Some Answers to the 2015 Asean Integrationby Christian Chua

The Asean integration is a series of programs which has an aim to create a single economic region. In this economic region, good, services and capital will flow freely without any barriers. The integration has already started even before 2015. Each member countries had implemented specific programs based on the agreed timeline. In the area of free flow of goods, most of the tariff rates in the Philippines are now close to zero. Although the reduction of tariff barriers has been implemented as planned, it seems that the reduction of non-tariff barriers will be beyond 2015. For example, in the single window and customs integration program, member countries will have the same standard customs procedures. This will allow a faster flow of trades. If the goods are already cleared in the originating country, the recipient country will just accept the goods with minimal inspection. However, such vision will be harder to attain. This integration of the customs procedures will require a higher and continuing level of assurance. How can the Philippines be assured that the customs from the exporting country had followed the required customs procedures in preventing the trade of contrabands? The relatively well-developed member countries, such as Singapore, Malaysia and Philippines, have an earlier deadline in the implementation of the programs. New member countries, such as Cambodia, Laos and Myanmar, were given more time to implement similar programs. The envisioned economic integration will contribute to the dislocation in the local economy. Hence, as part of the Asean Economic Community blueprint, provisions are provided to minimize the effects of this dislocation. For example, one of the major focus areas of the Asean integration is the SME and human resource development. In terms of impact, the year 2015 may just be a symbolic date for the celebration of this pursuit.

The regional corridor approach may be our strategy to compete in this new economic era. The Philippines is an archipelago country. Each of our regions has their unique economic needs and competitive advantage. Furthermore, the implementation of this strategy requires the heavy involvement of the local government and business. We can divide our country into nine economic corridors. These nine corridors are compsed of (1) Davao-ARMM-Soccsksargen, (2) Northern Mindano-Central Visayas, (3) Zamboanga Peninsula, (4) Bicol-Eastern Visayas-Caraga, (5) Cagayan Valley-Aurora, (6) MIMAROPA, (7) Western Visayas, (8) Ilocos-CAR and (9) Central Luzon-CALABARZON.

Each economic corridor will have its own production and logistics capability. Investments in integrated supply chain, infrastructure and mobility will allow these corridors to become significant contributors to the Philippine economy, with or without the Asean Integration.

Note: The corridor approach idea came from our work in SGV. Our team is working on a project that willidentify clusters of strength and weaknesses in the Philippines and ASEAN economies, and assess what are the industries and sub-industries who will thrive in this new environment.Thank you to our partner and team. Thank you also to Ms. Go for giving the idea for this topic. Due to limited space, I was not able to discuss thoroughly the current state of the Asean integration and the idea of the corridor approach. In case you want a copy of the full presentation, feel free to email me at Christian.edmund.l.chua@ph.ey.com.