Philippines seen gaining substantially from Asean integration

The Philippines is in a position to seize the opportunities from the forthcoming establishment of the Asean Economic Community (AEC), buoyed largely by the country’s economic performance as sustained by the economic reforms implemented by the Aquino administration.

In a statement, Trade Secretary Gregory L. Domingo said, “the future looks bright for the Philippines. Based on projections by HSBC and Goldman-Sachs, the Philippines will be ranked as the 14th largest economy in the world, the fifth largest economy in Asia and the largest economy in the Southeast Asian Region by 2050. We are even poised to surpass other Asean countries.”

The AEC aims to integrate the different economies in the region via standardized rules that will govern free flow of goods, services, and investments.

“The country is in a sweet spot. We have been experiencing robust economic growth, consistent upward rankings in competitiveness, and successive credit rating upgrades. In fact, last year, the Philippines achieved an average growth rate of 6.3 percent, the highest five-year average during the past 40 years. That’s a very decent number which is probably one of the highest growth rates in this part of the world.”

The trade chief stressed the need to step up efforts to further improve the competitiveness and capability of local industries, and enable them to significantly participate in regional trade and global value chains.

Domingo, who is also the current chair of the Asia Pacific Economic Cooperation, emphasized the need to place micro, small and medium enterprises (MSMEs) at the front and center of the regional trade agenda.

“Among our key priorities is advancing specific and concrete interventions to promote the participation of MSMEs in regional and global markets, either through global value chains (GVCs) or as direct exporters of finished goods and services. We are quite successful in doing so during the Apec Ministers Responsible for Trade (MRT) meeting. Member economies agreed to bolster the ability of MSMEs to participate in cross-border business through the Boracay Action Agenda to Globalize MSMEs,” he said.

In the Philippines, MSMEs account for about a third of the gross domestic product. The sector represents 98 percent of all registered businesses and employs more than 50 percent of the entire domestic workforce.

Domingo said good governance is key in this momentum.

He said good governance paved the way for a two-notch upgrade in the country’s investment grade ratings by agencies Fitch, Moody’s, and Standard & Poor’s, attracting investments for the country.

Domingo said there is also a need to harness the skills of the local labor pool to be productive.

The trade chief expressed optimism that by the end of next year, the Philippines will already feel the benefits of an improved infrastructure system.

“Believe it or not, even though we have this terrible traffic, we do invest in the right infrastructure. We have tripled our infrastructure budget from around P165 billion in 2010 to P535 billion this year. That explains why we now see many trains, bridges, much better roads, and skyways,” he said.

Domingo further cited significant economic reforms that were legislated, including the enacted Competition Law, and the amended Banking Act and Cabotage Law. Amy R. Remo