BAGUIO CITY – A top-rated economist said here that there is no need to fear the ASEAN economic integration. Dr. Cielito Habito, a professor of economics at the Ateneo De Manila University and the chief economist under the Ramos administration, has quelled the fears of many that the completion of the ASEAN Economic Community (AEC) will flood the country’s market with cheap imported goods making locally produced goods uncompetitive.
Instead, the advent of the AEC has actually made the government fast-track the implementation of various projects that aim to improve the competitiveness of local industries.
This, Habito emphasized, helped the government and private sectors fight complacency.
Habito was in the city to speak in a forum about industry roadmapping and the AEC organized by the Department of Trade and Industry – Cordillera Administrative Region (DTI-CAR).
The former chief economist said that the Philippines is at the forefront of seizing the opportunities brought about by the economic integration. Instead of fearing the economic integration, local companies should equip themselves with the necessary tools to become competitive in a much larger market.
The Philippines, according to him, is in a relatively better economic position in the ASEAN region because of lower inflation rates, decreasing unemployment rates and faster gross domestic product (GDP) growth.
Industries within the AEC can easily access a market with over 600 million people while the expanded AEC which includes the various trade agreements with Japan, China and South Korea offers a market composing of 3.4 billion people. Since the AEC will enable tariff-free trading, Filipino companies can significantly widen their market.
Habito further said that there is no truth that the market will suddenly be “flooded” with foreign goods beginning January 1, 2016, the target date for the full implementation of the commitments contained in the AEC blueprint which includes the elimination of tariff or import taxes on all imported goods. He explained that the Philippines has already achieved a compliance rate of 87% to the 400 economic commitments contained in the AEC blueprint without significantly experiencing any negative effects on the local market.
According to Habito, who is also the chief of party of the USAID Trade-Related Assistance for Development, new trade patterns in Southeast Asia (SEA) indicate that the products produced in member countries are containing less domestic content and that more trading occurs between companies within the same industries in the ASEAN region.
This means that ASEAN countries are not simply producing competing products but rather they are producing complementary products which helps grow the value chains within industries in the ASEAN region. This is what he calls as complementary trade and that implementing trade protection policies will only hamper the economic growth of the industry players both in the country as well as in the region.
Habito also said that the overall benefits of integration outweigh the cost. He cited the upsides of the AEC include improved economies of scales, technology sharing, higher regional productivity and stronger interdependence which can harmony and peace in the region. However, he also noted the downsides of the integration including the vulnerability of the supply chain to disruption as well as the unequal growth of some industry players which he said can be resolved using fiscal measures.
The AEC aims to transform the ASEAN into a region with free movement of goods, services, investment, skilled labor, and freer flow of capital. The ASEAN member countries that have committed to the economic integration are Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
The ASEAN secretariat website states that the ASEAN Economic Community (AEC) shall be the goal of regional economic integration by 2015. AEC envisages a single market and production base, a highly competitive economic region, a region of equitable economic development, and a region fully integrated into the global economy.
