IN 2007, the heads of states of the 10 countries comprising the Association of Southeast Asian Nations (ASEAN) agreed to establish the ASEAN Economic Community by Dec. 31 this year. Essentially, the ASEAN Economic Community is the integration of the 10 economies into a single unit. With its wide-ranging consequences, the ASEAN Economic Community will definitely affect the lives of every individual living in the region.
So what exactly is the ASEAN Economic Community and what’s in it for you and me?
According to its blueprint, the ASEAN Economic Community will have the following characteristics:
• A single market and production base.
• A highly competitive economic region
• A region of equitable economic development.
• A region fully integrated into the global economy.
Stripped of economic jargon, the ASEAN Economic Community is all about establishing laws, systems and standards that will allow goods, services, money, and skilled labor to move freely within the region.
FREE MOVEMENT OF GOODS
This entails the elimination of tariffs at each county’s borders. In other words, the goods or products from one ASEAN country will no longer be taxed (subjected to zero tariff) upon entry into another ASEAN country. It also entails harmonization of customs procedures of each ASEAN country, especially through the adoption of electronic technology and the establishment of a single window for customs processing of ASEAN products.
FREE MOVEMENT OF SERVICES
This involves the liberalization of the service industries in each ASEAN country. This means that ASEAN governments should relax their laws and procedures to allow people and corporations from ASEAN countries to engage in the service industry in each other’s territories. The blueprint specifically states that ASEAN countries should allow ASEAN people or corporations 70% equity participation or ownership in the service industries. Under the blueprint, the priority service industries for liberalization are air transport, e-ASEAN or electronic service, health care, and tourism.
FREE MOVEMENT OF INVESTMENT
This largely means that ASEAN governments should enhance the protection they afford to foreign investors and their investments by adopting international standards and best practices in investments, especially in the area of dispute settlement. Free movement of capital is closely connected, which basically entails the harmonization of rules and procedures in securities and exchange regulation.
FREE MOVEMENT OF SKILLED LABOR
This entails ASEAN governments allowing natural persons from ASEAN countries to trade in goods, services and investments in each other’s territories. The blueprint requires the ASEAN governments to facilitate the issuance of visas and employment passes for ASEAN professionals and skilled labor. ASEAN governments are also required to establish mutual recognition arrangements (MRAs) so that the education, licenses and experiences of ASEAN individuals may be recognized in every ASEAN country. So far, MRAs have been established in the engineering, surveying, architecture, medical, nursing, dental and accounting professions.
Many questions have been raised concerning the Philippines’ readiness to enter into the ASEAN Economic Community. These questions pertain to provisions in the Philippine Constitution reserving the practice of professions to Filipino citizens, and certain industries and services to at least 60% Filipino ownership. Likewise, there are concerns about the impact of liberalization on our agricultural sector, particularly the rice and sugar farmers. There is also the question of whether we can literally provide “free movement” considering the condition of our airports, seaports and roads. Although the blueprint provides for the principle of ASEAN Minus X — that is, ASEAN member-states should comply with their commitments minus those member-states who cannot — it is possible that non-compliance with our commitments would negatively affect the Philippines’ reputation in the international arena.
In any case, we Filipinos have a lot to gain from the ASEAN Economic Community. For example, Filipino professionals may use the existing MRAs so that they may be recognized as professionals and practice their professions in other ASEAN countries. Considering the high level of education in our country and our proficiency in English, Filipino professionals will have more employment opportunities.
These same characteristics of Filipinos will also attract more outsourcing and off-shoring of manufacturing and service industries into the Philippines. Once liberalization is introduced and the cost of doing business in the Philippines is minimized, it is not unlikely that foreign firms, not only from ASEAN, will establish their presence in our country and create job opportunities.
Filipinos engaged in small and medium enterprises (SMEs) also stand to benefit. Aside from having easier access to better and cheaper raw materials and services from the region, they will also have access to financing from ASEAN lenders who cater to SMEs.
The ASEAN Economic Community will become a reality by the end of this year. While continued debates on the ideology behind the ASEAN Economic Community should be encouraged, it is most prudent that we actively engage in the process of its establishment to harness its economic promises — more job opportunities, better products and services, and improved technologies and standards. –Amicus Curiae, Christopher Louie D. Ocampo, Businessworld
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