RP businesses have mixed
feelings on Asean integration

By Max V. de Leon
Reporter

PHILIPPINE business groups have mixed views on the Asean’s move to accelerate integration of the economies of the member countries, which is expected to be formalized in the 12th Asean Summit in Cebu on December 7.
           
The Philippine Exporters Confederation (Philexport) is excited with the removal of intra-Asean trade boundaries, seeing expanded opportunities for local exporters.
           
Sergio Ortiz-Luis, Philexport president, said, “We need to open up markets. So anything that will hasten the opening of markets and increase trade will definitely be beneficial to exporters.” 
           
Donald Dee, president of the Philippine Chamber of Commerce and Industry (PCCI), sees integration as supporting the growth of intra-Asean trade, adding that this would help Philippine industries, which are largely dependent on raw and intermediate inputs from her neighbors in the region. “We don’t have much raw materials here, so a seamless and open region will help us.” 
           
He said Filipinos should stop debating if integration is beneficial for the country. “We have no choice now because the decision to integrate was made long ago. The focus now is how we can grow as part of the Asean.” 
           
Local auto parts makers are not, however, optimistic, anticipating that investments of vehicle makers would be concentrated in countries in the region where demand is the biggest.
           
Orencio Hernando, director of the Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP), said one major reason the car manufacturers are spreading their manufacturing sites in the region is the tariffs and other taxes, as well as nontariff barriers, imposed by the individual Asean member-countries.
           
With tariffs going to zero with the integration, these carmakers will probably just concentrate their manufacturing facilities in the countries with the biggest demand like Thailand, and just export completely built-up (CBU) vehicles to those with smaller markets like the Philippines, he said.
           
With this, Hernando added the parts makers will lose the auto assemblers they are now supplying.
           
Rene Ofreneo, coconvenor of the Fair Trade Alliance, said leaders in the region wrongly equate integration with liberalization, when the target of integration should be on making the economies and industries in the region complementary, to promote mutual progress.
           
As it is now, Ofreneo said the countries compete with each other, making them vulnerable to exploitation by multinationals and transnationals, which use this opportunity to lead Asean economies to lower substantially their costs of production to attract investments.
           
He noted a so-called “race to the bottom” phenomenon in the region, where companies are just transferring from one country to another, or where the cost is the lowest.
           
Besides this, Ofreneo said countries like Singapore, which is ahead in forging bilateral trade agreements with big economies, are benefiting largely by reexporting the products they imported from outside the region to the other Asean member-countries.
           
This, he said, explains why Singapore has the biggest slice of the pie in the intra-Asean trade.