Asean 2015

SO soon! Indeed time flies at lightning speed and here staring at us is Asean 2015! And what’s in it for us in academe? But first, a very brief overview of Asean.
We are one of ten countries wishing to band together as a single market. We expect that by end of December this year Asean will have measures mostly in place which are designed, like the European Union, to reduce trade barriers and consequently attract more investments. We expect to have free flow of goods, services, investment and skilled labor among “us” – us, meaning the ten member countries of Southeast Asia with the 617 million people (2011 estimate) inhabiting Singapore, Indonesia, Malaysia, the Philippines, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia. In the future, two other countries could be incoming members of Asean: Papua New Guinea (on candidate status since 1976) and Timor-Leste (on observer status since 2002). These two countries have a combined population of 7,300,000 (2011 estimate).
Unlike the EU, Asean will likely not have a common currency and neither the same nor a similar governing structure.
About education, four priorities in this area have been laid down by the Asean Education Ministers. These are first, promoting Asean awareness among Asean citizens, particularly the youth; second, strengthening Asean identity through education; third, building Asean human resources in the educational field; and fourth, strengthening the Asean University Network.
Committees on these priorities are working in full gear. In fact, come September this year, the Asean education ministers are to convene in Vientiane, capital city of Laos, to formulate a 2016 to 2020 plan aimed “to further narrow the development gap on education and human resource development among Asean countries, notably between the older and newer member nations.”
For practical purposes, what steps can we academics take to help achieve these Asean goals in education? What can we capably do without much funds and fuss? Relative to the first two priorities we can begin by popularizing what Asean is about in our various curricula. We can gear socio-cultural courses toward learning outcomes such as cultural awareness, cultural knowledge, cultural understanding of and cultural sensitivity towards our Asean neighbors. This is important because our aim for Asean is that while we may have differing life styles, or “blueprint for living” (Clyde Kluckhohn’s classic definition), we are able to relate well with one another. Aware that Asean countries have differing cultures, we will try to know, understand and become sensitive to what may be acceptable or not acceptable to a particular culture. The final goal, culture-wise, is, we develop cultural competence.
Besides formally introducing the concept of culture through germane courses, we could popularize the meaning of culture as a theme in extra-class activities such as symposia or lecture series, student conferences, workshops, exhibits, dramas/plays, skits, other modes of theater programs and the like and maximize the use of digital technology as in cartoons, animations, etc. We can even stretch the reach of our efforts through our civic engagement activities if we invite as audiences and partners our catchment communities from our outreach areas, and those from civic, religious and professional organizations. Our reach would include housewives, farmers, security guards, street children, etc. For us teachers and our learners, these are fun ways to develop more awareness, an intensive motivation to gain an informed understanding of peoples and their respective cultures. Actual engagement would help develop cultural sensitivity and hopefully when Asean is actually experienced, we can demonstrate that we are truly culturally competent.
To show how cultural awareness, knowledge, understanding and sensitivity, are all imperatives to becoming culturally competent, I share you the following anecdotes.
Several years ago, I came across a newspaper item about a community composed of our Moslem brothers feeling so insulted when in their community, a lechon (roasted pig) as is usual among us Christians, was made the centerpiece of a party to celebrate a military victory. This action illustrates a pronounced lack of cultural sensitivity borne out of lack of cultural awareness or knowledge even if the taboo on pork by our Moslem brothers is better known these days than in yesteryears. The bottom-line of that incident is lack of cultural sensitivity and thus is short of cultural competence.
Another example is a field experience of one of my graduate students, a member of the military enrolled in Cultural Diversity in the Workplace, which he related in class. His story illustrates how a lack of cultural knowledge got their group into ill-will during a time they were deployed in a Mangyans community. Assigned to prepare food for his group, he looked for a site to prepare lunch. He found a certain mound of earth topped with three big stones – just right to serve as a stove for a pot of rice to cook. He described to us how a group of Mangyans, menacingly approached him when they saw him cooking rice over the mound of earth. Why? Because the ethnic practice was for Mangyans to mark the grave of their dead with three big stones. And here he was, desecrating the grave! The soldiers humbly explained that there was no ill intent and apologized for their ignorance.
Several other such stories followed. Meaningful observations were shared. You’re right! We had an interesting and very “meaningful” session that day. (To be continued)

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Teresita Tanhueco-Tumapon, Ph.D., is one of the Philippines most accomplished educators and experts on institutional management in colleges and universities. Her studies have included not only education and pedagogy but also literature. She has studied not only in the topmost universities in the Philippines but also in Germany, Britain and Japan. She is now the Vice-President for External Relations and Internationalization of the Liceo de Cagayan University (in Cagayan de Oro) after serving as its VP for Academic Affairs for six and a half years concurrent to her ten years as dean in the Graduate Studies of the same university. She holds a Lifetime Professional Achievement Award from the Commission on Higher Education.

PRESS RELEASES
SMEs must be ready for ASEAN economic integration by 2015
Two years from now, the Philippines and other ASEAN members will be moved toward a single market and production base under the ASEAN Economic Community (AEC) by 2015. However, the readiness of our small and medium enterprises (SMEs) for this regional economic integration draws a big question mark.

PIDS Vice President Rafaelita Aldaba`s study raises concerns over the weak performance of SMEs despite regional measures implemented in the ASEAN Strategic Action Plan for SME Development 2010-2015 (ASAPSD) and the ASEAN Policy Blueprint for SME Development 2004-2009 (APBSD).

A perception survey was conducted to evaluate the impacts of these frameworks. Four SMEs and one government-member of the SME Working Group were surveyed to evaluate the Philippine implementation. Both groups scored low in average effectiveness.

Majority of the respondents perceived that the APBSD had limited impact on facilitating SMEs` access to information, market, human resource development and skills, finance, and technology. Likewise, the ASAPSD has been perceived to have little concrete impacts in terms of enhancing competitiveness and flexibility of SMEs in moving toward a single market and production base.

