Materials

Workforce

Owners, Investors

Single Market and Production Base

Member States

Ranking

WEF Global Competitiveness Report 2011-2012

(out of 142 economies)

IMD World Competitiveness

Yearbook 2012 (out of 59

economies)

Brunei Darussalam (28) 28 -

Cambodia (109) 97 -

Indonesia (44) 46 (37) 42

Lao PDR - -

Malaysia (26) 21 (16) 14

Myanmar - -

Philippines (85) 75 (41) 43

Singapore (03) 02 (03) 04

Thailand (38) 39 (27) 30

Viet Nam (59) 65 -

Highly Competitive Economic Region

Equitable Economic Development

Integration into the Global Economy

Single Market and

Production Base

Competitive Economic Region

Equitable Economic

Development

Integration into the

Global Economy

ASEAN ECONOMIC COMMUNITY

1. Free Flow of Goods

2. Free Flow of Services

3. Free Flow of Investment

4. Free Flow of Capital

5. Free Flow of Skilled Labor

6. Priority Integration Sectors

7. Food, Agriculture and Forestry

1. Competition Policy

2. Consumer Protection

3. Intellectual Property Rights

4. Infrastructure Development

5. Taxation

6. E-Commerce

1. SME Development

2. Initiative for ASEAN Integration

1. Coherent approach towards external economic relations

2. Enhanced participation in global supply networks

- AEC 2015 Vision Statement adopted by Leaders in 2007

AEC – one of the core Pillars of the AEC – one of the core Pillars of the ASEAN CommunityASEAN Community

“An ASEAN Community shall be established comprising three pillars, namely political and security cooperation, economic cooperation, and socio-cultural cooperation that are closely intertwined and mutually reinforcing for the purpose of ensuring durable peace, stability and shared prosperity in the region”

- Bali Concord II (2003)

TimelineTimeline The ASEAN (Economic)

Community is the culmination of nearly 50 years of regional community building which began with the establishment of ASEAN in 1967, nurtured through the decades and which gained momentum in the 1990s as a response to globalization and trade liberalization.

ASEAN Launched1967

ASEAN Free Trade Area (AFTA)

1992

ASEAN Vision 2020

1997

Bali Concord II: 3-Pillared ASEAN Community

2003

ASEAN Charter signed; ASEAN 2020 fast tracked to 2015

2007

ASEAN Community Blueprints adopted and implemented

2009

Establishment of the ASEAN Community

31 Dec 2015

The AEC BlueprintThe AEC BlueprintTo ensure proper and timely

achievement of the lofty goals espoused in the ASEAN Charter, the ASEAN Member-States (AMS) developed an ASEAN Economic Community Blueprint that lays out the key actions, deliverables and timelines towards achieving its goals by 2015

Comparative Ranking of ASEAN Member States as per compliance with the AEC Blueprint targets*

Member States Ranking Percentage of Compliance

2008-2009

2010-2011 2012 (Jan-Oct)

2008-2009

2010-2011

2012 (Jan – Oct)

Brunei Darussalam 2 4 9 95.41 77.9 75.5

Cambodia 4 9 8 95.33 74.4 76.6

Indonesia 9 7 4 89.91 75.8 82.0

Lao PDR 5 8 5 95.28 74.6 81.3

Malaysia 8 2 2 93.60 81.8 84.3

Myanmar 7 6 5 94.39 76.9 81.3

Philippines 6 5 7 94.55 77.1 76.9

Singapore 1 1 3 96.30 82.2 84.0

Thailand 6 3 1 94.55 79.4 84.6

Viet Nam 3 3 6 95.37 79.4 79.6

*based on ASEAN Secretariat assessment (as of Nov 2012)

The First Misconception - The First Misconception -

The ASEAN Economic Community is NOT the European Union

(formerly the European Economic Community or EEC).

The Major Difference The Major Difference The European Union is a mature, functional political

and economic entity with common policies across all 27 member-states implemented by well-established institutions.

The EU is: A single market which guarantees the free movement of goods,

services, capital and people within the members of the union; A customs union with a single or common tariff applied on goods

imported into the union A monetary union with a common currency administered by a central

monetary authority (the European Central Bank or ECB) that can determine policy across the 27 member-economies

The Major Difference The Major Difference The ASEAN Community is a work in progress:

Discussions about establishing an ASEAN Economic Region began in 1997

Institutionalized in 2007 with the ratification of the ASEAN Charter

ASEAN Community to be formally established in 2015

ProximityProximity and and AccessAccess to some of the largest and fastest to some of the largest and fastest growing economies and markets in the world (i.e. China, growing economies and markets in the world (i.e. China, India)India)

The EU is there.

Average shipping distanceEU (Belgium) to Asia:10040 nautical miles;29 days sailing time

ASEAN is here.

