DTI strengthens involvement in ASEAN economic integration

CEBU, Philippines -  As the Philippines moves into a “sweet spot” as an investment destination and trading partner, the Department of Trade and Industry (DTI) said it will  strengthen its involvement in the ASEAN economic integration.

DTI undersecretary Adrian S. Cristobal Jr., who is also the managing head for Board of Investments (BOI) said that over the last decade, ASEAN has become increasingly an integrated production network centered on China and Japan.

The most prominent feature of this production network is that most of the goods traded are intermediate goods, meaning parts and components, rather than final goods.

“The Philippines is very much a part of this production network. The electronics industry is a case in point,” Cristobal said.

This development, he said, is result of business strategy where production process, such as for making an automobile or a computer, “is split into different steps and each production step is undertaken in different locations across national boundaries.”

Trade activities such as this have been one of the driving forces behind increased trade integration in ASEAN+3.

According to Cristobal foreign direct investments (FDIs) have played an important role in the formation of this production network in ASEAN+3 countries. Multinational companies, mostly Japanese and Chinese, used FDI as mechanism to facilitate trade in parts and components in countries where they operate.

The prevalence of FDI-based production networks has led to rapid increase o FDI inflows among ASEAN+3 countries over the years, as well as the greater expansion o exports and imports of intermediate goods of members of this production network.

“As we are moving into a sweet spot as an investment destination and trading partner, all the macroeconomic indicators, political legitimacy and credibility, improvements in governance, a population dividend, industrial peace, along with regional developments have brought us to where we are now,” said Cristobal.

However, he said that this is only a window of opportunity that may last for 2 or 3 years (some say even just a year). “So we cannot be complacent, let us seize this opportunity together.”

“Now more than ever, we have to strengthen our partnership, work closer with each other, together with labor, civil society stakeholders to make the most of this rare opportunity. We are aware of the President’s Social Contract, what we need now is an economic contract among all stakeholders,” Cristobal told business leaders in a recent competitiveness forum hosted by the Independent Business Clubs in the country, specifically  the Makati Business Club and the Cebu Business Club.

“We are confident that we can achieve sustained, rapid and inclusive growth in this decade onwards,” Cristobal concluded.  (FREEMAN)