In the study, the weak performance of SMEs has been attributed to the large number of barriers that SMEs face, particularly poor access to finance, technology, and skills, as well as information gaps and difficulties in product quality and marketing. Although there are government institutions or agencies responsible for development and technology support of SMEs, the growth of the sector has not been vigorous enough to propel the economy.

In 2006, micro, small, and medium enterprises (MSMEs) dominated the economy and accounted for almost 99.6 percent of the total number of establishments. However, they only accounted for 61.2 percent of the country`s total employment and 35.7 percent of total value added. Firm size distribution has also not changed significantly in the past two decades. Micro enterprises still formed the bulk of MSMEs, with a share of 91.6 percent, whereas medium and small enterprises accounted for only 0.4 percent and 7.7 percent, respectively.

The study also notes that that in spite of present programs and policies created for SMEs (e.g., establishment of Small Business Corporation for SME financing), access to finance has remained one of the most critical factors affecting the competitiveness of the sector. Many private banks are still reluctant to lend to SMEs because of lack of credit information and low appreciation of lending to small businesses. More specific issues on SME financing include lack of acceptable collateral, slow loan processing, short repayment period, high interest rates, difficulties in loan restructuring, and lack of start-up funds.

Asean 2015: Inclusive, sustainable development for all

The Association of Southeast Asian Nations (Asean) marks its 46th founding anniversary today against the backdrop of an impending economic integration.
Next year’s planned economic integration of the regional bloc will indeed have an impact on the estimated 600 million total population of Asean member-countries, or 8.8 percent of the world’s total population. According to the blueprint signed in 2007, member-countries will have a single market production base that will facilitate freer flow and exchange of goods, services, skilled labor, investments and capital through the creation of mutual recognition agreements. But despite the predicted rosy scenario, Asean leaders need to ensure that the planned economic integration would result in inclusive and sustainable growth and development for all.
Asean banks on agriculture as the key driver of growth in the region. Its member-countries rely on agriculture as the primary source of income for their peoples. Food security, livelihood and other needs of Asean citizens are at stake in the region’s vast resources, such as forests, seas, rivers, lands and ecosystems. However, climate change and inequitable access to productive resources are threatening shared growth with respect to natural resources.
Recent statistics on hunger and access to land and productive resources are alarming and ironic considering that Asia is home to two-thirds of the world’s food producers, on which the economies of Asean member-countries Thailand, Burma (Myanmar), Vietnam and the Philippines depend. The Food and Agriculture Organization says that at least 572 million people in Asia are chronically hungry and a huge percentage undernourished. Women make up more than half of the population in Asia, but they are not given equal access to resources. Only 12 percent of the 3 million landowners in Asia are women. Alongside this are the increasing cases of land-grabbing in the region, depriving small farmers and food producers of control over land and other natural resources. Also, opportunities created by growth often require skills that are often held by, for example, those who have access to education—a basic service that is until now not universally provided by all Asean governments.
Ironically, the same policies—globalization, technological innovation, market reform, structural adjustment, trade liberalization, and privatization—that produced exceptional economic growth and will enable the planned economic integration in 2015 are blamed by civil society groups as having exacerbated, if not caused, the pervasive poverty and gaping inequality in Asean.
Organizations like Oxfam-GROW Campaign East Asia, Greenpeace Southeast Asia, Eastern Regional Organization for Public Administration, Ateneo School of Government, Asiadhrra, Asian Farmers Association, Myanmar Climate Change Watch, and Indonesia Legal Resource Centre, together with experts and members of the academe from Southeast Asia, have called for an economic community in 2015 that would ensure growth and development for all and promote healthy and productive ecosystems.
Asean must ensure that its economic community building is geared toward low-carbon development anchored on sustainability and inclusive growth. It can start by ensuring that regional policies in public and private investments in agriculture and energy do not threaten food security, improve resilience against climate-related disasters, and respect asset reform policies and the rights of small food producers.
In terms of climate change mitigation, Asean needs to harmonize existing policies on coal and level the playing field where renewable energies can compete with other sources of energy. Furthermore, the 2015 economic integration must be clear on charting a low-carbon development plan for the region.
Asean leaders must also ensure that policies will be in place to shift the funding support from industrial agriculture to sustainable agricultural practices promoting agro-ecology and sustainable ecosystems. Furthermore, they must encourage the allocation of sufficient financial resources for community-driven climate change adaptation practices while working with communities and peoples’ organizations on knowledge-sharing and learning best practices.
At the global climate negotiations of the United Nations Framework Convention for Climate Change, Asean leaders must unite behind a fair and binding agreement toward building a global climate deal in Paris next year.
Asean must also adapt a regional regulatory framework that will ensure that rights of small food producers will be protected against the threat of land-grabbing and unfair land investments.
Fostering inclusive growth, dismantling inequality, improving resilience, and promoting sustainable development are the key toward the success of an Asean economic community.
Jed Alegado is Oxfam’s media and communications officer in the Philippines. He holds a master’s degree in public management from the Ateneo School of Government.

