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:

1. Prevalent existence of tropical infectious diseases (malaria and dengue)
2. Challenges on MDGs (child mortality, maternal health, HIV/AIDS)
3. Knowledge and development gaps among ASEAN member states (human capital, innovation capacity, infrastructure, economic growth)
4. Political-security conflicts
5. Lack of effective regional cooperation and collaboration
6. Investment on research and development

– Rappler.com

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.

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.

Asian bank seeks entry into Philippine market

AN ASIAN bank could be the first foreign lender to penetrate the Philippine market since rules allowing offshore banks’ entry were liberalized last year, according to a Bangko Sentral ng Pilipinas (BSP) official.

Central bank deputy governor Nestor A. Espenilla, Jr. told reporters yesterday that the BSP is “currently processing one application” from a foreign bank to operate in the Philippines.

“We hope to approve the first one within the first quarter,” Mr. Espenilla said on the sidelines of the Financial Executives of the Philippines’ inaugural meeting and induction ceremony held in Makati City.

The BSP official refused to divulge any information about the bank’s identity, except that it’s from Asia.

Signed into law by President Benigno S.C. Aquino III in July last year, Republic Act (RA) 10641, or An Act Allowing the Full Entry of Foreign Banks in the Philippines, amended certain parts of the two decade-old RA 7721, which sanctioned the entry of a limited number of foreign banks. 

The new law’s implementing rules and regulations were approved by the policymaking Monetary Board in November last year, and were released through BSP Circular 858.

RA 10641 states that more foreign banks -- which should be publicly listed in their home country -- could operate in the Philippines by acquiring, purchasing or owning up to 100% of the voting stock of an existing bank.

New entrants could also invest in up to 100% of the voting stock of a new banking subsidiary incorporated under the laws of the Philippines.

A third mode of entry would be through establishing branches with full banking authority.

Despite opening up the industry to more foreign players, the new law still mandates the Monetary Board to take steps in ensuring that at least 60% of the resources or assets of the entire Philippine banking system is held by domestic banks majority-owned by Filipinos.

Such measures include the suspension of entry of additional foreign bank subsidiaries and branches as well as a halt in the license upgrade or conversion to subsidiary of existing foreign bank branches.

Prior to the amendments stipulated in RA 10641, Section 6 of RA 7721 had only allowed up to 10 foreign banks to enter the Philippine market within five years from 1994, when that old law was passed.

Currently, all 10 slots are filled by: CTBC Bank (Philippines) Corp.; Maybank Philippines, Inc.; Bangkok Bank Public Co. Ltd.; Bank of America, N.A.; Bank of China Ltd. Manila Branch; Citibank, N.A.; JP Morgan Chase Bank, N.A.; Korea Exchange Bank; Mega International Commercial Bank Co., Ltd.; and the Bank of Tokyo-Mitsubishi UFJ, Ltd.

Under the old law, only when one of the 10 bank pulls out could another foreign lender enter the Philippine market. -- Daryll Edisonn D. Saclag

source:  Businessworld

World Bank unit sees 15 PPP projects as key to ASEAN connectivity

FIFTEEN public-private partnership (PPP) projects in the Philippines have been identified by the World Bank’s Singapore Infrastructure Hub as key projects for the Association of the Southeast Asian Nations’ (ASEAN) plans to improve the region’s connectivity with the rest of the world, Philippine officials said.

In a statement, the PPP Center said that the international organization -- in a forum held in the country last Dec. 16 and Dec. 17 -- identified the following PPP deals as “essential infrastructure” for realizing “the Master Plan for ASEAN connectivity:”

The P5.81-billion operations, maintenance and redevelopment of the Puerto Princesa Airport; the P30.40-billion operation and maintenance (O&M) of the Iloilo Airport; the P14.62-billion Laguindingan Airport O&M; the P4.57-billion Enhanced O&M of New Bohol (Panglao) Airport; the P5.81-billion O&M of Puerto Princesa Airport; the P40.57-billion O&M of Davao International Airport; the O&M of the Ninoy Aquino International Airport; the P8.1-billion upgrading of the San Fernando Airport; the P18.99-billion Davao Sasa Port Modernization Project; the P177.22-billion North-South Commuter Railway (South Line); LRT2 O&M contract; the P15.77-billion NLEX East Expressway;the P7.64-billion Central Luzon Link Expressway-Phase II; the P2.34-billion Improvement and O&M of Kennon Road and Marcos Highway; and the P151.78-billion Plaridel Bypass Toll Road.

The PPP Center said that these connectivity projects will “directly link the Philippines with its ASEAN neighbors and to the rest of the world.”

Once built, the PPP Center said that transportation costs are expected to be reduced, “paving way for the exchange of more goods and services. At the same time the new infrastructures would facilitate faster and better travel that could potentially boost local tourism.”

During the first ASEAN PPP Networking Forum hosted by the Philippine government last month, the country’s PPP initiative was regarded as “one of the most mature PPP programs in the region that has established several policy and process improvements and developed a robust pipeline of projects.”

