Industrial Complementation, ASEAN integration sets new business paradigm

CEBU, Philippines - Notwithstanding the politicians' pre-occupation with protecting their local industries, ASEAN integration is farther along than generally recognized and industrial complementation is a reality.

In a study conducted by the Barcino Advisers Limited, a consortium of independent professionals with proven record of achievements drawn from industry, financial services and academe, it revealed that industrial complementation in automotive, electronics and information technology will be a profound reality, with Filipino and Thai factories relying on parts suppliers from Malaysia (or vice versa).

Ricardo G. Barcelona, managing director of Barcino advisers, said in his recent visit to Cebu that increasingly, ASEAN supply and production chains are linked to global logistics of multinational firms under the ASEAN regime.

Industrial complementation, according to Barcelona, was brought to a transcontinental context, mentioning the Alliance Global Group, a Philippine company that owns Emperador brandy brand.

The company, he said imports Spanish brandy distillates, which was Spain's top export to the Philippines in 2013, for blending and local bottling into their best selling Emperador Light.

Recently, Cebuano businessmen were told to strengthen its regional penetration and supply chain as intra-regional trade will enter as new business paradigm in the ASEAN integration, and that member countries should not see themselves as competitors--but as one united economy conquering the world market.

Economist Cielito Habito, made this warning saying that it’s not enough for Filipino businesses to guard their market turf in the Philippine ground, as the ASEAN will open up a wider market for businesses to conquer the world as a region.

"We are part of the ASEAN, in fact the Philippines is part of the original five. ASEAN is not them its 'we'. ASEAN countries cannot afford to quarrel with each other," said Habito,

Habito also advised businesses to study expansion opportunities considering the wider consumer base rather than wider competition.

He said Philippine trade with other Asean members is largely complementary.

"With trade relationships in Asean being increasingly complementary rather than competitive, trade protection can be self-penalizing,” he added.

Habito also described Asean trade largely intra-industry in nature, noting that countries trade products belonging to the same industries such as electronics, vehicles and chemicals.

Habito said there are more intra-regional trade within Asia, especially South East Asia.

On the other hand, he also warned that if businesses are not ready with the intra-regional trade paradigm, they will not be able to cope with the expected disruptions of the supply chain, and that they will also carefully examine and be ready to face the downside of this opportunity, as the transition will make its correction. (FREEMAN)