Asean’s elusive integration

The University of the Philippines has shifted its school calendar from the June-May cycle to an August-July schedule. The main reason cited is the need to internationalize “as the country competes globally, but also in a region which will become an integrated Asean economic community by 2015.”
At the University of Santo Tomas, an approved school calendar shift also cites integration of the Association of Southeast Asian Nations (Asean) in 2015 as a major rationale.
The premise of these moves is that Asean 2015 is a done deal and therefore one has to be ready or be left out of the regional initiative. A closer and more informed look at Asean, however, will easily disprove this predicate and reveal that regional economic integration remains an elusive goal.
Asean was established in 1967, but 25 years elapsed before the organization started integrating its member economies through the establishment of the Asean Free Trade Area (Afta) in 1992.
Nothing much happened and it took another 11 years before Asean leaders in 2003 resolved to establish an Asean Economic Community (AEC) as a single production base and market by 2020. In 2007, this date was advanced to 2015.
Drawn-out process
Asean integration has been a long and drawn-out process. But will the AEC finally come to fruition in 2015 as planned? A 2013 survey by the Economist of 147 big companies operating in the Asean region shows that only 6.3 percent were expecting that the AEC could be put in place by 2015.
The official statements issued at the end of the April 2013 and October 2013 Asean Summits in Brunei make no mention of achieving the AEC by 2015, only that the leaders “are pleased with its progress.”
Furthermore, the statements merely recognized the need to “intensify efforts in those areas under the AEC with high impact to ensure credible integration results by 2015.”
A 2013 study by the Asian Development Bank and Institute of Southeast Asian Studies cautions that: “Although the self-imposed deadline for the realization of the Asean Economic Community is 2015, it should not be viewed as a hard target. One should not expect 2015 to see Asean suddenly transformed, its nature and processes abruptly changed, its members’ interests substantially altered. Rather, 2015 should be viewed more as a milestone year—a measure of a work in progress—rather than as a hard target year.”
The study concludes that Asean “has no prospect of coming close to … (a) single market by the AEC’s 2015 deadline—or even by 2020 or 2025.”
There you have it. Governments, business leaders, journalists, research centers and financial institutions agree that Asean 2015 will not take place. Why has it been a long and tortuous effort for Asean economic integration to come about?
Problems of integration
Asean leaders’ AEC vision is weakened by a strong aversion for a diminished national sovereignty for the sake of deeper economic integration. National strategies clash with Asean’s internal goals. Several members refuse to lower tariffs on certain critical products. Malaysia insists on protecting its state-owned car and vehicle parts industries, fearing competition from Thailand.
Indonesia continues to protect its agricultural products while the Philippines refuses to open up its petrochemical products sector. Trade disputes still take place. In 2011 the Philippines filed a suit in the World Trade Organization against Thailand’s discriminatory taxes, duties and health measures against Philippine-made cigarettes.
Progress has been slow on eliminating nontariff barriers (NTBs).
Myrna Austria, a member of the faculty of De La Salle University, identifies these NTBs as “import bans, import subsidies, NTBs not elsewhere classified (such as nonautomatic import licensing, new procedures for importation, additional requirements for importation, etc.), quotas, sanitary and phytosanitary measures, and technical barriers to trade, state aid measures, public procurement requirements, trade finance, export taxes, and restrictions and investment measures.”
Impediments to the free flow of labor sour relations between Malaysia on the one hand, and Indonesia and the Philippines on the other, over the former’s treatment of migrant workers.
Intra-Asean trade woes
Despite the avowed goal of increasing trade among Asean economies, the record shows a virtually stagnant pattern. (See Table 1.)
Intra-Asean trade peaked in 1995 at 24.1 percent but since then, has barely moved forward with the average for 1995-2012 hitting less than 25 percent. Thus, for 17 years there has been scant progress in intra-regional trade.
Asean economies have been trading more with non-Asean economies than with themselves by a ratio of three to one. If, however, we consider that exports from Singapore (the region’s top trading nation) are mainly re exports, actual intra-Asean trade would even be lower.
Ranged against other long-running regional trading blocs, Asean’s record pales in comparison. The European Union has an intra-trade level of 67.3 percent while the North American Free Trade Association (Nafta) registers an intra-trade record of 48.7 percent.
The only major trade bloc with a worse record is Mercosur (Mercado Común Del Sur), the South American alliance, with an intra-trade level of only 15.7 percent. The South Asian Association for Regional Cooperation has only a 4.7-percent intra-trade level but its free trade agreement started only in 2006.
Not complementary
Asean economic cooperation has been a tough goal mainly because Asean economies are not complementary, i.e., they compete with each other.
As Table 2 shows, of 15 major Asean export commodities, it is only in rice, coffee and palm/coconut oils that three to four Asean countries trade in. The rest of the export product lines have more than half of Asean countries engaging in trading activities.
All Asean economies trade in wood and wood products and in textiles/clothing while nine of the 10 countries are in beverages, machinery/equipment, and fish and fish products. Eight Asean countries are engaged in exporting chemicals, metal and metal products, travel goods/bags, and fruits/vegetables. Seven Asean economies export oil and oil products while six are in the trading of food and live animals.
Under the Afta Agreement of the Common Effective Preferential Tariff (CEPT), average intra-Asean tariffs have been reduced from 4.43 percent in 2000 to only 1.06 percent in 2010. It is estimated, however, that only 5 percent of intra-Asean trade utilizes CEPT due to:
Existence of nontariff barriers
Bureaucratic procedures
High costs of applying for preferential rates
Minimal differences between CEPT and MFN (most favored nation) rates
High tariff countries’ reluctance to reduce revenues by promoting the CEPT, and
Lack of information on existence of CEPT
Looming over Asean are the vast inequalities associated with intra-Asean trade.
In 2012, Singapore, Malaysia, Thailand and Indonesia dominated regional trade with an 86.47-percent share. (See Table 3.) Singapore alone had 34.81 percent. The bottom six countries (Vietnam, Philippines, Burma, Brunei, Laos and Cambodia) had only a 13.53-percent share.
Historically, Malaysia and Singapore have controlled regional trade, taking in two-thirds of total intra-Asean trade in previous years.
Challenges
Developments over the years have actually preempted and/or undermined collective efforts. Examples are the various bilateral agreements entered into by Asean member countries, such as between Singapore with Japan, Australia, New Zealand, Jordan, Panama, South Korea and the United States; Thailand with Australia, New Zealand, India and China; the Philippines with Japan; Malaysia with Japan; and, Indonesia with Japan.
As a body, Asean has also been moving away from integration by developing organizational linkages with non-Asean countries.
These include: Asean+3 (Japan, China and South Korea), the 2004 Asean-China Free Trade Area, the 2005 East Asia Summit, the 2005 Asean-Korea Free Trade Area, the 2008 Asean-Japan Comprehensive Economic Partnership, the 2009 Asean-India Free Trade Area and the 2009 Asean-Australia-New Zealand Free Trade Area.
Currently being negotiated is an Asean-Hong Kong free trade agreement.
Also posing a challenge to Asean integration is China’s aggressive involvement in the Mekong sub region. As Geoffrey Wade, a fellow at National University of Singapore Asia Research Institute, pointed out, “heavy Chinese investments in dams, transportation routes, energy grids, trade bases and other infrastructure … weaken Asean and diminish its influence as a unified bloc.”
A specter haunting Asean’s path toward integration are the social inequalities within and between Asean countries. (See Table 4.)
Poverty levels
Poverty levels remain critical. In the Philippines, Cambodia, Burma and Laos, more than one-fifth of the population lives below the poverty line. While Singapore, Brunei, Malaysia and Thailand have zero or single-digit poverty indices, the remaining six continue to endure double-digit poverty levels.
Former Socioeconomic Planning Secretary Cielito Habito noted that “in 1970, of the five founders, the average income of the richest member country, Singapore, was 11 times that of the poorest, Indonesia; in 1990, this ratio was now 19 times; in 2000, 29 times.
In 2010, the gap narrowed to 14 times” but still worse than in 1990. He adds that “in 1990, of the 10 members, the richest, Brunei, was 201 times richer than the poorest, Burma. By 2000, Singapore, the richest, had 129 times Burma’s average income. The gap narrowed to 62 times in 2010, but was still worse than in 1970.”
Conflicting national strategies, similar export product lines, social and economic inequalities within and between Asean societies, and moves away from integration pose serious obstacles to realizing the AEC and reflect the absence of a distinct and unifying regional identity. Habito’s words are ominous.
After more than four decades of conscious efforts for greater integration of their economies, the five original Asean members—Indonesia, Philippines, Malaysia, Singapore and Thailand—find their economies no closer to each other than they were when they first formally got together in 1967.
Finally, as the Economist observed, “Given the diversity of its 10-member economies, there is little that ties (Asean) together naturally.”
(Eduardo Climaco Tadem Ph.D., is professor of Asian Studies and editor in chief, Asian Studies [Journal of Critical Perspectives on Asia] at the University of the Philippines Diliman.)