ASEAN countries that are just starting with PPP programs are Cambodia, Myanmar, Laos and Vietnam, PPP Center said, adding that they have also expressed their intent for future engagements with the Philippines to learn more about the country’s experience. -- Chrisee Jalyssa V. Dela Paz

source:  Businessworld

US-Asean agri-food trade: Who is faring better?

The United States is one of the largest trade partners of the Association of Southeast Asian Nations.

In agri-food products, the total two-way trade in 2013 was $29 billion: $10.2 billion of US exports and $18.8 billion of US imports, or a US trade deficit of $8.6 billion.

This article benchmarks the trade performance of six Asean countries, namely, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam—in terms of growth in exports and trade balances between 2003 and 2013.

It also identifies the major US exports and imports.

Between 2003 and 2013, US exports to Asean-6 grew 3.8 times from $2.7 billion to $10.2 billion while its imports expanded 2.6 times from $7.2 billion to $18.8 billion.

Thus, the United States posted a trade deficit of $8.6 billion.

Who then are the Asean winners and losers? What are their main US exports and imports?

Indonesia. The United States exported $2.6 billion worth of goods to Indonesia in 2013, up from $0.7 billion in 2003. By contrast, it imported $5.4 billion in 2013 from only $1.9 billion in 2003.

The US had a trade deficit of about $2.8 billion in 2013, up from $1.2 billion in 2003.

Main Exports: milk and cream, wheat, soya beans, starch residues, animal feeds preparations

Main Imports: natural rubber and tire, frozen shrimps, coffee beans, palm oil, pepper, coconut oil, prepared crabs, prepared shrimps and cocoa butter

Malaysia. The United States exported $1 billion worth of products in 2013, up from $0.4 billion in 2003.

By contrast, imports reached $2.9 billion in 2003 from almost $1 billion in 2003.

The United States had a trade deficit with Malaysia of $0.9 billion in 2013 as compared to $0.6 billion in 2003.

Main Exports: soybeans, milk and cream, food preparations, fruits and nuts, residues from starch manufacturing

Main Imports: palm oil and fractions, coconut oil and fractions, articles of rubber, cocoa butter and powder, frozen shrimps

Philippines. In 2013, US exports to the Philippines amounted to $2.6 billion, higher than the $0.6 billion in 2003. Meanwhile, US imports reached $1.5 billion in 2013 from $0.8 billion in 2003. The US posted a trade surplus $1.1 billion in 2013 as against a $0.2-billion deficit in 2003.

Main Exports: wheat, soybean meal, milk and cream, poultry meat, pork and offal, alcoholic beverages, fruits

Main Imports: coconut oil, preserved fruits and juices, frozen fish, prepared crabs and prepared tuna.

Singapore. US shipments to Singapore, a non-agricultural country, moved up to $0.8 billion in 2013 from $0.4 billion in 2003. Meanwhile, US imports were down to only $0.1 billion from $0.2 billion during the same period. The US posted a trade surplus of $0.8 billion in 2013 as against $0.2 billion in 2003.

Main Exports: meat and offal, food preparations, articles of rubber, fruits, alcoholic beverages

Main Imports: biscuits and bread, live fish, cocoa butter and powder.

Thailand. US exports to Thailand increased to $1.3 billion in 2013 from $0.5 billion in 2003. US imports likewise went up to $5.8 billion in 2013 from $2.3 billion in 2003. The US posted a huge trade deficit of $4.5 billion in 2013, up from $1.8 billion in 2003. Thailand has the most diversified supplies to the US.

Main Exports: soybeans, wheat, brewing waste, animal feed preparations, fruits, milk and cream, frozen fish.

Main Imports: rubber, tires, articles of rubber, prepared tuna, prepared shrimp, frozen shrimp, preserved fruits, jasmine rice, pet food, food preparations, condiments and sauces, non-alcoholic beverages, pasta, biscuits, fruits and nuts.

Vietnam. US exports reached $1.8 billion in 2013, up from less than $0.1 billion in 2003. Similarly, its imports rose to $3.1 billion from $1 billion during the same period. The US posted a trade deficit of $1.3 billion in 2013 compared to $1 billion in 2003.

Main Exports: soybeans, nuts, brewer waste, soybean meal, milk and cream, peanuts

Main Imports: frozen shrimp, frozen catfish, coffee beans, pepper, cashew nuts,   prepared shrimps, canned tuna, prepared crabs, rubber and tires.

Comparisons

• The Philippines ranks first as a US market closely followed by Indonesia. The country has diversified exports but at relatively smaller values than Asean peers.

• Thailand and Indonesia are the largest US suppliers, followed by Vietnam and Malaysia. The Philippines is a far fifth.

• Thailand has the widest variety of exports, true to its name as “kitchen of the world.” This is followed by Vietnam and Indonesia.

• The US has trade deficits with Thailand, Indonesia, Malaysia and Vietnam. It has trade surpluses with the Philippines and Singapore. The trade surplus with Singapore is to be expected as it is a small island with little agriculture.

