The Regional Comprehensive Economic Partnership (RCEP) can open new opportunities for more trade and investments in the Philippine services sector, but only if the country increases its investment in human resources and continuously reforms domestic regulations, according to a study by a local think tank.
The country can actualize potential opportunities in many areas of services by leveraging the commitments of signatory economies to RCEP, according to the research paper published by the Philippine Institute for Development Studies. Highlights of the report were discussed in an online forum on April 27, 2023.
The mega trade deal can become a tool for the country to transform itself into one of the region’s key hubs for manufacturing, innovation, research and development (R&D), and training and education, says the discussion paper.
It will also “reinforce current reforms in trade and investment, as well as initiatives for the redevelopment of manufacturing sector, enhancement of investment regime, strengthening of agriculture sector, and integration of MSMEs into global value chains.”
And because RCEP brings to the ASEAN Economic Community (AEC) the three major economies of China, Japan, and South Korea in East Asia, the trade accord can open markets for 92% of Philippine products, including business process outsourcing services and service workers such as seafarers, teachers, computer programmers, and engineers.
RCEP, the world’s biggest free trade agreement (FTA), is also expected to encourage enterprises, investors, and professionals to come the Philippines to engage in business, which can help develop human capital, infrastructure, tourism, and other industries, thus enhancing domestic productivity, declares the report.
The FTA is likewise expected to supply business and professional services in RCEP-member economies.
The report calls on the trade department and the legislative branch to create a policy environment that will facilitate the benefits of RCEP in business and professional services.
“This can be done by utilizing strengths and managing weaknesses of Philippine business and professional services sectors. We recommend strengthening linkages and improving human resources,” it adds.
In his reaction to the research, Allan Gepty, assistant secretary at the Department of Trade and Industry, said the services sector contributes at least 60% to the Philippine GDP and holds great promise.
“Trade in services is a growing key interest for the Philippines, and based on data we have been consistently in surplus for so many years, unlike trade in goods where we have been in deficit.”
RCEP offers “vast and infinite” opportunities as the country transitions into a knowledge and creative economy, he added.
The people are one of its biggest assets as the Philippines makes this transition, so “policy directions must be charted towards empowering and capacitating our people,” urged Gepty.
To deepen the contributions of trade in services to the Philippine economy, he recommends positioning the country to become one of the regional centers for R&D and training and education in the free trade area.
He also suggests developing the country as one of the major investment hubs, particularly for the manufacturing sector.
Further, the country should not focus only on educating its human resources in order for Filipino workers to be part of a deployment program. People should also be educated and encouraged to have a more entrepreneurial mindset and take advantage of RCEP to set up small businesses and offices in other member countries.
Another reactor, Maria Cherry Lyn Rodolfo, lead convenor of the Safe Travel Alliance, said the Philippines has not captured a significant amount of intraregional ASEAN travel. Among RCEP countries, Rodolfo said only tourists from Australia, China, Japan, and South Korea mostly come to the Philippines.
“We have not really sustained beyond the 10 percent share for ASEAN visitor arrivals to the Philippines and there is significant room to actually expand,” Rodolfo said, as she urged the promotion of the business plus leisure travel, or “bleisure,” concept.
She said RCEP provides a broad platform for exchanges and opportunities to form institutional setups like technical working groups, where tourism can be part of the priority agenda.
Rodolfo noted that more investment promotions and travel development activities can be held in the Philippines to drive more investors and business groups to more destinations in the country.
Finally ratified by the Philippine Senate on February 21, 2023, RCEP counts as signatories the 10 members of the ASEAN—Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam—and the five ASEAN trade partners Australia, China, Japan, South Korea, and New Zealand. RCEP members account for about one-third of the global population and 30% of the world’s GDP.