THE GOVERNMENT must ease foreign restrictions, promote competition, and support small and medium enterprises (SMEs) to maximize the benefits of the planned regional economic integration next year, business groups and economists said.

Management Association of the Philippines (MAP) President Gregorio S. Navarro said there are still many issues that need to be resolved ahead of the Association of Southeast Asian Nations (ASEAN) integration.

"The most important ones that the government should prioritize include amending economic provisions of the Constitution, Customs Modernization Tariff and Tax reforms, investments incentives rationalization, reduction in red tape, and fair competition law," he said via text.

Makati Business Club (MBC) President Peter Angelo V. Perfecto agreed, saying in his text message that the "two critical pieces of legislation relevant to the AEC (ASEAN Economic Community) that Congress must prioritize are the Customs Modernization Act and the Competition policy."

For his part, European Chamber of Commerce of the Philippines (ECCP) Executive Director Henry J. Schumacher said "big businesses [have] certainly been watching the movements of their competitors in ASEAN and have developed strategies to cover the challenges and opportunities," while SMEs need more government support to better prepare for economic integration.

“SMEs may not have done that [prepared for integration] to the same extent. Especially companies involved in agriculture (sugar for instance) may be vulnerable; companies in services too,” he said via text.

Mr. Schumacher added that the “free movement” of people is another issue that the government needs to address, as more and more manufacturing companies express concerns over the "export" of skilled Filipinos.

ANALYSIS

Mr. Schumacher also urged the government to look into the country’s competitiveness as an investment destination.

“One area of concern is that some ASEAN members are subsidizing power. Government may also want to undertake a strength and weakness analysis and address the weaknesses now,” he said.

John D. Forbes, senior adviser of the American Chamber of Commerce of the Philippines (AmCham), said there are many restrictions on services in the ASEAN Framework on The Trade in Services (AFAS) that the Philippines has committed to liberalize -- including air transport, maritime transport, construction, financial services, and telecommunications.

“The Executive branch is preparing draft legislation that will support this commitment, but it has not been introduced. The Foreign Banking Act is a good model to be followed,” he said in a text message.

Economists at a forum last month by the Center for Philippine Futuristics Studies and Management also urged the government to take steps to enhance productivity and competitiveness.

Asian Institute of Management economics professor Federico M. Macaranas said the Philippines has the lowest labor activity among its ASEAN neighbors, Indonesia, Malaysia, Singapore, Thailand and Vietnam.

“We have a good capacity for innovation... but we all have to be more productive, and by productive, you produce more per work day. To be able to increase productivity, the Philippines must raise the bar of competitiveness by setting the benchmark on a par with global practices,” he said.

The Philippines must also address challenges in national legislation, former Finance secretary Roberto F. de Ocampo said.

“Among the bills relevant to the ASEAN, which is pending before Congress, is the creation of a Fair Competition Commission that will implement competition policy effectively across different sectors of the economy,” he said at the forum.

Citing a survey by New York think tank Conference Board, Mr. de Ocampo said the “local business sector is facing greater competition for shortage of management talent, retention challenges because of free movement of labor, increased competition from free trade, and meeting uniform quality standards for products and services,” in light of the upcoming single market among ASEAN nations.

"AEC will open up greater opportunities for businesses and industries to achieve economies of scale, which will raise productivity and at the same time reduce cost of production and result in more competitively priced goods," he added.

By 2015, the AEC sets in motion the creation of a single market spanning the 10-nation bloc: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

'PLENARY'

Sought for comment, House Speaker Feliciano R. Belmonte, Jr. said these proposals by business groups and economists are being studied by his colleagues.

"The eco provisions against foreign ownership is in the plenary," he added.

Malacañang, for its part, said government will pay "special attention" to the improvement of sectors with a competitive advantage in preparation for the ASEAN integration next year.

Communications Secretary Herminio B. Coloma, Jr., said in an e-mail that one major focus by the government is the improvement of agriculture, especially the production of high-quality and high-value crops.

Mr. Coloma added that the government thru agencies like the Department of Trade and Industry "continues to provide support to micro, small, and medium enterprises in the country to improve their production and management capacity, as well as access to financing."

"The Philippines is now about 85% to 87% compliant with ASEAN requirements. Although there are still gaps and there are sectors that need government support, the administration is doing everything to improve their performance so they could contribute to the national economy," Mr. Coloma said.

Source: www.bworldonline.com