Not only economic growth should be the focus of the integration of the Association of Southeast Asian Nations (Asean) members but also poverty and income inequality, Philippine Institute for Development Studies (PIDS) President Gilberto Llanto said.
Speaking at a forum recently organized by the Philippine APEC Study Center Network, together with PIDS and the De La Salle University (DLSU)–Angelo King Institute, Llanto explained that while globalization and the opening of markets proved to be beneficial, policymakers have to “bear in mind that these should work for the people, especially for the so-called ‘left behind’”.
Llanto said to feel the positive effects of the Asean integration, the Philippines needs to address a number of challenges, especially in ensuring that majority of Filipinos benefit from it.
A study presented by DLSU research assistant Justin Eloriaga emphasized the need to look at the digital divide in the region to address the income inequality among Asean countries.
Eloriaga said the study found that “income inequality is negatively associated with the percentage of internet users, which suggests that higher percentage of internet users shows lower income inequality.”
At present, nine of the 10 Asean countries experience high digital and income inequality.
According to Eloriaga, the region has the potential to become one of the top digital economies in the world by 2025.
This can be achieved if developing Asean countries like the Philippines focus on advancing software literacy, providing accessible internet to the public, and easing up regulations on technological goods and telecommunications tax.
This supports the study of Paulynne Castillo, a faculty member of DLSU’s School of Economics, which underscored the need for Asean to explore the growing creative industry, which includes advertising, gaming, and music, pointing out that the Asia-Pacific region is the top market for it.
In the Philippines, Castillo said that there is a lot of potential for the animation industry, a subsector of the creative industry, but noted that it accounts for only 8 percent of the IT-BPO sector.
She added that one of the key challenges is the problem with the internet infrastructure in the Philippines, which “hounds the outbound logistics” of the industry, or the ability to deliver the outputs in electronic format.
Meanwhile, Jamil Paolo Francisco of the Asian Institute of Management said that successful Asean firms “have had long histories of tough business environments to thrive in”.
One of the reasons, according to Francisco, is because the demand in the Asean region had been nascent, which meant firms had to be patient in maximizing the potential of their businesses. He said firms had waited long before their target markets were ready for a new product or innovation they offered.
Furthermore, Louie Dane Merced of the Foreign Service Institute said that the long-term challenges that Asean needs to address will be regional security, bilateral tensions, national resilience, and development gaps.
To be able to work together in addressing these challenges, Asean peoples must have an appreciation of the association first.
However, in the Philippines alone, there is only moderate familiarity of Asean among Filipinos and modest appreciation of the benefits of Asean membership, a separate PIDS study said.
Regarding oneself as an Asean citizen is also not strong although it increases with age. PIDS Research Information Director Sheila Siar, co-author of the study, said this can be attributed to the limited information about Asean disseminated to the public through the media. Nevertheless, the study found that Filipinos still have high hopes for the association, especially in the economic aspect.
Equitable spread of gains
Former Foreign Affairs Secretary Albert del Rosario, meanwhile, noted that while globalization has brought net gains to the region, it needs fixing “to spread its gains more equitably.”
“The Asean rate of growth and steady development is a direct result of opening up to the global economy. As it stands, it is in the Asean Economic Community that our region has its brightest prospects,” he said in a forum on Asean.
Del Rosario said the region had some 600 million people, or about 10 percent of the global population, and included some of the fastest growing economies in the world.
“Asean members have shown a skillfulness in exploiting economic niches. Our Economic Community, through which we engage the world, helps us to do that,” he added.
But while Asean economies remain to be among the most dynamic and resilient in the world, the regional bloc is urged to be wary of the political consequences of its economic relationships.
“Asean should stress that it is nobody’s backyard or exclusive preserve. Failure to do so would severely narrow Asean’s options and make it over-dependent on a single player,” del Rosario added.
“We need to continue to engage external powers –China, the United States, Japan, India, Europe, Australia –in the project for Asean’s continued peace and prosperity,” he said.
Finance Secretary Carlos Dominguez III also expressed optimism that the proposed 16-nation Regional Comprehensive Economic Partnership (RCEP) will be approved this year.
RCEP is a proposed free-trade pact among members of the Asean, which groups Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, and its major trading partners China, South Korea, Australia, India, Japan, and New Zealand.
”You know, it’s not our call only, but as the chairman of the finance process, I will certainly push it,” Dominguez said.
RCEP was launched in November 2012 to cover trade-in goods and services, investments, economic and technical cooperation, intellectual property rights, competition policy, and dispute settlement, among others.
It is seen as a good platform for the region to negotiate with other regional blocks.
Dominguez believes that the proposal “is very doable.”
“RCEP is a very good way for Asean and the Philippines is supporting it very well,” he said.
“The future is not very certain and we have to strengthen our internal markets and internal cooperation and RCEP is a very good tool for that,” he added.