RECENTLY, the McKinsey Global Institute (MGI) reported that the Association of Southeast Asian Nations (Asean), as a single entity, is the world’s seventh-largest economy, with a combined gross domestic product (GDP) worth $2.4 trillion, which is 25 percent larger than India’s GDP.
With a population (about 600 million) that is larger than that of the European Union and North America, Southeast Asia has the third-largest labor force in the world, after China and India. The region’s youthful population has been projected to yield immense demographic dividends— through increased productivity and spending power, for instance.
The Asean demonstrated laudable resilience after the 2008 global financial crisis struck, and maintains a gross government debt of less than 50 percent of GDP, which is far lower than that of many developed economies.
The MGI emphasized that such factors underpin the optimism and momentum surrounding the Asean Economic Community (AEC) in 2015. The resulting free flow of goods, services and labor could make the region a global economic-growth driver. As Singaporean Prime Minister Lee Hsien Long said at the recent Forbes Global CEO Conference, “As [the] Asean integrates economies, there will be more prosperity for all.”
However, many quarters have expressed reservations. Filipino business leaders note that, while selected industries—tourism and information technology-business-process outsourcing, for instance—are poised to benefit from regional integration, our agricultural and manufacturing sectors may not be so lucky, because they face stiff competition from their regional counterparts.
In a Management Association of the Philippines forum, Banco de Oro Unibank Inc. President Nestor Tan warns that Philippine banks might even find it hard to preserve their market share, because they have a much smaller business scale than their regional counterparts.
More fundamental challenges persist. For example, inadequate infrastructure remains the most serious barrier to doing business in the country, according to the latest Global Competitiveness Index of the World Economic Forum.
In the World Bank’s Logistics Performance Index, our rankings are dropping. From 44th out of 155 countries in 2010, we’re now 57th out of 160 this year. In terms of quality of trade and transport infrastructure, we dropped from No. 62 in 2012 to No. 75 this year.
No wonder the Japanese International Cooperation Agency (Jica) cautioned that Asean integration could worsen traffic congestion in Metro Manila and other key cities because of increased trade in goods and services. Jica officials said that, without the necessary infrastructure investments, by 2030 the Philippines could lose up to P6 billion a day to traffic.
Both challenges and opportunities await the Philippines because of Asean integration. And with the deadline for it fast approaching, public discussions and preparations on the matter should intensify.
On December 5 the Angara Centre for Law and Economics, in partnership with the Metrobank Foundation, will host a panel of experts who will discuss various topics on Asean integration.
National Economic and Development Authority Director General Arsenio M. Balisacan will keynote the event. Trade Assistant Secretary for Industry Development and Trade Policy Perry Rodolfo, Philippine Stock Exchange President and CEO Hans Sicat, Cathay Land President Jeffrey Ng, and The Manila Times College President Isagani R. Cruz will make up the panel of reactors.
Dr. Jorn Dosch, chairman of International Politics and Development Cooperation at the University of Rostock in Germany, will describe the state of implementation of the AEC and its implications for the Philippines.
Bangko Sentral ng Pilipinas Deputy Governor for the Supervision and Examination Sector Nestor A. Espenilla Jr. will talk about ongoing moves to prepare the Philippine banking system for economic integration.
Dr. Jayant Menon, lead economist from the Asian Development Bank’s Office for Regional Economic Integration, will discuss why it is unlikely that the AEC will meet all its deadlines by December 2015, given that, per the Asean’s recent self-assessment, only 77.5 percent of its targets have been fulfilled since 2008.
Dr. Robert G. Gregory, professor emeritus at the Australian National University’s Research School of Economics, will discuss possible policies that Asean members could take in response to China’s rapid economic growth.
And Dr. Pushpanathan Sundram, executive chairman of the China Asean Business Association, will look into the technical barriers to trade, emphasizing particularly standards and conformance.
E-mail: angara.ed@gmail.com.