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Gov’t urged to prepare MSMEs for Asean economic integration

October 27, 2014

THE government should prepare the country’s micro, small and medium enterprises (MSMEs) for the emergence of Association of South East Asian Nations (Asean) members in Asean Economic Community (AEC) by December next year, Senator Loren Legarda said Monday.

Legarda said the AEC would allow the region to gain greater influence in the global economic and political aspects, citing that MSMEs continue to dominate Asean region and operate as subsistence-based enterprises.

“If left unprepared or if they remain uncompetitive, our MSMEs will find little benefit from an AEC,” she said, noting that MSMEs account for 98 percent of all enterprises and about 85 percent of total employment in the region.

Based on Department of Foreign Affairs report, tariff lines for the Asean six member-states — Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, and Thailand — have been eliminated on 99.2 percent, as of 2010.

On the other hand, tariff in Cambodia, Lao PDR, Myanmar, and Vietnam has been reduced from zero to five percent on 97.52 percent of tariff lines.

Legarda stressed the figures showed that there is 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 Philippine MSMEs that are not able bring their production costs down and compete against well-supported MSMEs of other countries, this development can spell the end,” she said.

She, however, said MSMEs have limited capacities for compliance with standards and certification which are likely to lose out deeper competition that will be ushered by AEC.

She insisted that the country needs to be innovative and have creative minds in order to transform small businesses into competitive components of the ASEAN value chain.

“Clearly, 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,” Legarda said.

“If played out wisely, Asean’s bold vision of achieving the free flow of goods, services, investment, and skilled labor in the region may help us achieve higher productivity and economic diversification; but we have to play our cards well,” she added.

Source: Sunstar Manila