Trade Secretary Gregory L. Domingo has described apprehensions on Philippine preparations for the ASEAN Economic Community by 2015 as exaggerated even as a Cebu business leader recently expressed a lack of an information campaign by the Department of Trade and Industry (DTI).
“They are ready now, and 2015 will not be a big change for them,” newspaper reports quoted Domingo during the Financial Executives of the Philippines (FINEX) membership meeting in Makati City. However, the secretary added that “SMEs always need assistance and can always improve.”
This developed as business leaders air concern on the lack of an adequate information campaign and a Philippine road map towards ASEAN 2015.
Reacting to President Noynoy Aquino’s State of the Nation Address (SONA), Philippine Chamber of Commerce and Industry (PCCI) president Miguel B. Varela observed the lack of plans and road maps. “On trade and industry, plans and road maps were not given. I would have wanted a statement on how the Philippines would be competitive given the challenges of the Asean Economic Community in 2015.”
A Cebu business leader likewise lamented what he described as a lack of information. Robert Go, director of the Philippine Retailers Association Cebu chapter, called for an information campaign on the ASEAN market integration.
Domingo, however, assured, “There will be more of evolutionary, rather than revolutionary, changes. The anxieties [of certain groups] are slightly exaggerated. Businesses should not be anxious because we’ve basically seen the bulk of changes last Jan. 1, 2010 … That was when over 99 percent of tariff lines within the Asean were reduced to zero.”
“The biggest change has already happened in 2010. AEC 2015 will mostly affect service areas and investment rules, but even then, we don’t expect radical changes,” he said.
However, the findings of a state-run think tank showed Philippine small and medium enterprises (SMEs) will fall by the wayside once Asean economic integration comes into force by 2015.
The study authored by Philippine Institute for Development Studies (PIDS) vice president Rafaelita Aldaba said Philippine SMEs lacked access to credit, technology and skills compared with peers in other Asean member-states despite the implementation of the Asean Strategic Action Plan for SME Development 2010-2015 (ASAPSD) and the Asean Policy Blueprint for SME Development 2004-2009 (APBSD).
Many private banks are still reluctant to lend to SMEs because of lack of credit information and low appreciation of lending to small businesses. More specific issues on SME financing include lack of acceptable collateral, slow loan processing, short repayment period, high interest rates, difficulties in loan restructuring, and lack of start-up funds.
These initiatives include the lowering of trade barriers, capital markets integration, and greater information-sharing on policies within the region, among others. This should allow the region to increase its competitiveness through equitable economic development among ASEAN member economies.
The establishment of the Asean Economic Community by December 2015 will coalesce the 10-country ASEAN region into a single market.
The integration will allow companies based in Asean member-nations to enter each other’s markets, encouraged by zero tariffs and reduced bureaucratic clearances. The establishment of such a community will mean greater openness of the Philippine market to foreign brands. This will mean stiffer competition for Filipino businesses.
Go recalled the establishment of the ASEAN Free Trade Area (AFTA) that led to the closure of several firms in Cebu. Lucky Tableware, for instance, had 10,000 workers. When cheap goods from China flooded the country, the company closed down.
The Philippine Chamber of Commerce and Industry (PCCI), the country’s largest business organization, is urging the government to address the so-called investment “bottlenecks” that will allow local industries to become more competitive once the AEC has been established.
PCCI vice chairman Donald Dee said, “an improved business environment would support the companies [and allow them to] realize their full competitive potentials.”
“Our country has some catching up to do with our Asean and Asian neighbors, who have leapfrogged before us. Promising developments—such as the Asean Economic Community and the Philippines hosting of the APEC Summit, both occurring in 2015—present golden opportunities to institutionalize initial efforts toward inclusive growth,” he explained.
Sen. Alan Peter Cayetano told Cebu journalists during the recent Sari-Sari Store Festival that he will file a resolution that authorizes a Senate committee to look into the government’s preparation for ASEAN 2015.