Asean economic integration as a game-changer

On Jan. 15, 2014, Ms. Teresita Sy-Coson of the SM group of companies was the keynote speaker in the induction ceremonies of the new trustees and officers of the Financial Executives Institute of the Philippines (Finex), led by my friend and fellow avid Blue Eagles fan, president-elect Edmundo Soriano.
Finex was lucky enough to have Ms. Coson as a guest speaker. She rarely accepts public speaking engagements. The ballroom was jam-packed. Surely, business leaders and professionals not only wanted to hear Ms. Coson speak, but more importantly, they wanted to get her insights on an all-important topic that is just around the corner: Asean economic integration.
Significantly, Ms. Coson is the Philippine representative to the Asean Business Advisory Council, or Abac, composed of business leaders in the Asean region.
Ms. Coson traced the history of the Asean economic integration to the Asean Vision 2020, signed in Kuala Lumpur in 1997, which envisioned “a stable, prosperous and highly competitive Asean Economic Region.” It was conceived on the premise that small economies like those of the Asean countries have to join forces in order to broaden the market and to capture greater investment opportunities.
A few years later, or in 2003, the Asean Heads of States signed the Bali Concord II that sought to establish the Asean Community, including the Asean Economic Community (AEC), by 2020.
The agreement called for a “broad-based integration covering political-security, economic, and socio-cultural issues.” It envisioned the “free movement of goods, services, investment, skilled labor, and freer flow of capital” to make the Asean region more competitive in the global market.
It was meant to “grow regional competitiveness by reducing the cost of cross-border trade—through simplifying visa processes, equitable economic development, low import duties, and the development of hopefully, a single market—which, as a result, would increase the flow of both people and goods between them.”
Ten years later in 2007, in Cebu, Philippines, the Asean member countries agreed to “accelerate the establishment of the Asean Community, including the AEC pillar, to 2015.”
Ms. Coson frankly admits that political and cultural differences stand in the way of a timely Asean economic integration. The known obstacles are many, including “multiple bureaucratic costs, some confusion in terms of regional and national legal applications and jurisdictions, and lack of active promotion.” These pose problems for companies that wish to operate seamlessly within the region.
Ms. Coson informed the Finex members that notwithstanding the barriers to economic integration, Asean businesses are eager to connect with each other. She foresees these barriers to be eventually relaxed, albeit at a slow pace. In short, Asean integration will become the “new normal” in our midst.
In the words of Ms. Coson, “integration within the region is a natural progression of commerce, and a very crucial one.”
The misgivings about the economic integration notwithstanding, Ms. Coson says that it will be beneficial. For starters, it will provide an integrated consumer base of over 600 million potential customers, which will mean a much larger market for Asean businesses. In addition, bringing down the costs of the transfer of goods and people intra-regionally will truly open up the regional market, encouraging the proliferation of business in the region.
According to her, “this positively affects not only intra-region business travelers and tourists; it allows greater integration between companies which operate within the region, and abroad. All of this, in turn, stimulates global trade and makes production and the division of labor more efficient.”
Indeed, as 2015 draws nearer, the atmosphere ranges from near panic to optimism. The question is asked: Is the Philippines ready? What must Philippine businesses do in order to better prepare themselves for this inevitable development?
Ms. Coson’s answer could be culled from what she said the Asean economic integration means to the SM group of companies. She said: “We need to have a change of mindset and be more forward-looking and increase our level of competitiveness.”
“We need to think ‘regional.’ AEC integration means a market base of 600 million consumers that will support future growth. The free flow of people and goods reveals a bigger market, even in the domestic front with more investments interest and tourist-driven business.”
“We need to further scale up our banking operations to a comparable regional scale. All the three top banks are not yet regional size.”
“We need to factor in the effect of Asean market integration into our business decisions.”
Indeed, the right attitude for the Philippine business sector is to embrace Asean economic integration. It should not be in denial; on the contrary, it should decisively prepare for it. Our businessmen must change mind-set and aggressively strive to become more competitive. Our businessmen must remain firm in their belief that they can compete with other businesses in the Asean region.
As Ms. Coson succinctly summarized it, Asean integration is a “game changer” for Philippine businesses. Stiff competition from other Asean businesses is staring us in the face. We cannot afford to sit idly by as competition becomes more pronounced and other economies ride high on this endeavor. We need to adopt bold and sustainable steps that stand head and shoulders above other Asean economies.
The time to act is here and now.
(The author is the co-managing partner and head of the corporate and special projects department of the Angara Abello Concepcion & Regala Law Offices (Accralaw). The views in this column are, however, solely the author’s and should not in any way be attributed to Accralaw. The author may be contacted through francis.ed.lim@gmail.com.)

