There’s silver lining in trade war: PIDS


    While the Philippines may benefit and find opportunities from the ongoing trade wars of major economies, the government will have to step up and do more to fully take advantage of the situation so the Philippines will be better-positioned especially compared to neighbor economies.

    Roehlano Briones, Philippine Institute for Development Studies senior research fellow, said in a press conference yesterday there’s a “silver lining” that can be found in the ongoing trade wars.

    “It’s possible that with this trade war, countries will move away from China and they may look at other countries as the destination of their investments or as the source of the goods that they want to buy… maybe the Philippines will benefit from that,” Briones said.

    However, Marie Sherylyn Aquia, Department of Trade and Industry (DTI)-multilateral relations division chief, said even with the various programs and projects implemented by the DTI, as well as the various agencies of the government, there’s still a lot to be done and be addressed.

    “There’s still some key constraints in order for us to attract investments. There’s the uncertainty of the TRABAHO bill, that’s something that we have to address, there’s also the shortage of viable locations near the current economic zone clusters, this is important because a lot of our exports are coming from the PEZA (Philippine Economic Zone Authority), from the ecozones, so there’s a need to secure the expansion of ecozones outside of Metro Manila, and then also we need to implement properly the ARTA (Anti-Red Tape Act) and the Ease of Doing Business Act,” Aquia said.

    “(We have some) initiatives that we have launched in the DTI, in order for us to take advantage of the trade war. If we do not respond properly in government, for sure we will be affected negatively. We need to compete not just among ourselves, not (just) among our MSMEs (micro, small and medium enterprises), but we need to compete with our Asean partners. A lot of them are really taking advantage of the trade war, they’re in a better position compared to us,” she added.

    Aquia also pointed out the Philippines is not an export-oriented economy.

    “It may sound big, but compared to our Asean neighbors, our share of trade is way way smaller. So we have to, in government, and it’s a whole-of-government approach, we need to be much more proactive in order to take advantage of this current developments,” Aquia said.

    “And it’s something that’s going to continue, we do not see lessening of the populist sentiments, lessening of the trade war. Just over the weekend, the US already implemented additional tariffs to China on certain goods such as smart watches, flat panel TVs and all, and these are the very same line of products that we export, so we have to be vigilant, we have to be very proactive in government,” she added.

    Aquia said to benefit from the ongoing trade war, the DTI is finding different markets for the export products and looking at the European side as well as strengthening cooperation with Asean neighbors.

    “Even though they (Asean economies) are competitors, they are also our partners. In terms of other things that we can do, I mentioned already that TRABAHO bill, that has to pass, because it will certainly provide business confidence, we cannot compete with… the different investment opportunities by our neighbors including Thailand and Vietnam, but if we are able to pass the TRABAHO bill, it will help us invite more investments and more investors into the country,” Aquia said.

    Briones also said the Philippines has fallen way behind in terms of exports of agriculture products, especially compared with its Asean neighbors.

    “This is also a big opportunity for small and medium enterprises to break through in foreign markets,” Briones said.

    Meanwhile, Aquia cited the services sector as one of those which will benefit from the ongoing globalization.

    “Services, that’s a very important sector for us right now, that’s a very competitive area for the Philippines. This is an area where we can really excel as a country, in the service trade,” Aquia said.

    The agriculture sector, on the other hand, will be “hard hit,” Briones noted.

    “Right now they’re protected by very high tariff walls, even rice, which we had recently liberalized, still being protected by 35 percent tariff wall. It’s been mentioned that rice is kind of a cautionary tale, although I’d rather say that tale is too early to tell. We’re just a few months off the implementation of the Liberalization Act, so a lot of the dust is still settling, but while that dust is settling, we’re already drawing conclusions. I think it’s kind of premature,” Briones said.

    “Nonetheless it is already being seen by sugar industry, because there are some ideas floating around and even the new Department of Agriculture secretary welcomed the idea of opening up (the) sugar sector so that the cost of doing business will go down for food manufacturing, a lot of whom draw sugar, and they have to pay 50 to 100 percent more for their sugar. They are at a disadvantage compared to competitors in Thailand, in Vietnam,” he added.

    Briones said based on the method followed by the latest Rice Liberalization Act, there is a need to program safety nets for the adversely affected sectors.

    “Certainly this cannot be ignored, we anticipate already that they will be on the receiving end of more cost-effective imports, so we have to help them match the cost of production,

    remain competitive, or even explore livelihood opportunities,” Briones said.