Setting the example in Asean
As chair and host of the Association of Southeast Asian Nations (Asean) this year, all eyes are on the Philippines to demonstrate leadership in the various areas on which the 10 member-states of the regional bloc have built their cooperation. Not the least of these is in the economic sphere, with the Asean Economic Community as platform for closer cooperation and integration. As its fastest growing economy in recent years, we stand at the forefront of a region whose dynamism and potential as an economic bloc thrusts Asean prominently on the world stage.
Membership in Asean has clearly done us good. Asean as a bloc is now the Philippines’ largest trading partner, accounting for 22 percent of our total trade, eclipsing traditional leading partners Japan and the United States, both now with less than 15 percent. Our manufacturing exports to Asean have surged since the early 2000s as import tariffs fell to zero in 2010, and the growth of the manufacturing sector sped up to 7-8 percent annually, faster than overall economic growth. Intermediate goods have assumed the largest share in our trade with Asean, reflecting our strong integration into the regional production networks and value chains.
Even so, we have yet to catch up with our comparable Asean neighbors in export earnings, foreign direct investment inflows, tourism revenues, quantity and quality of infrastructure, and many other indicators of economic dynamism. While we nearly doubled our export earnings over what we got in the previous decade, our neighbors zoomed even faster, and actually widened the gap by which we fall behind. Vietnam used to earn about $10-15 billion more than we did from exports; now it exceeds ours by close to $100 billion! We have multiplied our foreign direct investment inflows nearly eightfold, from an annual average of $1 billion in the last decade, to $7.9 billion last year. But even that still puts us behind the original Asean 5, and Vietnam.
We also need to address high poverty incidence and wide income gaps, environmental degradation, and vulnerability to natural disasters and climate change, which remain among our most daunting challenges as a nation. Vietnam achieved all the Millennium Development Goals well before the 2015 target year; we missed achieving nearly half of them, including the primary goal of halving our 1991 poverty rate. Physical connectivity with the rest of the region remains a challenge as well, especially with our geographical separation from mainland Southeast Asia, even as internal connectivity is already made more difficult by our being an archipelago.
Even as a founding member of Asean, we have yet to take fuller advantage of opportunities for economic synergies offered by regional production networks and value chains. This especially applies to products of agriculture, where we have continued to restrict trade in rice and products of livestock and poultry, rather than benefit from the regional production networks that have rapidly emerged in these products. We have yet to eliminate longstanding constitutional and legal restrictions on foreign ownership in vital services such as transport, telecommunications, mass media and education. Among other things, these have led us to suffer the consequences of lack of competition in the provision of critical infrastructure facilities especially in transport, telecommunications (including internet), and energy. Particularly embarrassing is how we lag in implementing our National Single Window, an online one-stop platform for all import and export clearances aimed at facilitating trade, which needs to be linked to the regionwide Asean Single Window (ASW) platform. Right now, activation of the ASW cannot proceed because of us, even as we had the bravado in 2007 to volunteer to lead the initiative and chair the ASW Committee, a post we still hold.
Chairmanship of Asean should go well beyond our President and other officials sitting at the head of the table as our Asean colleagues talk above our heads. Leadership demands setting a good example, and in Asean, I’m afraid we have yet to be a good example to be able to lead with authority.
