Enhancing market opportunities in ASEAN…

Brunei Darussalam
Cambodia
Indonesia
Lao PDR
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam

ASEAN Free Trade Area

SENEN M. PERLADA
Director, Bureau of Export Trade Promotion (BETP)
and
Concurrently Executive Director, Export Development Council (EDC)
The Philippines’ FTA Network

China Japan
S.Korea

India

ASEAN

Australia
New
Zealand

AFTA is the Philippines first FTA...

 Provisions of AFTA Agreement

 ASEAN Trade in Goods Agreement

 ASEAN Framework Agreement in Services

 ASEAN Comprehensive Investment

Agreement

 Trade Facilitation
 SMEs
 Consumer Protection
 How big is the ASEAN market?
Selected basic ASEAN indicators
as of 2011:

 10 member state-bloc

 598.5 million consumer base

 US$ 700 billion aggregate

GDP

 US$ 2,066 average ASEAN

GDP per capita

Sources: www.aseansec.org/www.adb.org
 2011: The World as a Destination for Philippine Exports (% Share)

France, 0.89
Chinese ROW, 11.48
Taipei, 4.13 ASEAN, 18.01

Republic of
Korea, 4.63

Netherlands, 3.61
Japan, 18.40
Germany, 3.58

China, 12.91
USA, 14.70

Hong
Kong, China, 7.66

Source: ITC calculations based on National Statistics Office, Republic of the Philippines
 2011: ASEAN as a Destination for Philippine Exports (% Share)

Country Value in
US$
Brunei
Indonesia, 1.3 Cambodia, 0.02LaoPDR, 0 Thousand
Darussalam, 0.01
Myanmar, 0.03 ASEAN 8,603,733
Viet Nam, 1.56 Total
Singapore 4,278,559

Malaysia, 2.28 Singapore, 8.86

Thailand 1,906,006
Malaysia 1,009,076

Viet Nam 752,141

Thailand, 3.95
Indonesia 627,235
Myanmar 14,129
Cambodia 9,743
Brunei 6,233
Darussalam

Lao PDR 611

Source: ITC calculations based on National Statistics Office, Republic of the Philippines
 2011: The World as a Source of Philippine Imports (% Share)

Germany, 2.35

UAE, 2. 86

ROW, 13.12
Hong Kong, China ASEAN, 27.94
2.50,

Saudi Arabia, 5.33

Chinese Taipei, 6.96

Japan, 10.77
Rep.of Korea, 7.31

China, 10.06 USA, 10.80

Source: ITC calculations based on National Statistics Office, Republic of the Philippines
 2011 ASEAN as a Source of Philippine Imports

Cambodia, - Country Value in

Brunei US$
Darussalam, 0.01
Myanmar, 0.03 Thousand
Viet Nam, 1.40 Lao PDR, -
ASEAN Total 16,269,812
Singapore 4,899,445
Thailand 3,463,995
Indonesia, 4.06
Singapore, 8.10
Malaysia 2,640,271
Indonesia 2,399,713
Malaysia, 4.36
Viet Nam 849,421
Myanmar 18,653
Thailand, 5.73 Cambodia 1,175
Brunei Darussalam 5,048
Lao PDR 87

Source: ITC calculations based on National Statistics Office, Republic of the Philippines
 Exports of ASEAN Countries to the World 2011
(Value in US$ Billion)
Country Intra-ASEAN Exports Share to Total Exports Total Export

Singapore 106.57 33.62 351.95

Malaysia 50.49 18.99 198.79
Thailand 44.33 18.66 195.31
Indonesia 33.34 15.07 157.78
Viet Nam 8.76 4.91 71.03
Philippines 11.55 6.78 51.43
Brunei 1.89 0.50 8.54
Myanmar 3.17 0.82 5.12
Cambodia 0.31 0.16 5.26
Lao PDR 0.76 0.49 1.71
TOTAL 261.17 100.00% 1,046.92
 Market Characteristics
• Entered into force in January 1992 and started the tariff liberalization program
under the AFTA – Common Effective Preferential Tariff Scheme (CEPT) now
called the ASEAN Trade in Goods Agreement (ATIGA)
• 0-5% tariffs on almost all products
• Low entry barriers
• Harmonized standards, measures and procedures to facilitate the flow of
goods, services, capital and natural persons
• Expanded and strengthened infrastructure linkages for transport, energy and
telecommunications
• Endowed with a great variety of natural resources
• Wide range of choices of location in accordance with the requirements of the
line of business and where the greatest profit is to be gained
• Foreign direct investments can now flow much freely within ASEAN, with
investors from ASEAN country given access to and national treatment by other
ASEAN countries
• “Single market and production base”
Prospects in AFTA
 Proximity to international markets

 Emerging markets: of Lao PDR, Myanmar and Cambodia

 Young population and growing middle class base with

preference for quality and branded consumer products

 Strong growth in areas such as consumer electronics,

vehicles, household goods, clothing, food and luxury
products

 Strong demand for rubber, minerals, oil, coal, natural gas

and energy for the production of consumer goods
Prospects in AFTA

 High growth in service industries

such as tourism, healthcare,
recreation, entertainment,
education, retail; and the creative
industries for music and visual arts
 Greater market access in other ASEAN countries…

AFTA Benefits for Philippine Business

 Moving towards more defined rules in doing business for greater
certainty and transparency

 Low-tariff regimes of other ASEAN ensure continued and

enhanced market access for Philippine products

 Philippine exports to other ASEAN market enjoy substantial

margin of preference (MOP)

As much as 50% MOP over non-ASEAN exports

Example: Qualified Philippines exports of seaweeds and imitation

jewelries from the Philippines countries can enter Thailand market duty-
free, while non-ASEAN exports are charged with 20% MFN rate.