Benchmarking

The Philippines faces challenges in the US market. The level of US imports is far lower than its Asean peers, except for Singapore, a non-agricultural country. While it is third in vegetable oils, it is behind in rubber products, fresh seafood (shrimp and fish), processed seafood, coffee and many others.

Competitiveness in the global market means principally adequate supply of raw materials to package or process, and secondarily, logistics. This cuts across many industries.

Much needs to be done if the country can expand its agri-food exports, promote off-farm and non-farm jobs, and create a vibrant agro-industry.

More than ever, this country needs more resolve and problem solvers.

(The author is vice chair of the MAP Agribusiness and Countryside Development Committee, and the executive director of the Center for Food and AgriBusiness of the University of Asia & the Pacific. Feedback at <map@map.org.ph> and < rdyster@gmail.com>. For previous articles, please visit <map.org.ph>)

source:  Philippine Daily Inquirer

‘We are ready’ – DTI ‘Non-tariff barriers are a challenge’ – PCCI

“We are ready for the ASEAN Economic Community. We are very competitive,” declared Trade and Industry Secretary Gregory L. Domingo as the ASEAN economic integration moves closer to reality a few days from now.

Outside Singapore, Domingo said, the Philippines is the most competitive.

“We are ready because we were the first to liberalize in the region and so we already know how to compete. Trade liberalization is good for us,” he added noting that other ASEAN countries have more restrictions than us.

Naturally, investments would flow into a country where there are lesser business restrictions.

Domingo even stressed that the country’s liberalized economy has prepared businesses to compete in the global arena long before the AEC comes into force.

But business leader Alfredo M. Yao has cautioned that while Filipino businesses can easily look for foreign partners because doing business in the country has become very cheap, non-tariff barriers (NTBs) have also become more prevalent, not just in ASEAN but non-ASEAN countries, as well.

“It is very cheap to do business here so we can look for partners, but we are talking here of zero tariff, which means we have to look at the non-tariff side,” Yao pointed out.

He cited the case of the banking sector, which has been fully liberalized, but which the other ASEAN countries still heavily protect.

“We should look at non-tariff barriers,” stressed Yao.

While it is the private sector’s lookout, Yao has urged government to ensure that domestic industries are not being disadvantaged by the NTBs being implemented by other ASEAN countries.

“The government should assign one czar/trade attaché per country to just monitor the NTBs of other trading parties,” he said.

source:  Manila Bulletin

Localize plans to benefit from ASEAN integration, business, gov’t leaders told

CEBU CITY -- With the completion of a national game plan for ASEAN integration, the Department of Trade and Industry (DTI) is encouraging regional government and business leaders to localize the plan and craft their own regional industry road maps.

Trade Undersecretary Zenaida C. Maglaya said existing industry clusters in each region are encouraged to look at the national game plan and check how they can relate to it.

“There are peculiarities in each region. You cannot just give the plan to them and ask them to implement it. They have to see whether the plan applies to them. One thing good about bringing it down is that there will be buy-in by the private sector. Eventually, they will own the plan. It will become their regional plan,” she said in a press conference on the sidelines of a forum here on the ASEAN (Association of Southeast Asian Nations) Economic Community (AEC) game plan.

The AEC game plan consists of industry road maps that the private sector, with the assistance of government agencies, crafted. As of Monday, Trade Assistant Secretary Rafaelita M. Aldaba said 30 sectors have completed national road maps and submitted these to the Board of Investments while 22 others, including those which are still undergoing rapid industry assessment, are working on theirs.

Of the 22 sectors, the road maps for jewelry, bamboo, coco coir, creative industries and gold are in the final stages of development.

These road maps form the building blocks of the Manufacturing Industry Roadmap, which serves as the blueprint for the Manufacturing Resurgence Program, as well as the Comprehensive National Industrial Strategy.

In Central Visayas, DTI Regional Director Asteria C. Caberte said that the agency has created technical working groups for the information and communications technology, human resources, agriculture, tourism, retail, furniture, and creative sectors.

Some of the road maps were crafted and funded solely by the private sector while others were drawn up with the assistance of the government and foreign funds.

Among the strong industry sectors that funded their road-mapping activities was the furniture sector, Ms. Maglaya said. Other sectors, such as the auto parts and IC design sectors, are getting assistance from the EU-Philippines Trade Related Technical Assistance Project.

In her keynote speech during the forum, Ms. Maglaya said most of the industry sectors have realized “that they really have to go big because the market is getting bigger. They cannot work as individuals, they need the industry. When orders come and one company alone cannot meet it, that company will lose the order,” she said.

The AEC aims to establish a single market and production base with free movement of goods, services and investments across the 10 ASEAN member countries by end-2015. Tariffs on 99.6% of products traded within the region have already been eliminated.

The Philippines, for its part, has 439 policy commitments such as the adoption of open skies, trade facilitation and passage of a competition law, among others.

source:  Businessworld