ILS Discussion Paper Series 2012

ASEAN 2015:
Implications of People Mobility and Services

Mary Grace L. Riguer

Working Paper Series 2012

For Discussion Purposes Only

ASEAN 2015: IMPLICATIONS OF PEOPLE MOBILITY AND SERVICES

Mary Grace L. Riguer

The views expressed in this paper are those of the authors and do not reflect the opinion of the Institute for Labor Studies and the Department of Labor and Employment.

Abstract

This paper examines the readiness of Philippines for worker mobility within the region of Association of Southeast Asian Nations (ASEAN). It focuses on the implications of the impending establishment of the ASEAN Economic Community by 2015 as specifically governed by rules and regional commitments on free flow services, mutual recognition of qualifications and skills, movement of natural persons, and movement of skilled labor.

1
I. INTRODUCTION

It is 2016 Filipinos can freely move for work anywhere in the nine (9) countries that comprise the Association of Southeast Asian Nations or ASEAN. Indonesians, Malaysians, Singaporeans, Bruneians, Myanmar, Cambodians, Vietnamese, Laotians can also do the same in the Philippines. Just the previous year, in 2015, the ASEAN Economic Community, as envisioned by ASEAN leaders in 2007, formally came to being, ushering in a region with a single market and production base characterized by free flow of goods, free flow of services, free flow of investment, freer flow of capital, and free flow of skilled labor. Like other ASEAN peoples, Filipinos, have now become more mobile across this regional economy.

What has just been illustrated is a scene in a future that takes shape in the ASEAN Community established through the Declaration of Bali Concord II (ASEAN Concord II). Agreed upon by ASEAN members in the 12th ASEAN Summit in 2007, ASEAN Community will have been formally established by 2015, consisting of three pillars: the ASEAN Economic Community (AEC), the ASEAN Socio-Cultural Community (ASCC) and the ASEAN PoliticalSecurity Community (APC). With the objective of transforming ASEAN as a single market and single production base, the ASEAN Economic Community will be established through the free flow of goods, capital, services and investments.

Equally likely, however, is a scenario where movement for the purpose of work between ASEAN countries may happen, but not totally free. While ASEAN members envisioned a single market and production base, their commitments toward realizing this vision still recognize national limitations. In the language of the Roadmap for an ASEAN Community 2009-2015, in particular, free flow of skilled labor will happen through “managed mobility or facilitated entry,” instead of full integration.

2

This paper will examine what will happen in ASEAN by 2015, focusing on mobility of persons for purposes of work, more particularly on aspects of free flow of services associated with movement of natural persons and free flow of skilled labor. It will also determine implications on Philippine labor and employment policies and laws.

II. RESEARCH OVERVIEW

Rationale and Problem. The government’s medium-term goal is inclusive growth. Under the Philippine Development Plan (PDP), the essential to inclusive growth are two pathways: massive employment generation and massive poverty reduction.

As the world becomes more connected through various modes of cooperation and integration, the PDP recognizes the importance of outward-looking policies. The PDP, therefore, sees the need for an enabling legal and regulatory environment for optimal economic benefits from engaging with other countries, stating:

“An outward-looking orientation must be complemented by an alignment of laws and regulations that facilitate the expected benefits and lessen any adverse effects of interfacing closely with the world economy. Internal processes and legal framework must be strengthened to take advantage of opportunities presented by the global economic environment.”

Labor and employment policies and decisions could no longer ignore the fact of global economic integration. As a member of the Association of Southeast Asian Nations that moves closer to becoming one community in 2015, the reality of economic integration

3 becomes even more imminent. This policy paper aims to contribute to efforts of the Department of Labor and Employment in framing and managing the policy transition toward integration of ASEAN economies by 2015 particularly on aspects that affect worker mobility. This paper aims to examine the prospect and requirements for policy transition for worker mobility within the ASEAN.

This paper proposes a framework of pathways to mobility and for managing the transition for worker mobility within the context of the ASEAN Economic Community by 2015. It therefore seeks to address the questions: What are the policy or legal requisites for managing the transition so that mobility of Filipino workers will be promoted? The scope of the paper will be limited to aspects that relate to movement of natural persons and movement of skilled labor. It will also use the ASEAN Economic Community framework as the area of focus, and labor and employment at the core of policy recommendations.

Objectives. The objectives of the study are as follows:

1. Investigate the scope of free flow of services and free flow of skilled labor within ASEAN Economic Community;

2. Make an inventory of Philippine policies and regulations related to free flow of services and free flow of skilled;

3. Determine readiness of the Philippine policy and regulatory framework for free flow of services and free flow of skilled labor within AEC; and

4
4. Recommend strategies for managing transition for worker mobility in the ASEAN Economic Community, balancing commitments under ASEAN

Economic Community Blueprint with respect to free flow of services and skilled labor and the development objective for inclusive growth through employment opportunities. III. BACKGROUND ON ASEAN

Overview on ASEAN. Established in 1967, the Association of Southeast Asian Nations (ASEAN) is composed of 10 member states: Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. It formally came to being in 2007, with the adoption of the ASEAN Charter at the 13th ASEAN Summit held in Singapore. Prior to that, in 2003, members agreed to pursue deeper and broader cooperation through community building with the adoption of the Declaration of ASEAN Concord, also known as Bali Concord II, at the 9th ASEAN Summit in Bali, Indonesia. The concord envisions the establishment of an ASEAN Community by 2020 with three pillars: ASEAN Economic Community, ASEAN Socio-Cultural Community and ASEAN Political-Security Community. Meeting in Cebu in 2007, the members decided to accelerate community building by moving inception from 2020 to 2015. To fast track the integration, members adopted blueprints containing action areas and goals—the ASEAN Economic Community (AEC) Blueprint in 2007, and the ASEAN Political-Security Community Blueprint and the ASEAN Socio-Cultural Community Blueprint in 2009. These blueprints were consolidated into the Roadmap for ASEAN Community, 2009-2015.