 Other ASEAN as a price-competitive source of inputs

Manufacturing sector benefits from duty-free importation of chemicals,

plastics, paper, rubber, textiles, glass, aluminum, and steel
 Cooperation in areas other than tariff…

AFTA Benefits for Philippine Business

Zero tariffs for all Normal Track (NT) products exported to ASEAN
countries translating to greater market access and making ASEAN as
a cheap source of inputs

 54,467 tariff lines of ASEAN 6 at zero duty

Adequate protection for sensitive products

 Tariffs on products classified under the Sensitive List have not been
eliminated and will instead have end rates of 5% in 2010

 Longer timeframe for tariff reduction/elimination on rice and sugar

 Cooperation in areas other than tariff…

AFTA Benefits for Philippine Business

Program for Elimination of Non-Tariff Barriers in Place

 ASEAN countries have commenced elimination of some NTBs.

For example:

— Malaysia has eliminated its ILPs on certain forklift trucks,

bulldozers and other machineries.

— Thailand has eliminated its TRQs on pepper, soya beans, soya

bean oil, tobacco, and onion seeds.
 Longer timeframe for tariff elimination
for sensitive products…

AFTA Benefits for Philippine Business…

ASEAN Highly
Sensitive List
Member State Sensitive List
Brunei Coffee and tea none
Darussalam
Cambodia horses, swine, poultry, carp, milkfish or lapu-lapu, orchids, roses, tomatoes, onions, garlic, cauliflower, none
broccoli, cabbages, lettuce, carrots, turnips, cucumbers and gherkins, beans, coconuts, pineapples,
guavas, mangoes and mangosteens, oranges, melons (including watermelons), and longans
Indonesia none rice and sugar
Lao PDR bovine, swine, poultry, carcasses and half-carcasses, trout, birds’ eggs, tomatoes, onions and shallots,
cauliflowers, broccoli, lettuce, carrots and turnips, cucumbers and gherkins, beans, aubergines (egg-
plants), mushrooms, chillies, sweet corn, onions, manioc (cassava), sweet potatoes, other nuts,
(almonds, hazelnuts, walnuts, chestnuts, pistachios, macadamia nuts), pineapples, guavas, mangoes
and mangosteens, citrus fruits (oranges, mandarins, lemons), melons (including watermelons),
papaya, longans, tamarinds, rice, sugar cane, and tobacco
Malaysia swine, poultry, orchids, cabbages, bananas, pineapples, guavas, mangoes and mangosteens, melons rice
(including watermelons), papayas, durians, rambutan, langsat, starfruits, jackfruits, coffee, bamboos,
rattans, tobacco and cigarettes
Myanmar rice and sugar none
Philippines swine, poultry, manioc (cassava), sweet potatoes, maize (corn), grain sorghum, and sugar rice
Singapore none none
Thailand Fresh cut flowers and flower buds of a kind suitable for bouquets or for ornamental purposes (i.e. none
roses, carnations, orchids, chrysanthemums)
Vietnam poultry, bovine, swine, rabbits or hares, forgs, birds’ eggs, orchids, roses, citrus fruits (oranges,
mandarins, lemons, grapefruit), rice, and sugar
 Cooperation in areas other than tariff…

AFTA Benefits for Philippine Business

Trade Facilitating Measures in Place

 National Single Window and ASEAN Single Window as a one-stop shop for
customs clearance

 Continuous reform of the rules of origin – introduced other origin criteria as a

co-equal rule to RVC 40%

 Mutual recognition arrangements for conformity assessment of products

 Harmonization of product standards

 Uniform system of classification of goods through the ASEAN Harmonized

Tariff Nomenclature (AHTN)
 www.asean.org
Framework Agreement on Comprehensive Economic Co-
Operation
Text of the Agreement: http://www.aseansec.org/13196.htm
1st Protocol: http://www.aseansec.org/15157.htm

Trade in Goods Agreement

Text of the Agreement: http://www.aseansec.org/22223.pdf
Schedule of Commitments:
http://www.aseansec.org/25053.htm
(Refer to the individual Tariff Reduction Schedules of ASEAN
Member States)
2010: The World as a Destination for Philippine Exports (% Share)

Chinese
Taipei, 3.4

ROW, 15.2 Japan, 15.2

Thailand,
3.5
Korea, U.S.A, 14.7
4.3

Singapore,
14.3
China, 11.1
Netherlands,
4.7

Germany, 5.2 Hong Kong,

China, 8.4
Source: ITC calculations based on National Statistics Office, Republic of the Philippines
2010: The World as a Source of Philippine Imports (% Share)

Indonesia, Japan, 12.5

ROW, 25.6
4.1
U.S.A, 10.8

Singapore, 9.3

Saudi Arabia,
4.2

Malaysia, 4.4 China, 8.5

Chinese
Thailand, 7.0
Taipei, 6.7 Korea, 6.9

Source: ITC calculations based on National Statistics Office, Republic of the Philippines
Thank you...