The European Union (EU) is seeing more trade opportunities in Southeast Asia, as the region’s economies begin to integrate before the end of the year, the European Chamber of Commerce of the Philippines (ECCP) said.
“Although the ambition level [of the regional economic unification] is less than the EU—with common currency and all that—it is an important first step to start trading more with newer markets [in Europe and in other parts of the world],” ECCP Vice President Erik Moller Nielsen told the BusinessMirror.
“It is already a very powerful region. If the economic growth of the Asean [Association of Southeast Asian Nations] countries continues like now, it will overtake the European Union as an economic block in the next few years,” he added.
Under the unification of economies of all the 10 Asean member-states, which will start in December, there will be free flow of goods, services, investment capital and skilled labor.
Expecting tariff reductions and streamlining of certain administrative procedures in a single regional common market, the chamber’s official said the Asean block will be as important as China, as the latter is becoming “more expensive” in terms of doing business.
“We see some [companies] being less interested in China now and moving here,” he noted.
Recent reports revealed that foreign businesses have begun pulling out their investments in this communist country, and move to emerging economies, like the Philippines.
“Of course, with the Asean Economic Community [or AEC, happening later] this year, it is a very interesting place to be and to sell locally with no import tariffs in the region,” Nielsen said.
This is because the AEC will become a single large market with over 600 million people, comprised by the populations of Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
“So we see that as a big opportunity, for example, on our food export as there are more and more European food that can be exported here,” he explained.
While the euro zone is poised to benefit from the ease of trade under the economic integration of Asean, the latter is, likewise, seen at the advantage with stronger ties with the former.
Nielsen cited the Philippines, for instance, which can consider now the EU as a potential market for export, since it is now part of the so-called Generalized Scheme of Preferences (GSP) Plus regime.
This status, he said, is likely to increase the country’s access to the EU market through duty-free imports of GSP-eligible products.
“It means that it does not have to pay import duty in the EU. So Philippine products are now more competitive in the EU,” he said, while citing that both Thailand and Malaysia are now out of the GSP Plus. “Hence, they do not enjoy favorable tariff treatment anymore as you do. Filipino companies should really discover that [the EU] is an export market, as well.”
Economic ties and business relations between the Philippines and Europe remain strong and stable, as far as the ECCP is concerned, according to Nielsen.
In fact, he said that there is a growing interest from European companies in the consumer goods, manufacturing, infrastructure and construction sectors here.
“While it is still not a big market [for the EU], it is there already on the radar screen, which is also why you see some embassies now coming back here,” he said, referring to the reopening of the Danish Embassy in Manila in January of this year. “You also see more investments and more companies discovering this country.”
Without revealing the total amount of direct investments coming from the euro block at present, he revealed, though, that “they are at record-high.”
“I know that we’re talking about a two-digit percentage increase over last year. And that we see more and more companies coming in, particularly in Peza zones, because the conditions there are favorable. So if you look at the EU as a block, it is the main investor in the Philippines,” he added.
The ECCP is a membership organization, which currently has more than 750 member-companies. This service-oriented organization provides a wide range of business services and creates linkages between companies, organizations and individuals with existing or potential business interests in Europe and the Philippines.
Source: Business Mirror