Enhancing Philippine Competitiveness, Empowering Business

Transcription

1 ASEAN ECONOMIC COMMUNITY 2015 Enhancing Philippine Competitiveness, Empowering Business Rafaelita M. Aldaba 24 April 2014

2 Outline AEC 2015 TRADE LIBERALIZATION & FACILITATION SINGLE MARKET, SINGLE PRODUCTION BASE GLOBAL/REGIONAL PRODUCTION NETWORKS Opportunities & Potential Benefits vs. Threats & Challenges Government strategy to manage the transition process & maximize gains from AEC MANUFACTURING INDUSTRY ROADMAP UPGRADE INDUSTRIES, IMPROVE COMPETITIVENESS

3 AEC 2015 Key Messages Free flow of goods, investment, services, skilled labor, capital Removal of tariff & non-tariff barriers, restrictions & regulations Trade facilitation, harmonization, standardization, conformance, transport connectivity Challenges, threats, opportunities Opportunities: FDI, market access, lower input costs, lower transactions costs, better quality goods & services at lower prices Businesses & SMEs: participation in production networks Strong competition: uncompetitive sectors Game Plan: enhance competitiveness, empower business facilitate adjustment process to AEC integration Firm strategy based on global perspective Industry upgrading & restructuring: move up the value chain Strengthen institutional & regulatory environment

4 1. AEC: Free Flow of Goods ASEAN Trade In Goods Agreement: intra-asean trade in goods Tariffs, quantity restrictions & non-tariff barriers Rules of Origin: only ASEAN products directly produced within the region will qualify for benefits of AFTA Customs Modernization: National Single Window (NSW) 26 government agencies: E-licenses, permits & certificates Connected to NSW portal: submit applications & documents, verify status online, get decisions on transactions Product Standards & Conformance Procedures: 1 standard, 1 test, accepted everywhere national standards with international standards implement mutual recognition arrangements (MRA) on conformity assessment

5 2. Potential Implications Benefits & Opportunities Market access opportunities for Filipino firms to expand Filipino companies can sell to 600 million people Investment liberalization, facilitation, promotion, protection Can own 100% of companies in other ASEAN countries Should be able to own 70% of services companies Access to capital markets Should be treated equally as local companies/people Labor mobility: visa, economic test Mutual Recognition Arrangements Transport & logistics, trade facilitation, product standardization & conformance: lower transaction costs Improved administrative processes (customs, mutual recognition) Easier/less costly movement goods

6 Challenges & Threats Intense competition Bigger, more financial capability, better technical products/service systems May get support from home countries How to manage short term adjustment costs? Winners: firms that gain from market expansion & improved competitiveness, workers who get employed in growing sectors, government to collect higher revenue, consumers from wide variety of goods & services at lower prices Losers: inefficient, uncompetitive sectors How to ensure SME survival chances? Lack of access to finance, technology, skilled labor, inability to comply with standards Weak linkages to high tech sectors Penetrating export market a major challenge

7 3. Strategy: New Industrial Policy Globalization/regional economic integration AEC 2015: Global/Regional Production Networks Productivity/competitiveness crucial Industry upgrading: achieve inclusive growth, create jobs, increase income, reduce poverty 800K new entrants/year; 3M unemployed; 7.3M underemployed Services cannot provide all the needed jobs Manufacturing can employ skilled, semi-skilled, unskilled To attract investments, new industrial policy Remove obstacles to growth Efficient use of existing capacity & expansion Deepen participation in regional production networks HRD, Innovation & Technology Upgrading Industrial policy: coordination/facilitation, creation of proper environment for private sector development

8 Roadmap for Structural Transformation Vision: globally competitive manufacturing Phase I Rebuild capacity of existing industries, strengthen emerging industries, maintain competitiveness of comparative advantage industries Phase II Shift to high value added activities, investments in upstream industries -Link & integrate industries --SMEs & large enterprises Phase III Participate as hubs in regional & global production networks for auto, electronics, machinery, garments, food 8

9 Strategic Actions, Complementary Measures Coordination mechanism Horizontal measures Vertical measures Investment promotion Power, smuggling, logistics & infrastructure Competitive exchange rate 30% value added; 15% employment Close supply chain gaps Expand domestic market & exports HRD & skills SME development Technology upgrading, innovation, common facilities open trade regime, sustainable macro policies, sound tax policies & administration, efficient bureaucracy, secure property rights, institutions that promote adaptive research & patent regime, access to finance & technology for SMEs 9

