asean economic commuity

8/17/2019 ASEAN Economic Commuity

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Achieving the ASEAN Economic Community 2015: Ch!!enges for the

"hi!ippines

#enny $. %!&o' (tim )ourdes E. $e! "rdo nd #osef *. +p1

,ntroduction

ASEAN mem&er countries re moving to-rds chieving the ASEAN Economic

Community -ith the time!ine set t 2015. ecent studies hve sho-n the &enets of the

AEC. (or emp!e' the study edited &y "!ummer nd Chi 2003 presents estimtes

tht ASEAN economic -e!fre -i!! rise &y 5. percent or 6 &i!!ion re!tive to the

&se!ine. ,t is therefore importnt for po!icym7ers in the region to sustin the

momentum8or perhps even cce!erte the pce8 to-rds est&!ishing the AEC.

"o!icy mesures re &eing imp!emented &sed on the AEC %!ueprint greed upon in

2009. o-ever' progress mong the ASEAN mem&er countries in meeting their

commitments hs &een uneven. ;oreover' mny di<cu!t region! issues hve notyet

&een reso!ved. Among these re -ide deve!opment gps' entrenched domestic

interests' nd the s!o- pce of ;ynmr in imp!ementing fundment! economicnd

po!itic! reforms.2

ence' chieving the AEC in 2015 my &e on the optimistic side. *he

theme of this yer=s ASEAN Summit' >(rom ?ision to Action@' is therefore uite

pproprite.

*his pper revie-s the progress of the "hi!ippines in meeting its commitments. *he

progress is !rge!y reBected in the AEC Scorecrd' n n!ytic! too! in trc7ing the

chievements of mem&er countries -hich -s deve!oped &y ASEAN for thispurpose.

*he frme-or7 of the AEC %!ueprint nd mechnics of the ASEAN Scorecrd re



descri&ed in Appendi 1. As of this -riting' on!y the "hi!ippine scorecrd for the rst

&tch of priority ctions -s vi!&!e. *he o<ci! dt is supp!emented &y study

conducted &y the Economic eserch ,nstitute for ASEAN nd Est Asi Cor&ett nd

meD7i 2003.

,n the net section' the current "hi!ippine economic sitution is descri&ed &ycompring

it -ith other economies in terms of indictors of competitiveness. ;ny of the !tterre

components of the AEC %!ueprint. *his is fo!!o-ed &y section -here the "hi!ippine

performnce in terms of the ASEAN Scorecrd is presented nd discussed. As

mentioned er!ier the o<ci! dt -i!! &e supp!emented &y resu!ts from E,Astudies.

*he penu!timte section ttempts to ep!in the progress of the "hi!ippines inmeeting its

AEC commitments' prticu!r!y visFvis the more deve!oped ASEAN countries. *he!st

section !oo7s t structur! pro&!ems in the "hi!ippines tht my prevent it from&eneting

1

Supervising eserch Speci!ist' eserch Speci!ist' nd "resident' "hi!ippine

,nstitute for $eve!opment Studies ",$S3 respective!y. *he uthors -ou!d !i7e to

c7no-!edge the v!u&!e inputs of $r. fe!it ;. A!d& nd $r. Er!ind ;.;ed!!.

*he ece!!ent reserch ssistnce of ;s. Susn "iDrro is !so c7no-!edged. *he

usu! disc!imer pp!ies.

2

(or emp!e' see >egion! &!oc=s 2015 ded!ine Gstretch go!=H@' %usiness Ior!d'5

Apri! 2010' pge 1.

2from the AEC. *hese pro&!ems !so ep!in the re!tive!y poor performnce of the

"hi!ippines in terms of competitiveness.

Competitiveness of the "hi!ippine Economy



*he AEC &!ueprint c!!s for creting sing!e mr7et nd production &se -hich -i!!

improve the competitiveness of the region. ,n this contet' the "hi!ippines stnds to

&enet gret de! since its !eve! of competitiveness !gs those of mny economies

inc!uding its ASEAN neigh&ors. (or emp!e' the Ior!d %n7=s Ese of $oing%usiness

eport sho-ed deteriorting performnce for the "hi!ippines in its !test survey. *he

country fe!! &y three notches' from its rn7 of 141th in 200 to its 2010 rn7 of 144th. *he

sme survey !so sho-ed the country=s g!o&! rn7ing -e7ening in !! res of doing

&usiness' prticu!r!y in the res of ese of pying tes' strting &usiness'

de!ing-ith construction permits nd protecting investors *&!e 13.

(or comments' suggestions or further inuiries p!ese contct:



"hi!ippine ,nstitute for $eve!opment Studies Surin s mg "gr! "ng7un!rnng "i!ipins

*he ",$S $iscussion "per Series constitutes studies tht re pre!iminry ndsu&Ject to further revisions.

*hey re &eing circu!ted in !imited num&er of copies on!y for purposes of so!iciting comments nd suggestions for further renements.

*he studies under the Series re unedited nd unrevie-ed.

*he vie-s nd opinions epressed re those of the uthors3 nd do not necessri!yreBect those of the ,nstitute.

Not for uottion -ithout permission from the uthors3 nd the ,nstitute.

*he eserch ,nformtion StK' "hi!ippine ,nstitute for $eve!opment Studies

5th (!oor' NE$A s ;7ti %ui!ding' 106 Amorso!o Street' )egspi ?i!!ge' ;7ti

City' "hi!ippines *e! Nos: 623 L425L4 nd L5905M ( No: 623 L5LM Emi!:

pu&!ictionspids.gov.ph

Or visit our -e&site t http://---.pids.gov.ph

Septem&er 2010

$,SCSS,ON "A"E SE,ES NO. 201020

#enny $. %!&o et !.

Achieving the ASEAN Economic Community2015:Ch!!enges for the "hi!ippinesAchieving the ASEAN Economic Community 2015:Ch!!enges for the

"hi!ippines

#enny $. %!&o' (tim )ourdes E. $e! "rdo nd #osef *. +p

ASEAN mem&er countries re moving to-rds chieving the ASEAN Economic

Community -ith the time!ine set t 2015. ,t is therefore importnt for po!icym7ersin the

region to sustin the momentum8or perhps even cce!erte the pce8 to-rds

est&!ishing the AEC. "o!icy mesures re &eing imp!emented &sed on the AEC



%!ueprint greed upon in 2009. o-ever' progress mong the ASEAN mem&er

countries in meeting their commitments hs &een uneven. *his pper revie-s the

progress of the "hi!ippines in meeting its commitments on the AEC nd compring it

-ith chievements of other ASEAN countries. *he pper !so discusses some of the

pro&!ems nd constrints tht my prevent the "hi!ippines from &enetting from theAEC.

Pey-ords: ASEAN' egion! ,ntegrtion' ASEAN Economic Community

1Achieving the ASEAN Economic Community 2015: Ch!!enges for the "hi!ippines

#enny $. %!&o' (tim )ourdes E. $e! "rdo nd #osef *. +p1

,ntroduction

ASEAN mem&er countries re moving to-rds chieving the ASEAN EconomicCommunity -ith the time!ine set t 2015. ecent studies hve sho-n the &enets of the AEC. (or emp!e' the study edited &y "!ummer nd Chi 2003 presentsestimtes tht ASEAN economic -e!fre -i!! rise &y 5. percent or 6 &i!!ionre!tive to the &se!ine. ,t is therefore importnt for po!icym7ers in the region tosustin the momentum8or perhps even cce!erte the pce8 to-rdsest&!ishing the AEC.

"o!icy mesures re &eing imp!emented &sed on the AEC %!ueprint greed upon in2009. o-ever' progress mong the ASEAN mem&er countries in meeting theircommitments hs &een uneven. ;oreover' mny di<cu!t region! issues hve not

yet &een reso!ved. Among these re -ide deve!opment gps' entrenched domesticinterests' nd the s!o- pce of ;ynmr in imp!ementing fundment! economicnd po!itic! reforms.2

ence' chieving the AEC in 2015 my &e on the optimistic side. *he

theme of this yer=s ASEAN Summit' >(rom ?ision to Action@' is therefore uitepproprite.

