The two main organizations for the local semiconductor and BPO industries – the Semiconductor and Electronics Industries in the Philippines, Foundation Inc. (SEIPI) and Information Technology and Business Process Association of the Philippines (IBPAP) – have urged the Senate to immediately ratify the Regional Comprehensive Economic Partnership (RCEP) agreement.
The RCEP Agreement is a 15-member trading bloc signed by the Philippines in November 15, 2020. Since January 1, 2022, the agreement is implemented by its 10 signatory states — Brunei, Cambodia, Laos, Singapore, Thailand, Vietnam, Australia, China, Japan, and New Zealand. South Korea and Malaysia will be implementing the same on February 1 and March 18, respectively.
The agreement was ratified by President Rodrigo Duterte last September, with the measure being deliberated in the Senate for concurrence.
Dan Lachica, SEIPI president, wrote in their position paper, “the country’s participation in this partnership will allow us to take advantage of the enhanced market access, more sources of raw materials, and improved trade relations with the countries already implementing the agreement.”
He highlighted that the improvement on the country’s Foreign Direct Investments (FDI) net inflows which is at 48.1% increase in January to October 2021 compared to 2020 of the same period, as reported by the Banko Sentral ng Pilipinas (BSP), may be affected by the country’s non-ratification of the RCEP Agreement. Investors will be discouraged if such will happen and forestall post-pandemic economic recovery and growth, Lachica said.
Furthermore, he emphasized that the electronics industry which in 2020 accounted for $39.67 billion, or 62.2% of the Philippines’ total commodity export, and employs over 3 million direct and indirect workers will benefit from the agreement.
“Due to its liberalization of trade by eliminating 90% of tariffs within member countries, active participation in RCEP will reduce the overall cost of imported materials and exported goods for the electronics industry. Being the largest trade pact representing 50% of global manufacturing output and 70% of electronics, RCEP can provide the Philippines greater market access by increasing trade with China, Australia, New Zealand, and other ASEAN countries,” Lachica added.
The agreement which will increase market access with RCEP member countries will also complement SEIPI’s electronic roadmap, Lachica added.
“This may likewise move the Philippine electronics industry up the global value chain, which is the goal of SEIPI’s electronics roadmap called PATHS (Product and Technology Holistic Strategy),” he said.
Jack Madrid, president of IBPAP, said the RCEP will increase external trade and spur more investments that create more livelihood and other business opportunities in the country.
He added that the stable regulatory environment provided by RCEP would improve the Philippines attractiveness to investors and accelerate the economy’s recovery, adding that the country had the potential to be a manufacturing and services hub under the agreement.
“RCEP also promises seamless production networks among the members who will be tied to common standards, disciplines on intellectual property, rules of origin, customs process, e-commerce and competition policy. With stable and predictable rules, the Philippines could aspire to become a regional manufacturing and services hub, thereby creating much-needed domestic jobs. This framework will benefit the IT & Business Process Management Industry by making the country a more attractive investment destination and help expedite the economic recovery from the pandemic by creating more job opportunities,” he explained.
