Critical growth constraints, such as “inadequate infrastructure” and a “small industrial and manufacturing base” may hinder the country from fully enjoying the benefits to be had from the proposed Regional Comprehensive Economic Partnership (RCEP).
According to a paper published on the website of the Philippine Institute for Development Studies (PIDS), the “Philippines should take key structural and institutional reforms in order to realize the potential benefits coming from participation in the RCEP [and] … anticipate necessary adjustments to make in view of the changes in rules and processes governing trade, services, investments and other important areas.”
The paper’s authors, Gilberto M. Llanto and Ma. Kristina P. Ortiz, noted the need to focus reforms on “low utilization of free trade agreements (FTAs), critical constraints to growth, trade facilitation and customs administration, services liberalization, and investment incentives system.”
More specifically, the paper cited the need to raise more awareness on how FTAs can be beneficial for local businesses; “to make substantial investments” in infrastructure, notably for power, transport and logistics, and “to improve the institutional and regulatory frameworks of the ports and maritime sectors”; as well as “to pursue reforms related to transparency, standardization and harmonization, and electronic processing of customs requirements.”
“On services liberalization, the government needs to review all constitutional and legal barriers to investments and trade, in particular addressing issues on limitation of foreign equity,” the paper further said.
By 2015, the Association of Southeast Asian Nations (Asean) and its six trading partners hope to conclude the RCEP, a free trade agreement, which, if successfully negotiated, could give rise to the world’s biggest trading bloc.
Negotiations for the RCEP involved the 10 member states of the Asean, which include the Philippines, and their main trading partners: Japan, China, Korea, Australia, New Zealand and India.
Trade Secretary Gregory L. Domingo earlier stressed that the RCEP was crucial for the Philippines because it involved two of the country’s biggest trading partners—China and Japan.
“[The RCEP is beneficial] to the extent that we can get better two-way flows in both trade in goods and trade in services, and to the extent that we can encourage a better investment regime. If more investments come from these partners, that will be good for us. The RCEP just kind of integrates the Asean and its partners into one economic regime,” Domingo earlier said.