5
ASEAN economic community building. The ASEAN Charter explicitly includes economic community building as one of the purposes of the organization:

To create a single market and production base which is stable, prosperous, highly competitive and economically integrated with effective facilitation for trade and investment in which there is free flow of goods, services and investment; facilitated movement of business persons, professionals, talents and labor; and freer flow of capital.

The AEC Blueprint embodies the collective commitments, including targets and timelines, of the ASEAN members for deeper and broader economic integration, with the following attributes: a) a single market and production base, b) a highly competitive economic region, c) a region of equitable economic development, and d) a region fully integrated into the global economy.

The AEC Blueprint specifically provides that the “ASEAN single market and production base shall comprise five core elements: (i) free flow of goods; (ii) free flow of services; (iii) free flow of investment; (iv) freer flow of capital; and (v) free flow of skilled labor. Box 1 shows the commitments and targets for free flow of services and free flow of skilled labor.

6

Box 1. ASEAN Economic Community Blueprint: Commitments A2. Free flow of services 20. Free flow of trade in services is one of the important elements in realizing ASEAN Economic Community, where there will be substantially no restriction to ASEAN services suppliers in providing services and in establishing companies across national borders within the region, subject to domestic regulations. Liberalization of services has been carried out through rounds of negotiation mainly under the Coordinating Committee on Services. Negotiation of some specific services sectors such as financial services and air transport are carried out by their respective Ministerial bodies. In liberalizing services, there should be no back-loading of commitments, and preagreed flexibility shall be accorded to all ASEAN Member Countries. 21. In facilitating the free flow of services by 2015, ASEAN is also working towards recognition of professional qualifications with a view to facilitate their movement within the region. Actions: i. ii. iii. iv. Remove substantially all restrictions on trade in services for 4 priority services sectors, air transport, e-ASEAN, healthcare and tourism, by 2010 and the fifth priority services sector, logistics services, by 2013; Remove substantially all restrictions on trade in services for all other services sectors by 2015; Undertake liberalization through consecutive rounds of every two years until 2015, i.e. 2008, 2010, 2012, 2014 and 2015; Target to schedule minimum numbers of new sub-sectors for each round: 10 sub-sectors in 2008, 15 in 2010, 20 in 2012, 20 in 2014 and 7 in 2015, based on GATS W/120 universe of classification;

7
Box 1. ASEAN Economic Community Blueprint: Commitments (continuation) v. Schedule packages of commitments for every round according to the following parameters:   No restrictions for Modes 1 and 2, with exceptions due to bona fide regulatory reasons (such as public safety) which are subject to agreement by all Member Countries on a case-by-case basis; Allow for foreign (ASEAN) equity participation of not less than 51% by 2008, and 70% by 2010 for the 4 priority services sectors; not less than 49% by 2008, 51% by 2010, and 70% by 2013 for logistics services; and not less than 49% by 2008, 51% by 2010, and 70% by 2015 for other services sectors; and Progressively remove other Mode 3 market access limitations by 2015;

 vi. vii. viii. ix.

Set the parameters of liberalization for national treatment limitations, Mode 4 and limitations in the horizontal commitments for each round by 2009; Schedule commitments according to agreed parameters for national treatment limitations, Mode 4 and limitations in the horizontal commitments set in 2009; Complete the compilation of an inventory of barriers to services by August 2008; Allow for overall flexibilities ix. 2, which cover the sub-sectors totally excluded from liberalization and the sub-sectors in which not all the agreed parameters of liberalization of the modes of supply are met, in scheduling liberalization commitments. The scheduling of liberalization commitments in each round shall be accorded with the following flexibilities:     Possibility of catching up in the next round if a Member Country is not able to meet the parameters of commitments set for the previous round; Allowing for substituting sub-sectors that have been agreed to be liberalized in a round but for which a Member Country is not able to make commitments with subsectors outside the agreed sub-sectors; and Liberalization through the ASEAN Minus X formula. Complete mutual recognition arrangements (MRAs) currently under negotiation, i.e. architectural services, accountancy services, surveying qualifications, medical practitioners by 2008, and dental practitioners by 2009; Implement the MRAs expeditiously according to the provisions of each respective MRA; Identify and develop MRAs for other professional services by 2012, to be completed by 2015; and Strengthen human resource development and capacity building in the area of services.

  

8
Box 1. ASEAN Economic Community Blueprint: Commitments (continuation) For the financial services sector, 22. Liberalization measures of the financial services sector should allow members to ensure orderly financial sector development and maintenance of financial and socio-economic stability. Member Countries would be guided by the following principles in pacing their liberalization measures: (a) Liberalization through ASEAN Minus X formula where countries that are ready to liberalize can proceed first and be joined by others later; and (b) The process of liberalization should take place with due respect for national policy objectives and the level of economic and financial sector development of the individual members. Actions: i. ii. Progressively liberalize restrictions in sub-sectors or modes as identified by each member country by 2015; and Progressively liberalize restrictions in the remaining sub-sectors or modes, which are not identified under “pre-agreed flexibilities”, by 2020

A5. Free flow of skilled labor 33. In allowing for managed mobility or facilitated entry for the movement of natural persons engaged in trade in goods, services, and investments, according to the prevailing regulations of the receiving country, ASEAN is working to: Action: i. Facilitate the issuance of visas and employment passes for ASEAN professionals and skilled labor who are engaged in cross-border trade and investment related activities.

34. In facilitating the free flow of services (by 2015), ASEAN is also working towards harmonization and standardization, with a view to facilitate their movement within the region. Actions: i. ii. iii. Enhance cooperation among ASEAN University Network (AUN) members to increase mobility for both students and staff within the region; Develop core competencies and qualifications for job/occupational and trainers skills required in the priority services sectors (by 2009); and in other services sectors (from 2010 to 2015); and Strengthen the research capabilities of each ASEAN Member Country in terms of promoting skills, job placements, and developing labor market information networks among ASEAN Member Countries.