*his pper revie-s the progress of the "hi!ippines in meeting its commitments. *heprogress is !rge!y reBected in the AEC Scorecrd' n n!ytic! too! in trc7ing thechievements of mem&er countries -hich -s deve!oped &y ASEAN for thispurpose. *he frme-or7 of the AEC %!ueprint nd mechnics of the ASEANScorecrd re descri&ed in Appendi 1. As of this -riting' on!y the "hi!ippinescorecrd for the rst &tch of priority ctions -s vi!&!e. *he o<ci! dt issupp!emented &y study conducted &y the Economic eserch ,nstitute for ASEANnd Est Asi Cor&ett nd meD7i 2003.

,n the net section' the current "hi!ippine economic sitution is descri&ed &ycompring it -ith other economies in terms of indictors of competitiveness. ;nyof the !tter re components of the AEC %!ueprint. *his is fo!!o-ed &y section



-here the "hi!ippine performnce in terms of the ASEAN Scorecrd is presented nddiscussed. As mentioned er!ier the o<ci! dt -i!! &e supp!emented &y resu!tsfrom E,A studies.

*he penu!timte section ttempts to ep!in the progress of the "hi!ippines inmeeting its

AEC commitments' prticu!r!y visFvis the more deve!oped ASEAN countries. *he!st

section !oo7s t structur! pro&!ems in the "hi!ippines tht my prevent it from&eneting

1

Supervising eserch Speci!ist' eserch Speci!ist' nd "resident' "hi!ippine,nstitute for $eve!opment Studies ",$S3 respective!y. *he uthors -ou!d !i7e to

c7no-!edge the v!u&!e inputs of $r. fe!it ;. A!d& nd $r. Er!ind ;.;ed!!. *he ece!!ent reserch ssistnce of ;s. Susn "iDrro is !soc7no-!edged. *he usu! disc!imer pp!ies.

2

(or emp!e' see >egion! &!oc=s 2015 ded!ine Gstretch go!=H@' %usiness Ior!d'5 Apri! 2010' pge 1.2 from the AEC. *hese pro&!ems !so ep!in the re!tive!y poorperformnce of the "hi!ippines in terms of competitiveness. Competitiveness of the"hi!ippine Economy *he AEC &!ueprint c!!s for creting sing!e mr7et ndproduction &se -hich -i!! improve the competitiveness of the region. ,n thiscontet' the "hi!ippines stnds to &enet gret de! since its !eve! of

competitiveness !gs those of mny economies inc!uding its ASEAN neigh&ors. (oremp!e' the Ior!d %n7=s Ese of $oing %usiness

eport sho-ed deteriorting performnce for the "hi!ippines in its !test survey. *he country fe!! &y three notches' from its rn7 of 141th in 200 to its 2010 rn7 of144th. *he sme survey !so sho-ed the country=s g!o&! rn7ing -e7ening in !!res of doing &usiness' prticu!r!y in the res of ese of pying tes' strting &usiness' de!ing -ith construction permits nd protecting investors *&!e 13.

$oing %usiness 2010 rn7

$oing %usiness 200 rn7 Chnge in rn7 Strting %usiness 162 155 Q9 $e!ing

-ith Construction"ermits

111 106 Q5

Emp!oying Ior7ers 115 114 Q1

egistering "roperty 102 101 Q1



Retting Credit 129 125 Q2

"rotecting ,nvestors 12 129 Q5

"ying *es 15 126 Q

*rding Across %orders 6L 66 Q2

Enforcing Contrcts 11L 116 Q2

C!osing %usiness 15 15 0

$oing %usiness eport n7 144 141 Q

*&!e 1: EASE O( $O,NR %S,NESS ,N *E ",),"",NES

Source: $oing %usiness eport http://$oing %usiness in "hi!ippines Q $oing%usiness Q

*he Ior!d %n7 Rroup.htm ccessed 10 Apri! 20103

(ctors tht cn ep!in this poor performnce re sho-n in (igure 1. )test surveys

sho-ed tht corruption' ine<cient government nd indeute supp!y ofinfrstructure

remin to &e the min o&stc!es for doing &usiness in the "hi!ippines.

*he "hi!ippine sitution high!ights t-o 7ey issues re!ted to the AEC nd economic

integrtion in gener!. (irst' the fctors tht hmper the progress to-rdsimp!ementing

the country=s commitments hve to &e ep!ined. Some of these fctors my

over!p

-ith second ctegory: fctors tht prevent the "hi!ippines from &eneting fu!!yfrom

imp!ementtion of these commitments' in prticu!r' nd previous po!icies underthe

&nner of !i&er!iDtion' privtiDtion' nd deregu!tion' in gener!. *hese fctors-i!! &e

discussed in turn in the !st t-o sections of the pper.

(oreign currency regu!tions

,nBtion

,ndeute!y educted -or7force

"oor -or7 ethic in ntion! !&or force

"oor pu&!ic he!th



estrictive !&or regu!tions

Rovernment inst&i!ity/coups

* rtes

Crime nd theft

* regu!tions

Accessto nncing

"o!icy inst&i!ity

,ndeute supp!y of infrstructure

,ne<cient government &ureucrcy

Corruption

(igure 1: *E ;OS* "O%)E;A*,C (AC*OS (O $O,NR

%S,NESS ,N *E ",),"",NES

Source: R!o&! Competitiveness eport' 2002010

"rogress of the "hi!ippines -ith its AEC Commitments

*he AEC Scorecrd

*o monitor the time!y imp!ementtion of the AEC %!ueprint' n AEC Scorecrd -s

deve!oped to serve s too! to 7eep trc7 of the progress of mem&er sttes in

imp!ementing the commitments. *he Scorecrd hs t-o mJor go!s: 3 to provide

u!ittive nd untittive indictions of the rtiction' doption ndtrnsposition into

domestic !-s' regu!tions nd dministrtive procedures of greed o&!igtions' nd

commitments -ithin the prescri&ed timefrmes s specied in the AEC %!ueprintMnd

&3 trc7 imp!ementtion of greements/commitments nd chievement ofmi!estones in

the AEC Strtegic Schedu!e.

*he Scorecrd monitors the time!y imp!ementtion of the "riority Actions &sed onthe

AEC %!ueprint. *he "riority Actions re derived from the four primry o&Jectives nd

seventeen core e!ements of the AEC. *he four primry o&Jectives re: 13 sing!e

mr7et nd production &seM &3 high!y competitive regionM c3 region of



euit&!e economic deve!opmentM d3 region fu!!y integrted into the g!o&!

economy.

*he ASEAN Sing!e ;r7et nd "roduction %se hs seven core e!ements 13 (ree

Bo- of goods' 23 (ree Bo- of services' 3 (ree Bo- of investment' 43 (reer Bo- of

4cpit!' 53 (ree Bo- of s7i!!ed !&our' 63 "riority ,ntegrtion Sectors' nd 93 (ood'

Agricu!ture nd (orestry.

Iith respect to creting Competitive Economic egion' si core e!ements re

inc!uded' nme!y: 13 Competition "o!icy' 23 Consumer "rotection' 3 ,nte!!ectu!"roperty

ights' 43 ,nfrstructure $eve!opment' 53 *tion' nd 63 ECommerce.

*-o core e!ements re inc!uded in the Euit&!e Economic $eve!opment o&Jective'

sfo!!o-s: 13 S;E $eve!opment nd 23 ,nititive for ASEAN ,ntegrtion ,A,3.

(in!!y' in creting egion (u!!y ,ntegrted into the R!o&! Economy' ASEAN is

-re tht it needs to t7e into ccount etern! ru!es nd regu!tions. ,n thisregrd'

t-o e!ements re inc!uded in this o&Jective: 13 $eve!oping coherent pprochto-rds

etern! economic re!tions' 23 enhnced prticiption in g!o&! supp!y net-or7s.

"riority ctions under these core e!ements re to &e undert7en -ithin four

imp!ementtion periods' &eginning from 200L200' 20102011' 2012201' nd2014

2015.

*he ASEAN Secretrit 7eeps trc7' ev!utes' nd rtes the performnce ofmem&er

countries. Ihi!e the Scorecrd cn &enet from further renement' the currentformt

gives picture of the chievement of ASEAN mem&er sttes in incorporting the

Strtegic Actions of the AEC %!ueprint.