Average shipping distanceASEAN (Manila) to Asia: 2,642 nautical miles;8 days sailing time

CountryRanking

(Population)Population(est. 2012)

Ranking (2012 GDP)

Nominal GDP (2012) in US

China 1 1,350,695,000 3 4,522,140,211,438

India 2 1,236,686,732 8

1,368,761,731,904

Japan 10 127,561,489 2

4,711,867,439,634

Korea 26 50,004,000 12

1,078,208,564,659

Australia 51 22,683,600 15 844,469,499,748

New Zealand 122 4,433,100 44 123,106,971,831

TOTAL 7,023,106,813 51,331,459,608,448

% Share to World 39.8% 24.6%

Source: World Bank, World Development Indicators Database

6 of these economies in close proximity to ASEAN 6 of these economies in close proximity to ASEAN account for a large part of the world’s population account for a large part of the world’s population and economyand economy

The Second MisconceptionThe Second Misconception

… is that the ASEAN Economic Community will only ‘happen’ in 2015; that ASEAN companies and citizens will start reaping the benefits when ‘ASEAN 2015’ is in place.

Not necessarily … Not necessarily … There are key components and measures

under the ASEAN Economic Community that are IN PLACE and FUNCTIONING which have already started to benefit ASEAN companies and citizens.

Tariff Reduction, for exampleTariff Reduction, for exampleSince 2010 and the ratification of ATIGA:

99.65% of tariff lines for ASEAN-6 (Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand) at 0% duty

98.68% of tariff lines for CLMV (Cambodia, Laos, Myanmar and Vietnam) at 0-5% duty

In other words, intra-ASEAN trade is virtually duty-free, providing a relative advantage (price-wise) on the cost of goods when compared to other countries.

Intra-ASEAN trade has shown marked Intra-ASEAN trade has shown marked improvement in the past decade … improvement in the past decade …

Source: ITC Trademap, in USD billlion; no data reported for CLMV for 2012.

How has ASEAN engaged its Partners?

The Philippines’ FTA Network

China

Japan

Australia New

Zealand

India

S.Korea

ASEAN

Rationale for PH

Participation

Means to promote trade and investment flows

Ensure continued and enhanced market access for ASEAN’s exports

Draw greater and sustained inflows of FDI

Mutual support on issues of common interest in international fora

Maintain competitiveness

Portfolio diversification

Cross-border industrial complementation

Advantages of geographic proximity

Leverage in FTAs

ASEAN Free Trade Agreements

The Only Full FTA that the Philippines is Party To

Intra-ASEAN Integration Liberalization

a) Common Effective Preferential Tariff (CEPT) & Priority Integration Sectors (PIS)

b) ASEAN Framework Agreement on Servicesc) ASEAN Comprehensive Investment Agreement

Facilitation e-Customs/Single Window; Standardization and

Harmonization; multi-modal transport; logistics; e-commerce

Cooperation Bridging Development Gaps Sub-Regions/Growth Areas

ASEAN

ASEAN Free Trade Agreements

ACFTA has been realized on 1 January 2010 (90% of products traded are already at zero tariffs)

Tariff commitments on the Sensitive Track are being implemented since 1 January 2012

Current discussions are ongoing to improve utilization rate through more liberal rules of origin

Negotiations for a chapter on customs and trade facilitation in the Trade in Goods Agreement. SPS/TBT chapters completed.

Consideration of the request of Hongkong to be a party to the ACFTA

Protocol to implement 2nd package of commitments on services signed at the 19th ASEAN Summit in Nov 2011.

ASEAN - China

ASEAN Free Trade Agreements

AKFTA has been realized on 1 January 2010 ( 90% of products traded are already at zero tariffs)

Current discussions ongoing to improve utilization (self-certification)

Tariff commitments on the Sensitive Track are being implemented since 1 January 2010

Review of the Sensitive Track ongoing

Review of the Services Agreement ongoing

ASEAN - Korea

ASEAN Free Trade Agreements

All Countries except Indonesia are implementing the AJCEP Agreement

Review of PSRs ongoing

Discussions ongoing for a formal monitoring mechanism

Negotiations are ongoing on the services and investment chapters. Main issue is on the approach/scope of the negotiations

ASEAN - Japan

ASEAN Free Trade Agreements

All Parties implementing the Agreement

Feedback from the Bureau of Customs indicates that the AANZFTA is heavily utilized for both Philippine exports and imports.

Establishment of a monitoring mechanism on FTA utilization being discussed. This is assess the actual figures on the use of the FTA by business.

Review of NTMs ongoing

ASEAN – Australia –

New Zealand

ASEAN Free Trade Agreements

Philippines has implemented its commitments under the Trade in Goods Agreement on 17 May 2011 under EO 25

Negotiations are expected to be concluded within 2012 and possibly have the ASEAN – India Trade in Services and Investment Agreements signed in December.

