Benefits Outweigh Disadvantages of Free Trade in the Philippines

‘Benefits of Free Trade Outweigh Disadvantages’: Philippines Trade Minister

By Dion Bisara on 10:37 am Oct 14, 2013

Category Business, Economy

Tags: Indonesia economy, Indonesia trade, Trans-Pacific Partnership TPP

Filipinos are purchasing more processed foods, some of which come from Indonesia. The Philppines is among the region’s fastest-growing economies. (Reuters Photo/Romeo Ranoco)

Being an early adapter of liberalization, the Philippines has reaped some benefits from free-trade agreements.

“In general we think of trade agreements as a way to improve our industries. Only by introducing competition can we make them more competitive,” Philippine Trade and Industry Secretary Gregory L. Domingo told the Jakarta Globe last week.

Protecting local industries can be politically favorable, but it only leads to less efficient local firms, at a cost to the country’s consumers. In the Philippines, industries that were protected in the past — such as in the transportation, telecommunication, electronics and service sectors — were not competitive until they were liberalized, he said.

“The challenge is to find a phase to introduce competitiveness that will match the ability of your industry,” Domingo said, adding that domestic industries that mainly serviced the local market, would likely take most of the impact from any free-trade agreement.

On the other hand, free-trade agreements can benefit the country’s exports, by opening access to more market destinations, he said.

The Philippines’ biggest export is electronics, accounting for 40 percent of the country’s $44 billion total exports last year. Other Philippine exports are prefabricated housing, wires and harnesses, car transmissions, coconut oil and tropical fruits, Domingo said.

The country is also highly integrated in the global supply chain, supplying components for global industries.

“Our exports are already quite competitive,” he said.

The exposure to global markets also forces the Philippine textile industry to produce high-end products, as the country cannot compete in term of costs with cheap exports from China, Pakistan,Vietnam and Bangladesh.

Considering all the benefits, Domingo said, his country had vested interests in multilateral trade agreements such as the Doha Round — the ongoing negotiation in the World Trade Organization.

Domingo noted that Asia-Pacific Economic Cooperation member countries have made some progress to ensure progress when the WTO meets in Bali in December.

The Philippines also showed its intention to enter the Trans-Pacific Partnership, a US-oriented free-trade agreement negotiated by Australia, Brunei, Chile,Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.

“The TPP is something we’re seriously looking at, it’s something that very favorable to us,” he said, adding that the agreement already includes the Philippines’ largest trading partners.

Japan accounts for 20 percent of the Philippines’ total exports, while shipments to the United States make up 13 percent.

Entering such trade agreement will open some potential new markets in South America, Domingo said, noting that the ambition of the TPP was slightly higher with regards to environmental standards, intellectual property rights and services. As such, the Philippines may not qualify for the agreement.

“It is by invitation only, so we cannot really apply for it,” Domingo said.

In the case of trade between Indonesia and the Philippines, Indonesia has benefited from the Asean-China free-trade agreement, which became effective in 2010, Domingo said.

Total trade between Indonesia and the Philippines has risen by 3.6 percent to$2.7 billion in the first seven months of this year, compared to $2.6 billion in the same period last year. During the January-July period, Indonesia posted a $1.6-billion trade surplus with the Philippines.

“It’s hard for us to export more toIndonesia,” Domingo said. “Whatever we have, you [Indonesia] have more of.”

Philippine imports from Indonesia are made up mainly of crude palm oil, metals, minerals and processed food.

The Philippines received an investment-grade rating from Moody’s Investors Service on Oct. 3, reflecting its speedy growth and political stability in past few years. That also means the country is now ranked investment grade by three of the world’s largest rating agencies.

Reference: http://thejakartaglobe.beritasatu.com/business/benefits-of-free-trade-outweigh-disadvantages-philippines-trade-minister/

BPOs and the Philippines

BPO – Business Process Outsourcing

Business process outsourcing (BPO) is the contracting of a specific business task, such as payroll, to a third-party service provider. Usually, BPO is implemented as a cost-saving measure for tasks that a company requires but does not depend upon to maintain their position in the marketplace. BPO is often divided into two categories: back office outsourcing which includes internal business functions such as billing or purchasing, and front office outsourcing which includes customer-related services such as marketing or tech support.

The Philippines and BPO

There are a variety of reasons why the Philippine BPO industry has been very successful these past few years.

The first reason is that the country has a very good infrastructure in place. Buildings are already built in major cities around the country ready to accommodate BPO centers. And to point out, these buildings are built with to follow the international safety standards. So, these buildings are generally safe.

Another reason is that the Filipinos and the Western countries or clients for that matter, have a similarity in cultures. In a sense, the Filipinos have a strong sense of the Western culture.

Why are Filipinos attracted to the Business Process Outsourcing industry?

In the BPO industry, the work times are usually at night. People in the BPO industry are working while the rest of the country is sleeping. Most of the times, BPO professionals work during holidays. Many important occasions are missed because of the demands of the work. In call centers, the agents don’t know who they’re talking to. There are times that some of them get harassed by perverts. In the area of customer service, the agents get the brunt of the customers complaints. They get irate customers most of the time. In a sense, they become emotional punching bags. In technical support, agents have to instruct people how to make their gadgets run smoothly. Most of the times, the callers don’t know what they are doing. In other aspects, the demands of the job are also very high. Clients expect high quality output in a short time. Sometimes, they move the deadline to almost impossible time frames.

Why does the Philippine BPO industry stand out among the rest of the world?

About 15-20 years ago, the Philippines ranked as deficient in terms of technological advancement. Again, that was two decades ago. Things have changed dramatically. Before, technology or the personal computer for that matter, was out of reach to the common man. To put it simply, it was very, very expensive. But with the introduction of so many companies producing different computer software and hardware, the prices have reduced steeply. Now, more than 50% of Philippine households have computers, be it the PC or the laptop. Along with this development, the Philippines has become at par with the rest of the world in terms of computer technology.

Reference: http://www.philippinesbpo.com/