*he "hi!ippine Scorecrd: *enttive esu!ts

"re!iminry estimtes sho-ed tht the "hi!ippines generted score of 45.91'

indicting 2 mesures imp!emented out of 92 for the rst set of priority ctions. *he



score cn sti!! improve s sever! commitments under *rnsport /253 -erecomp!ied

&ut not yet imp!emented. At !est e!even "rotoco!s from the *rnsport sector re

pending for Eecutive tiction s of this period.

igh!ights of esu!ts of AEC Scorecrd for the "hi!ippines *enttive esu!ts3

)isted &e!o- re the high!ight of AEC Scorecrd esu!ts of the "hi!ippines s of ;y

2010:

,mp!emented ;esures

A. Sing!e ;r7et nd "roduction %se

1. (ree (!o- of Roods

T CE"*A(*A fu!! imp!ementtion of the A(*A CE"* Scheme

T *riK )i&er!iDtion' ecept for the end rte for igh!y Sensitive "roduct rice3

T u!es of Origin U Approved revised CE"* OO Scheme hd &een revie-ed

nd imp!emented

"re!iminry drft provided &y the %ureu of ,nterntion! *rde e!tions

$eprtmentof *rde nd ,ndustry. pdted commitments re sti!! under em&rgo s of this-riting.

5T ASEAN *rde (ci!ittion Ior7 "rogrm U Comprehensive Ior7 "rogrmme

on *rde (ci!ittion hd &een n!iDed

T ASEAN Sing!e Iindo- %ureu of Customs3 U the Ntion! Sing!e Iindo-

-s !unched recent!y nd inc!uded stndrdiDed dt e!ements for

digit!iDed processing nd echnge. o-ever' it is sti!! to &e fu!!y

opertion!iDed

T Stndrds nd Conformnce %ureu of "roduct Stndrds3 U ASEAN

eference )&ortories hd &een est&!ished nd the ASEAN Cosmetic

$rive hd &een imp!emented. *he %ureu sti!! hs not imp!emented the

fo!!o-ing: 3 ASEAN Common *echnic! $ossier nd ASEAN rmoniDed



Common *echnic! euirementM 23 Signing of ASEAN Sector! ;A on

R;" of ,nspection of ;nufcturers of ;edicin! "roducts.

2. (ree (!o- of Services

T Schedu!e mimum of types of noneuity mr7et ccess ;A3 !imittions

for 12 su&sectors under the Other Sectors re

T Schedu!e >none@ for modes 1 nd 2 ;A nd ntion! tretment N*3' -ith

eceptions due to &onde regu!tory resons

T Comp!ete compi!tion of inventory of &rriers to services

T Comp!eted negotitions nd signed ;A on ccountncy services

T Comp!eted negotitions nd signed ;A on medic! prctitioners

T Comp!eted negotitions nd signed ;A on dent! prctitioners

. (ree (!o- of ,nvestment

T $iscuss' drft' negotite nd sign the ne- ASEAN Comprehensive

,nvestment Agreement AC,A3

T "u&!iction of ASEAN ,nvestment eport

T "u&!iction of Sttistics of ($, in ASEAN

T Commence "hse 1 of progressive reduction/e!imintion of investment

restrictions nd impediments

4. "riority ,ntegrtion ;esures

T Automotive region! strtegy study on utomotive industry is &eing

deve!opedM other mesures such s ASEAN dt&se on utomotive

products s -e!! s n ASEAN port! for ASEAN utomotive components re

!so &eing deve!oped.

T *eti!e/Appre! ,nititive study to ssess the impct of ;u!ti(i&re

Agreement epiry on ASEAN teti!e industry nd studied the impct in

ASEAN of Chin=s eport of teti!es nd ppre! products in Asi

%. Creting Competitive egion

T Competition "o!icy U Crrying out foundtion!ying study' revie- of study

ndings nd recommendtions' nd convening region! meeting on study

ndings nd recommendtionsM Est&!ishment of the ASEAN Epert Rroup



on Competition

T Consumer "rotection U Est&!ishment of the ASEAN Coordinting Committee

on Consumer "rotection

6T ,nfrstructure U Sever! "rotoco!s nd inititives under the *rnsport Sector

C. Euit&!e Economic $eve!opment

T ,nititive for ASEAN ,ntegrtion ,A,3 U endorsement of the ,A, Strtegic

(rme-or7 nd Ior7 "!n 2

"riority Actions "ending for ,mp!ementtion

A. Sing!e ;r7et nd "roduction %se

1. (ree (!o- of Roods

*riK )i&er!iDtion

T End rte for S) products rice3

T ASEAN Sing!e Iindo- to &e fu!!y opertion!iDed3

T Stndrds nd Conformnce U ,mp!ementtion of ASEAN Common *echnic!

$ossier nd ASEAN rmoniDed Common *echnic! euirementM Signing of

ASEAN Sector! ;A on R;" of ,nspection of ;nufcturers of ;edicin!

"roducts

2. (ree (!o- of Services

T Schedu!e of 10 ne- su&sectors

T Schedu!e t !est 51 of foreign euity !!o-ed in the priority services sector

T Schedu!e t !est 4 of foreign euity !!o-ed in !ogistics services nd other

sectors

T Schedu!e mimum of 2 types noneuity ;A !imittions for !! 2 su&sectors

of the four priority services sector

T Schedu!e mimum types of noneuity ;A !imittions for !! !ogistics services

su&sectors

. (ree (!o- of Cpit! $O(3

Assess nd identify top 5 ru!es for !i&er!iDtion' !isting of eisting ru!es nd

mesures on ($,' nd revie-' ev!ute nd ssess eisting ru!es nd mesures

4. "riority ,ntegrtion ;esures



T EASEAN $O)E/NE$A3 U (ci!itte ;As for u!ictions in ,* profession!s

T E!ectronics %O,3 ,nstitution!iDe osettnet compti&i!ity in ASEAN for

echnge of trde documentsM ,mp!ement 24/9 customs opertions' s my &e

pp!ic&!e or deemed necessry' through opertion!iDtion of systems of

e!ectronic processing nd those simi!r on the &sis of the ASEAN Crgo

"rocessing ;ode!

T e!thcre $O3 U Set up >one stop centre@ in ech ASEAN country responsi&!e

for fci!itting investments inc!uding he!thcre proJects

T (ood' Agricu!ture nd (orestry U $ene !eg!ity stndrds of tim&er e!ements

nd indictors for !eg! tim&er3

%. Creting Competitive egion

T Consumer "rotection U *erms of eference nd Ior7 "rogrmme for

deve!opment of rpid !ert system nd informtion echnge

9T *rnsport U 11 "rotoco!s covering issues on trde fci!ittion pending for

rtiction

T Energy U tify ;O on ASEAN "o-er Rrid

C. ,nititive for ASEAN ,ntegrtion

Conduct study to determine the impct of cce!erting AEC from 2020 to 2015

on C);?

ecent Achievements: *he Ntion! Sing!e Iindo- "roJect

An importnt strtegic ction under the AEC %!ueprint is the interntion! Sing!eIindo-

"roJect. *he proJect is prt of the inititive to improve import/eport nd customs

opertions in ASEAN. *he min ide of this proJect is to hve sing!e customs port!for

ASEAN &y interconnecting the Sing!e Iindo- of mem&er economies for esier ndmore e<cient import nd eport processing in the region. *he ASEAN Sing!eIindo-

"roJect is due to &e comp!eted &y 2012.

ecent!y' the "hi!ippines hd the soft !unching of the Ntion! E!ectronic Sing!e

Iindo-. "!nning nd imp!ementtion of the proJect is overseen &y steering



committee !ed &y the $eprtment of (innce nd composed of gencies !in7ed tothe

%ureu of Customs %OC3. *he Ntion! Sing!e Iindo- proJect is epected to

su&stnti!!y speed up customs processing for importers nd eporters nd enhnce

trnsprency nd e<ciency in trnsctions -ith %OC.

esu!ts of Se!ected E,A Studies

*o comp!ement the ASEAN Scorecrd' the Economic eserch ,nstitute for ASEANnd

Est Asi E,A3 hs em&r7ed on series of studies under the &nner >$eepening

Est Asin Economic ,ntegrtion@. *he initi! set of studies Cor&ett nd meD7i'2003

-s focused on deve!oping untittive mesures to >provide sever! snpshots of

the

progress in se!ected 7ey po!icy pi!!rs in the AEC %!ueprintV*he untittivemesures

-ere designed 13 to visu!iDe the process of po!icy reforms consistent -ith the AEC

%!ueprint' 23 to provide frme-or7 under -hich mi!estones nd end go!s forech

e!ement cn &e dened' nd 3 to ev!ute the current sttus nd the progressto-rds

the mi!estones nd end go!s.@

rt nd Ando 2003 conducted study to emine nd ev!ute the

restrictiveness/openness of the ($, po!icy regime nd environment for ASEAN

countries. *hey emined ($, po!icies -hich re found in !eg! documents re!ted tosi

spects: mr7et ccess or right of est&!ishment' ntion! tretment' screening nd

pprov! of procedure' restrictions on &ords of directors s -e!! s foreigninvestors'

nd performnce reuirement.