Chapters under the proposed text of the Trade in Services Agreement include, among others, Domestic Regulation, Recognition, Safeguards, Security Exceptions, Subsidies, and Cooperation.

Moreover, a separate Annex on Movement of Natural Persons (MNP) and Financial Services are currently being discussed.

ASEAN – India

Regional Comprehensive Economic Partnership (RCEP)

1. Earlier proposals on EAFTA and CEPEA prompted ASEAN to develop its own integration framework (RCEP)

2. Other regional economic developments also influenced ASEAN

Trans-Pacific Partnership EU Bilateral Negotiations with some AMS China-Japan-South Korea Trilateral Dialogue

3. At the 19th ASEAN Summit and Related Summits last November 2011, Leaders issued the ASEAN Framework for Regional Comprehensive Economic Cooperation (ARCEP Framework).

4. The Framework sets the principles for the establishment of a comprehensive partnership agreement that is: (i) an engagement open to ASEAN FTA Partners and other External Economic Partners, (ii) of mutual interest to all Parties, (iii) undertaken through an ASEAN-led process and (iv) adheres to best practice and standards.

5. Scoping exercise on-going with ASEAN Plus One FTA Partners.

Trade in Services?

It is a huge sector

It is more complex than goods

It is increasingly globalized

There is increasing pressure to liberalize services. Need to manage the process

There are opportunities in services trade that should be exploited. Comparative advantage

Signing of the ASEAN Framework Agreement on Services (AFAS) (December 1995), in order to:

• enhance cooperation in services amongst Member States in order to improve the efficiency and competitiveness, diversify production capacity and supply and distribution of services of their service suppliers within and outside ASEAN;

• eliminate substantially restrictions to trade in services amongst Member States; and

• liberalise trade in services by expanding the depth and scope of liberalisation beyond those undertaken by Member States under the GATS with the aim to realising a free trade area in services.

ASEAN Economic Blueprint targets intra-regional services liberalization by 2015

Services liberalization is also facilitated through the establishment of Mutual Recognition Arrangements (MRAs) which provide mutual recognition on the qualifications of professional services.

a) MRA on Engineering Services (2005) b) MRA on Nursing Services (2006) c) MRA on Architectural Services (2007) d) Framework Agreement for the Mutual Recognition of Surveying Qualifications (2007)

e) MRA on Accountancy Services (2009) f) MRA on Medical Practitioners (2009) g) MRA on Dental Practitioners (2009)

Philippine Export Development Plan Philippine Export Development Plan (PEDP) 2011-13 (PEDP) 2011-13 Core product strategies

Move up the value chainCapture high-value processes in the global supply chainDevelop product linkages for natural, organic and

certification-enabled products

Core market strategiesMaximize benefits of FTAsTarget high-growth emerging marketsAttract the migration of supply chain nodes to the

Philippines

PEDP 2011-13 PEDP 2011-13 Key elements defining opportunities in the global

economy: Supply and value chain management International trade negotiations Innovations in finished goods marketing

Key export sectors under the plan: IT-Business Process Outsourcing and other services Electronics Agribusiness products (food, coconut and other resource-based

products) Minerals Shipbuilding

High potential Growth Sectors Motor vehicle parts Garments and textiles Homestyle products (furniture, furnishings, décor) Wearables (fashion accessories, shoes, bags, jewelry)

Complementary Industry StrategiesComplementary Industry Strategies National Industry Cluster Capacity Enhancement Program

aims to further the competitiveness of the country’s industries by integrating their upstream and downstream activities with the micro, small and medium enterprises as key participants

Industry development strategies push for growth in key big industry winners (i.e. electronics, ICT/BPO/call

center, shipbuilding, ship repair, steel fabrication)

focus on Micro and SME development and continue to develop strategy for sectors with large scale potential (i.e. car manufacturing, bamboo industry, palm oil, rubber, corn and corn farming).

Industry competitiveness road maps (19) sectors providing a solid foundation for further regional economic

integration (copper, chemicals, furniture, biodiesel, petrochemicals, auto parts, rubber, cement, air cargo, logistics, paper, mass housing, tool and die, motor vehicles, ceramic tiles, iron and steel, plastics, electric vehicle and metal casting).

PH has the right ingredients to tap AEC trade and PH has the right ingredients to tap AEC trade and business opportunitiesbusiness opportunities

Strategies, policies and measures are in place

PH focus on core industries with high growth potential

Success lies, however, in addressing the implementation gaps of our initiatives and policies and integrating the PH business community into the broader AEC agenda

Public-private partnership is essentialActive Philippine participation in ASEAN business networks and fora

“Worrying is like a rocking chair, it gives you something to do, but

it gets you nowhere.” – Glenn Turner

Thank you