The ABCs of preparing for the Asean integration

Asean integration is upon us.

Whether Filipino organizations recognize it or not, the prospect of economic integration is changing business dynamics across the region, creating new opportunities and with it, new risks.

Embracing a new reality is not always an easy task, even for experienced businessmen. There are a lot of adjustments that they will need to make, as the Asean Economic Community (AEC) takes shape.

Already, the AEC—envisioned to be a regional arena where Asean’s 10 member states enjoy a single market and production base anchored on its 600-million population—is seen as a force to reckon with.

In the future, this community will be a competitive economic region with the soft and hard infrastructure to support its growth, allowing it to foster equitable development while being integrated into the global economy.

As it draws closer, Filipino organizations have to recognize that it is no longer business as usual. With competition more pronounced, companies cannot afford to be complacent and ignore the threats posed by their new competitors. Tariffs, one of the issues associated with integration, is just one of the many concerns that organizations will have to face.

What, then, are its implications for organizations?

Recognizing that many organizations have more questions than answers, the Management Association of the Philippines (MAP) recently held the AEC Exchange Forum, with the theme “Beyond Tariff: Understanding the Impact of Free Flow of Goods in an Asean Free Trade Area.”

Coinciding with the general membership meeting of MAP, the forum was attended by 135 of the country’s top decision makers. Speakers included the executive director of the Philippine Automotive Competitiveness Council Inc. and former assistant secretary for International Trade Ramon Kabigting; Ramon Gutierrez, president of the Chamber of Automotive Manufacturers of the Philippines (CAMPI); Sergio Ortiz-Luis, president of Philippine Exporters Confederation (Philexport); and Jay Yuvallos, presidential appointee, Asean Business Advisory Council.

On the table were the mandatory and priority programs, measures and activities that Asean countries bound themselves to, which resulted in the elimination and reduction of tariff on most products to 0-5 percent, and led to the signing of various agreements.

Some integration efforts foreseen to have a major impact on the way organizations will do business are the Asean Trade in Goods Agreement (Atiga), which facilitates the free flow of goods with provisions that are not limited to tariff reduction; the Asean Framework Agreement on Services (AFAS) that calls for continuous negotiations to liberalize the services sectors; and the Asean Comprehensive Investment Agreement (ACIA), which covers almost all forms of investments and aims to increase intra-Asean investment and encourage greater industrial complementation and specialization among Asean countries.

Listening to the discussions, it became crystal clear to me that there are many things that Filipino organizations have to do on both the internal and external fronts. At the very least, they need to increase efficiency, and throw away the ways of old. They have to be more forward-looking and stay ahead of the curve by being more innovative and creative in order to compete with local and foreign business.

They also have to arm themselves with knowledge.

So how do we prepare for the AEC? There are three basic steps that I see, captured in ABC.

First, companies must Audit the environment—mapping the company’s strengths and weaknesses vis-à-vis threats and opportunities locally and in neighboring countries, and using these for business planning.

Second, organizations have to strengthen their Brand—aligning it with market needs and establishing credibility given a strong understanding of the local and regional context.

Third, we must all Communicate. This calls for engaging stakeholders at the proper time and venues; reaching the right audiences; and talking about one’s services using appropriate platforms to reach a wider market or client base. Messages will have to reflect the new reality that is the AEC.

Organizations also have to look beyond themselves, and see themselves as moving parts of a whole. Therefore, stakeholder engagement and partnerships become even more important. As such, constant dialogue with local and regional trade associations, business partners, peers and government regulators will be imperative to ensure that the Philippines moves as one.

Mr. Kabigting captures this very well in what he calls the “one country, one voice approach”—an approach that will give Filipino enterprises the ability to compete vigorously in the regional space created by the AEC.

Most importantly, organizations should continue to communicate and engage other stakeholders to learn more about the AEC.

For its part, the MAP is keeping discussions alive through the next AEC Exchange Session.

The next session’s theme is “At Your Service: Enhancing Asean Services, Moving People in an Integrated Region” on 30 May 2013.

This will culminate with the AEC Exchange Series at the 11th MAP International CEO Conference on Sept. 10. Call up MAP at +632.751.1150 to book your seats.

As Asean takes integration to the next level, knowledge will be the most important tool that Filipino companies will wield.

And the AEC Exchange Sessions should help organizations sharpen these tools.

(The author is chair of the MAP Asean Integration committee and the MAP CEO conference committee. He is CEO of EON The Stakeholder Relations Firm).