National implementation of the AEC Blueprint is monitored and evaluated through an indicator system denoted as “Scorecard.”

9
IV. FRAMEWORK

People move through great distance. According to the Human Development Report (HDR) (United Nations Development Programme [UNDP], 2009), international migrants worldwide have ballooned to 200 million worldwide and internal migrants, or migrants who do not cross national borders, are now at estimated 740 million.

What is the kind of movement that has the highest development benefit? HDR 2009 argues that people reaps the best benefits when they move in conditions of freedom. This is defined as human mobility or the ability and freedom of a person to move to a destination that one wants, as opposed to movement, which is the “act of changing one’s place of residence.” HDR also explains that “the absence of formal restrictions on the movement of people across or within borders does not in itself make people free to move if they lack the economic resources, security and networks necessary to enjoy a decent life in their new home, or if informal constraints such as discrimination significantly impede the prospects of moving successfully” (UNDP, 2009, p. 15-16). In summary, the ideal movement is movement that is free, therefore approximating mobility.

Yet, movement can never be free. Choosing whom to enter, and stay in, a territory is an attribute of its sovereignty and this attribute manifests through admission and entry policies including visa requirements, permits and passes. In essence, as long as there are states, which are sovereign entities, movement will not be free.

In Tabladillo (2010), three pathways to international mobility for Filipinos residing in the Philippines are identified: 1) overseas employment; 2) mode 4 of trade in services (movement of natural persons); and (3) alternative modes of entry including working

10 holiday scheme, cultural exchange and education or training exchanges. The first may afford protective mechanisms, but the second and the third are protection-neutral. The first is also clearly a pathway for employment or work; but the second does not permit entry to the labor market for employment purposes. It is, instead, a mode of supply services, which is temporary, and not a mode for binding oneself to an employment contract, permanent or temporary. International mobility in the ASEAN Economic Community (AEC) is characterized by the second form. In summary, virtually all the known pathways to international mobility do not afford free movement or total mobility. They are all what can be described as managed movement or managed mobility.

This paper thus has two arguments: 1) that mobility does not have to be absolute or totally free, but it should also not be too restrictive, and 2) there are many pathways that can be blended to ensure greater mobility for Filipinos.

As ASEAN makes the transition to economic integration in 2015, with free flow of services and free flow of skilled labor part of core aspects, what are the core elements for a policy or legal framework that will allow Filipinos to gain optimal benefits through managed mobility? Will investigate the degree of openness of Philippine legal framework for inward and outward international mobility and suggest strategies for safeguarding interests of Filipinos for greater mobility.

11
Figure 1. Framework of Analysis

PHILIPPINES
AEC

Zone of mobility
AEC

ASEAN

g

Other Mobility Pathways

V. ASEAN ECONOMY AND MOBILITY AREA: PHILIPPINES IN FOCUS

Stock of suppliers. The ASEAN is a vast region with a total land area of 4.436 million square kilometers and total population of 598.5 million in 2010. Based on estimates, ASEAN population will remain robust in the coming years, expanding to 626.5 million in 2015, 43% of which will consist of working-age persons at 25 to 54 (ASEAN Secretariat, 2011). Despite of the global economy slowdown, ASEAN economies will continue to expand—by an annual average 10% in 2012-16 (Grant Thornton International Business, 2012).

By 2015, Philippines will be the largest ASEAN member in terms of population, after Indonesia. Its projected population at 101 million in 2015 will account for 16% of the ASEAN total (Table 1).

12
Table 1. ASEAN Population
Share of Population Total Population Total Population (000) Member ASEAN Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam 390 14,444 231,627 5,859 26,572 48,798 87,960 4,436 63,884 87,375 453 16 641 251 567 6 699 30 047 51 998 101 090 4 809 66 763 96 467 177 4 658 97 085 1 896 10 575 20 907 31 326 2 144 29 477 35 539 206 6 239 110 300 2 429 12 320 23 496 37 871 2 081 29 581 42 470 45.3 32.3 41.9 32.4 39.8 42.8 35.6 48.3 46.1 40.7 45.3 37.5 43.8 36.3 41 45.2 37.5 43.3 44.3 44 2007 571,345 2015 626,534 Aged 25-54 (000) 2007 233,785 2015 266,992 2007 40.9 Aged 25-54 to Total (%) 2015 42.6

*2015 figures are projections Source: International Labour Organization (2008)

ASEAN labor force is at 390 million in 2008, which is projected to expand to 346.6 million in 2020. The Philippines contributed nearly 10% of the ASEAN labor force in 2008. This share will increase to 14% in 2020 (Table 2).

13
Table 2. ASEAN Labor Force (000)
Member ASEAN Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam 4,936 86,879 2,119 8,167 22,412 27,460 1,739 32,030 35,585 5,916 99,577 2,391 9,737 24,858 30,830 2,059 34,176 38,716 7,680 115,443 2,964 11,867 28,361 37,862 2,411 36,937 46,602 9,104 128,805 3,601 13,856 31,307 44,407 2,709 38,279 52,797 10,014 137,382 4,009 15,170 33,038 49,266 2,805 38,669 55,979 1995 221,459 131 2000 248,415 1155 2008 390,317 191 2015 325,085 221 2020 346,572 240

*2015 and 2020 figures are projections Source: International Labour Organization (2008)

Opportunities for movers. Services sector has become an income and employment generator for ASEAN member states, accounting for 40% to 60% of their Gross Domestic Product (GDP) (ASEAN Economic Community Handbook for Business 2012) and 36.5% of employment. (ASEAN Secretariat, 2010). See Table 3.

Services sector has increasingly become an employment generator in ASEAN. Employment growth in ASEAN is driven by services, contributing 3.16 million in 2006-2007. While the region remains agricultural, with the share of agriculture to total employment at 44.5% in 2007, it is also largely driven by the services sector, accounting for a share of 36.5%. It is estimated also that by 2015, the services sector in ASEAN will be the largest sector in terms of employment, contributing a share of 41% up from 36.5 % in 2007 (Table 3).