Since it is common in deve!oping countries tht the eistence of !- does not

necessri!y imp!y its imp!ementtion' rt nd Ando used informtion on &rriersto ($,

from the survey compi!ed &y the #pn ;chinery Center for *rde nd ,nvestment



#;C3. *he survey !oo7ed into the o&stc!es fced &y #pnese rms operting in

ASEAN countries.

*he scoring system used sho-s high score for re!tive!y open ($, regime ndthe

vrious fctors re given diKerent -eights. *he resu!ts of their ev!ution' -hich re

Lsho-n in *&!e 2' indicte tht the ($, po!icy regime in Singpore is very open nd

those in the "hi!ippines' *hi!nd' ,ndonesi' nd Cm&odi re re!tive!y open'-hi!e

those in ;ynmr' ;!ysi' %runei' nd )o "$ re re!tive!y c!osed. *he sidstudy

rn7s the "hi!ippines s the secondmost open economy in ASEAN.

*&!e 2: Assessment of ($, "o!icy egines of ASEAN Countries

;r7et Ntion! Screening W %ord of ;ovement of "erformnce *ot!

Access *retment Appris! $irectors investors euirement Score

Ieight 0.40 0.20 0.10 0.10 0.10 0.10 1.00

%runei 0.96 0.20 0.59 0.41 0.L2 0.L2 0.61

Cm&odi 0.L6 0.60 0.25 1.00 0.25 0.LL 0.90

,ndonesi 0.6 0.5 0.24 0.5 0.4L 0.5 0.9

)o "$ 0.60 0.90 0.4 0.69 0.54 0.9 0.61

;!ysi 0.5 0.19 0.96 0.62 0.L 0.1 0.5

;ynmr 0.55 0.61 0.0 0.61 0.24 0.61 0.52

"hi!ippines 0.94 0.L1 0.L 0.4L 0.6 0.L 0.9L

Singpore 0.L 0.5 0.L6 0.95 0.5 0.5 0.LL

*hi!nd 0.5L 1.00 0.1 0.L 0.9 0.0 0.95



?ietnm 0.66 0.94 0.64 0.91 0.5 0.L5 0.6

Averge 0.6 0.69 0.5L 0.92 0.60 0.L5 0.6

Stndrd devition 0.11 0.2 0.2L 0.20 0.2L 0.10 0.11

Source: )ifted from *&!e .2 of rt nd Ando 2003

A study conducted &y rt' Ando nd ,to 20093' -hich is re!ted to the

forementioned #;C survey' sho-ed tht ($, performnce in country is not on!y

determined &y !i&er!iDtion po!icies' &ut !so fci!ittion issues. *en 10 mJorctegories

of issues -ere identied' -ith four issues re!evnt to ($, !i&er!iDtion nd si issues

re!evnt to fci!ittion' thus:

($, )i&er!iDtion:

1. estrictions on foreign entry

2. "erformnce reuirements

. estrictions on overses remittnces nd contro!s on foreign currency

trnsctions

4. estrictions on the movement of peop!e nd emp!oyment reuirements

($, (ci!ittion

5. )c7 of trnsprency in po!icies nd regu!tions concerning investment

institution! pro&!ems3

6. Comp!icted nd/or de!yed procedures -ith respect to investmentre!ted

regu!tions imp!ementtion pro&!ems3

9. ,nsu<cient protection of inte!!ectu! property rights

L. )&or regu!tions nd re!ted prctices ecessive!y fvor&!e to -or7ers

. nderdeve!oped infrstructure' shortges of humn resources' nd insu<cient

investment

10. estricted competition nd price contro!s

*he survey conducted in 200L sho-ed tht ($, !i&er!iDtion po!icies in the"hi!ippines'



3 estricted competition nd price contro!s 0 0

*ot! 4L 59

Source: )ifted from *&!es 4.2 nd 4. of rt nd Ando 2003

"hi!ippines

;en-hi!e' the survey of (ind!y 2003 on trde fci!ittion sho-ed tht there re!rge

diKerences in the regu!tory environment for !ogistics of the ASEANY6 economies.%oth

the domestic mesures tht pp!y to !! entrnts nd mesures tht pp!y on!y toforeign

providers -ere ev!uted. Citing study of o!!-eg nd Iong 2003' (ind!yreports

tht ?iet Nm' )o "$' ,ndi' nd the "hi!ippines hve re!tive!y high scores8i.e.

re!tive!y restrictive regimes8on the domestic inde. *he countries -ith high scoresfor

the foreign inde re ,ndonesi' "hi!ippines' Chin' nd ;!ysi. On!y the"hi!ippines

ppers in &oth !ists.

Ep!ining the "rogress -ith AEC Commitments

*rends in the "hi!ippines

*he "hi!ippine AEC Scorecrd reve!s tht the "hi!ippines is committed to &e prt ofthe

ASEAN Economic Community nd to contri&ute to region! integrtion go!s. ,tsho-ed

positive resu!ts in trde !i&er!iDtion' -ith the CE"*A(*A in fu!! imp!ementtion nd

triK &rriers reduced or e!iminted' !!o-ing free Bo- of goods in the country. *he

"hi!ippines= commitment to free trde is more or !ess reBective of the gener!pttern of

trde !i&er!iDtion in the region. *&!e 4 sho-s triK nd non triK &rriers inASEAN

nd other Est Asin countries. Averge triK rtes hd &een either removed forsome

mem&er countries or !o-ered to .1. Averge triK -eight for nongricu!tur!products is



!i7e-ise &rought do-n to the sme !eve!. *riK rtes for gricu!tur! products rehigher'

10&ut hd &een gener!!y &rought do-n to 0.5' -ith the "hi!ippines hving sm!! .1

verge triK rte.o-ever' NontriK %rriers N*%s3 remin high in the region' -ith #pn hving the

most num&er of N*%s t 65.4' nd the "hi!ippines c!ose!y fo!!o-ing t 64.5. NontriK

mesures N*;s3 -s !so o&served to &e signicnt!y incresing in the "hi!ippinesin

the pst decde' -ith more *echnic! %rriers to *rde *%*s3 &eing imposed %su'

20103. One of the resons cited for the increse in N*;s is tht -ith the reduction

orremov! of triKs' N*;s hve &een resorted to in order to provide some protectionto

!oc! industries to he!p them survive competition ginst imports. Nonethe!ess'&sed on

its AEC commitment' "hi!ippine N*%s -i!! &e reduced &y 2012. Comp!ince to this

commitment -i!! ddress the issue of rising N*;s.

*&!e 4: *riK nd Non *riK %rriers ,ndictors

*rde -eighted *rde -eighted *rde -eighted

NontriK

&rriers

Country verge triK rte verge triK rte verge triK rte

for nongricu!tur! for gricu!tur!

products products

Austr!i 0.1 0.1 0.0 20.2

%runei

Cm&odi 0.1 0.1 0.2 4.2

Chin/"C 0.1 0.1 0.2 22.6

ong Pong 0.0 0.0 0.0 n/



,ndonesi 0.1 0.1 0.1 45.0

#pn 0.0 0.0 0.2 65.4

Pore ep. of3 0.1 0.1 0.5 n/

)o "$

;!ysi 0.1 0.1 0.2 19.1

;ynmr

Ne- Ze!nd 0.0 0.0 0.0 2.9

"hi!ippines 0.0 0.0 0.1 64.5

Singpore 0.0 0.0 0.0 2.L

*i-n 0.1 0.0 0.2 2.0

*hi!nd 0.1 0.1 0. 26.

?ietnm 0.1 0.1 0.4 4.

Source: R!o&! Competitiveness eport' 2010

Iith triKs removed nd the remining ones grdu!!y reduced nd removed' nd-ith

eKorts to-rds e!iminting nontriK &rriers' ASEAN nd Est Asi -i!! &e creting

huge open mr7et s the economies move c!oser to its trget dte of creting n

ASEAN Economic Community in 2015. *he net step -ou!d &e ho- to crete nopen

&usiness environment tht -ou!d fci!itte free Bo- of trde nd cce!ertetrnsctions

&et-een nd mong economies. As discussed in the er!ier section' the "hi!ippineshs

11 !ot of ctching up to do in improving its competitiveness nd in m7ing thecountry n

ttrctive trde nd investment destintion.

