Robust growth keeps PH on track to AEC 2015
MANILA, Philippines - The Philippines' strong macroeconomic fundamentals is the country's main advantage in its efforts to successfully integrate into the ASEAN by 2015.
In an interview with Rappler before the October 23 forum on ASEAN 2015, ASEAN Deputy Secretary General Dr. Lim Hong Hin said the country's progress in meeting the agreements under the ASEAN Economic Community (AEC) has been significant.
This is also one of the reasons for the optimism of the ASEAN why the country can also play a significant role in the Regional Community Economic Partnership (RCEP) which is being envisioned to be the largest Free Trade Agreement (FTA) in the world.
However, Hin said its performance has slowed to 74% in the 2010 to 2011 period. This is significantly lower than the 94.55% it registered in the 2008 to 2009 review period.
He said this performance is understandable since meeting agreements and measures to comply with the AEC will become more difficult as 2015 nears. Hin said meeting the agreements would require changes in Philippine laws and national policies - which both take time to accomplish.
Hin said, however, with the Philippine economy's robust growth which has made it the third fastest growing economy in the world, have helped keep the country's efforts on track to meet the conditions by 2015. Strong growth, he said, is attributed to better household and government spending as well as higher local investments.
"The Philippines is on the right track. In the past, the Philippines has been considered as one of the developmentally challenged economy in Asia and its good that we are seeing a change in perception and the Philippine government is right on track in introducing the right policy and to go through the process to make sure that whatever policy gets introduced, the key beneficiary is the private sector and the people. This is something that you should be very proud of because you are on the right track," Hin said.
Largest FTA worldwide
The RCEP, Hin said, intends to consolidate all the bilateral agreements of the ASEAN with six other countries - China, India, Japan, Korea, Australia, and New Zealand.
Hin said the ASEAN is already in the process of consolidating the bilateral FTAs with these countries and its is launched in November this year. He explained that the RCEP will cover half of the world's population and a third of global Gross Domestic Product (GDP).
The main issue in RCEP right now is dealing with the tariff reductions in all the ASEAN FTAs. The most ambitious of which, Hin said, is the Australia-New Zealand FTA with ASEAN which highlights zero tariff lines.
This is a significant drop from where the other tariffs under ASEAN FTAs which still allow tariff rates to stay at 80% or even higher at 90%.
"Since April the ministers, the senior officials, all the working groups have been very busy trying to come up with the guiding principles as to how we intend to govern this negotiation when it is launched. The Asean countries have met among themselves, they have also met with the 6 country we have bilat ftas, and they have come up with a template which shall be used as basis for (the agreements)," Hin said.
"If successfully negotiated and completed, it will be the largest FTA in the world, partly because it will include half of the world population, you have china and india as partners, and you'll also be accountable for a third of world GDP," he added.
Single currency not feasible
Despite efforts that are underway to finally merge the ASEAN into a single market by 2015, Hin said the region is not ready to adopt a single currency, similar to the European Union (EU).
Hin said the ASEAN will become a free trade area but will require more time to become an economic and monetary union, which is what the EU is.
What the ASEAN has done quite well on, on the financial side, is the creation of funds such as the Chiang Mai Initative (CMI). Hin said these funds have been instrumental in helping countries who encounter economic difficulties.
Hin added that efforts to improve the financial sector in all ASEAN countries since the Asian Financial Crisis 1997 to 1998 have made it resilient to succeeding economic shocks. This includes the Global Economic Crisis of 2009 which left many Asian countries virtually unscathed.
He added that efforts such as the ASEAN exchange, which facilitates cross-listing of firms in different stock exchanges in the region, has been instrumental in the free flow of trade, investment, and capital in the region.
"I think for the currency we have to wait for the right time when the right time will be, your guess is as good as mine. We still have a long way to go from a free trade area to an economic, monetary unit," Hin said. - Rappler.com