14
Table 3. ASEAN Employment by Sector
Indicator Employment growth (000) (20062007) Employment growth (%) (2007) Share to total employment (%) (2007) 1.9 44.5 5.1 19.0 3.3 36.5 Agriculture 2,235 Industry 2,484 3,163 Services

Source: ASEAN Secretariat (2010). ASEAN Statistical Yearbook 2010

Movement with ASEAN. Movement of persons within ASEAN differs across the member countries; some members can be described more as origin countries with their outward migration to other ASEAN members far exceeding that of inward migration of persons from other ASEAN members. Indonesia, Lao PDR, Myanmar, Philippines and Vietnam are in this category. The largest origin country is Indonesia with outward migration at 1.5 million while Malaysia is the largest destination country with inward migration at 1.9 million (Table 4).

Malaysia, Indonesia, Myanmar and to some extent Singapore are countries with that high share of movers to ASEAN countries compared to their total migration. This means that migrants from these countries can be found more in ASEAN than in non-ASEAN destinations. On the other hand, Viet Nam and Cambodia migrants are moving to destinations that extend to beyond ASEAN.

15
Table 4. Intra-ASEAN Migration
Intra-ASEAN Migration Total Migration Share of Intra-ASEAN Migration to Total Outward Migration Inward Migration Ratio of Outward/ Inward Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam TOTAL 53,722 1,518,687 82,788 1,195,566 321,100 335,407 122,254 262,721 221,956 4,123,515 320,573 158,485 10,134 1,882,987 814 9,096 1,162,960 448,218 21,511 4,135,357 0.17 9.58 8.17 0.63 394.47 36.87 0.11 0.59 10.32 1.00 350,485 2,504,297 366,663 1,481,202 514,667 4,275,612 297,234 811,123 2,226,401 12,852,027 335,829 397,124 18,916 2,357,603 98,008 435,423 1,966,865 1,157,263 69,307 6,984,461 1.04 6.31 19.38 0.63 5.25 9.82 0.15 0.70 32.12 1.84 15.33 60.64 22.58 80.72 62.39 7.84 41.13 32.39 9.97 32.08 95.46 39.91 53.58 79.87 0.83 2.09 59.13 38.73 31.04 59.21 9,313 120,578 0.08 24,343 148,123 Outward Migration Inward Migration Ratio of Outward/ Inward 0.16 38.26 81.40 Outward Migration Inward Migration

Notes: all data are based on data estimates of World Bank released in 2010, except that for Myanmar which are based on estimates for 2007 Source: Pasadilla (2007)

16
VI. FRAMEWORK FOR MOBILITY IN THE ASEAN ECONOMIC COMMUNITY

ASEAN has multitude of rules for mobility; but this paper focuses on the framework of ASEAN Economic Community (AEC) or the AEC Blueprint 2009-2015, which includes free flow of services including movement of natural persons and free flow of skilled labor among its core elements.

Figure 2. The ASEAN Economic Community and its Pillars

Source: Rillo (2011)

The ASEAN is envisaged to transform into a single market and production base. For this to happen, national barriers will have to be substantially reduced if not eliminated, to allow free flow of capital, investment, goods, services and skilled labor.

17
Based on the Roadmap for the ASEAN Community 2009-2015, the concept of free flow is not absolute, total or full. Free flow means managed flow through regional rules subject to domestic or national laws and regulations. Free also means freer or faster implementation of commitments from previous agreements or frameworks. Therefore, the ASEAN Economic Community, far from ushering in full economic integration, will just build on, or accelerate, previous initiatives for community building, including the initiative for trade in services liberalization under the ASEAN Framework Agreement on Services (AFAS) and ASEAN mutual recognition agreements (MRAs). See Boxes 2 and 3 for background on AFAS and MRAs.

18

Box 2. ASEAN Framework Agreement on Services ASEAN Members signed the ASEAN Framework Agreement on Services or AFAS in 1995 with the following aims: 1. 2. 3. enhance cooperation in services among ASEAN Member States to improve the efficiency and competitiveness of ASEAN services industries, diversify production capacity and supply, and distribution of services; eliminate substantial barriers to trade in services; and liberalize trade in services by expanding the depth and scope of liberalization beyond those undertaken under the General Agreement on Trade in Services of the World Trade Organization

Under the AFAS members are required to undergo in successive rounds of negotiations to progressively liberalize trade in service sectors with the ASEAN region through “packages of commitments.” Since 1995, members have concluded eight (8) packages of commitments, covering the sectors of business and professional services, construction, distribution, education, environmental services, healthcare, maritime transport, telecommunications and tourism. In addition to these packages of commitments signed by ASEAN Economic Ministers, members have also concluded five packages of commitments for the liberalization of financial services signed by ASEAN Finance Ministers and seven packages of commitments for air transport services signed by ASEAN Transport Ministers. The Philippines has completed its the 8th package of commitments. AFAS is consistent with the General Agreement on Trade in Services, adopting the four modes of entry of service providers: 1. 2. 3. 4. cross border supply – does not require the presence of the service provider in the country where the service will be rendered; the service is usually delivered through information technology consumption abroad – the service consumer moves to the country where the service will be provided commercial presence – foreign investment of service providers movement of natural persons – requires the presence of the service provider in the country where the service will be provided

AFAS uses the classification of services sectors under GATS, which covers 120 individual sectors under 12 broad sectors: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Business Services Communication Services Construction and Related Engineering Services Distribution Services Educational Services Environmental Services Financial Services Health Related and Social Services Tourism and Travel related Services Recreational, Cultural and Sporting Services Transport Services Other Services Not Included Elsewhere.