(or the "hi!ippines' n importnt re tht it hs to ddress is Customs "rocedure.

%sed on !test survey conducted &y the Ior!d Economic (orum' the "hi!ippines is

perceived to &e the most ine<cient' corrupt nd cost!y &y midd!e income country

stndrds3 customs service in Est Asi *&!e 53. (u!! opertion of %OC=s Ntion!

Sing!e Iindo- cou!d potenti!!y &e the so!ution to this pro&!em. educing humn



interfce in Customs trnsctions cou!d reduce the gency=s vu!ner&i!ity to corrupt

prctices nd !so su&stnti!!y reduce trnsction costs.

*he "hi!ippine AEC Scorecrd !i7e-ise reBected the country=s -e7ness in the reof

(ree (!o- of ,nvestment nd (reer (!o- of Cpit!. *his is consistent -ith the studyof

rt nd Ando discussed er!ier. ,ndeute government po!icies to fci!itte theset-o

7ey res resu!ted to sm!!er investment nd cpit! Bo-s in the country re!tive toother

midd!e income economies in ASEAN. A recent survey sho-ed tht the "hi!ippines is

perceived to &e the !est open in foreign prticiption in the region *&!e 63. *he

government is &ounded &y Constitution! restrictions to !egis!te po!icies tht -i!!

fci!itte foreign investment in certin res. *he (oreign ,nvestment Negtive )ist

(,N)3 A L19' s mended3 en!ists the res restricted to (i!ipinos nd resopened

to foreigners' nd the corresponding investment euity restrictions. *he (,N)inc!udes'

mong others restrictions on the use' mngement nd o-nership of certinuti!ities nd

infrstructure e.g. the c&otge !- in shipping3' nd imposes foreign euityrestriction

of up to 40 in %O* proJects nd Rovernment "rocurement. ,n reti! trde' minimum

of S9.5 mi!!ion euity is reuired -hich is much higher thn the reuirement of

*hi!nd t S250'0003. ;en-hi!e' Singpore nd ong Pong hve no such

reuirement.

,n terms of Creting Competitive egion' the "hi!ippines need to strengthen eKorts

in

this re. Amidst fer of mr7et domintion of !rge foreign compnies -ith more

!i&er!iDed investment regime' deve!oping n eKective Competition "o!icy !igned-ith

region! guide!ines hs even &ecome more epedient. *his is n re tht needsurgent



ttention nd -hich for !ong time no-' the government hs fi!ed to come up -ith

decisive ctions due to strong privte sector !o&&y. A!so in re!tion to creting

Competitive egion' the government needs to enct &etter po!icies in protecting

,nte!!ectu! "roperty ights nd improve t regu!tion po!icies in the country.

*he "hi!ippines is !so sore!y !gging in infrstructure nd !ogistics nd need toctch up

-ith the other Est Asin economies *&!e93. *his is n importnt re since

infrstructure nd !ogistics Kects the country=s ttrctiveness s n investment

destintion.

*he "hi!ippine AEC Scorecrd did not inc!ude ctions to strengthen S;Es to m7e itt

pr -ith &est prctice in S;Es in Est Asi. As the &iggest emp!oyer in the countrynd

source of emp!oyment of the poor' S;E is critic! sector for gro-th nddeve!opment

nd therefore needs fu!! support in terms ccess to nncing nd product nd s7i!!s

deve!opment to en&!e them to compete -ith domestic nd interntion! p!yers.S;E

deve!opment shou!d &e considered top priority nd its progress shou!d &e c!ose!y

trc7ed t &oth the domestic nd region! !eve!s. *he $eprtment of *rde nd,ndustry'

through the %ureu of ;icro' Sm!! nd ;edium Enterprise $eve!opment %;S;E$3'is

12in chrge of this sector. %;S;E$ hs !unched sever! inititives to spur ;S;Egro-th

in the country.

(in!!y' the "hi!ippine AEC Scorecrd did not ep!icit!y inc!ude strtegy on etern!

economic re!tions under the "riority Action on (u!! ,ntegrtion in the R!o&!Economy.

*he "hi!ippines is n ctive prticipnt in (*As &oth t the &i!ter! nd p!uri!ter!!eve!s

s prt of its commitment -ith ASEAN3. o-ever' the country sti!! needs toimprove its

technic! nd dministrtive cpcity in imp!ementing the vrious (*As.



"o!itic! Economy Considertions

*he s!o- pce in ASEAN economic integrtion hve &een ttri&uted to num&er of

fctors tht re!te most!y to imperfect mr7et conditions' non&inding region! trde

rrngement nd the futi!ity of stte!ed gro-th. Eisting !iterture ho-ever fi!edto

understnd tht economic po!icies my &e pursued t vrince -ith the o<ci!

commitment to region! economic integrtion *nti7u!nnt' undted3.

nder the guise of Gntion! interest=' domestic po!itics nd dominnt interestgroups

see7 to mintin trde &rriers nd economic restrictions. *nti7u!nnt further

mintins tht these protection mesures &y individu! countries serve to o&struct

ASEAN economic integrtion. *he recent c!!s of ,ndonesi for renegotition t theonset

of the ASEANChin pct nd the "hi!ippines= ppe! for deferment of triK cuts on

sugr to give the domestic sugr industry more time to dJust to !i&er!iDed trdeunder

A(*A' re mnifesttions of -ht venhi!! 200L3 c!!ed Gnegotited protectionism=.,n

the "hi!ippines' this trde distorting prctice t7es mny forms nd persists inhigh!y

sensitive sectors.

A cse in point is the "hi!ippine vition industry. Ihi!e the doption of open s7ypo!icy

my &e -e!! on trc7' ne- entrnts hve to contend -ith the uneven p!ying e!d in

"hi!ippine vition mr7et' -hich is !rge!y dominted &y the "hi!ippine Air!ines"A)3.

"A) sti!! receives the sc! incentives nd other uncondition! gurntees it once

enJoyed s government corportion A!d&' 200L3. (urthermore' termin! spcend

!nding s!ots re dominted &y "A)' -hich mnged to secure so!e o-nership of n

irport termin! origin!!y intended to serve s the country=s domestic termin!.A!!egtion

of institution! -e7ness nd regu!tory cpture is !so o&served in the fi!ure ofCivi!



Aeronutics %ord CA%3 to co!!ect from the "hi!ippine Air!ines "A)3 the mndted

regu!tory fees. CA%' government regu!tory gency chrged -ith the supervisionnd

regu!tion of ir crriers' hs !i7e-ise &een ccused of interfering in fvor of "A) in

&i!ter! ir rights negotitions.4

%y !!eged!y contro!!ing the country=s Ggte-ys= through CA% nd its GDero sum=po!icy3 '

"A) hs not on!y ignored the needs of mi!!ions of Overses (i!ipino Ior7ers O(Is3for

freuent' cheper nd shorter Bights' &ut hs shunned inconceiv&!e economic

4

imndo' ) 200L G"A) contro!s gte-ys through CA%' sy eperts= A%SC%N Ne-s'

02 ;rch 200L' vie-ed 10 Apri! 2010' [http://---.&sc&nne-s.com/0/02/0L/p!contro!sgte-ysthroughc&syeperts\.

1opportunities nd &enets for the "hi!ippines from potenti! tourists' nd trdend

&usiness !in7ges.5

Another emp!e of institution! -e7ness is in the "hi!ippine po-er sector. $espitethe

moves to deregu!te the country=s energy sector through the pssge of the E!ectric

"o-er ,ndustry eform Act of 2001 E",A3' there remins cp on foreigno-nership

nd cross o-nership' nd the congression! frnchise reuirement on energy

trnsmission nd distri&ution. *his csts dou&t not on!y on the eKectiveness ofE",A

nd &ut !so on the cp&i!ity Energy egu!tory %ord E%3 to regu!te the mr7et

nd pprehend erring gents. A!redy !rge privte e!ectricity distri&utor hs &een

ccused of fvoring !!ied compnies essenti!!y su&sidiDing cost!y nd ine<cientrms



-ith consumers ending up pying higher energy prices SE"O 2003.

*he "hi!ippines my hve mde signicnt strides in deregu!ting the

te!ecommunictions industry &ut cses of &use of po-er &y dominnt p!yer re-e!!documented.