Low awareness of 2015 Asean integration noted

MANILA, Philippines—Citizens of Asean (Association of Southeast Asian Nations) members generally don’t know much about or are uninterested in the regional grouping even as the 2015 threshold for building an integrated economic bloc approaches.
A study released by the Asean Secretariat found that three out of four people (76 percent) “lack a basic understanding” of what Asean is and what it is striving to do.
However, four out of five (81 percent) are “familiar with” or have heard of Asean. According to those who prepared the report, this “significantly surpassed the expected public awareness.”
The 11-page study presents the results of a survey that covered 2,200 respondents from the general public as well as in-depth interviews with 261 business leaders in 11 sectors—all spread out across the capital cities of the 10 Asean members.
Businesses have a relatively better understanding of Asean as some of them are taking part in activities related to the promotion of Asean integration, according to the report.
Even then, the data show that 55 percent of business respondents only have “a basic understanding” of what Asean is and 30 percent lack any basic knowledge of the grouping.
“The overall level of understanding for both businesses and general public is still low because of a general lack of interest alongside an ineffective use of communication channels,” the report said.
“However, it is good to note that the overall perception and attitude towards the Asean community is positive,” it added.
The survey shows that businesses and the general public both perceive Asean integration as having positive impacts on the region.
Businessmen who were surveyed generally believe the planned Asean Economic Community will improve the overall economy of the region, helping Asean compete globally.

Lawyers rise, Asean economic integration is here

It was the farthest in the minds of the graduating class of Ateneo Law School whom I addressed in 2010. The resolution in the Cebu Summit was to accelerate the Asean Vision 2020 of a single economic unit, characterized by free movement of goods, services, investment, skilled labor and freer flow of capital, to 2015. But I warned them then and urged them to prepare for the coming Asean practice of law.
Today, with 2015 just around the corner, the Asean Economic Community is the talk of the town. While some claim that the Philippines is not at all ready to be in such a region, others, en contra, maintain that we can be, provided we make the right moves with the little time left. But certainly, unlike a decade ago, those with strong opinions, when taken as a group, far outnumber those who are unconcerned or simply clueless.
I propose in this piece to share some insights which are the fruits of the more than half a century that I have devoted to the practice of law in the Philippines.
A salient, though silent, feature of the private practice of law in the Philippines is the belief of clients, rightly or wrongly, that their lawyer knows, or ought to know—”know” not in the pejorative sense of knowing the judge, but in the legitimate expectation that the lawyers to whom they pay good money, know not only what the law says but, in a degree that is a notch or two above the rest—how to deal with the law in a manner that will be advantageous to them.
This demand on lawyers is multiplied a hundredfold by clients who do or plan to do investments. When I spoke to the Ateneo graduates in 2010, direct foreign investments and loans in the Asean totaled roughly $346,187 million in 2008, up from only $23,541 million in 2000. Exports for the same period doubled; imports rose from $348,960 million to $831,229 million. Figures have gone north on a steep trajectory since then.
The impact of this development on the legal profession is inevitable. Lawyers are a necessary evil in assisting in the negotiation and crafting of agreements of interested parties. Hence, a great demand for legal services in the whole of Asean lurks around the corner. Country barriers to knowledge of inter-Asean law, though not necessarily license to practice in all, is a necessity.
This is not a pipe dream or a visionary prophecy; the germinal elements of such a development are already here. The same forces that unleashed the lowering of trade barriers will push cross-border practice in our region. We must therefore prepare for the inevitable by developing now a corps of skilled lawyers that can measure up to the demand.
But how do we do that? I submit that the Philippine legal profession can do so in a pragmatic way, taking our cue from the way the West dealt at one point with its need to invest in China. At that time I observed, when it was in fashion to have offices in China, that multinational law firms had been hiring in New York our former associates for posting in Hong Kong and Singapore, to involve them in servicing their clients’ interest in China and Asean. The move made good sense because we Filipinos have several unique advantages: We speak English, we have an Asean face, and, most significant, we have trained in the two great legal systems of the world—the Civil and Roman law which we inherited from Spain and the Anglo-American common law brought here by the Americans.
I therefore exhort young lawyers (any lawyer less than my age is by definition “young”) to spread their wings, after a few years of working locally by way of giving back, and seek engagement, if not employment, with multinational firms with branch offices in Asean and/or China. The learning and training they will receive and the contacts and contracts they will make will serve them well personally. Also, when intra-Asean practice becomes the new normal, they will constitute the skilled manpower (and womanpower) that the Philippines will require to be a meaningful participant in the opportunities that will take place in such an unprecedented event as Asean economic integration.
As intimated earlier, the groundswell has begun. Our firm’s former associates are presently employed by multinational law firms, and they are assigned to their respective offices in New York, Sydney, Paris, Belgium, The Hague, Hong Kong, Jakarta and Singapore. There is no reason to believe that the same phenomenon is not happening in the other big law firms in the country. And there certainly is no justification why the movement will not be inclusive of all in the Philippine legal profession.
It is my hope that while there is still time, Philippine lawyers will decide to ride in front of the Asean wave. Otherwise, we will be ceding the dominance of the forthcoming cross-border Asean practice of law to lawyers of other countries. That would be a pity because the potential for legal services in the Asean alone is tremendous. I would hate to see us lose it by default.
Ricardo J. Romulo is a senior partner of Romulo Mabanta Buenaventura Sayoc & De Los Angeles.