Source: ASEAN Economic Community Handbook for Business 2012

19

Box 3. Mutual Recognition Agreements/Arrangements (MRAs) Mutual recognition is a process by which a host or destination country recognizes the content of training or professional qualifications obtained in the origin country and the latter’s authority to certify such training or qualifications through granting of diplomas/other certificates. Its purpose is to promote the international mobility of workers or in service suppliers. Equivalence is a related process through which the host country’ assesses whether its regulatory objectives are met by the origin country and to arrive at a decision for accepting the origin country’s regulation as equivalent. The host country is permitted to additional requirements Limitations Under MRAs, recognition is not automatic. MRAs instead usually set out processes for the determination of standards and other requirements for recognitionto be undertaken competent authorities from the origin and host countries. Effect Recognition does not “automatically confer right to exercise a profession, as market access must be granted.” Recognition can exclude some professions or skills. Capacity or eligibility to work after recognition will be subject to the following principles:    To be eligible to work in the host country, professional must meet requirements in his home country, including years of education, acquisition and other capacities (e.g., age, citizenship) To be eligible to work in the host country, the professional must meeting the requirements of domestic laws and regulations While working in the host country, the professional must follow rules for professional conduct and must continuously comply with professional standards.

ASEAN MRAs 1. MRA for engineering services - recognition for registered ASEAN architects and engineers; provides harmonized standards and qualifications. 2. MRA for architectural services – same as engineering 3. MRA for nursing services – Promotes exchange of expertise, experience and best practices 4. MRA for medical practitioners – provides bilateral registration processes 5. MRA for dental practitioners – same as medical practitioners 6. MRA framework for accountancy services – same as medical practitioners 7. Framework Arrangement for the MRA of Surveying Qualifications – lays down broad principles and framework for negotiating bilateral and multilateral MRAs MRA vs. MRA framework. The former refers to the facilitation of mobility of professionals across borders while the latter sets out the process of negotiations for a recognition agreement.

Source: Yue (2012)

20
Table 5. Strategic Schedule of Priority Actions for the ASEAN Economic Community
Strategic Approach Free flow of services • Services Liberalization under AFAS* Schedule at least 10 new sub-sectors (2008) Remove substantially all restrictions on trade in services for the 4 priority services sectors (2010) Remove substantially all restrictions on trade in services for logistics services by Schedule at least 15 new sub-sectors (2010) Schedule at Set the parameters of liberalization for national treatment limitations, Mode 4 and limitations in the horizontal commitments for each round (2009) Schedule commitments according to agreed parameters for national treatment limitations, Mode 4 and limitations in the horizontal commitments set in 2009. least 20 new sub-sectors (2012) 2013 Schedule at least 20 (2014) and 7 (2015) new subsectors Remove substantially all restrictions on trade in services for all other services sectors by 2015 2008-2009 2010-2011 Priority Actions 2012-2013 2014-2015

21
Mutual Recognition Arrangements (MRAs) Complete MRAs currently under negotiation, i.e. architectural services, accountancy services, surveying qualifications, medical practitioners, and dental practitioners (2008). Identify and develop MRAs for other professional services by 2012 Full implementation of completed MRAs (2015)

Implement the completed MRAs Free flow of skilled labor Complete MRAs for major professional services, including PIS services sectors by 2008 Develop core competencies (concordance of skills and qualifications) for job/occupational skills required in the priority services sectors by 2009 Develop core competencies (concordance of skills and qualifications) for job/occupational skills required in all services sectors by 2015.

*Subject to flexibility as provided in the AEC Blueprint. The scheduling of liberalization commitments in each round shall be accorded with the following flexibilities: 1) possibility of

22 catching up in the next round if a Member Country is not able to meet the parameters of commitments set for the previous round; 2) allowing for substituting sub-sectors that have been agreed to be liberalized in a round but for which a Member Country is not able to make commitments with subsectors outside the agreed sub-sectors; and 3) liberalization through the ASEAN Minus X formula (where one Member can proceed with liberalization without waiting for the others to do the same). Priority integration sectors include air travel, agro-based products, automotives, ecommerce, electronics, fisheries, healthcare, rubber-based products, textiles and apparels, tourism, wood-based products and logistics; the four services sectors referred to above include air travel, e-commerce, tourism and health care; Source: Roadmap for an ASEAN Community (2009-2015)

VII. PROGRESS FOR MOBILITY: ASEAN SCORECARD

Based on the ASEAN Scorecard, the overall implementation rate of the AEC Blueprint for the period 2008-2011 is 67.9%. The rate was derived by counting the number of actionstaken by the Member States in terms of 1) “measures that provide qualitative and quantitative indications of the ratification, adoption and transposition into domestic laws, regulations and administrative procedures with the prescribed timeframes as specified in the AEC Blueprint”; 2) measures that “track implementation of agreements/commitments and achievement of milestones in the AEC Strategic Schedule”; and 3) measures that serve as statistical indicators on ASEAN Economic Community (AEC Scorecard 2011).

With regard to free flow of services and free flow of skilled labor, there is a small gap between what has been fully implemented and not.

23

Table 6. ASEAN Economic Community Scorecard 2011
Key Areas Fully implemented Free flow of services Free flow of skilled labor 1 0 0 1 10 Not fully implemented 3 Fully implemented 13 Not fully implemented 17 Fully implemented 23 Not fully implemented 20 Phase I (2008-2009) Phase II (2010-2011) Total (2008-2011)

24
VIII. PHILIPPINES IN FOCUS

Legal and Policy Framework for Mobility

The Philippines has a mix of policies for international mobility. The inward policy leans toward nationalization and protection, while the outward policy is a mix of protection and facilitation.

The nationalization policy is embodied in the Constitution, which gives preference to Filipino labor and to Filipinos in the practice of profession within the Philippine jurisdiction, and in various laws that restricts entry, stay and employment or productive engagement of foreigners to implement the policy for preference to, and protection for, Filipino labor.