*he "hi!ippine )ong $istnce Compny ")$*3' o-ns the &c7&one

fci!ity' nd hs the most num&er of ed !ine su&scri&ers. ")$* hs &een ccused&y

other crriers of ep!oiting its mr7et po-er &y !!eged!y de!ying interconnection'

grnting uneu! ccess nd predtory pricing.

,n ddition to these' !test government pronouncements !i7e the pssge ofEecutive

Order No. 261 nd 264' grnt protection nd sfegurd mesure on d hoc &sis to

se!ected mnufcturing industries' prticu!r!y cement' cermic ti!e' c!er Botg!ss' nd

re!ted sectors -here chrges of crte!!i7e prctices &ound. *he pprent revers!to

trdition! protectionist prctices cn eKective!y turn oK investors' s this not on!yimp!ies

unfir nd uneven p!ying e!d' &ut is !so reBective of the unre!i&i!ity nd

unpredict&i!ity of government sttutes nd institution! -e7ness in enforcing

ru!es nd

regu!tions A!d& 200L3.

5 ,&id

14*&!e 5. Customs "rocedures

Country *ime for $ocuments Cost to ,mport *ime for eport $ocuments for Cost toeport

,mport for ,mport eport

Num&er of dys Num&er of documents Num&er of dys Num&er of documents

Score n7 out of 1 Countries3 reuired to import/200 reuired to import/200S per continer3 reuired to eport/200 reuired to eport/200 S percontiner3

Austr!i 4. 24.0 L.0 5.0 111.0 .0 6.0 1060.0 29.0



%runei 4.6 6.0 1.0 6.0 90L.0 2L.0 6.0 60.0 4L.0

Cm&odi 0.0 11.0 L92.0 22.0 11.0 92.0 129.0

Chin/"C 4.6 41.0 24.0 5.0 545.0 21.0 9.0 500.0 44.0

ong Pong 6.1 2.0 5.0 4.0 5L.0 6.0 4.0 625.0 2.0

,ndonesi .9 L.0 29.0 6.0 660.0 21.0 5.0 904.0 45.0

#pn 4.4 4.0 11.0 5.0 1049.0 10.0 4.0 L.0 19.0

Pore ep. of3 4.6 42.0 L.0 .0 942.0 L.0 .0 942.0 L.0

)o "$ 50.0 10.0 2040.0 50.0 .0 1L60.0 16L.0

;!ysi 4.L 2L.0 14.0 9.0 450.0 1L.0 9.0 450.0 5.0

;ynmr

Ne- Ze!nd 5. 4.0 .0 5.0 L50.0 10.0 9.0 L6L.0 26.0

6L.0

Singpore 6.4 1.0 .0 4.0 4.0 5.0 4.0 456.0 1.0

*i-n 5.0 2.0 12.0 9.0 92.0 1.0 9.0 920.0 .0

*hi!nd 4.1 60.0 1.0 .0 95.0 14.0 4.0 625.0 12.0

?ietnm .6 1.0 21.0 L.0 40.0 22.0 6.0 956.0 94.0

"hi!ippines .0 119.0 16.0 L.0 L1.0 16.0 L.0 L16.0

1/ Ior!d Economic (orum' Ior!d Competitiveness eport: 200

n7 out of 1L

countries' 200

*rding

cross

&orders

o- -ou!d you rte the !eve! of e<ciency of customs

procedures re!ted to the entry nd eit of

merchndise3 in your countryH 1 ] etreme!y

ine<cientM 9 ] etreme!y e<cient3 ^ 200LU200

-eighted verge

Source: Ior!d %n7' $oing %usiness eport: 200

%urden of Customs



procedures 1/

15*&!e 6. Openness to (oreign "rticiption

Openness to Ese of hiring

Country (oreign foreign !&or

"rticiption

*his vri&!e is c!cu!ted s the )&or regu!tion in your

verge of four vri&!es: Ese country 1]prevents your

of hiring foreign !&or' "rev!ence compny from emp!oying foreign

of foreign o-nership' %usiness !&or' 9]does not prevent your Score Score

,mpct of ru!es on ($,' W Cpit! compny from emp!oying foreign

contro!s./ 2009' 200L 1]!est open'

9]most open3 !&or3 2009' 200L

Austr!i 5.2 4.5 5.6 26.0 5.1 55.0

%runei 4.2 10L.0 4.L 9L.0

Cm&odi 5.0 4.6 4. 99.0 5.2 49.0

Chin/"C 4.5 5.1 4.4 L.0 5.6 2.0

ong Pong 6. 5.4 6.6 1.0 6.5 .0

,ndonesi 5.5 5. 5. 41.0 5. 41.0

#pn 4.6 4.0 4.4 .0 4.5 L.0

Pore ep. of3 5.2 4. 5.1 62.0 4. 65.0

)o "$

;!ysi 5.1 4. 5.0 6L.0 5. 4.0

;ynmr

Ne- Ze!nd 5.5 4.L 5. 14.0 5.0 61.0

Singpore 6. 5. 6.4 .0 6.9 1.0

*i-n 4.L 4.2 5. 51.0 5.4 .0

*hi!nd 4.6 4. 4.L L0.0 5. 44.0

?ietnm 4.L 4.L 4.2 109.0 5.5 29.0

Source: Ior!d Economic (orum' Eecutive Opinion Survey 2009' 200L

"hi!ippines 4.5 4.0 4. 102.0 4.5 9.0



1/ Ior!d Economic (orum' Ior!d Competitiveness eport: 200

"rev!ence of foreign o-nership 1/ %usiness impct of ru!es on ($,

1/

o- prev!ent is foreign o-nership of compnies in

your countryH 1 ] very rreM 9 ] high!y prev!ent3 ^

200LU200 -eighted verge

*o -ht etent do ru!es governing foreign

direct investment ($,3 encourge or

discourge itH 1 ] strong!y discourge

($,M 9 ] strong!y

encourge ($,3 ^ 200LU200 -eighted

verge

n7 out of 1

countries3

n7 out of 1

countries3

16*&!e 9. ,nfrstructure

od

Country "ved ods 1/ congestion 1/

"ved rods s ;otor vehic!es per

percentge of tot! 7m of rod/2005 Score n7 Score n7 Score n7 Score n7Score n7

rods/2005 Out of 1 Countries3 Out of 1 Countries3 Out of 114 Countries3Out of 1 Countries3 Out of 1 Countries3

Austr!i L.9 19.0 4.6 50.0 5.L 2L.0 4.1 2.0 5.0 9.0 5.0 L.0

%runei 4.L 42.0 5.2 49.0 5.2 2.0Cm&odi 6. 9.0 .5 L.0 4.1 LL.0 1.6 4.0 . 99.0 .4 L2.0

Chin/"C L1.6 16.0 4. 61.0 4. L0.0 4.1 29.0 4.2 50.0 4.0 66.0

ong Pong 100.0 254.0 6.L 2.0 6. 2.0 6.5 .0 6.6 .0 6.9 .0

,ndonesi 55. 62.0 .4 5.0 4.9 6L.0 2.L 60.0 2. 4.0 .1 6.0



#pn 99.9 6.0 5.2 4.0 5.1 5.0 6.6 2.0 5.6 22.0 5.L 19.0

Pore ep. of3 96.L 151.0 5.1 6.0 6.0 21.0 5.9 L.0 5.L 14.0 5.L 20.0

)o "$

;!ysi L1. 92.0 5.5 1.0 5.L 29.0 4.L 1.0 5.5 24.0 5.4 29.0

;ynmr

Ne- Ze!nd 64. 2.0 5.5 22.0 6.1 19.0 .9 9.0 4.6 4.0 4.9 45.0

L.0

Singpore 100.0 1L.0 6.L 1.0 6. 1.0 5.9 .0 6.9 1.0 6.9 2.0

*i-n n/ n/ 5.6 16.0 5.5 41.0 5.L 9.0 5.L 1L.0 5.L 1.0

*hi!nd L.5 n/ 4.9 49.0 5. 26.0 .0 52.0 5.0 5.0 4.L 41.0

?ietnm 25.1 n/ . .0 4.1 L4.0 2.L 5L.0 2.L 102.0 2.L 111.0

Source: Ior!d Economic (orum' Ior!d Competitiveness eport: 200

1/ Ior!d Economic (orum' Eecutive Opinion Survey 2009' 200L

o- -ou!d you ssess gener!

infrstructure e.g.' trnsport' te!ephony'

nd energy3 in your countryH 1 ]

etreme!y underdeve!opedM

9 ] etensive nd e<cient &y interntion!

stndrds3 ^ 200LU200 -eighted verge

_u!ity of Over!!