PCCI to help PH get ready for Asean integration in 2015

The Philippine Chamber of Commerce and Industry (PCCI) is seeking to accelerate the development of small and medium enterprises as part of a global supply chain through outsourcing and subcontracting products and services.
The move is supportive of the country’s efforts to get ready for the Asean economic integration, which will make the region a single market and production base by December 2015.
During that time “the Philippine economy should be ready to compete,” said PCCI president Alfredo M. Yao.
The PCCI will cooperate with the government in implementing the strategic policies and programs for the small and medium enterprises (SMEs) to cushion the impact of the Asean economic integration.
“Large companies have been forming joint ventures with their Asean counterparts in manufacturing and marketing products and services. But the small and medium enterprises need support to improve their participation by delivering value as part of supply chains of the large companies,” the PCCI president said.
“Our joint concern in the private and public sectors is not only to ensure that the policies and programs are firmly in place, but also that their design and implementation have effective impact on the competitiveness of enterprises, particularly of SMEs,” Yao added.
The SMEs account for the backbone of each of the 10-member economies and employ more than 90 percent of their work force.
Philippine companies and entrepreneurs could exploit the opportunities and reap the benefits of the Asean integration when barriers are reduced at the fourth meeting of the 2014-2015 Board, Yao said.
“Government policies and programs could strengthen the participation of small enterprises,” he said.
The PCCI will continue monitoring the implementation of strategic plans and programs designed to have an impact on the growth of enterprises and employment with government agencies such as the National Economic and Development Authority, Department of Trade and Industry, and the Department of Agriculture.
Yao said that the formal transformation to an integrated Asean market is getting closer.
“Zero-tariffs for made-in-Asean products and services have been in force since 2010, so we have had lots of practice,” said Yao. “As time between now and December 15 next year narrows, we have to make use of the lessons learned to improve the impact of the strategic policies and programs on local enterprises in the remaining months,” he said.
Meanwhile, the PCCI and the ASEAN Business Advisory Council (Asean BAC) Philippines will hold the first in a series of workshops to equip the small enterprises with the necessary tools and strategies to better improve their competitiveness in light of the forthcoming ASEAN 2015 integration. The seminar will be held on 8 May at the PCCI Training Center, McKinley Hill, and Taguig City.
The resource person for this workshop is Wouter Put from the Netherlands, who has also worked in the corporate environments of Switzerland, Luxembourg, and the United States. The seminar is intended for company owners, production managers and supervisors, quality managers, design managers and technicians of production companies, particularly those in the manufacturing sector.

Asean integration, ready or not!

THE Aquino III has been in its 3rd year in office and, interestingly, we have not made much inroads in foreign policy, save the predictable US-centric bias and the alarm bells mode on China. Our foreign policy should be dictated by the saving grace of the PH economy: OFW, but it seems we are too bipolar in approach. We are pro US and if anyone is against the US, we side with the US. The US foreign policy has shifted and pivoted back to Asia while ours remain in a time warp.
Our sable rattling ways with China is just that, all hot air. Instead of focusing on what we can provide the biggest market in Asia and how we can integrate with the countries contiguous to China, we seem to always be at odds with her and her territories, like Hong Kong and recently, Taiwan. Against the characterization of the Philippines as “being too Western than Asian,” another development is inching its way us fast and that is the Association of Southeast Asian Nations (Asean) integration by 2015.
Asean was founded on 8 August 1967 when the Foreign Ministers of Indonesia, Malaysia, Singapore, Thailand and the Philippines completed negotiations of the 1967 Asean Declaration in Bangkok. Then, the Philippines was leading lights in diplomacy with the likes of Felipe Agoncillo to Carlos P. Romulo, Rafael Salas, Blas Ople, among others. Today, we seem to be back at being just pro-US. We have a Constitution that bans entry of nuclear powered and enabled ships, but we often see port visits of warships and even a submarine. Then, every inch of the PH territory being considered for basing rights is now source of protests. Today, we have well entrenched and outside the radar screen landing and naval facilities in GenSan, Palawan, and even in remote ARMM, but -may I digressed.
The following countries later joined Asean: Brunei, Myanmar, Cambodia, Laos and Vietnam. Timor Leste and Papua New Guinea meanwhile are observers. How would an integrated Asean look like? Asean covers a land area of 4.46 million km+, which is 3% of the total land area of Earth, and has a population of approximately 600 million people, which is 8.8% of the world’s population. The sea area of Asean is about three times larger than its land counterpart. In 2011, its combined nominal GDP had grown to more than US$ 2 trillion. If Asean were a single entity, it would rank as the eighth largest economy in the world. Having said that, a lot of eyes are looking into its integration, such as Australia, China, India, Japan, New Zealand, and South Korea through the Regional Comprehensive Economic Partnership. The economic potential is great, but the political risks may be huge for others if not properly handled, as in the case of the PH.
Is the PH ready for AEC? Is the 16th Congress ready to champion the AEC? The policies that need to be harmonized from products to service and people have to be identified, studied, filed, and enacted. So could we see any movement in this regard?
The Asean leaders adopted the AEC Blueprint in November 2007, with the vision to “establish by 2015 a highly competitive single market and production base for its ten member economies that promotes their equitable economic development and facilitates their integration with the global community.” Much work is to be done regionally.
Making our people aware of the integration is critical and crucial because it will have a great impact on their lives and the future of the region. Interestingly, a survey found that while 80 percent of Asean’s population is aware of Asean, 70 percent of them do not understand what the Asean Community is all about.
The people of PH are our greatest assets in terms of employment, as well as trainers in the region. We just have to see the strategies built by our institutions so we reap the bounties this integration hopes to bring.
If Asean achieves what it plans to do come 2015, we might just see the possibility of pushing for an Asean parliament. The idea was sowed first by the Philippine delegation at the 3rd AIPO General Assembly in Jakarta in 1980. Some 26 years after, by the 27th AIPO General Assembly in Cebu City in 2006, consensus moved towards making the Asean Parliament a long-term goal. Would the first speaker of the Asean parliament be a Filipino? Only the process of integration and our commitment to its objectives could lead to it.

