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Materials Workforce Owners, Investors Emphasis on production networksEmphasis on service suppliersEmphasis on capital flows Single Market and Production.

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Presentation on theme: "Materials Workforce Owners, Investors Emphasis on production networksEmphasis on service suppliersEmphasis on capital flows Single Market and Production."— Presentation transcript:

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2 Materials

3 Workforce

4 Owners, Investors

5 Emphasis on production networksEmphasis on service suppliersEmphasis on capital flows Single Market and Production Base

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7 Member States Ranking WEF Global Competitiveness Report (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-

8 Emphasis on competitiveness Emphasis on consumer protection and intellectual property rights Emphasis on infrastructure development Highly Competitive Economic Region

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10 Emphasis on SME Development Emphasis on access to information, human resource development, and financing Emphasis on technical assistance and capacity building programmes Equitable Economic Development

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12 Emphasis on enhancing participation in global supply networks Emphasis on deeper engagement with other external markets Emphasis on adopting international best practices and standards Integration into the Global Economy

13 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

14 - AEC 2015 Vision Statement adopted by Leaders in 2007

15 AEC – one of the core Pillars of the ASEAN 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)

16 Timeline 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 Launched 1967 ASEAN Free Trade Area (AFTA) 1992 ASEAN Vision Bali Concord II: 3-Pillared ASEAN Community 2003 ASEAN Charter signed; ASEAN 2020 fast tracked to ASEAN Community Blueprints adopted and implemented 2009 Establishment of the ASEAN Community 31 Dec 2015

17 The AEC Blueprint To 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

18 Comparative Ranking of ASEAN Member States as per compliance with the AEC Blueprint targets* Member StatesRankingPercentage of Compliance (Jan-Oct) (Jan – Oct) Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam *based on ASEAN Secretariat assessment (as of Nov 2012)

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20 The First Misconception - The ASEAN Economic Community is NOT the European Union (formerly the European Economic Community or EEC).

21 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

22 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

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24 Proximity and Access to some of the largest and fastest growing economies and markets in the world (i.e. China, India) The EU is there. Average shipping distance EU (Belgium) to Asia:10040 nautical miles; 29 days sailing time ASEAN is here. Average shipping distance ASEAN (Manila) to Asia: 2,642 nautical miles; 8 days sailing time

25 Country Ranking (Population) Population (est. 2012) Ranking (2012 GDP) Nominal GDP (2012) in US China 1 1,350,695,0003 4,522,140,211,438 India 2 1,236,686,7328 1,368,761,731,904 Japan ,561,4892 4,711,867,439,634 Korea 26 50,004, ,078,208,564,659 Australia 51 22,683, ,469,499,748 New Zealand 122 4,433, ,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 account for a large part of the worlds population and economy

26 The 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.

27 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.

28 Tariff Reduction, for example Since 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.

29 Intra-ASEAN trade has shown marked improvement in the past decade … Source: ITC Trademap, in USD billlion; no data reported for CLMV for 2012.

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31 How has ASEAN engaged its Partners?

32 The Philippines FTA Network ChinaJapan Australia New Zealand India S.Korea ASEAN

33 Rationale for PH Participation Means to promote trade and investment flows Ensure continued and enhanced market access for ASEANs 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

34 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 Services c)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

35 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 2 nd package of commitments on services signed at the 19 th ASEAN Summit in Nov ASEAN - China

36 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

37 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

38 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

39 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

40 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 19 th 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.

41 Trade in Services?

42 Why consider 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

43 Deeper intra-regional integration through services... 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

44 Promoting market access in all modes of supply. 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)

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46 Philippine Export Development Plan (PEDP) Core product strategies Move up the value chain Capture high-value processes in the global supply chain Develop product linkages for natural, organic and certification-enabled products Core market strategies Maximize benefits of FTAs Target high-growth emerging markets Attract the migration of supply chain nodes to the Philippines

47 PEDP 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)

48 Complementary Industry Strategies National Industry Cluster Capacity Enhancement Program aims to further the competitiveness of the countrys 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).

49 PH has the right ingredients to tap AEC trade and business 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 essential Active Philippine participation in ASEAN business networks and fora

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51 Worrying is like a rocking chair, it gives you something to do, but it gets you nowhere. – Glenn Turner

52 Thank you


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