QUEZON CITY -- A study by the Philippine Institute for Development Studies (PIDS) found that the Philippines is on track in achieving the goals of the ASEAN Economic Community (AEC). However, it shows “moderate performance” compared with other countries in the region.
This was shared by PIDS Senior Research Fellow Francis Mark Quimba, author of the study “How Does the Philippines Fare in Meeting ASEAN Economic Community Vision 2025?” during a webinar organized by PIDS recently.
The study assessed how the Philippines, vis-à-vis ASEAN member-states, has fared in achieving the characteristics found in the AEC Blueprint 2025, namely, a highly integrated and cohesive economy (Characteristic 1); a competitive, innovative, and dynamic ASEAN (Characteristic 2); enhanced connectivity and sectoral cooperation (Characteristic 3); a resilient, inclusive, people-oriented, and people-centered ASEAN (Characteristic 4); and a global ASEAN (Characteristic 5). In particular, the study looked at the country’s performance in the key result areas or indicators specific to each characteristic.
“The Philippines performed at the middle level compared to other ASEAN countries, specifically in 29 out of 60 indicators,” Quimba said. He added that based on data, the Philippines is “on track” in 37 out of 60 indicators.
For Characteristic 1, an upward trend was observed in trade in goods and services, participation in global value chains, and financial inclusion. However, the Philippines ranked low in intra-ASEAN exports, intra-ASEAN foreign direct investment (FDI) flows by source country, and accounts in a financial institution.
For Characteristic 2, little progress was seen in indicators such as research and development expenditure and time required to start a business.
For Characteristic 3, the Philippines ranked low in intra-ASEAN tourist arrivals and percentage of 3G coverage.
For Characteristic 4, improvements were seen on private partner investments in infrastructure for sectors such as energy, transport, and sanitation but not for information and communications technology (ICT). The study also observed the country’s sluggish performance in youth labor force participation rate and density of micro, small, and medium enterprises.
For Characteristic 5, the Philippines has increased its openness to the world through trade by reducing tariff rates for its free trade agreement partners; however, its FDI flows to the rest of the world are decreasing.
Given the findings of the study, Quimba said that if the Philippines wants to become an upper-middle-income country, “more improvements would be needed to step up the progress being made.”
For example, while the country shows its openness to trade, there is still a need to improve trade volume.
“Our national industrial strategy would need to keep supporting and pushing the industries to innovate and produce competently and sustainably,” Quimba explained.
He also emphasized the importance of prioritizing ICT infrastructure, highlighting the “high cost but low speed and weak internet connection” in the country.
Meanwhile, for a more inclusive society and economy, Quimba underscored the need to support entrepreneurs and start-ups, promote financial inclusion among the unserved and underserved, and create job opportunities for the youth.
“The experience from the pandemic has shown that a lot of young people are innovative and enterprising. The country can capitalize on these characteristics to maximize the gains from the demographic dividend,” Quimba explained.
Finally, he urged the government to attract more foreign direct investments, especially in the technology sector. To do this, Quimba said it should first create an enabling environment for domestic and foreign businesses. (PIDS)