10 Action 1. Close Supply/Value Chain Gaps Sector Copper Furniture Tool & die Paper Iron & steel Petroche m Plastic Measures Institutional mechanism to fully integrate the industry Supply hubs for raw & natural materials Access to raw materials, equipment, & software Expand fiber raw material base, develop massive tree plantations & commercial agro forestry integrated with virgin wood pulp production Full integration of industry upstream-mining, reliable supply of iron ore & coal Enhance competitiveness of downstream products Encourage growth of recycling industry 10

11 Action 2. Domestic Market Base Expansion Sector Automotive Ship building Motorcycle assembly Motorcycle parts Measures Incentive to rebuild domestic market, create scale economies, become an export platform Implement RA 9295: retirement of old vessels Development of the support (local parts) industries, critical parts & components are imported which leads to high costs Incentives to attract supporting industries (die making, precision machining), capacity building & HRD programs 11

12 Action 3. HRD & Skills/Trainings Type Design, tool making, prototyping, molding, die & casting Chemical engineering, Materials Engineering Supervisory, managerial, consultancy for improved productivity Foundry technology, Metallurgical Engineering, Mechanical Engineering, Industrial Engineering, Metal casting Engineering Die design, Tool & Die Engineering Vocational trainings (TESDA) Sectors Auto parts, Tool & Die Chemical, Rubber, Plastics Furniture Metal casting Tool & Die Iron & steel 12

13 Action 4. SME Development & Innovation Type Sectors SME development: access to finance, incubation facilities, clusters Quality testing facilities R&D facilities Industry-academe linkages for new product development & applied technology Action 5: Other Key Measures Aggressive marketing & promotion to attract investments (new technologies) High cost of power & domestic shipping, smuggling & measures to streamline & automate government procedures Competitive exchange rate 13

14 Comprehensive National Industry Strategy (CNIS) FRAMEWORK EXTERNAL FACTORS: GLOBALIZATION, REGIONAL/BILATERAL/MULTILATERAL TRADING ARRANGEMENTS, GLOBAL & REGIONAL PRODUCTION NETWORKS AGRICULTURE FISHING, FORESTRY MINING MANUFACTURING SERVICES INTERNAL FACTORS: GOVERNMENT POLICIES &PROGRAMS, INSTITUTIONS, INFRASTRUCTURE, MACRO STABILITY, RULE OF LAW, PEACE & ORDER, POLITICAL CLIMATE THREE IMPORTANT CHANNELS AFFECTING INDUSTRY GROWTH: COMPETITION, INNOVATION, PRODUCTIVITY

15 SERVICES Current comparative advantage IT-BPM, business services Potential comparative advantage creative industries medical tourism, aircraft MRO, ship repair, educational, recreational, cultural & sporting, tourism & travel related distribution (retail, franchising), construction & engineering, transport support services Goal: Industry upgrading, move up the value chain: all sectors Strategy: optimizing supply-chain integration, improve regulation, make education more industry appropriate, encourage industry clustering toward agglomeration

16 Roadmap Implementation Industry Development Council Venue for coordination mechanism, information sharing, monitoring & policy formulation Overall guidance & direction in roadmap implementation Members: economic & other national agencies, business & academe Department of Trade and Industry Formulation of roadmap & detailed action plans 14 Technical Working Groups Manufacturing Resurgence Program Government priority program with funding from the Department of Budget & Management for projects to enhance manufacturing competitiveness

17 rising star, new tiger economy, breakout nation GDP Growth Rate, by quarter, (at constant 2000 prices) Manufacturing & Construction Growth Rate, by quarter, MANUFACTURING CONSTRUCTION 17

18 4. Final Thoughts AEC Blueprint: enabler of regional integration & facilitator of industrial development empower business Manufacturing Industry Roadmap: moving up the value chain Develop industrial base & technology upgrading Deepen participation in regional production networks Improve productivity of agriculture & services Empower Business: Productivity & Competitiveness Formulate own strategy from a global perspective Address supply chain gaps: raw material, logistics Know your consumer, create product niches Engage in innovation: product, process, marketing Comply with rules of origin requirements, product standards, conformance procedures Joint ventures/partnerships

19 THANK YOU!