Economic team, businesses laud ratification of RCEP

MANILA, Philippines — The National Economic and Development Authority, Department of Trade and Industry (DTI) and business groups yesterday lauded the Senate’s concurrence of the ratification of the Regional Comprehensive Economic Partnership (RCEP) agreement as this would strengthen the country’s position as an investment destination in Southeast Asia.

More foreign investments that would generate additional jobs are in the offing for the Philippines following the Senate ratification of the Regional Comprehensive Economic Partnership (RCEP).

The country’s economic team, led by Finance chief Benjamin Diokno, lauded the approval of Senate Resolution 485 concurring in the ratification of RCEP, a multilateral trade agreement between and among ASEAN countries, including the Philippines, and China, Japan, South Korea, Australia and New Zealand.

Diokno said the ratification of RCEP is key to a more open, transparent and predictable trade and investment environment.

“Deeper economic integration among the RCEP member states will expand the country’s market access for goods and services, attract more investments, and create more and better jobs,” Diokno said.

Budget chief Amenah Pangandaman, for her part, said the RCEP agreement is an instrument that would further the country’s economic trade with participating nations.

“We have to capitalize on the benefits of this as it will help provide Filipinos with more avenues for better economic opportunities and outcomes,” she said.

“With the country’s participation to RCEP, the Philippines has now further strengthened its position as an ideal investment hub in the region as we expand market access, facilitate trade, and align our rules and procedures with participating economies,” Socioeconomic Planning Secretary Arsenio Balisacan said.

Signed in November 2020 and took effect January 2022, all RCEP participating countries have since ratified the agreement, except the Philippines.

The economic team has been pushing for the benefits of the RCEP, which takes into account emerging trade issues affecting small and medium enterprises, e-commerce, competition, intellectual property, and government procurement that were not covered in existing free trade agreements (FTAs).

As the largest regional FTA, RCEP accounts for 30 percent of the world’s population, 29 percent of gross domestic product and trade, and 33 percent of global inward investments.

The agreement provides enhanced trade facilitation provisions that make cross-border trade simpler and more efficient.

Diokno said such would result in a stable and predictable business environment to attract more investments in the Philippines and safeguard the country’s investments abroad.

The agreement will also support MSME development and drive participation in the global value chain. The Philippines is also seen benefitting from economic and technical cooperation support in order to strengthen its competitiveness.

Further, Diokno highlighted that lower import tariffs for Philippine exports such as agricultural products, automotive parts, and garments would give the country greater access to bigger markets for its products.

“Philippine manufacturers would also benefit from wider sources of raw materials due to zero or lower import duties on their inputs, as well as more flexibility in the rules of the FTA on product manufacturing,” Diokno said.

Balisacan said the Philippines could serve as a gateway to the ASEAN region given its young, growing workforce, as well as a stable legal regime, particularly on intellectual property and competition policy.

“With the strong support of Congress, the concurrence to the RCEP agreement is a testament to the government’s commitment to creating an environment conducive for trade and investments that are catalysts for job creation, skills development, and technology transfer as we seek to transform the Philippine economy in the next six years,” he said.

Trade Secretary Alfredo Pascual also lauded the Senate’s action on the RCEP as the country’s participation in the deal gives a strong signal to trading partners and shows the resolve of the present administration to provide a conducive business environment.

He said in a press conference, businesses have been anticipating the country’s participation in RCEP.

“My expectation is they are ready to avail of the advantages now being afforded to us under RCEP. But more than that, I think investors that are eyeing the Philippines as a production hub will now be really implementing their intention and plans to set up manufacturing hubs in the Philippines and making their investments in the country,” he said, noting those setting up production facilities in the Philippines would be able to export to RCEP members at preferential tariff.

Business groups such as the Management Association of the Philippines (MAP), Makati Business Club (MBC), Joint Foreign Chambers (JFC) and Confederation of Wearable Exporters of the Philippines (CONWEP) also welcomed the Senate’s move on the RCEP.

“The ratification will enable the Philippines to compete on equal footing with our ASEAN and Asian partners already in RCEP in attracting foreign investments as they capitalize on the shift by a number of multinational corporations to seek alternative locations for their manufacturing sites,” MAP president Benedicta Du-Baladad said.

She said the RCEP would also help micro, small and medium enterprises expand market access, as well as allow the sourcing of cheaper alternative sources of inputs, and reduce the cost of doing business through improved trade facilitation, especially customs and trade clearance procedures.

MBC executive director Francisco Alcuaz Jr. said the move would open foreign markets for Philippine businesses while improving the quality and affordability of local goods and services.

“We are confident this will help accelerate inclusive growth and economic recovery, and most importantly, job creation. We’ll support government policies that ensure Philippine businesses, especially manufacturing, are up to the challenge and opportunity,” he said.

For the JFC which groups the American, Australian-New Zealand, Canadian, European, Japanese, and Korean chambers of commerce and the Philippine Association of Multinational Companies Regional Headquarters Inc., the country’s participation in the RCEP “reinforces the decision of many of our members to invest in the Philippines and will attract more investment from our home countries.”

In addition, the JFC said the move builds on significant reforms that benefit the economy such as Tax Reform for Acceleration and Inclusion Law, Corporate Recovery and Tax Incentives for Enterprises, Act, Electric Vehicles Industry Development Act, Philippines Creative Industries Development Act, and the amendments to the Public Services, Retail Trade Liberalization, and Foreign Investments Acts.

For its part, CONWEP said the RCEP member countries represent 19 percent of the country’s total wearable exports to the world.

If the Philippines fails to ratify the said agreement and form part of this major regional economic bloc, it said the same can be diluted by other member RCEP countries.