WITH the Regional Comprehensive Economic Partnership (RCEP) Agreement ratified by the Philippine Senate, some economists believe the impact may not be immediately felt, if at all.
Ateneo de Manila University’s Leonardo A. Lanzona Jr. told BusinessMirror that RCEP’s impact will take longer to be felt as the country needs to make institutional and technological changes.
However, Lanzona said, labor-intensive industries such as agriculture and manufacturing are expected to improve after RCEP if the government can support transition and other reform efforts.
“RCEP will require a long-term process. What people do not realize about trade policies is that these will require both institutional and technological changes to obtain its gains. Without these changes, we will not be able to realize its maximum returns,” Lanzona told this newspaper.
Lanzona said while investments in agriculture as well as industries are needed to maximize the benefits from RCEP, a more urgent requirement is to have a comprehensive plan to implement needed reforms.
On the question of which industries will benefit, University of the Philippines School of Economics head of research Renato E. Reside Jr. said the fine print of the RCEP should first be examined more closely.
However, Reside said the trade deal will have guaranteed long-term benefits as it will increase consumer choices. Such could even help lower food inflation in the country, he added.
“I do believe this will be beneficial in the long run since this move will probably increase the range of choices for consumers and producers, which can lower prices,” Reside said.
Nonetheless, National Scientist Raul V. Fabella said what the RCEP did is to maintain the status quo in the region. But not being part of RCEP would have led to economic losses for the Philippines.
Fabella said RCEP is one example of an incremental improvement that would hardly be a game changer for the economy. These kinds of changes allow the country to reap “benefits at the edges, not tsunamis.”
“We mistake individual policy changes as shifts in policy ecology. It is the latter, which is a universe of investment-pulling policies, that create noticeable changes in investment,” Fabella said.
“Before RCEP kulelat na tayo [we were a cellar dweller] in foreign investment. Our rivals embraced RCEP. Our embrace of RCEP puts us back to the status quo ante which is kulelat,” he added.
Gateway to ASEAN
IN a statement on Wednesday, National Economic and Development Authority (Neda) Secretary Arsenio M. Balisacan said the ratification of the RCEP brings the country closer to becoming a gateway to ASEAN.
Balisacan said the Philippines has an advantage: it can serve as a gateway to the dynamic ASEAN region, and boasts of a young, growing work force, and stable legal regime, particularly on intellectual property and competition policy.
This makes the country an ideal manufacturing and research and development hub, even for non-RCEP countries, he said. Manufactured products can then be exported to RCEP-participating countries with preferential tariffs.
He said RCEP consolidates existing ASEAN regional free trade agreements among members and covers trade in goods, services, investments, economic and technical cooperation, as well as dispute settlement, among others.
“With the country’s participation to RCEP, the Philippines has now further strengthened its position as an ideal investment hub in the region as we expand market access, facilitate trade, and align our rules and procedures with participating economies,” Balisacan said.
In line with the overall goals of the Philippine Development Plan 2023-2028, robust business expansion and investment are seen to lead to more, higher quality, and more resilient jobs that will be key to rapid and sustained poverty reduction.
“With the strong support of Congress, yesterday’s concurrence to the RCEP Agreement is a testament to the government’s commitment to creating an environment conducive for trade and investments that are catalysts for job creation, skills development, and technology transfer as we seek to transform the Philippine economy in the next six years,” Balisacan added.
Complementary to RCEP’s ratification is the recent implementation of key economic liberalization laws such as the amendments to the Retail Trade Liberalization Act, Foreign Investments Act, Public Service Act, and the Build-Operate-Transfer Law, which will facilitate a more open and business-friendly investment climate.