For outward mobility, protection is at the core of the policy. The government can impose moratorium against travel or departure for countries found unfit as destination countries for Filipinos. All employment contracts are required to be processed by the Philippine Overseas Administration, which also manages a system of pre-departure training and cultural orientation to facilitate seamless transition of migrants into country of destination and their new jobs abroad and to prevent abuses by raising awareness on rights. On the other hand Philippines also enters in cooperation agreements or arrangements with other countries to facilitate recruitment of Filipino workers and to safeguard their rights to decent work conditions. Included in these agreements are the MRAs, which are deemed vital to promoting the outward or international mobility of Filipino professionals.

25

Table 8.

Policy and Legal Framework for Inward and Outward International

Mobility: Philippines
Policy Entry and stay visas/ Departure Inward Mobility Protection for the Filipino Labor; preference for Filipino labor Pre-Arranged Employment Visa A foreign national who will be occupying an Philippine Constitution of 1987, Art. XII: Section 12. “The state shall promote the preferential use of Filipino labor, domestic material and locally produced goods, and adopt measures that executive, technical, managerial or highly confidential position in a company for at least one year, but not to exceed five years, may apply for a prearranged employment visa under Sec. 9(g) of the Philippine Immigration Act. Article 40, Paragraph 2 of the Labor Code of the Philippines, as amended states that an “employment permit may be issued to a nonresident alien or to the applicant employer after a determination of the nonavailability of a person in the Philippines who is competent, able, and willing at the time of application to perform the Coverage. Foreign nationals required to apply for an AEP a. Foreign nationals seeking employment in the Philippines whether they are non-residents or refugees; b.Foreign professionals who are allowed to practice their profession in the Philippines under reciprocity and other international agreements and in consultancy services Employment Permit for Foreign Nationals Reciprocity. Foreigners may be allowed to practice in the Philippines provided the same treatment is accorded to Filipino professionals in the alien's home country under the principle of reciprocity A registered enterprise may be allowed to employ foreign nationals in supervisory, technical or advisory positions for five (5) years from date of registration, extendible for limited periods The positions of President, General Manager and Treasurer of foreign- owned registered Labor Market Test Employment permits/passes Qualification Requirements Technology Transfer

26
Policy Entry and stay visas/ Departure help make them competitive.” Treaty Trader Visa A foreign investor is Section 14. The State shall encourage appropriate technology and regulate its transfer for the national benefit. entitled to enter the Philippines as a treaty trader pursuant to Sec. 9(d) of the Philippine Immigration Act, only if he is a national of a country with which the The practice of all professions in the Philippines shall be limited to Filipino citizens, save in cases prescribed by law. Philippines has concluded a reciprocal agreement for the admission of treaty traders or investors. At present, only nationals of the United States, Japan and Germany are entitled to treaty trader visas. services for which the alien is desired.” pursuant to Section 7(j) of the PRC Modernization Act of 2000. c. Holders of Special Investors Resident Visa (SIRV), Special Retirees Resident Visa (SRRV), Treaty Traders Visa (9d) or Special NonImmigrant Visa (47(a)2) for as long as they occupy any executive, advisory, supervisory, or technical position in any establishment. exemption by law, permanent resident foreign nationals, owners and representatives of principals whose companies are accredited by the POEA for the purpose of conducting Commonwealth Act 108, as amended by PD 715 Section 2a, otherwise known as the Anti-Dummy Law states that foreign nationals are allowed only in technical positions in enterprises where foreign equity participation is limited by law or Constitution enterprises (more than 40%) or their equivalent shall, however, not be subject to the foregoing limitations. Labor Market Test Employment permits/passes Qualification Requirements Technology Transfer

27
Policy Entry and stay visas/ Departure interviews with Special nonimmigrant visa under Sec. 47(a)(2) of the Philippine Immigration Act is issued upon approval of the Secretary of Justice (formerly the President) on public interest or public policy considerations. Examples of industries invested with public interest are companies engaged in oil exploration, power generation, and infrastructure, and those registered with the Philippine Economic Zone Issuance of Certificates of Registration or Special Temporary Permits for professionals who will practice professions in the Philippines (PRC Resolution. 2012Filipino applicants for employment abroad, foreign nationals who are members of the Governing Board and do not necessarily occupy any other position but have only voting rights in the corporation, and foreign nationals who come to the Philippines for teaching and research purposes. to a maximum of 40% Labor Market Test Employment permits/passes Qualification Requirements Technology Transfer

28
Policy Entry and stay visas/ Departure Authority and Board of Investments (BOI). 668, Series of 2012 pursuant to the PRC Modernization Act of 2000) Labor Market Test Employment permits/passes Qualification Requirements Technology Transfer

Special multiple entry visas may be issued to foreign personnel of offshore banking units of foreign banks duly licensed by the Central Bank of the Philippines to operate as such pursuant to Presidential Decree No. 1034. The same visas may be issued to foreign personnel of regional or regional operating headquarters of multinational companies

29
Policy Entry and stay visas/ Departure officially recognized by the Philippine Government pursuant to Republic Act No. 8756 Labor Market Test Employment permits/passes Qualification Requirements Technology Transfer

Special Subic Working Visa Special multiple entry visas are also given to foreign nationals employed by the Subic Bay Freeport Locators. This visa is coterminus with the employment contract, and is normally extendible.

Special Clark Working Visa Special multiple

30
Policy Entry and stay visas/ Departure entry visas are likewise given to foreign nationals employed by the Clark Special Economic Zone Locators. This visa is normally valid for two (2) years and may be periodically renewed. Labor Market Test Employment permits/passes Qualification Requirements Technology Transfer

Special Investor’s Resident Visa The Special Investor Resident Visa (SIRV) entitles the holder to indefinitely stay in the Philippines, with multiple entry privileges, so long as his investments subsist, pursuant to Book V of

31
Policy Entry and stay visas/ Departure Executive Order No. 226. Labor Market Test Employment permits/passes Qualification Requirements Technology Transfer

Special Investor Resident Visa for investors in tourist– related projects and tourist establishments A variation of the SIRV discussed above is the visa issued to investors in tourist-related projects and tourist establishments pursuant to Executive Order No. 63.

