SINCE the Bali summit in 1977 that yielded the preferential trade agreement, followed by the 1992 signing of the Common Effective Preferential Tariff Scheme that marked the way toward the Asean Free Trade Area, the success and failure of the post-Asean Economic Community (AEC) 2015 will always be measured as to how local government units (LGUs) prepare and participate. Our local entrepreneurs and micro, small and medium enterprises (MSMEs) that make up 99 percent of the Philippine economy are faced with a phenomenon that the national government has chosen for them. There is no other way to succeed but upgrade their capabilities and build upon their competitive advantage. The LGUs stay at the fulcrum in this endeavor—the key for the Philippines’s success in AEC depends on them.
Among the Asean countries, it is only Cambodia and Myanmar that maintain significant agricultural output as percent of their GDP at more than 30 percent. Advance economies of Indonesia, Malaysia, the Philippines and Thailand each have less than 15 percent, while Brunei Darussalam at 0.70 percent and Singapore at 0 percent. The glaring implication is that who will ensure food security in the region? In contrast, industry and services sectors are booming at rapid 30 percent to 50 percent. While this trend signals industrialization, it likewise poses threat to human survival as food production becomes extinct—simply not enough to feed a population of 600 million.
At the backdrop of this reality is the promising opportunity for the Autonomous Region in Muslim Mindanao (ARMM) to directly supply agricultural products within Asean. Currently, it is only ARMM that produces more than 60 percent of its regional accounts coming from agriculture, hunting, forestry and fishing. However, does ARMM fully equip to develop its huge potentials? Has our national government aid its LGUs toward such direction? And most important, do local traders in ARMM know about AEC and its promise for a larger market?
These questions are not isolated for ARMM alone, but common to all 144 cities and 1,490 municipalities that are directly affected by intense competition within the region. Perhaps, few exceptions with those LGUs in Metro Manila, which have direct access to national resources. But the local businessmen and traders in our countryside need assistance and robust support from our national government in terms of information dissemination, investment counseling, market identification and boosting one’s competitive advantage against hundreds of cities in Asean.
So how do we ensure that our LGUs are systematically aligned with the vision of the national government in benefiting more from AEC? Ultimately, whatever gain or burden may arise from AEC redounds back to the local community. Indeed, the Board of Investments was quick to identify important steps for LGUs to implement.
First is to scan the local environment. Similar to what the national government is doing in terms of identifying key sectors for growth, LGUs must do the same at their own respective jurisdictions. They must be able to recognize which industries are most competitive and which industries need drastic government intervention. Basic strengths, weaknesses, opportunities and threats analysis would be very much helpful.
This exaggerates the importance of having a local investment ordinance that complements with the Omnibus Investment Code and Investment Priority Plan, among others. With the assistance of national agencies, scan the Asean environment.
LGUs must be able to recognize which countries where their local outputs are competitive.
Second is to be mindful of repetitive procedures in doing business. LGUs must be able to streamline local processes in accepting business applications. AEC means a possibility of investment influx to your locality due to improved access and direct trade, but such remains a “possibility” when redundant procedures are in place, discouraging prospective businessmen. Competition is much stiffer today; we race not only with the 18 regions of the Philippines but with the other nine countries of Asean.
As much as possible, set up online applications and maintain a web site that contains all the necessary requirements when doing business with your locality. In this age and time, it is easier to market your goods and services anywhere in the globe with the use of technology. Adopt a one-stop-shop business- registration facility and replicate the “no red tape, only red carpet” policy of the Philippine Economic Zone Authority.
Finally, cultivate a strong partnership with the local business community. Essentially, it is the private sector that drives investments while the government is the enabler of growth. LGUs must work hand in hand with the local business organizations in crafting ordinances, improving ease of doing business, exploring opportunities, as well as strengthening industries. For instance, the city of Valencia in the province of Bukidnon has made significant progress in local economic legislation due to collaborative efforts and shared responsibility with its local business community.
Businessmen do not only speak up about their concerns but also elaborate on the possible alternative solutions to be undertaken. It is noteworthy to point out that our government does not have answers to every challenge, hence, entrepreneurs and local traders must advise their LGUs on aspects relating to their sectors and industries. Such established mechanism has effectively produced a fiscal-reform policy in a span of only one-and-a- half years. This could possibly be a benchmark for other LGUs in the Philippines.
At the national front, the Department of Trade and Industry (DTI) and the Department of the Interior and Local Government (DILG) should monitor and proactively conduct regular briefings and provide technical expertise to MSMEs and LGUs in remote areas. While the National Competitive Council ranks competitive cities and municipalities, the DTI and the DILG should trace their compliance, performance and readiness toward the AEC. Surely, the country’s success or failure in AEC depends largely on the competitiveness and capabilities of our local businessmen and local governments.
Kent Marjun Primor serves as the market research and communications specialist at the Nordic Business Council of the Philippines (NBCP). For comments and inquiries, please direct it to firstname.lastname@example.org.
Article originally published by Business Mirror, which can be accessed here.