,nfrstructure _u!ity of port infrstructure

o- -ou!d you ssess port fci!ities in your

countryH 1 ] etreme!y underdeve!opedM 9 ]

-e!! deve!oped nd e<cient &y interntion!

stndrds3` ^ 200LU200 -eighted verge

o- -ou!d you ssess pssenger ir trnsport

infrstructure in your countryH 1 ] etreme!y

underdeve!opedM 9 ] etensive nd e<cient &y

interntion! stndrds3 ^ 200LU200 -eighted

verge



_u!ity of ir trnsport infrstructure

o- -ou!d you ssess the ri!rod system in

your countryH 1 ] etreme!y underdeve!opedM 9

] etensive nd e<cient &y interntion!

stndrds3 ^ 200LU200 -eighted verge

o- -ou!d you ssess rods in your

countryH 1 ] etreme!y underdeve!opedM

9 ] etensive nd e<cient &y

interntion! stndrds3 ^ 200LU200

-eighted verge

_u!ity of ri!rod infrstructure _u!ity of rods

"hi!ippines . 14.0 .0 112.0 .9 100.0 1.9 2.0 2.L 104.0 .1

19Structur! "ro&!ems in the "hi!ippines

*he discussion in the !st section' prticu!r!y on po!itic! economy considertions'on!y

high!ights the structur! pro&!ems tht continue to p!gue the "hi!ippine economy. *hese

-ere discussed etensive!y &y %!&o' et ! 20093. *he mJor fctors tht hve

prevented the "hi!ippines from mimiDing its gins from g!o&!iDtion cn &etrced to

po!icy shortcomings' nd cn &e summriDed s fo!!o-s:6

1. )o- investments in infrstructure. According to Ior!d %n7 estimtes' midd!e

income country in Est Asi -i!! need to spend t !est 5 percent of R$" on

infrstructure to meet their needs in the net 10 yers. ,nfrstructure ependiture inthe

"hi!ippines is fr &e!o- this &enchmr7 s it on!y ccounts for 2.L percent of R$". ,n

ddition' resources !!otted for infrstructure deve!opment re spent ine<cient!y.

,nfrstructure upgrding is necessry to improve economic performnce of thecountry

s it -ou!d he!p ttrct more investments nd reduce production costs. *he !c7 of

infrstructure progrm is !rge!y re!ted to the frgi!e sc! sitution of thegovernment.



2. )c7 of po!itic! -i!! to imp!ement sustined nd credi&!e sc! reform progrm.

Ie7 sc! institutions creted po!icies tht incresed the de&t &urden ndinherent!y

put &is to-rds decitspending. *hey re !so responsi&!e for the sc! &!unders

creted such s po!iticiDed spending nd de!yed sc! conso!idtion during crises8s

epitomiDed during the ftermth of the 200L g!o&! nnci! crisis. *o &e eKective'sc!

reforms' shou!d im t creting stronger sc! institutions tht dhere to ru!es nddo not

esi!y give in to popu!ist demnds. eforms shou!d !so crete ccount&!e ndmore

trnsprent institutions tht -i!! imp!ement the revenue genertion progrms ndinc!ude

cp&i!ity enhncement mesures to reinforce technic! cpcity of theseinstitutions to

fu!!y mo&i!iDe revenues for the country=s needs.

. igh *rnsction Costs. *rnsction costs refer to mr7etre!ted infrstructure'

fci!ities nd services needed to conduct &usiness' inc!uding !ogistics. ,t !soinc!udes

costs in cuiring nd echnging informtion in trnsctions nd contrctenforcement.

,f trnsction costs re high' these &ecome disincentive to producers toprticipte in

ny mr7et echnge. ,t hs &een rgued tht the re!tive!y poor performnce of

"hi!ippine eports my &e ep!ined &y high trnsction costs in the country rtherthn

mr7et ccess issues. )ogistic! cost disdvntges8s pointed out er!ier in this

pper8 hve hindered domestic industries from &eneting fu!!y from the eKects of

trde

!i&er!iDtion nd hve discourged foreign investors from considering the"hi!ippines in

their production nd !ogistic! net-or7s.

4. )c7 of coherent industri! po!icy. *his is n re tht hs &een over!oo7ed



&ecuse of the controversy it genertes. o-ever' recent -or7 hs ttempted toprovide

prgmtic pproch tht esche-s ideo!ogic! prescriptions nd insted !oo7s more

c!ose!y t historic! eperience. *he &sic rgument is tht industri! po!icy is s

much&out e!iciting informtion from the privte sector on signicnt etern!ities8primri!y

informtion nd coordintion etern!ities8nd their remedies s it is &out

imp!ementing pproprite po!icies. o-ever' the cpcity to pp!y industri! po!icyis

!so importnt' -hich !eds to the importnce of governnce nd institutions. Since

192' "hi!ippine economic mngers fo!!o-ed progrm tht !rge!y mimic7ed the

6

%!&o' et !. 20093' pges 114.

1LIshington Consensus nd did not !!o- for strtegic intervention on the prt ofthe

government.

*here -ere !so gps in the imp!ementtion of reforms nd this is re!ted to fi!ureto

ddress issues in good governnce. *his focuses on nticorruption inititives nd

institution!iDtion of corporte governnce prctices. *he "hi!ippines hs !-ys&een

cited s country -hose potenti! for gro-th hs &een eroded &y corruptinstitutions.

According to Ior!d %n7 gures' 20 percent of nnu! government &udget is !ost to

corruption.

,t is of utmost importnce tht mesures to cur& corruption re undert7en.Anticorruption

strtegy shou!d &e reinforced &y committed !edership nd &!e

mngement s7i!!s to imp!ement the progrms nd sustin the progress mde.

Continued reengineering of the &ureucrcy is necessry' -ith reforms focused noton!y



on chieving e<ciency nd eKectiveness' &ut !so insti!!ing cu!ture of dherenceto

ru!es %!&o nd ;ed!! 20063.

*he "hi!ippines hs to -or7 on ddressing governnce issues tht hinder the

country tot7e dvntge of opportunities from region! integrtion. A committed !edershiptht

hs the po!itic! -i!! to pursue genuine reforms -ou!d &e critic!. *he "hi!ippine

eperience hs sho-n tht e!ite groups' t their -i!!' cou!d impede imp!ementtionof

reforms. ence' mechnisms to-rd reducing opportunities for monopo!y of po-ertht

undermine reform eKorts shou!d &e inst!!ed.Conc!uding emr7s

*he economic reform process in the "hi!ippines cn &e depicted in (igure 2. "o!itic!

economy fctors !rge!y ep!in the s!o- progress in imp!ementing economicreforms'

inc!uding AEC commitments. *hese fctors inc!ude the need to dhere to thedemocrtic

process nd the presence of entrenched domestic interests.

;en-hi!e' even if reforms re imp!emented' economic gents8especi!!y privte

rms8re un&!e to t7e dvntge of the opportunities presented. *his cn &e

ep!ined &y structur! fctors inc!uding supp!yside constrints. "oor infrstructurend

the &sence of strtegic nd eKective industri! po!icy re the min e!ements of

supp!yside constrints.

*he intersection of these t-o sets of fctors re spects re!ted to poor governncend

-e7 institutions. nfortunte!y' economists do not hve the redy ns-er to the

uestion of ho- to strengthen institutions. *his -ou!d reuire mu!tidiscip!inry

pproch. %ut denite!y credi&!e nd visionry !edership is n importntconsidertion.

1(igure 2: $epiction of eform "rocess in the "hi!ippines



20eferences

A!d&' ; 200L' Assessing Competition in "hi!ippine ;r7ets' ",$S $iscussion"per

No. 200L2' "hi!ippine ,nstitute for $eve!opment Studies' ;7ti City.

ASEAN Secretrit' n.d.' *he ASEAN Economic Community %!ueprint 200L' Accessed

on 15 ;rch 2010.

%!&o' #$ W ;ed!!' E; 2006' GAntiCorruption nd Rovernnce: *he "hi!ippine

Eperience=' pper presented in the A"EC Senior O<ci!s ;eeting ,, t o Chi ;inh

City' ?ietnm' 2 ;y.

[http://---.pec.org.u/docs/06ASCCaC;C/06aa1a%!&o.pdf\.

