MANILA, Philippines – Twenty years after the Philippines signed
the Asean Free Trade Area (AFTA) agreement, the country may still not be ready
to join the ASEAN Economic Community (AEC) by 2015.
In an interview with Rappler,
Josef Yap, president of state-owned think tank Philippine Institute for
Development Studies (PIDS), said that without a strategy in place, the
Philippines was not ready for many things, including its membership to the
World Trade Organization (WTO) in 1995 or various free trade agreements (FTAs)
undertaken in recent years.
Yap said the absence of an
industrialization policy may prevent the Philippines from sharing the gains of
globalization, which it’s neighbors such as Singapore, Taiwan, or Japan were
already able to enjoy.
"We jumped in too soon
without any strategy. The pendulum swung too far to the right," Yap said.
"We didn't adjust effectively unlike our neighbors. So we did not
experience the same level of investment inflow as our neighbors."
Crafting an industrial masterplan
Yap said having an industrial
masterplan in place would have made the Philippines’ accession to the WTO in
1995 easier in the sense that it would have paved the way for infrastructure
projects that will link producers to markets as effectively as what happened to
other countries.
He said this is the reason why
his advice to Trade Undersecretary Adrian Cristobal was to veer away from
signing any new trade agreements, including FTAs, and focus more on the
country’s supply-side constraints.
These constraints include
problems with infrastructure, logistics, and firm’s competitiveness. Yap said
focusing on resolving these issues would render far better results than
changing the 60-40 rule in the constitution or granting more incentives and
subsidies.
Yap said this is the reason why
the PIDS is now working with the Department of Trade and Industry (DTI) in
crafting an industrial masterplan that will be used until 2030.
The plan will consolidate the
roadmaps of 32 industrial sectors. The roadmaps will include their goals and
aspirations as well as the challenges they face in a globalized world.
Yap said the masterplan will also
include measures on how sectors can overcome these challenges.
"We (will) go back to the
concept of firm level competitiveness (which means) what constrains their
competitiveness and each sector will have their common concerns and then they
will have sectoral concerns and then you have to develop this mechanism to
address these concerns," Yap explained.
Solutions sans cha-cha
Yap said there are ways to
improve firm level competitiveness without resorting to charter change,
incentives, or subsidies.
Yap said changing the
constitution as a means to encourage investments and ushering economic growth
will take time. Solutions that require mere resolutions in the local level or
agency level should be sought.
He added that incentives and
subsidies will only make firms dependent on the government. It will also make
them lazy in increasing their competitiveness.
"(These are) necessary measures
that can be implemented without any prolonged debates. If you review the 60-40
(rule), that will take some time," he said. "Incentives are actually
superfluous. It’s a collective action problem. Our major problem will still be
infrastructure in the Philippines."
Yap said solutions should include
building sufficient and well-targeted infrastructure and implementing
improvements in logistics. Examples of these are the upgrade of ports and
opening up the shipping industry.
He said given that the
Philippines is an archipelago, infrastructure to support ports should be a
priority while encouraging other firms to enter the shipping industry,
particularly when it comes to handling break bulk cargo, will make logistics
costs more competitive.
"One important aspect is
ports, making our ports efficient. There are these studies that compare the
port handling costs with the Philippines and other countries and we have one of
the highest port handling costs," he said.
Rappler.com
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