Exporters and micro, small and medium enterprises (MSMEs) are encouraged to tap trade and investment opportunities in 15 participating countries of the Regional Comprehensive Economic Partnership (RCEP) especially in this time of pandemic.
Department of Trade and Industry (DTI) Assistant Secretary Allan Gepty said RCEP, a free trade agreement (FTA) between the 10 Association of Southeast Asian Nations (ASEAN) member states and five of ASEAN’s external partners –Australia, China, Japan, Korea and New Zealand, is an ASEAN-led FTA.
“The Philippines, as a member of ASEAN, has to support this (FTA) but more than that, what is important is that we have to seize the opportunity right now. Almost all aspects of economic activities have shifted from North America and Europe to Asia right now, particularly in Southeast Asia,” he said.
“The trend is that there is an ongoing regional economic integration in the process and we cannot afford also not to follow the same trend,” he added.
Gepty said the Philippines needs to be part of the RCEP region as it consists of almost 30 percent or $23.9 trillion of the world’s gross domestic product (GDP), about 28 percent or $10.5 trillion of the world’s total trade, and covers around 24 percent in terms of global inward investment.
He cited a United Nations Conference on Trade and Development (UNCTAD) 2020 study on RCEP indicating that the FTA was expected to boost exports in the region by 10 percent by 2025.
“For the Philippines, what is important is that we can say that through the RCEP, this will be cheaper costs to our stakeholders, particularly our MSMEs. It will also offer convenience, competitiveness and complementation,” he added.
Gepty said RCEP can help businesses access cheaper inputs because of zero or reduced tariffs.
“For farmers, key agricultural products are still under tariff protection while enjoying access to cheaper farm inputs and implements,” he said.
“Customs procedures that are in a way uniform so therefore this will facilitate trade in the process. Since we have unified rules, then it will also lessen barriers to our exporters and importers and the end result is that it will result in less administrative cost and of course trade facilitation,” he added.
Gepty said exporters and MSMEs can offer various products to these RCEP member countries, taking into consideration the retail market.
“With that, it is really important for us to really tap these foreign markets which are available to us through various FTAs and of course one of them is RCEP. The question of volume on (our exports) primarily the consideration is of course quality but more than that, your product has to be unique. So there has to be something wherein your products stand out,” he said.
Gepty also advised them to learn how to be compliant with the rules of origin and understand the whole value chain.
He said RCEP participating countries are the Philippine major trading partners both for the export market and a source of imports even in a trade deficit.
“Even if we are in deficit, the fact remains that most of our importations are intermediate products or capital goods or those products that can either be used for consumption or also intermediate. It tells us that many production and manufacturing activities are happening in this region…,” he added.
On the other hand, Gepty said the Philippines is in surplus in trade in services for many years led by business services, followed by travel that includes tourism, telecommunications, and computer and information services because of the information technology-business process outsourcing (IT-BPO) sector.
“Relating this performance of trade in services with the goods sector, take note on manufacturing services, there is an upward trend starting 2015 and again this is consistent with the increase in importation of intermediate goods,” he said.
On investments, Gepty said that in the last five years, investments that the Philippines received from the RCEP participating countries range only from 10 to 12 percent.
“So, it tells that there are still a lot of opportunities that we can promote to these RCEP participating countries and invite them to invest more here in the Philippines,” he added.
“We cannot really afford not to be part of this large free trade (agreement).”