ASEAN Free Trade Area (3)

18 April 2013

Mekaniko

By Jaime T. Lopez, III

sl3.mekaniko@gmail.com

ASEAN Free Trade Area (3)

Last Tuesday’s column (PJ, April 16) indicated that in less than two years (by 2015) there will be full free trade in the AFTA which covers the 10 member countries of ASEAN. By that time, virtually all goods (that has at least 40% of FOB value attributable to ASEAN) imported by any member of the “600 million pax trade block” from another member, shall be subjected to zero tariff. This virtual elimination of tariff, together with the elimination of “non-tariff barriers”, is viewed to help reduce the cost of the region’s manufactured products and induce internal trade among member countries. Such a development, should improve also the competitiveness of the region’s manufactured products in the world market. The cheap products, together with the huge internal market of the AFTA is expected to attract and draw in more Foreign Direct Investment, which should be an added factor that can enhance further the economic growth of the ASEAN members .

From where I stand, it seems that the benefits expected from the creation of the AFTA, and the progressive implementation of the reduction/elimination of its tariff as well as, “non-tariff barriers”, are being realized, at least by ASEAN in general. Data available indicate that GDP per Capita in 2011 (for all 10 members) increased over that of 2010, between 7.85% and 23.88%. Total FDI inflow to ASEAN also has progressively increased from US$ 46, 896.7 million in 2009, to US$ 92, 278.6 million in 2010, and US$ 114, 110.6 million in 2011 (Asia Development Update, ADB October 2012; asean.org, as of January 2013).

That’s swell and good for ASEAN, but it’s sad to note that the Philippines has been, during the past years, left behind in terms of getting its fair share of benefits from AFTA.

This can be deduced, for example, from the Philippines’ performance when it  got only (in 2011) $US 1, 262.00 million FDI net inflow, or only 1.1%, out of the total ASEAN FDI net inflow of US$ 114,110.60 million. This places us in the sixth spot (out of 10) after Vietnam which got US$ 7,430.00 million or 6.5%. The fact that the countries in the first five spots got US$ 104,279.8 million or 91.33% of the total ASEAN FDI net inflow clearly demonstrates the disproportion.  Similar situations exist for the Philippines in terms of the other parameters like “intra-ASEAN exports”, “intra-ASEAN imports”, “ASEAN total trade”, etc. (asean.org, as of Jan 14, 2013), which, to me, indicates that we have so far also failed to tap the competitive edge that the AFTA can give to our manufacturing industry.

Since last year, however, the country has been getting good signals as well as encouragement from the international business community, especially with investment grade credit status given by Fitch. There has also been so much being heard and read about some bright prospects particularly for the manufacturing industry (Japanese and Taiwanese factories, among others, seriously eyeing relocation here) and tourism, which for the first time succeeded last year in bringing in more than 4 million tourist.

I believe that given the convergence of the “universally recognized” success of President PNoy’s “Tuwid na Daan” inspired governance, and the bright economic prospects that AFTA brings, there is today another rare opportunity available to our country, which would enable us to rapidly improve economically, such that in 10-20 years, we can hopefully achieve the dream of a “better quality of life” for most, if not all, Filipinos. I hope that this time, we won’t squander this rare opportunity the way we allowed ourselves to be deprived of such an opportunity in the late 1980s (during President Cory’s time) by scheming demagogues, and who, unfortunately succeeded in getting themselves entrenched in positions of power.

And I’ve always believed that working for this dream should not be left alone to our leaders, or the government. Those of us, citizens, longing for that “dream”, must participate as well in the effort; and there are perhaps a thousand ways by which we can get involved ranging from simple efforts like “being an upright and considerate citizen” to more forceful efforts like “going to the streets”.

However, what is now immediately at hand, and which is of prime importance, is that of getting involved in the upcoming elections. Each one who cares for the “dream” should somehow participate in influencing the outcome of the election (in whatever manner one is capable of) so that the budding successes that the present administration of President PNoy has achieved will continue to grow during the rest of his watch, and continue further into full bloom in the next administration. The nation should, now, not allow the known charlatans, self-serving, opportunist, corrupt and immoral ones to thwart the delivery of that “dream” that is now starting to be born.

Comments/reactions will be appreciated and can be sent through this writer’s email (sl3.mekaniko@gmail.com) or through this writer’s blog (http://mekaniko-sl3.blogspot.com).