Transcript Title of the Presentation - APEC SME Crisis Management Center

YOUR EXPORT
FITNESS PARTNER
Trade Liberalization and the
associated risks faced by domestic
SMEs
VENUS C. GENSON PhD
CEO/President, Venus Group of Companies
President, PHILEXPORT-Cebu
CURRENT SITUATION
1. Several bilateral and multilateral trade agreements
have been signed among trading partners.
2. The Philippines is one of the signatories of the
ASEAN free trade agreement. It has 12 overall.
3. The Philippines have also signed bilateral free trade
agreements with its strategic neighbors like Japan,
South Korea, Australia and New Zealand, and China.
4. The Philippines is basically a consumer economy and
not a producer economy, relying mostly on foreign
workers’ remittances.
5. The Philippines’ surplus in merchandise trade is
barely 1% of Gross Domestic Product.
6. The Philippines’ service sector contributes around
55% to GDP and employs roughly around 51% of the
total work force.
Getting our Principles in place
• National Interest is the primordial objective
Lock in benefits to:
•
•
•
•
Broaden our export base
Expand investment inflows
Protect the interest of our overseas workers and professionals
Position both offensive and defensive interests in key sectors in
relation to their value chains
• Transparent and expansive information and network to build our
capacity to address gaps in emerging issues in trade such as Non
tariff barriers, Intellectual Property Rights Administration, Trade
Facilitation, Technology Transfer, Competition Policy and
Development Aid
There are a lot of problems that can
weaken a potentially strong business
opportunity
Huge
Potential
Benefits
$
$
wrong
set up
Of
business
$
$
insufficient
research of
potential
market
$
$
$
bad
identification
of gain
areas
$
no
strong
To-Be
vision
$
$
not
enough
attention
to
adaptation
$
agree with
overconservative
estimations
Weak
Business
Outcome
Reasons for Participation in
FTAs
•Maintain
Competitiveness
•Cross-border industrial
Complementation
•Sustain inflows of investments
•Mutual support on
issues of common
interest
Existing FTAs
1.
2.
3.
4.
ASEAN Free Trade Area ( AFTA)
ASEAN-China Free Trade Area (ACFTA)
ASEAN-Korea Free Trade Area (AKFTA)
ASEAN-Australia-New Zealand Free
Trade Area (AANZFTA)
5. ASEAN-Japan Comprehensive Economic
Partnership Agreement (AJCEPA)
6. Philippines-Japan Economic Partnership
Agreement ( PJEPA)
7. ASEAN–India Free Trade Area (AIFTA)
OTHER CHALLENGES
1. The appreciation of most foreign currencies vis-à-vis the US dollar. The
unrestrained appreciation of the PESO has substantially eroded margins
of Filipino SME exporters.
2. The high cost of fuel and electricity. The Philippines have one of the
most expensive power rates in the region. The strong rise in the cost of
crude oil in the global markets has put upward pressure on wages.
3. The openness caused by trade liberalization has imposed a regime of
stiff competition for the Filipino SMES who have to fight hard against
cheaper imports from other trading partners within their own domestic
markets.
4. The unpublished fact that other countries heavily subsidize their own
SME exporters purports to an “uneven playing field,” contrary to the core
objectives of trade liberalization.
5. The mandated minimum wage increases which are not linked in any
way to productivity.
POTENTIAL SOLUTIONS
1. On the appreciation of the PESO vis-a-vis the US dollar.
a) Advocate currency hedging
b) Banks to design new hedging instruments for SME exporters
c) Quote in local currency or other more stable currencies
2. On the high cost of fuel and electricity.
a) Advocate power management training
b) Practice Sustainable Consumption and Production (SCP)
3. On the openness caused by trade liberalization:
a) Product diversification
b) Shift to quality competition instead of price competition
4. On the heavily subsidized imports and dumping.
a) Create a strong oversight body or consumer watchdog
b) Impose stiffer sanctions on violators
5. On mandated minimum wage increases.
a) Practice “flexicurity” instead of security of tenure
b) Go for automated manufacturing processes
Doing business with Australians
•
•
•
•
•
•
•
Meetings start on time – if you’re going to be late, let
them know
Facilitation fees” are not normal – Australia has laws
covering bribery of foreign officials
Australians will face issues “front-on”
Like to hear the “bad news” up-front so that they know
where they stand
Like to have resolution
When issue is settled, the matter is dropped
Don’t normally carry a grudge
VENUS C. GENSON, PhD
Email: [email protected]
www.art-n-nature.com;
www.venuscrafts.com
MARAMING SALAMAT
谢谢
THANK YOU!
Shangri-la Hotel, Taipei
August 17, 2011