.59 billion, respectively.
The ASEAN youth in particular, reach to about 107 million and among the countries that have a relatively young population are Indonesia, the Philippines, and Vietnam with a median age of 26.9, 22.3, and 28.5 years old, respectively.
“This is important because, for example China and Japan they will age very fast. In the next 20 to 30 years, there will be a shortage of youth -- in a certain sense,” said Mr. Peiris.
With this demographic backdrop, and “the fact the Philippines and Indonesia have a young population force… [these two countries] are going to be the labor force of the world while the rest of the world will age. ASEAN’s youth will be critical,” he said.
Population control measures, particularly the one-child policy introduced in the late 1970s, have led to other concerns in China, which has since lowered restrictions in certain provinces. But the damage may have been done, as the policy has resulted in low population growth rates (0.62%), which, in turn, sharply raised China’s median age to 34.6 years old in 2010 from 22.1 years old in 1980.
Japan, too, has experienced low population growth rates (0.059%) leading to a higher proportion of elderly citizens and a small youth population. Data from the United Nations show that Japan’s youth comprise only 10.1% with the elderly (ages 65 and up) who make up 23%. Japan’s median age is 44.9 -- the oldest in the world.
Mr. Peiris added that the young population, particularly in the Philippines, is “instrumental” in establishing new production bases and service centers which in turn, will attract new investments, both local and foreign.
“The other countries can gain from lower costs of goods and services from the abundant youth labor force in the Philippines,” Mr. Peiris said. “The relatively lower cost and mobile work force in the country could also work abroad in other ASEAN countries if insufficient high-paying jobs are created in the Philippines.”
George M. Manzano, economist at the University of Asia & the Pacific, said in an e-mail interview that with a free flow of labor, “expect Singapore to attract a lot of skilled professionals from all over ASEAN.”
On the other hand, neighboring countries that are not part of ASEAN, will also be affected since “there will be a potential diversion of employment in favor of the ASEAN nationals in the region.”
FREE FLOW OF LABOR
Among the possible developments that will directly involve the youth once the ASEAN’s integration takes into effect is the free flow of skilled labor.
Under the ASEAN Economic Blueprint, which details the facets and elements of the ASEAN Economic Community, the free flow of skilled laand employment passes for ASEAN professionals and skilled labor who are engaged in cross-border trade and investment related activities.”
Director Dominique Rubia-Tutay of the Bureau of Local Employment explained that with the free flow of skilled labor, “it won’t be uncommon to see, let’s say, a Thai working in an investment company in Indonesia, or a Vietnamese executive chef in a five-star hotel in Myanmar, or a Laotian graphic artist in an animation company in Singapore.”
“With the coming of the ASEAN integration as economies become more connected to each other, employment opportunities are amplified and spread throughout the region,” she also said.
By providing greater employment opportunities, ASEAN’s integration will create a diverse working environment. This, too, will prove essential since “it does not only contribute to increased productivity but also, and more importantly, it greatly adds to the potential for new ideas and innovation which is crucial for achieving an ASEAN powerhouse,” Ms. Rubia-Tutay said.
Mr. Manzano, said a free flow of labor “will signal which jobs or professions are more attractive.”
He added that heightened competition for jobs across ASEAN will ensue once integration takes place, and for companies part of the ASEAN, the “search for talent will not be restricted to their own countries. They will have a pick of the best from an ASEAN pool that is much enlarged.”
On the other hand, applicants in ASEAN “will not be limited to their own national firms but could apply to any firm within ASEAN,” Mr. Manzano said.
DEMANDS OF THE LABOR MARKET
Tied along a bigger and fully integrated market is the greater demand for skilled jobs. A joint study by the Asian Development Bank and the International Labor Organization said 14 million employment opportunities will be available for the high-skilled workers, 38 million for medium-skilled, and 12.4 million for the low-skilled, once the ASEAN integration comes into fruition.
For Ms. Rubia-Tutay, this structural change, seen through the heightened demand for medium-skilled workers, implies that having a diverse skill set for workers is essential, to be effective and efficient amid the ever-changing demands in the labor market.
Mr. Peiris added that, “the premium of specialized skills could increase, requiring an upward gradation of education and vocational training standards. The youth, labor market and education/training institutions will also have to respond quickly to changing skills demands and patterns in a more integrated economy.”
Mr. Manzano echoed this view and stressed the importance of the educational sector in each ASEAN country since they will need to be “well equipped to produce the graduates with the skills that are in demand.”
“The current trend to have mutual recognition agreement is important in order to standardize or harmonize the quality of instruction among ASEAN,” he said.
Both Mr. Peiris and Ms. Rubia-Tutay lauded the Philippine government’s efforts in response to integration and its resulting broader labor market, by centering mainly on resource development through increased investment in social services, specifically education and training.
