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Integration just the start for ASEAN

Posted on February 17, 2014

THE ASSOCIATION of Southeast Asian Nations (ASEAN) must continue to work on harmonization and convergence after it pushes through with market integration next year, a Cabinet official said.

Finance Secretary Cesar V. Purisima, in a speech delivered at the International Institute for Strategic Studies (IISS) in Singapore earlier this month, cited the Philippines’ and ASEAN’s prospects as the region moves closer to becoming an economic community.

“The ASEAN is in the right place of the world for the next 30 to 50 years,” he said.

“If looked at as a single country, ASEAN will be among the top ten economies in terms of population, and probably among the youngest with an average age of twenty-seven years old ... the young and the middle class are the drivers of growth,” he added.

“However, we cannot capitalize on these opportunities if we do not do the right things ... We have to accept that although we can reap countless benefits from integration in the future, we have to strive much harder to achieve them. We have to ensure first that our institutions, our standards, and our people grow to be harmonized.”

Improving the regional business climate and connectivity through increased infrastructure investment, said Mr. Purisima, will help in facilitating trade among ASEAN countries.

“We can ease doing business in ASEAN countries by simplifying rules, investing in infrastructure and increasing connectivity... Obviously, connectivity is not just about physical connectivity. It is also about harmonizing standards and the regulatory environment,” he said.

“When you look at where ASEAN is now in terms of intra-ASEAN trade, we are only at about 25% of total trade... We need to trade more within ASEAN.”

Encouraging trade involves the cooperation of the private sector as well, he said.

“Businesses will boom if ASEAN integrates successfully but this is not possible without their participation... That is the challenge for the private sector, to become a catalyst for integration itself. It will be a more daunting challenge for smaller sections of the private sector but this is where the government can step in to facilitate the sharing of information,” Mr. Purisima noted.

Opening up labor markets will likewise be “crucial,” he said, especially in terms of increasing worker mobility and their capacities.

To facilitate trade and investment in the region, integration of financial and capital markets through the harmonization of regulatory standards is crucial, the Finance chief added.

An integrated regional capital market will also give ASEAN countries increased liquidity, which could be used to fund and bridge infrastructure and development gaps.

“ASEAN has potential and 2015 is already less than a year away. However, I look at 2015 not as the time of integration but as a time of harmonization and convergence... The more conscious we are of one another’s challenges, the more likely we will succeed at integration, and the more likely we will reap the rewards of an integrated market,” Mr. Purisima said.

For the Philippines, he said there were many “upsides” even as the country was continuing to face challenges such as the effects of climate change, poverty and an infrastructure lack.

The Finance chief touted the administration’s good governance agenda, which he said had allowed the country to gain confidence.

“Even despite the difficult global economic environment, we have continued to reap benefits of growth because of our main drivers, namely consumption, as spurred by our people, and infrastructure, spurred by investment,” Mr. Purisima said.

Areas that could provide the economy with an extra lift, he said, include mining, tourism, and agriculture -- sectors that are among the government’s investment priorities.

“We are hopeful that once we turn these upsides into reality, we will be able to sustain growth rates of 7%-8%. If we are to deal with poverty, we have to grow at those levels,” Mr. Purisima said. -- Bettina Faye V. Roc