PUBLISHER/EDITOR’S COMMENT
VERY important for us Filipinos is the matter tackled in Dr. Jose Romero’s Ambassadors Corner column today. He originally titled his piece “The AEC: Its past and its future.” But we decided to give it a punchier headline because his intention is to persuade those who “have visions of Armageddon here in the Philippines with the implementation of the EAC” that it will be good for us Filipinos.
AEC is the Asean Economic Community. It is scheduled to start being a reality next year. The Asean countries’ leaders who envisioned it wants our region to be something like the unified economy that Europe is supposed to be.
But the current state of the European Union, the Eurozone (those countries that have made the euro their national legal tender) and the vision of an EEC (European Economic Community) formalized in the 1957 Rome Treaty might now not be as inspiring as it used to be.
Economic problems in every one of the EU countries have made the richer countries less generous—with loans, soft financing and actual aid—to the poorer and less disciplined countries. That’s because the poorer sectors of the rich countries’ population are now more resentful than during better times of their governments’ and banks’ magnanimity to the troubled economies of the poorer European countries.
In the decades before our present one, over-all prosperity allowed the European Union to function as if it had a single economy–as if the European Economic Community of the founders’ vision had really become a seamless Common Market. But the credit meltdown caused by the global economic crisis of 2007-2008 and fears of it recurring (in fact the world has really not yet fully recovered up to now) have revived economic nationalism and a me-first outlook all over the EU.
EU, Eurozone will prevail
I don’t think the EU and the Eurozone will unravel, though. But if the inward-looking Euro skeptics and EU-hating parties had their way, they would dismantle the EU and the Eurozone. These rightwing political parties are gaining ground. In the last European elections, they have won more seats in parliaments than ever.
The EU would have been more solid and the Common Market a reality had there been a union government to impose rules and laws on all the members. But there is none. There is no Europe-Government run central bank to penalize member countries that show no discipline in financial affairs and no EU-central police directorate to help countries curb the disruptive disorderliness of some citizens.
I personally wish implementation of the AEC next year would go on as scheduled. It might just be the jolt some of our countrymen need to shape up. An Armageddon-like struggle against foreign competition will. I’m sure, drive our businessmen to learn to be more united, more competitive, so that their enterprises can become sustainable.
While the European Common Market-EU model seems to be losing its attractiveness, economic globalization is unstoppable. And Asean must become an economic powerhouse because that is the only way the 50 or more percent of the human population of our region can be lifted up from absolute poverty. That would also be the way the Asean region will become a leader in global economic growth.
Worrisome Channel News Asia report but something that Singapore-based Channel News Asia reported last week makes me worry that the AEC might not begin in 2015.
This report, by CNA’s Dylan Loh, says two surveys in Singapore reveal that majority of businessmen in Asean don’t know what AEC is. “A survey by the Institute of Southeast Asian Studies found that 55 per cent of some 380 firms polled across the region were not aware of the AEC. And Singapore companies had the highest level of ignorance – at 86 per cent.”
Another survey, by the Singapore Business Federation, found that about 38 per cent of its 1,000 members were ignorant of the impending economic integration of the 10 Asean countries. And it seems that in sophisticated First World Singapore, businessmen running smaller companies cannot tell you what the AEC means or even which countries are members of Asean.
If that’s the case in Singapore, what do you think is it in the Philippines?

COUNTDOWN TO AEC 2015

ON December 31, 2015—it’s a Thursday—the Association of Southeast Asian Nations (Asean) will announce the creation of the Asean Economic Community (AEC). There is a growing consensus that milestone will be a lot less meaningful than was originally hoped.
In a conference hosted by the Angara Center for Law and Economics and the Metrobank Foundation at the beginning of this past December, the insights of a number of experts led to that conclusion. Although remarkable progress has been made, much of it has been easy progress, leaving the most difficult measures to be solved later.