“TESDA (Technical Education and Skills Development Authority) has done a good job training graduates for jobs in the business process outsourcing (BPO) and information technology (IT) space and consideration could be given to extending TESDA-type industry-training linkages to other sectors,” Mr. Peiris said.
He pointed out that the K to 12 program too “could lay the foundation with a more modern and jobs-oriented curriculum supported by a strong technical and vocal skills program” and added that “tertiary education also has an important role to play by developing more specialized skills including in engineering and technology that could be facilitated by opening up the sector to foreign universities or their branches.”
Ms. Rubia-Tutay, for her part, said: “Through the K-12 program, bias against technical and vocational courses were removed by integrating skills training and certification at the secondary education level.”
The TESDA established in 1994 aims “to encourage the full participation of and mobilize the industry, labor, local government units and technical-vocational institutions in the skills development of the country’s human resources,” as the agency described in its website.
TESDA’s technical-vocational education and training (TVET) has produced 16.1 million graduates since its inception in 1994. According to data available online, the tourism, health, social and other community development services, as well as maritime and automotive sectors were among the industries with the most number of persons who took assessment and certification.
On the other hand, the K to 12 is also one of the government’s initiatives in preparation for economic integration. The program which covers Kindergarten and 12 years of basic education (six years of primary education, four years of Junior High School, and two years of Senior High School) aims “to provide sufficient time for mastery of concepts and skills, develop lifelong learners, and prepare graduates for tertiary education, middle-level skills development, employment, and entrepreneurship.”
“The strengthened link between the government, the academe, and the industry assures industry-driven policies, standards, and guidelines in the higher education and basic education and training curricula,” Ms. Rubia-Tutay said.
The story originally appeared in the BWorld University Edition's February 19 to March 4 issue. Available in universities around the metro.
The youth in this region will also play a key role, as second secretary Basriana Basrul of the Indonesian Embassy told this year’s ASEAN Youth Summit in De La Salle University held from Jan. 23 to 25.
Ms. Basrul noted to her audience, which comprised of around 200 delegates from ASEAN colleges and universities, Rizal’s famous saying of the youth as “fair hope of my motherland.” After all, generations do come and go and it is always the youth who’s next in line at the forefront of nation-building.
Illustration by Samantha Gonzales
ASEAN’S YOUTH
The youth in the region are in the limelight, as the ASEAN slowly moves toward integration aiming to operate as a single market and production base.
“The potential of ASEAN is quite large,” Shanaka Jayanath Peiris, International Monetary Fund resident representative to the Philippines, told delegates at the youth summit.
“It’s a very large place, the third most populous region in the world, and a number of countries have a very high youth population,” he said.
According to the World Population Prospects report by the United Nations Population Division, Southeast Asia has 597 million people as of 2012. This is third to South Asia and East Asia with their populations of 1.68 billion and 1.59 billion, respectively.
The ASEAN youth in particular, reach to about 107 million and among the countries that have a relatively young population are Indonesia, the Philippines, and Vietnam with a median age of 26.9, 22.3, and 28.5 years old, respectively.
“This is important because, for example China and Japan they will age very fast. In the next 20 to 30 years, there will be a shortage of youth -- in a certain sense,” said Mr. Peiris.
With this demographic backdrop, and “the fact the Philippines and Indonesia have a young population force… [these two countries] are going to be the labor force of the world while the rest of the world will age. ASEAN’s youth will be critical,” he said.
Population control measures, particularly the one-child policy introduced in the late 1970s, have led to other concerns in China, which has since lowered restrictions in certain provinces. But the damage may have been done, as the policy has resulted in low population growth rates (0.62%), which, in turn, sharply raised China’s median age to 34.6 years old in 2010 from 22.1 years old in 1980.
Japan, too, has experienced low population growth rates (0.059%) leading to a higher proportion of elderly citizens and a small youth population. Data from the United Nations show that Japan’s youth comprise only 10.1% with the elderly (ages 65 and up) who make up 23%. Japan’s median age is 44.9 -- the oldest in the world.
Mr. Peiris added that the young population, particularly in the Philippines, is “instrumental” in establishing new production bases and service centers which in turn, will attract new investments, both local and foreign.
“The other countries can gain from lower costs of goods and services from the abundant youth labor force in the Philippines,” Mr. Peiris said. “The relatively lower cost and mobile work force in the country could also work abroad in other ASEAN countries if insufficient high-paying jobs are created in the Philippines.”
George M. Manzano, economist at the University of Asia & the Pacific, said in an e-mail interview that with a free flow of labor, “expect Singapore to attract a lot of skilled professionals from all over ASEAN.”
