Getting ready for One ASEAN

The Philippines continues to lag behind her immediate neighbors in terms of competitiveness even as the establishment of a 10-country ASEAN Community in less than four years looms. (Other ASEAN members are Indonesia, Malaysia, Singapore, Thailand, Brunei, Viet Nam, Lao PDR, Myanmar, and Cambodia.)

By 2015, this fraternity of nations would have been bound by its commitment signed in 2003 to integrate its economies into one. First in the defined steps towards a One ASEAN is the elimination or reduction of tariffs among member-countries even as each country maintains its own external tariffs against the rest of the world.

The next steps towards the aspired union will call for (1) a common external tariff is set among members applied to third-country non-members; (2) labor, capital, persons, and services freely moving within and between member countries; and (3) monetary and fiscal policies, including the use of a common currency, among members taking effect.

While there are still some reservations as to how we as an island nation will be able to use the integrated economic platform to an advantage given our poor ranking in terms of competitive readiness in ASEAN, there is no turning back now. We just have to be ready.

Weaknesses

This means sharpening our competitive edge by getting rid of problems that have been recognized to hinder economic growth. Among these impediments are corruption, favoritism in decisions of government officials, inefficient legal framework in settling disputes, diversion of public funds, wasteful government spending, unethical behavior by firms, and burdensome government regulations.

In addition, the Philippines is still seen as a haven to terrorism, a factor that cripples businesses in the country and deters investment. In the labor market, on the other hand, job creation is hindered by a lack of labor mobility and the costly exit of workers.

For business to flourish, the availability of adequate basic utilities as well as reliable infrastructure is prerequisite. This would include competitive electricity rates, and an adequate transportation network supported by quality ports and road systems.

Elusive take-off point

In the middle of all these problems, which include an apparently unhealthy public sector financial balance sheet, it is imperative that we find that elusive take-off point that will allow the country to leap to more robust economic levels.

There is a plethora of suggested remedies that have been prescribed by concerned stakeholders including international lending organizations like the World Bank and the International Monetary Fund. Every six years, the program for economic growth changes depending on the leanings of the incumbent government.

P-Noy’s PPP

Currently, P-Noy’s administration is banking on public-private partnerships that will bring in investments to areas deemed priority. In this case, the agenda is focused on tourism development.

In the bag are projects that deal with tourism-related infrastructure including build-operate highways, air terminals, and seaports. These are regarded as essential to encouraging other private sector investments in hotels, hospices, and even tourism-related hospitals and retirement havens.

But with the global economy still struggling to shake off the after-effects of the recent crippling financial crisis, there are few investors willing to commit. In fact, nothing much is happening.

While waiting for investors to come in and take a bite, the housekeeping continues. Foremost in the past year’s activities includes efforts to try to remold the massive bureaucracy to make it more transparent and less susceptible to corruption.

Dependence on OFWs continues

Meanwhile, the country’s economy continues to be kept afloat by millions of Filipinos working abroad. Their remittances have helped stave off hunger, provided for shelter and education, and in many instances, improved standards of living of even more of our countrymen.

If there is one positive fall-out in our peculiar migrant worker-dependent situation, it is the entry of billions of dollars into the mainstream economy. During the first years of this phenomenon, back in the 70s, money simply went to providing for food and education support.

These days, we are seeing more money that is fueling small- and medium-scale housing projects as well as the patronage that is keeping shopping malls bustling. While they bring contentment to our countrymen, these are largely unproductive activities.

But for a developing economy, overdependence on this kind of economic activity is least desired especially when you consider the ability of the country to keep afloat for years, an indicator that businessmen attach weight when making investment decisions.

Until the government is able to convince the private sector that there is potential long-term growth for their investments in the country, it will be difficult to attract the desired commitments that could become our take-off point.

Making OFWs earnings work

Meantime, as long as the economy continues to be dependent on OFW remittances, we might as well redirect these earnings into more productive endeavors by instituting programs that will make it easy for these earnings to become source for investments.

It would be nice, for instance, to see part of the earnings of our OFWs earmarked for micro and small businesses. The MSME sector could very well benefit from counterpart funding from new entrepreneurs that could become the seeds of a more sustainable economy.

I understand that many medical professionals currently working abroad are already investing in the construction of new hospital facilities and retirement homes, most of them catering to aging Europeans and Americans who want to live in the tropics.

Now if only other OFWs could set their minds to making their money work in other business sectors in the country. These may be small steps, but they’ll help especially when the ASEAN intra-nation economic borders are removed.

Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.