There is simultaneous happiness and unease over the ASEAN Free Trade Agreement (AFTA) or its more recent transformation into ASEAN Trade in Goods Agreement (ATIGA) and ASEAN Framework Agreement on Services (AFAS). These are the heart of the ASEAN Economic Community for which a mindset change of stakeholders is needed to face the end- 2015 economic integration deadline; these include politicians who have to implement agreements committed and signed by the government, business leaders who ask for protection and preferential treatment instead of proactively addressing long-term problems, and the general public who must wage a continuous battle against corruption and inefficiency.
Fears over changing comparative advantages, bad environments of doing business, more complex and chaotic global conditions, etc. must be balanced by careful exploitation of opportunities. The Philippines has its own strengths going into AEC 2015 ,e.g., governance improvements that led to stronger economic fundamentals and investment upgrades, and network of overseas Filipinos who bring information on markets, financing options, transferable technologies on top of continued foreign exchange remittances.
It could overcome its weaknesses by pushing for more reforms in investment/ trade promotion and facilitation by–
Automating business procedures in national government agencies; streamlining procedures across various offices, and making them more transparent and consistent;
Unifying various investment promotion bodies and adopting PEZA operation practices, harmonizing their incentives, reviewing the Constitutional 60-40 rule on foreign equity participation and other limitations; and
Instituting a national single window and linking its databases with the Bureau of Customs to improve risk management ; instituting e-government with sufficient physical and human infrastructure.
The Philippines should also pay attention to its much neglected physical ports facilities through PPP, remove conflict-of-interest in regulatory agencies that own certain infrastructure, review its cabotage policy, and improve the efficiency of regulatory agencies and trade-related offices.
The ASEAN Political-Security Community and the ASEAN Socio-Cultural Community do not receive as much attention but serve as foundations for the economic pillar of the integration exercise in Southeast Asia. Issues such as drug trafficking, labor migration, a peacekeeping force, strong mechanism for enforcing human rights, and border issues among member states and with China on maritime waters do affect the progress of the ASEAN Economic Community. Local and foreign direct investments, as well as government expenditures, are swayed in certain locations and industries according to perceptions on these matters.