On the other hand, neighboring countries that are not part of ASEAN, will also be affected since “there will be a potential diversion of employment in favor of the ASEAN nationals in the region.”
FREE FLOW OF LABOR
Among the possible developments that will directly involve the youth once the ASEAN’s integration takes into effect is the free flow of skilled labor.
Under the ASEAN Economic Blueprint, which details the facets and elements of the ASEAN Economic Community, the free flow of skilled laand employment passes for ASEAN professionals and skilled labor who are engaged in cross-border trade and investment related activities.”
Director Dominique Rubia-Tutay of the Bureau of Local Employment explained that with the free flow of skilled labor, “it won’t be uncommon to see, let’s say, a Thai working in an investment company in Indonesia, or a Vietnamese executive chef in a five-star hotel in Myanmar, or a Laotian graphic artist in an animation company in Singapore.”
“With the coming of the ASEAN integration as economies become more connected to each other, employment opportunities are amplified and spread throughout the region,” she also said.
By providing greater employment opportunities, ASEAN’s integration will create a diverse working environment. This, too, will prove essential since “it does not only contribute to increased productivity but also, and more importantly, it greatly adds to the potential for new ideas and innovation which is crucial for achieving an ASEAN powerhouse,” Ms. Rubia-Tutay said.
Mr. Manzano, said a free flow of labor “will signal which jobs or professions are more attractive.”
He added that heightened competition for jobs across ASEAN will ensue once integration takes place, and for companies part of the ASEAN, the “search for talent will not be restricted to their own countries. They will have a pick of the best from an ASEAN pool that is much enlarged.”
On the other hand, applicants in ASEAN “will not be limited to their own national firms but could apply to any firm within ASEAN,” Mr. Manzano said.
DEMANDS OF THE LABOR MARKET
Tied along a bigger and fully integrated market is the greater demand for skilled jobs. A joint study by the Asian Development Bank and the International Labor Organization said 14 million employment opportunities will be available for the high-skilled workers, 38 million for medium-skilled, and 12.4 million for the low-skilled, once the ASEAN integration comes into fruition.
For Ms. Rubia-Tutay, this structural change, seen through the heightened demand for medium-skilled workers, implies that having a diverse skill set for workers is essential, to be effective and efficient amid the ever-changing demands in the labor market.
Mr. Peiris added that, “the premium of specialized skills could increase, requiring an upward gradation of education and vocational training standards. The youth, labor market and education/training institutions will also have to respond quickly to changing skills demands and patterns in a more integrated economy.”
Mr. Manzano echoed this view and stressed the importance of the educational sector in each ASEAN country since they will need to be “well equipped to produce the graduates with the skills that are in demand.”
“The current trend to have mutual recognition agreement is important in order to standardize or harmonize the quality of instruction among ASEAN,” he said.
Both Mr. Peiris and Ms. Rubia-Tutay lauded the Philippine government’s efforts in response to integration and its resulting broader labor market, by centering mainly on resource development through increased investment in social services, specifically education and training.
“TESDA (Technical Education and Skills Development Authority) has done a good job training graduates for jobs in the business process outsourcing (BPO) and information technology (IT) space and consideration could be given to extending TESDA-type industry-training linkages to other sectors,” Mr. Peiris said.
He pointed out that the K to 12 program too “could lay the foundation with a more modern and jobs-oriented curriculum supported by a strong technical and vocal skills program” and added that “tertiary education also has an important role to play by developing more specialized skills including in engineering and technology that could be facilitated by opening up the sector to foreign universities or their branches.”
Ms. Rubia-Tutay, for her part, said: “Through the K-12 program, bias against technical and vocational courses were removed by integrating skills training and certification at the secondary education level.”
The TESDA established in 1994 aims “to encourage the full participation of and mobilize the industry, labor, local government units and technical-vocational institutions in the skills development of the country’s human resources,” as the agency described in its website.
TESDA’s technical-vocational education and training (TVET) has produced 16.1 million graduates since its inception in 1994. According to data available online, the tourism, health, social and other community development services, as well as maritime and automotive sectors were among the industries with the most number of persons who took assessment and certification.
On the other hand, the K to 12 is also one of the government’s initiatives in preparation for economic integration. The program which covers Kindergarten and 12 years of basic education (six years of primary education, four years of Junior High School, and two years of Senior High School) aims “to provide sufficient time for mastery of concepts and skills, develop lifelong learners, and prepare graduates for tertiary education, middle-level skills development, employment, and entrepreneurship.”
“The strengthened link between the government, the academe, and the industry assures industry-driven policies, standards, and guidelines in the higher education and basic education and training curricula,” Ms. Rubia-Tutay said.
The story originally appeared in the BWorld University Edition's February 19 to March 4 issue. Available in universities around the metro.
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