Special Subic Investor’s Visa Any investor who has made, and

32
Policy Entry and stay visas/ Departure continues to maintain an investment of not less than US$250,000.00 within the Subic BayFreeport (SBF) may reside in the Philippines under this visa for as long as his investment subsists. Labor Market Test Employment permits/passes Qualification Requirements Technology Transfer

Special Clark Investor’s Visa Any investor who has made, and continues to maintain an investment of not less than US$250,000.00 within the Clark Special Economic Zone may apply for the said visa which remains valid as long as

33
Policy Entry and stay visas/ Departure the investment subsists. Labor Market Test Employment permits/passes Qualification Requirements Technology Transfer

Special Resident Retiree’s Visa The SRRV is a visa issued by the Bureau of Immigration upon indorsement of the Philippine Retirement Authority (PRA) pursuant to Executive Order No. 1934. It entitles the holder to multiple- entry privileges with the right to reside permanently in the Philippines as long as his dollar deposit subsists.

34
Policy Entry and stay visas/ Departure Outward Mobility The State adopts a policy for protecting workers, located in the Philippines or abroad. Ban or moratorium of “State shall, at all times, uphold the dignity of its citizens whether in country or overseas, in general, and Filipino migrant workers, in particular, continuously monitor international conventions, adopt/be travel or departure for a country deemed unsafe for Filipinos, if found non-compliant with three criteria set by the Migrant Workers Act as amended: 1) It has existing labor and social laws protecting the rights of workers, including migrant workers; 2) It is a signatory to Pre-departure orientation Employment contract processing An Overseas Employment Certificate (OEC) is a requirement under POEA Rules and Regulations to help ensure that OFWs are properly documented and protected MRAs Reintegration system Labor Market Test Employment permits/passes Qualification Requirements Technology Transfer

35
Policy Entry and stay visas/ Departure signatory to and ratify those that guarantee protection to our migrant workers, and endeavor to enter into bilateral agreements with countries hosting overseas Filipino workers.” (Migrant Workers Act as amended) and/or a ratifier of multilateral conventions, declarations or resolutions relating to the protection of workers, including migrant workers; and 3) it has concluded a bilateral agreement or arrangement with the government on the protection of the rights of overseas Filipino Workers: Labor Market Test Employment permits/passes Qualification Requirements Technology Transfer

Provided, That the receiving country is taking positive, concrete measures to protect the rights of migrant workers in furtherance of

36
Policy Entry and stay visas/ Departure any of the three guarantees Labor Market Test Employment permits/passes Qualification Requirements Technology Transfer

Other conditions for departure may also be set according to terms of bilateral labor agreements between the Philippines and the destination country

Sources: 1987 Philippine Constitution; various laws as indicated; Board of Investments (n.d.). Primer for Doing Business; Yue (2012)

37
IX. ACHIEVING MOBILITY IN AEC

The Philippines seems to be on track in terms of complying with the requirements AEC integration under the AEC Blueprint Strategic Schedule priority actions up to the year 2015 (Table 7).

Table 7. Implementation of the AEC Scorecard by Country, Phases I and II
Phase I (2008-2009) Phase II (2010-2011)

Progress in Implementation

Free Flow of Services

Free Flow of Skilled Labor Na

Free Flow of Services

Free Flow of Skilled Labor /

Full implementation Partial Implementation /

Na

/

Note: Full - all measures targeted were implemented Partial – more than half of the measures targeted in the area have been implemented Slow – less than half of the measures have been implemented
Source: AEC Scorecard 2011

However, there are remaining priority actions for which compliance of the Philippines may not be assured. For instance, a set of priority actions for the removal of “substantially all restrictions on trade in services” might not be fully realized because of Constitutional limits, particularly the policy on presence for Filipino labor. Until the Constitution is amended, which will not happen in the foreseen future, the Philippines will have difficulty complying with substantial lifting of restrictions in services sectors. In the same vein, the law requiring the labor market test, which is a restriction against entry foreign nationals for the purposes of

38 engaging in remunerative activity, has to be amended before the employment permit system can be totally removed. An administrative remedy, however, is taking shape to ease this restriction, with the ongoing initiative to develop a system of listing occupations in shortage as a signal for international migrants or service suppliers, and as a substitute for employment passes or permits.

Since the AEC Blueprint uses the language of trade in services and therefore does not contemplate engagement of labor, it can argued that all employment-related restrictions such as labor market test or employment permits may not apply; neither do the policy of preference for Filipino labor. Conversely, the concept of free flow under AEC is only to the extent of managed movement, subject to domestic laws and rules, which therefore does not require removal substantially of all barriers.

There are also prospects for full participation in the AEC, which is expected as the outcome of improving competitiveness of professions through the strategic planning and roadmapping initiative of the Professional Regulation Commission. This initiative aims to promote the international mobility of professionals by improving compliance of professional education and certification or licensing system with international standards. Related to the roadmapping initiative is the effort to establish a standard for qualifications in the Philippines, which culminated in the recent issuance of an executive order (EO) by the President (EO 83, series of 2012) formalizing the initiative to adopt a more coherent qualifications among the different education and training agencies, to promote the portability of education and training credentials as pathway to seamless school-to-work transition, and to benchmark national qualification standards with international frameworks.

39
Table 8. Philippine Readiness for Priority AEC actions
Priority AEC Actions Readiness of Philippine Laws/Regulations Free flow of services Set the parameters of liberalization for national treatment limitations, Mode 4 and limitations in the horizontal commitments for each round (2009) Prospects

High
The ASEAN Agreement on Movement of Natural Persons has been approved and it will be used as the framework for subsequent scheduling of commitments

Scheduling of commitments under ASEAN Agreement on MNP aligned with AEC requirements

Schedule commitments according to agreed parameters for national treatment limitations, Mode 4 and limitations in the horizontal commitments set in 2009.

