SMEs seen most vulnerable to integration challenges

The Philippines’ small- and medium-sized enterprises remain the most vulnerable sector to the challenges arising from the Asean economic integration, as non-tariff barriers will make it more difficult for these companies to survive and expand to neighboring countries.

Thus, the Philippine Chamber of Commerce and Industry (PCCI) has laid down a strategic game plan to help capacitate and prepare its members for an era that would see Asean transform into a single market and production base, characterized by the free flow of goods, services, skilled labor, investments and capital.

This game plan, according to PCCI president Alfredo M. Yao, will involve weekly industry meetings to help prepare the SMEs for the impact of the Asean Economic Community. These meetings will not only identify the new needs and challenges faced by SMEs, but will also provide an avenue where PCCI members can come up with new strategies that will help more enterprises move up the value chain.

The key, Yao stressed, is to produce high value products to make local SMEs more competitive compared to their neighbors in the region.

“We plan to have every week an industries meeting because it will be the SMEs who will be directly hit. In terms of sectors, it will be those that are very power intensive given our high electricity costs. So we have to look for a way that we won’t have to compete in the low value products category. We need to move up the value chain and produce high value added products to become competitive,” Yao explained.

“We shouldn’t always rely on the government to help us because the private sector should also look after its own problems and capitalize on the existing funds, technology and people to come up with solutions,” he added.

Another thing to watch out for, according to Yao, are the various non-tariff barriers (NTBs) being set up by other Asean countries.

Yao explained that although most of the tariffs across the Asean region had been brought down to zero, the NTBs would make it difficult to take advantage of the benefits and opportunities presented by an integrated regional economy. These NTBs often come in the form of additional standards and requirements, import licenses, accreditation and certifications.

The PCCI has thus urged the government to put in place a “point person” in each Asean country to guard against these NTBs that would hamper the entry of Philippine companies and exports into other Asean markets.

“The DTI should assign one person (for each Asean country) to monitor the NTBs. We will do our part as we have been telling our members to monitor what’s going on in the countries where they export, say, if there are NTBs or subsidies. We ask them to let us know so we can appeal to the government,” Yao explained.

“The private sector can do its own monitoring, collect the data, and give all the evidence to the government so they can work on it. That will then be a government to government discussion,” he said.