Country ready for integration

THE PHILIPPINES is ready for the Association of Southeast Asian Nations’ (ASEAN) planned integration in 2015, despite reports that ministers have called for a one-year deferment.

“I don’t know where those reports have come from, but as far as I am concerned, the deadline will be in 2015 … The target set forth by the leaders is, as always, 2015,” Finance Secretary Cesar V. Purisima said at the sidelines of yesterday’s Philippine Economic Briefing.

He claimed Philippine industries were ready and that they stood to gain from the creation of the ASEAN Economic Community (AEC), initially slated for Jan. 1, 2015 but reportedly set to be moved to Dec. 31, 2015.

“What we’ve seen so far in the industries that have been integrated ahead of the 2015 schedule is that they actually benefit. Electronics is an example. Before the integration, people were sounding the death knell for our electronics industry for many reasons — lack of a business cluster, lack of scale, etc,” Mr. Purisima said.

The integration, he added, linked the country’s electronics sector with the larger ASEAN market, bringing in more investments, technology and consumers. Today, electronics accounts for bulk of the Philippines’ exports.

Other industries could also benefit from economies of scale, the Finance chief added, specifically citing insurance.

“I’ve been pushing our insurance industry to increase their capitalization. That’s part of the recognition that they have to battle with other insurance companies from other countries,” he said.

He pointed out that if insurers merged, their capitalization will increase and so will their capacity to provide products and protect consumers from risk.

Mr. Purisima was of the same view with regard to the greater capital market.

“Since money is traded across borders, they had better be ready. Cross-border trading is increasing and our disclosure requirement standard should also follow suit,” he said.

Once implemented, the AEC will allow for the free movement of goods, services, labor and capital across Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

ASEAN Secretary-General Surin Pitsuwan last week said economic minsters had asked for a delay of the 2015 deadline to prepare their countries for integration. The organization, he added, also has to bridge development gaps among its members.

In a related development, a study by the Philippine Institute for Development Studies (PIDS) found that locally based firms believe the country is better prepared than other Southeast Asian neighbors for regional integration.

The Philippines ranked third behind Singapore and Malaysia in a regional economic integration score card.

Three separate surveys covering investment facilitation and liberalization, trade liberalization and facilitation, and transportation facilitation showed the country had moved forward in its preparations for the AEC.

A number of issues remain, however, among them the automation of customs procedures, which PIDS research fellow Erlinda M. Medalla said “must be fast-tracked.”

Also, there is still no central body that coordinates and monitors the promotion and administration of incentives, and streamlining of the business registration process is still needed.

“Some firms have noted that there is difficulty in securing permits from agencies other than investment promotion agencies,” said Rafaelita M. Aldaba, also a PIDS research fellow.

“Policy recommendations for investment facilitation also include further study into the 60-40 ownership structure for land and utilities but because it is unlikely by 2015 this could be finished, the government should look into strengthening and improving regulatory measures to encourage competition in utilities,” she added. –Businessworld