Remove substantially all restrictions on trade in services for the 4 priority services sectors (2010)

Weak
The Constitution limits practice of profession to Filipinos save in cases of reciprocity as provided by law

Replacing the employment permit system with the positive list approach, where a list of occupations or skills in huge shortage will be issued

Remove substantially all restrictions on trade in services for logistics services by 2013

Low prospect for amendment of restrictive laws particularly on the labor market test and visa systems.

through consultations and research. The new system may ease the restrictiveness of the law through administrative

Remove substantially all restrictions on trade in services for all other services sectors by 2015 Mutual Recognition

reform

40
Priority AEC Actions Readiness of Philippine Laws/Regulations Arrangements (MRAs) Complete MRAs currently under negotiation, i.e. architectural services, accountancy services, surveying qualifications, medical practitioners, and dental practitioners (2008). Implement the completed MRAs Prospects

High
Full compliance according to AEC Scorecard, 2008-2011

The Philippines has signed all the seven MRAs

Moderate

Recognition requires readiness in content and procedures.

Full implementation of completed MRAs (2015)

The Professional Regulation Commission has made progress in improving the professional sectors through a strategic planning (roadmapping process) Full implementation of these roadmaps (Competitiveness Roadmaps for Professionals), which are benchmarked against international standards and checked for compliance with international agreements, will enable the Philippines to fully engaged in MRA processes

Free flow of skilled labor Develop core competencies (concordance of skills and qualifications)

High
Executive Order No 83 institutionalizes the Philippine

The Philippines has taken a lead role in the process, chairing the meeting of ASEAN

41
Priority AEC Actions Readiness of Philippine Laws/Regulations for job/occupational skills required in the priority services sectors by 2009 Qualifications Framework to adopt a national standards and levels for outcomes of education; support the development and maintenance of Develop core competencies (concordance of skills and qualifications) for job/occupational skills required in all services sectors by 2015 pathways for portability of education units and training certificates earned across higher education and training institutions; and align the national qualification system with international frameworks to promote international mobility of Filipinos and increase value, comparability and recognition of their qualifications Task Force on the National Qualifications Framework in Thailand this year (2012) Prospects

42
X. POLICY RECOMMENDATIONS

There are many pathways to international mobility and trade in services or services liberalization and MRAs under AEC are just a few of these. This study proposes blended strategy for managed mobility.

Essential to managing the transition for worker mobility within the framework of AEC is to blend the pathways to enlarge the zone of mobility for Filipinos:

1. The Constitution gives the mandate to the government to give preference to Filipino labor and professionals and to protect citizens moving out of the country for work. However, the AEC framework is protection-neutral because it only covers only access, and protection typically lies beyond access. Therefore, for outward mobility, MRAs may still be pursued alongside bilateral labor agreements to safeguard protection of rights of workers, even service suppliers. AEC is only one of the three pillars of the ASEAN Community. The ASEAN Socio-Cultural Community focuses on the social dimension of integration, including decent working conditions, social protection, and protection of rights for migrant workers.

2. It is argued earlier that the type of mobility within AEC may be characterized as facilitated or managed. Because it still recognizes domestic laws and regulations, AEC does not contemplate fully free and borderless flow of skilled labor or service providers within ASEAN. The Constitutional limitations against foreign service providers may be retained, but with administrative concessions such as the formal adoption of the list of occupations or skills in shortage, benchmarking of qualifications standards for mutual benefits of Philippines and other countries, ora

43 unified special visa system for foreign service providers within the ambit of the AEC or the AFAS.

3. Complementary policies should also be pursued to improve competitiveness of Filipino human resources, to safeguard equity and to enhance institutional efficiency.



For outward mobility - competitiveness measures such as quality education, skills upgrading and bridging



For inward mobility – equity measures that will include transition strategies, including budget allocation, for trade related and economic adjustment or safety net fund or programs benefiting workers that might be displaced or has been displaced as an effect of economic integration; industrial upgrading to strengthen and expand the base for decent employment, and for improving competitiveness through continuous on-the-job skills acquisition and development.



For both outward and inward mobility – improving efficiency in policy research and coordination among agencies involved in AEC related transactions. A single-body approach is favored for trade related and economic integration related transactions and negotiations with agencies extending technical and research support for positions and commitments and participating in decision-making. As it is there are too many agencies involved in meetings and transactions. Streamlining the institutions and processes will usher in specialization and fast-tracked policy making.

44
REFERENCES

ASEAN Economic Community handbook for business 2012 ASEAN Economic Community scorecard 2008-2011
ASEAN Secretariat. (2010). ASEAN statistical yearbook 2010. Jakarta: ASEAN Secretariat. Balboa, J., Del Prado, F. & Yap, J. (n.d.). Achieving the ASEAN Economic Community 2015:

Challenges for the Philippines.
Board of Investments. (n.d.). Primer for doing business Grant Thornton. (2012). International business report 2012 – Economy focus series: Focus

on ASEAN.
International Labor Organization. (2008). Labor market and social trends in ASEAN: 2008:

Driving competitiveness and prosperity with decent work. Bangkok: International Labor
Organization-Regional Office for Asia and the Pacific. Pasadilla, G. (2011). Social security and labor migration in ASEAN. Tokyo: Asian Development Bank Institute. Rillo, A. (2011, February 4). AEC Scorecard: The road to ASEAN single market. Paper presented at the Conference on Network of Reformers, Kenya.

Roadmap for an ASEAN Community (2009-2015)
Tabladillo, S. (2010). Alternative modes of entry to the global services market: The working tourists, au pairs and overseas students in focus. Manila: Institute for Labor Studies . United Nations Development Programme. (2009). Human development report 2009Overcoming barriers: Human mobility and development. New York: Author. Yue, C.S. (2012, May 25). AEC-free flow of skilled Labor. Paper presented at the ISEAS ASEAN Roundtable, York Hotel, Singapore.