SENATOR LOREN LEGARDA
Speech for the ASEAN Youth Summit
Introduction to ASEAN Economic Integration 2015
De La Salle University-Manila
January 23, 2015
I speak before you today, against the backdrop of an emerging ASEAN Economic Community or AEC by December 2015.
ASEAN is one of the most diverse regions in the world. It is a region of 32,000 islands spanning over 4 million square kilometers and hosting more than 600 million people who speak more than 900 different languages and dialects.
It is a region that seeks to create a community, anchored on the strength of its diversity.
ASEAN, in pursuit of an ASEAN Economic Community, operates on the assumption that with open borders and free intra-ASEAN trade, more investments will come in and therefore improve the region’s competitiveness. The AEC, it is believed, will allow the region to gain greater influence in the global economic and political stage.
This optimism is fueled by ASEAN’s resilient economic performance over the past two years.
The AEC, as the experts claim, will set the stage for ASEAN as a single market and production base that would create opportunities for business complementation, thereby transforming ASEAN into a vital segment of the global supply chain.
A look at basic facts would seem to support these assumptions.
ASEAN, as a regional group, has the third largest market in Asia, after China and Japan. It has a huge and young market, with a rising middle class.
In terms of trade, it is the fourth largest in the world, trailing only the European Union, North America, and China. And if ASEAN were a single entity, it would rank as the eighth largest economy in the world.
ASEAN is rich in natural and human resources. Its GDP has grown over 170% over the past decade, amounting to USD1.8 trillion by 2011.
But as we pursue the pathway that will bring the economies and people of ASEAN under a single economic community, we also have to be mindful of the following glaring facts that hound the people of the region:
The agenda of poverty eradication is one of the goals of ASEAN, and yet, nearly 50 years after its creation, almost 13% or 76 million of the region’s people continue to live below the World Bank’s international poverty line of US$1.25 a day.
About 415 infants die each day in the region.
More than one third of the region’s people have no access to improved drinking water sources.
Income distribution and equality concerns abound as evidenced by the fact that GDP per capita across ASEAN countries can be as low as 800 US Dollars to a high of 49,000 US Dollars.
The Philippines’ Department of Foreign Affairs reports that as of 2010, duties have been eliminated on 99.2% of tariff lines for the ASEAN-6 Member States, including Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand. In the case of Cambodia, Lao PDR, Myanmar and Vietnam, tariff has been reduced to 0 to 5 percent on 97.52% of tariff lines.
This is partly the reason why we see a significant level of goods from other ASEAN countries in the Philippine market today. For the consumers, this can mean wider choices, lower product costs, and exposure to ASEAN brands. For Micro, Small and Medium Enterprises (MSMEs), this would mean more competition, which is both opportunity and challenge.
The ASEAN region is dominated by MSMEs, accounting for 98% of all enterprises and about 85% of total employment in the region. Many of these continue to operate as subsistence-based enterprises, which, if left unprepared or if they remain uncompetitive, will find little benefit from an AEC.
MSMEs are the backbone of the ASEAN economies. Their contribution to GDP is about 30% to 50% and they account for 19% to 31% of their economies’ exports. They also account for the largest source of domestic employment across all economic sectors in both rural and urban areas.
Clearly, the MSMEs are vital in supporting regional integration through the ASEAN Economic Community.
Innovation and creativity play a significant role in transforming small businesses into competitive components of the ASEAN value chain. We need to develop industries that will be innovators, rather than consumers, of technology. Many studies have shown that ASEAN SMEs are users rather than creators of technology. Research is weak and there is very little collaboration with industries on research projects. We need to build internal innovation competencies given the nascent stage of research in ASEAN.
December 2015 is not the culmination of the economic integration for ASEAN. It is only the beginning and we should regard December 2015 as a milestone given that integration is an on-going process. It is an evolution much like what ASEAN itself has been.
Conferences such as this are important especially because the youth should understand and get involved in the process. This is your future.
But I wish to remind you of a very important goal we must all aim for as we move towards economic integration—resilience and sustainable development.
The ASEAN Community is geographically located in one of the most disaster prone regions of the world.
According to the UN, people in the Asia-Pacific region are four times more likely to be affected by disasters caused by natural hazards than those in Africa; and 25 times more likely than those in Europe or North America, based on a recent UN report.
Moreover, climate change has already made its presence felt in our region and in our respective countries. Extreme weather events, stronger typhoons, heavier rains, more severe floods, and devastating droughts have become recurring events, a common concern for countries in the region.
We have been warned that if global temperature increases by 4 degrees Celsius, coastal cities will be inundated; dry regions will become drier, while wet regions will be wetter; there will be extreme heat waves, water scarcity, stronger tropical cyclones, and loss of biodiversity.
Furthermore, the Intergovernmental Panel on Climate Change (IPCC) said that poverty alleviation and achieving food security will become increasingly difficult, new poverty traps will arise as existing obstacles remain, and economic growth will slow down because of climate change.
Faced with these difficulties, it is a must that development policies should promote effective risk reduction towards sustainable and resilient growth.
We must make our countries resilient by increasing investments in disaster risk reduction, conducting and sharing risk assessments, establishing effective and efficient early warning systems, and protecting our ecosystems, among other actions.
We must link disaster risk reduction and climate change adaptation to local, national and even in regional development planning.
Moreover, we must realize that we are living in a world with finite resources and yet generations have lived over the centuries like there is no tomorrow.
Our natural environment has been compromised. We all need to acknowledge and embrace this reality. Our biological diversity has been significantly reduced and the general health of our environment is conceded to the greed of some. We cannot keep a blind eye to this.
Our ecosystems have been altered more rapidly in the name of development; but the poor have remained poor and their numbers are increasing notwithstanding the emergence of megacities and the increasing “GDPs” of nations.
If we truly want the ASEAN Economic Community to be successful, we must learn to co-exist with our environment.
The Earth that we live in provides us with our needs, and even if we have all the money in the world, we will not survive in a deteriorating environment.
In closing, I wish to stress that the words “ASEAN Economic Community” invite optimism, but they also evoke a sense of uncertainty and even fear for some.
Much work obviously needs to be done in order that this community that we all seek to build will be relevant and will help usher in a higher quality of life for our people.
The attributes of an economic community began to unfold decades ago. The road for an AEC has been paved. We just need to make sure that the path we take will indeed bring us to the goal of a better life for all the people in the region.
Thank you and good morning.