ASEAN Economic Integration: Effect on sectors
We have basically reached the target line for the economic integration: 1 January 2016. Now the question arises whether countries and sectors, governments and business, large corporations and SMEs, are ready to benefit from and to face the challenges of economic integration.
The name of the game is competitiveness. Philippine companies like all firms operating in ASEAN must find the means of enlarging their economic position, alone or in partnership with other regional or international firms. European companies in the Philippines and in Europe are in stand-by to become partners in this important process.
Let’s look at some sectors of importance for Cebu:
Aviation
The aim of the ASEAN Single Aviation Market is to foster a competitive airline industry and propel the Region’s carriers into the global market.
It is a strategy that seeks to increase market access, establish central authorities and industrial standards, for a sector that is undergoing unprecedented expansion. Open skies will yield a host of opportunities for ASEAN members by removing obstacles to growth, such as restrictive airspace and route constraints.
In the Philippines, the decision has to be made to expand Clark and modernize NAIA, expand Cebu, provide night-landing equipment to 14 airports, and improve civil aviation regulation.
ICT
Sustained investment in information and communication technology is proving to be one of the most potent drivers of development for emerging economies. The strong focus on ICT development is having a significant impact on the ASEAN region.
There is a master plan to deliver ICT as an engine of growth for all member states and to establish the Region as a global communications hub. The Philippine telecoms and IT market is estimated to contribute more than 10% to the country’s GDP, boosted by the exponential development of mobile telephony.
The Philippines is a leader in business process management and will have to improve its telecoms infrastructure / broadband if it wishes to maintain that position.Cebu will have to look more seriously at managing the deteriorating traffic situation.
A private / public taskforce may have to be formed to find solutions – short-term, mid-term and long-term. Without solutions, the economic growth of Cebu will be limited.
Services
Within ASEAN, the services sector accounts for 40 – 70% of each economy’s GDP. Education, the upgrading of local skills, infusion of foreign skills (which will lead to mutual technology / knowledge transfer), and overall productivity increases are the cornerstone of a competitive economy.
The Philippines has a great chance to take dominant positions in business process management (we are already No.1 in voice in the world) and in various creative sectors, from animation to game development to digital content and digital designs). Cebu is part of this focus and has to create the environment to make the growth possible.
Education
According to the Word Bank, development of higher education in low and middle income ASEAN countries has the potential to dramatically lift productivity and competitiveness by providing the high level skills and research necessary for innovation and growth.
The Philippines, with its pool of English speaking workers, vies with India as the world’s largest business process outsourcing industry that has developed from call centers to provide a range of back office support services, engineering design and software development.
As the Philippines moves from business process outsourcing to knowledge process outsourcing closer cooperation between academic institutions, government and the private sector are needed to develop the labor force required for that shift.
Manufacturing
The promise of a harmonized customs system between ASEAN countries offers opportunities for the integration of supply chains and unhindered movement of goods between member states.
This has positive implications for a range of industries such as garments, footwear, textiles, electronics, and the automotive and food sectors. Integration is also proving a powerful magnet for foreign investment, as mentioned above. Cebu will have to pay a role by providing new locations for manufacturing – with infrastructure access.
Food & Beverage
Almost all countries in ASEAN are experiencing high economic growth accompanied by rapid changes in the consumption pattern. A growing middle class is developing preferences for food and beverages that are more convenient and packaged well, especially juices and premium beverage alcohols.
The Philippines must take the agri-food supply-chain much more seriously and develop strategies to increase farm productivity through mechanization, consolidation of farm land and the application of new technologies. Proper supply-chain management from the farm through food production to international markets would favor Cebu as a part of the supply-chain.
Tourism
The travel sector is helped by growing connectivity in the Region which supports to stimulate tourism. As a result, the travel and tourism industry is seen as crucially important for development; tourism in vital for the socio-economic benefits as it promotes people to people connectivity, one of the key strategies towards achieving the ASEAN Community, starting 2016.
ASEAN attracted 90 million visitors in 2013, an increase of 12 percent from 2012. This is a precursor to what lies ahead for the Region, a robust tourism economy. It is human capital that is at the core of this sustainable success.
Again, Cebu has to be part of this development.
In conclusion, AEC is a big adventure.
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