%!&o' #$' ;ed!!' E; W +p' #* 2009' GC!oser *rde nd (innci! Coopertion in

ASEAN: ,ssues t the egion! nd Ntion! )eve! -ith (ocus on the "hi!ippines=' ,n

)orrine Cr!os S!Dr nd Snchit %su $s eds3' %ridging the ASEAN

$eve!opment! $ivide: Ch!!enges nd "rospects' ,SEAS "u&!ishing' Singpore.

%su' S 2010' NontriK ;esures nd "rotectionism' "o-erpoint s!ides' ",$S

%ro-n&g "resenttion' ;7ti City' "hi!ippines' 16 ;rch 2010.

%ureu of ,nterntion! *rde e!tions 200' AEC Scorecrd of the "hi!ippines

"re!iminry $rft3.

Cor&ett' # W meD7i' S 200' $eepening Est Asin Economic ,ntegrtion' E,A

eserch "roJect eport 200L No. 1' Economic eserch ,nstitute for ASEAN ndEst

Asi' #7rt.

(ind!y' C 200' G*rde (ci!ittion= ' in Cor&ett nd meD7i eds.3' ,n $eepeningEst

Asin Economic ,ntegrtion' Economic eserch ,nstitute for ASEAN nd Est Asi'

#7rt.

o!!-eg' C W Iong ;' 200' ;esuring egu!tory estrictions in )ogisticsServices'

E,A $iscussion "per Series No. 20014' Economic eserch ,nstitute for ASEAN

nd Est Asi' #7rt.

"!ummer' ;R W Chi' S+ 200' e!iDing the ASEAN Economic Community: A



Comprehensive Assessment' ,SEAS "u&!ishing' Singpore.

venhi!!' # 200L' G(ighting ,rre!evnce: n economic community -ith ASEAN

chrcteristics=. *he "cic evie- ' vo!. 21' no. 4' pp. 464LL.

imndo' )! 200L G"A) contro!s gte-ys through CA%' sy eperts= A%SC%N

Ne-s' 02 ;rch 200L' vie-ed 10 Apri! 2010'[http://---.&sc&nne-s.com/0/02/0L/p!contro!sgte-ysthroughc&syeperts\.

Sente Economic "!nning O<ce 200' egu!ting competition' "o!icy %rief "% 004'

Sente Economic "!nning O<ce' ;ni!.

[http://---.sente.gov.ph/pu&!ictions/"%202000420

20egu!ting20competition.pdf\.

2122

Soesstro' di' 200' G,mp!ementing the ASEAN Economic Community AEC3

%!ueprint=' in Cor&ett nd meD7i eds.3' ,n $eepening Est Asin Economic

,ntegrtion' Economic eserch ,nstitute for ASEAN nd Est Asi' #7rt.

*nti7u!nnt' Chu!nee n.d.' Rovernment&usiness re!tions nd ASEAN economic

integrtion in the post nnci! crisis: cse study of *hi!nd' Schoo! of "o!itic!

Science nd ,nterntion! Studies' *he niversity of _ueens!nd' %ris&ne'

Austr!i'

ccessed: 11 Apri! 2010'

[http://---.po!.m.edu.u/ps/ppers/efereed20ppers/*nti7u!nt20Rovern

ment&usiness20re!tions20nd20ASEAN.pdf\.

rt' S. nd Ando' ; 200' G,nvestment C!imte Study on ASEAN ;em&erCountries='

in Cor&ett nd meD7i eds.3' ,n $eepening Est Asin Economic ,ntegrtion'

Economic eserch ,nstitute for ASEAN nd Est Asi' #7rt.

rt' S' Ando' ; W ,to' P 2009' GSurvey on ,nvestment

)i&er!iDtion nd (ci!ittion=' in O&stc!es to ($, in the A"EC Economies: A

Study %sed on the #;C (irm Survey' #pn ;chinery Center for *rde nd

,nvestment' #pn. Avi!&!e t



[http://---.pec.org/pec/pu&!ictions/freeado-n!ods/2009.htm!\.

Ior!d %n7 2010' $oing %usiness eport. Ior!d %n7' Ishington' $.C.' Accessed

on 10 Apri! 2010.

Ior!d %n7 200L' Ior!d-ide Rovernnce ,ndictors' Ior!d %n7' Ishington' $.C.

Ior!d Economic (orum 2010' R!o&! Competitiveness eport' Accessed on 09 Apri!

2010. Appendi 1: ASEAN Economic Community %!ueprint igh!ights3

Strtegic Approch Some of the ;Jor "riority Actions

A. *o-rds Sing!e ;r7et nd "roduction %se

A1. (ree (!o-s of Roods

Enhncement of Common EKective "referenti! *riKsQASEAN (ree *rde Are CE"*Q

A(*A3

*riK eduction Q comp!ete the triK reduction schedu!e to 0Q5 for ,) products C);

countries

E!imintion of *riKs

E!imintion of NonQ*riK %rriers

u!es of Origin Q Continuous!y reform' enhnce nd simp!y CE"* OO nd itsopertion!

procedures

*rde (ci!ittion Ior7 "rogrmme

Customs integrtion Q ensure customs deve!opmentM opertion!ise ASEAN Sing!eIindo-

Stndrds nd Conformnce Q imp!ement Sing!e egu!tory Scheme for CosmeticM

ensure eKective imp!ementtion of the ASEAN Sector! ;A on E!ectric! ndE!ectronic

EuipmentM ,mp!ement ASEAN Common *echnic! $ossiers for "hrmceutic! nd

;edic! $evice

A2. (ree (!o-s of Services

Services )i&er!istion under A(AS

;utu! ecognition Arrngements ;As3

2(innci! Services Sector

A. (ree (!o-s of ,nvestment



ASEAN ,nvestment Agreement A,A3

A4. (ree (!o-s of Cpit!

Strengthening ASEAN Cpit! ;r7et $eve!opment nd ,ntegrtion

)i&er!istion of (oreign $irect ,nvestment Bo-s inc!uding portfo!io nd other

investments Bo-s

A5. (ree (!o-s of S7i!!ed )&our

Comp!ete ;As for mJor profession! services

$eve!op core competencies for Jo&/occuption! s7i!!s reuired in priority servicessector

A6. "riority ,ntegrtion Sectors

Conduct &iQnnu! revie- to monitoring the sttus' progress nd eKectiveness of

",Srodmps

,dentify sectorQspecic proJects or inititives -ith Country Coordintors

A9. (ood' Agricu!ture nd (orestry

Enhnce etrQASEAN trde nd !ongQterm competitiveness of ASEANbsfood'gricu!ture

nd forestry products

"romote coopertion' Joint pproches nd techno!ogy trnsfer -ith the privte

sector

nd interntion! orgniDtions

"romote ASEAN gricu!tur! coopertives

24%. *o-rds igh!y Competitive Economic egion

%1. Competition "o!icy

%ui!ding cpcity nd introduction/doption of &est prctices for introducingcompetition

po!icy%. ,nte!!ectu! "roperty ights

,nte!!ectu! "roperty ights Action "!n

%4. ,nfrstructure $eve!opment

*rnsport Action "!n



ASEAN (rme-or7 Agreement on ;u!timod! *rnsport

ASEAN (rme-or7 Agreement on the (ci!ittion of Roods in *rnsit

ASEAN (rme-or7 Agreement on (ci!ittion of ,nterQStte *rnsport

odmps for ,ntegrtion of Air *rve! Sector

,nformtion Structure

Energy Coopertion i.e. ASEAN "o-er Rrid3

%5. *tion

Comp!ete the net-or7 of &i!ter! greements on voidnce of dou&!e ttionmong

mem&ers

%6. EQCommerce

Enctment of EQCommerce )-

C. *o-rds egion of Euit&!e Economic $eve!opment

2526

C1. S;E $eve!opment

ASEAN "o!icy %!ueprint for S;E $eve!opment

C2. ,nititives for ASEAN ,ntegrtion ,A,3

Conduct periodic socioQeconomic studies to monitor impct of economic integrtion

$. *o-rds (u!! ,ntegrtion into the R!o&! Economy

$1. Coherent ppoch to-rds Etern! Economic e!tions nd Enhnced"rticiption in R!o&! Supp!y Net-or7s

evie- (*A/CE" commitments visQFQvis ASEANbs intern! integrtion commitments

,dentiction of technic! ssistnce to deve!op nd upgrde industri! cp&i!itiesnd

productivity of ASEAN mem&er countries

Source: ASEAN Ie&site

asean economic commuity

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