By Tyrone Jasper C. Piad, January 24, 2022; Business Mirror
Local and foreign business groups are pushing two economic measures—ratification of the Regional Comprehensive Economic Partnership (RCEP) and Public Service Act (PSA) amendments—before legislators go into election campaign recess. They said these will allow more investments and business activities that can aid recovery.
The Joint Foreign Chambers (JFC), in a statement, called on the Senate to finally ratify the Philippines’s membership in RCEP, one of the world’s biggest economic deals, to access more business opportunities.
Over 70 agricultural sector groups, however, are seeking the opposite (story below, anchor), asking senators to either reject, or at least defer approval of, RCEP.
RCEP, which entered into force this month, is a free trade agreement among Asean countries and their trading partners including Australia, China, Japan, New Zealand and South Korea. This represents 30 percent of the global gross domestic product (GDP) or $26.2 trillion.
“As business associations representing major industrialized economies, we are concerned the Philippines export industry that has been severely hit by the pandemic, will miss out unless this free trade agreement is approved by the Senate,” Canadian Chamber of Commerce of the Philippines President Julian Payne said, warning that non-participation puts the country at a disadvantage compared with other RCEP signatories.
Chamber of Commerce of the Philippines President Lars Wittig, meanwhile, said that ratifying RCEP will complement other economic reforms that the government has been pursuing to liberalize the economy, such as the Foreign Investment Act, Retail Trade Act and PSA.
“The ratification of the RCEP will be instrumental to instilling foreign-investor confidence in the country, which will be urgently needed to revive the economy,” said Daniel Alexander, president of the Australian-New Zealand Chamber of Commerce of the Philippines.
Sourcing raw materials
The local garment industry, through Confederation of Wearable Exporters of the Philippines (Conwep) and its affiliate the Coalition of the Philippine Manufacturers of PPE (CPMP), also called for the Senate’s concurrence of RCEP to allow them to source raw materials such as yarn and fabric from foreign markets.
Conwep Executive Director Maritess Jonson-Agoncillo and CPMP Executive Director Rosette Carrillo, in a letter to the Department of Trade and Industry (DTI), stressed that the industry needs “RCEP to sustain such opportunities.”
“Otherwise, we again lose these orders, as well as significant planned investments on apparel and textile from countries such as China, Taiwan, and others, to Vietnam which is expected to resume its operations in the next couple of months,” they added.
In an earlier joint statement, several Philippine business organizations expressed the same sentiment. These include the Financial Executives Institute of the Philippines, Makati Business Club, Management Association of the Philippines and Philippine Council for Foreign Relations.
“Like any free trade agreement, RCEP provides wide economic opportunities for our country, along with certain threats to uncompetitive industries, and individual producers and their workers. And like in the other free trade agreements the country has joined, the overall economic gains in terms of net job creation, economic growth and price stabilization will well outweigh the costs,” they said.
The business groups said the trading agreement will allow micro, small and medium enterprises gain further market access, in addition to cheaper alternative sources for inputs and lower costs for doing business given the improved trade facilitation.
“Exclusion from RCEP would be immensely costly to our economy and our people. We can anticipate a significant decline in our exports to RCEP countries, which now account for nearly two-thirds [64 percent] of our total exports, as trade with us will logically be diverted to fellow members,” the statement read.
In a separate statement, meanwhile, business groups and foreign chambers urged the Congress to ratify the bicameral conference committee report on the bill amending the PSA.
The private sector groups said that “PSA reform is one of the most important for the Philippine economy in many decades and is essential to restoring and eventually exceeding prepandemic rates of economic growth.”
They said the measures will encourage further new capital inflows that can support construction of crucial infrastructure such as telecommunication and transportation services for air, ground and marine.
Citing a Congress report, the business groups said the PSA amendments will result in over $300 billion worth of foreign direct investments in the next five years. These are expected to add almost a half percent to the country’s annual GDP growth.
“Eventually, consumers will enjoy the benefits of increased competition from more choices of service providers with better technology, pricing, and customer service,” they added.
The signatories stressed the need to liberalize these sectors: airports and seaports, tollways/express ways, air carriers, telecommunications and public utility vehicles.
“Finally, the justified concerns of policy-makers in government for national security should be satisfied by the language in the Senate bill, which restricts state-owned enterprises [SOEs] from owning public services and creates a process for all foreign investments in public services to be reviewed and approved by the president,” they concluded.