The speakers, led by Socioeconomic Planning Secretary and National Economic and Development Authority (NEDA) head Dr. Arsenio Balisacan, described the various thorny issues that need to be solved in order to make the AEC work as intended. He pointed out how some “stubborn” factors in the Philippine economy—persistent poverty and unemployment rates, and comparatively low rates of capital formation and foreign investment—might put the Philippines at a disadvantage.
Other speakers noted the great institutional and economic disparities among the 10-member regional bloc, as well as differences in progress in making necessary amendments to domestic laws and other institutional changes in preparation for regional integration.
Lack of awareness one major handicap to progress on the AEC was described by Dr. Jayant Menon, lead economist for Regional Economic Integration at the Asian Development Bank. Over time the pace of progress towards completing AEC’s priority measures has slowed, which to Dr. Menon suggests that interest in the AEC is waning. He cited an ADB study in which 55 percent of businesses surveyed said they were unaware of the AEC, and less than 20 percent had made any plans to prepare for its December 2015 launch date.
The survey to which Dr. Menon was referring was conducted in early 2012 by the ADB, and the results published in an exhaustive assessment of the AEC by the Institute of Southeast Asian Studies in Singapore in 2013. The figures cited as examples are regional averages; the level of awareness and interest in the AEC in the Philippines are far lower. 80 percent of Philippine businesses surveyed said they were unaware of the AEC (only Singapore was worse, with 86 percent), and 91 percent said they were unaware of the AEC scorecard. By contrast, awareness of other Asean free trade agreements, such as those with China, Australia and New Zealand, and India ranges from 60 to 80 percent. Paradoxically, despite the widespread lack of awareness, 51 percent of the Philippine firms surveyed felt AEC 2015 would have some impact on their business.
In an e-mail message last week Dr. Menon commented, “A number of parties need to play a role in increasing awareness of the AEC before its deadline of December 2015,” a reasonable suggestion that The Manila Times has decided to follow in the coming months, beginning with this week’s overview of the broad issues in Asean integration.
Evolution of the AEC
According to the official Asean history, the Association of Southeast Asian Nations was founded on August 8, 1967, with the signing of the Asean Declaration by the foreign ministers of Thailand, Malaysia, the Philippines, Indonesia, and Singapore. The origins of Asean explain much about the challenges of bringing the Asean Economic Community from concept to reality.
The idea, which the history says took about 14 months to develop into a signed agreement, formed from multi-party negotiations over intraregional disputes. It was in that context—a desire to improve conflict resolution through better communications and consultation—that the guiding principles of “sovereignty, equality, territorial integrity, non-interference, consensus and unity in diversity” were first adopted.
The concept of the Asean as an economic arrangement developed much later, becoming a more-or-less official policy direction in the Asean Vision 2020 adopted in December 1997. The explicit goal of forming the Asean Economic Community by 2020 was adopted at the Asean Summit in Bali in October 2003.
As early as mid-2006 serious discussion about accelerating the timeframe for the AEC was taking place, and at the 12th Asean Summit in Cebu in January 2007, a formal declaration advancing the deadline from 2020 to 2015 “to transform Asean into a region with free movement of goods, services, investment, skilled labor, and freer flow of capital.” Many of the specific details about how to accomplish that were worked out at the next summit in November 2007 in Singapore, and at the 14th Asean Summit held in Thailand in 2009, the member states agreed to hold future summits twice a year, in acknowledgement of the great amount of work to be done in order to make the AEC a reality.
Not the EU
Speaking to reporters at the recent World Economic Forum in Davos, Switzerland, Malaysia’s Trade Minister Mustapa Mohamed said that the Asean would officially call itself a single market by year’s end even though, “We don’t have complete integration or harmonization yet, 2015 is laying the stage for bigger things to come.”
Part of the confusion among businesses and ordinary citizens about what the AEC will actually mean may come from the inaccurate description of it as a single market, which evokes comparisons with the European Union. Malaysia’s Mohamed stressed, however, that, “From day one, we know that we’re not going to adopt the EU model.”
A single or common market is a specific form of regional economic integration, one that the Asean will not achieve by the end of this year, and perhaps never will. What the Asean Economic Community blueprint actually describes is an enhanced version of what the Asean already is, a free trade area. A free trade area is characterized by the free intraregional movement of goods and services, with each of the member states maintaining their own external tariffs. There is no provision in the blueprint for a common external tariff, which would create a customs union. Only when Asean accomplished that could it move on to becoming a common market.
That may never happen, because of the nature of the Asean group as established from its very beginnings. Tasks like the harmonization of customs procedures and sanitary regulations, for example, have proven difficult because “unity through diversity” is an aspiration that is not conducive to creating supranational frameworks. In an ADB working paper published in November 2014, ADB’s Jayant Menon and Hal Hill of the Australian National University explain that the unique characteristics of the Asean which have made it the most durable of regional associations in the developing world despite the wide disparity of attributes among its members may limit it to a certain level of development. They describe it as “open regionalism,” a form of regional cooperation that has a primarily external focus. While this has allowed relatively rapid, stable economic growth, it is a framework which primarily supports individual rather than collective action.
Overcoming the information gap
That ‘external orientation’ is best reflected in the lopsided export balance of the Asean group; about 75 percent of the member states’ exports are to non-Asean countries, while only about 25 percent is interregional trade. In the recent Angara Center forum, it was noted by several speakers that the prospects for an increase in trade among Asean nations were dampened somewhat by this balance—Asean exporters are not likely to significantly cut back on trade with proven markets (such as China, the US, Korea, Japan, and Australia) in order to increase Asean commerce. Trade in Asean will grow, but its proportion to total trade will likely not.
The reality, which seems to be much better understood by companies actually involved in trade than it is by national governments or Asean planners, is likely a factor in the “lack of awareness” of the AEC. The AEC is perceived as being unlikely to have a great impact on business, and so it is not a key part of many businesses’ plans. This perspective is in a sense validated by the slower than anticipated progress towards achieving AEC’s priority measures as well; despite the December deadline, there is an apparent lack of urgency.
According to ADB’s Menon, overcoming the information gap should be a key focus of efforts now, not only to build interest in the AEC but also to help resolve some of the lingering issues, particularly institutional changes that need to be made within member states. “Asean itself needs to improve its communications policy by having more outreach activities, as must national governments and their respective agencies,” Menon said. “There is a need for more forums and seminar to discuss and debate the AEC, whether led by the public sector, private sector or multilateral and other donor agencies. Finally, civil society groups and NGOs need to play a role, in increasing awareness of the AEC among the citizenry, to promote community building.”

Group 8
MBA