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FDIs expand for 6th straight month in November

MANILA, Philippines — Riding on the tailcoats of economic reopening in November in domestic and global economies, foreign direct investments to the Philippines grew for the sixth straight month, the Bangko Sentral ng Pilipinas reported Thursday.

What’s new

Data from the BSP revealed FDI tallied a net inflow of $1.1 billion in November 2021, sustaining its feverish pace of growth at 96% year-on-year.

On a monthly basis, FDI jumped 28.07%.

In 11 months, FDI net inflows to $9.2 billion, markedly improving 52.5% compared with the same period in 2020 and exceeding BSP's target of $8 billion net inflow for last year.

Why this matters

FDIs are firmer commitments that provide jobs for Filipinos, so the government wants to attract more FDIs and not only keep existing ones, unlike the so-called “hot money” which enters and leaves markets with ease.

For this year, the central bank revised its full-year forecast to $8 billion, which was already exceeded back in October 2021.

Other figures

  • Equity capital placements, a measure of new FDIs, sagged 1.4% on a yearly basis to $1.74 billion in the first 11 months of 2021. The majority of this fresh capital came from Singapore, Japan, and the United States. 
  • Intercompany borrowings between multinational companies and their local offices soared 82.1% year-on-year to $6.8 billion in the January-November period.
  • Reinvestment of earnings swelled 12.8% on-year to $1.02 billion in the first 11 months of 2021

ADB bewails delay in RCEP ratification

MANILA, Philippines — Firms waiting for the ratification of the Regional Comprehensive Economic Partnership (RCEP) should not be discouraged despite the delay as the Philippines can still catch up, according to the Asian Development Bank (ADB).

Still, the ADB said the deferment of the ratification of RCEP, which is considered as the world’s largest free trade agreement, is unfortunate.

During the launch of the Asian Economic Integration Report (AEIR) yesterday, ADB chief economist Albert Park said RCEP presents an avenue for economies such as the Philippines to find new opportunities and global value chains that are going to be facilitated by the agreement.

“So it is unfortunate to delay the implementation of that agreement. But at the same time, the agreement just went into force in January and I think its impact is going to be quite gradual,” Park said.

The RCEP took effect on Jan. 1 as the required number of countries had deposited their instruments of ratification of the deal.

However, the Philippines failed to ratify the agreement. The Senate last week adjourned its session for the election break.

President Duterte ratified the RCEP last September. It has since awaited the concurrence of the Senate.

Amid the delay, Trade Secretary Ramon Lopez expressed hope that the Senate would give its concurrence once session resumes in May.

Park said the impact of RCEP would unfold over time as companies understand and then react to the changing opportunities brought about by the agreement.

“I don’t think companies in the Philippines or workers should feel discouraged as long as there’s an agreement to get there eventually. I’m sure as the years unfold, those opportunities will also be made available. And that’s true for any country, not just the Philippines,” Park said.

In particular, ADB economist Cyn-Young Park said the trade deal would significantly help the business process outsourcing (BPO) sector in creating jobs and income for many Filipinos.

“The Philippine government, I do believe, is taking measures to ratify. I share the optimistic sentiment that it will provide great potential for promoting more active employment generation in the BPO sector in the Philippines,” she said.

The Philippines is a major hub for services exports through BPOs such as call centers and high-end outsourcing or knowledge process outsourcing and business process management.

The Philippines accounts for over 12 percent of the global IT-BPO market and is expected to cover 15 percent of the global outsourcing market this year.

In an earlier report, ADB said the RCEP could provide the Philippines with an additional $7 billion in exports by 2030 even amid trade uncertainties, allowing total exports to hit $184 billion.

Meanwhile, the AEIR showed that trade among economies in Asia-Pacific jumped to its highest level in three decades amid recovery from the pandemic.

Trade in the region grew nearly 30 percent in the first three quarters of 2021 following a 3.1 percent contraction in 2020.

Intra-regional trade made up almost 60 percent of the region’s total trade last year, the highest share since 1990.

ADB said the strong intra-regional trade, along with the release of global pent-up demand and the early economic recovery in China, underpinned the region’s economic resilience.

Source: The Philippine Star

'Conversational commerce' to rise

CONVERSATIONAL commerce is among the digital trends that are seen to continue growing this year, a Viber executive said.

In a statement on Wednesday, David Tse, Rakuten Viber senior director for Asia-Pacific, underscored four digital trends, which include the further rise of conversational commerce.

"As we've witnessed on Viber, independent online business owners managed to get back on track and then move forward with more steady steps as they learn more about their customers' online behavior and preferences," Tse highlighted.

He said conversational commerce gained traction to replicate personal service without physical interaction, which increased the demand for chatbots.

"Before the pandemic, customers were used to receiving personalized services in traditional stores and their preference for an individual service shifted to digital and mobile shopping," he added.

Tse noted that Viber's Communities feature has seen a 22-percent growth in the country last year, especially those in business-related Viber Communities.

The feature allows brands and businesses to connect with consumers and have one-on-one conversations with members.

Tse also sees the trend for a person-to-person experience to continue this year, which he said online businesses can do by maximizing private chats with their customers.

"By increasing engagement with customers beyond just customer service support or promotional driven information, Communities allow businesses to create regular content to amplify the interest from the customers on the product category and organically create an interest-focused conversation rather than transactional conversation," he explained.

The digital era, likewise, highlighted more locally made products, according to Tse.

"This pandemic habit is likely to be embedded, as we've realized that going local can be very much part of our day-to-day life," Tse said.

Citing data from the trade and industry department, Tse noted that micro, small and medium enterprises or MSMEs accounted for 99.5 percent of business establishments in the country in 2020.

The segment also contributed around 36 percent to the country's economy in the past years.

Tse said data privacy would also be a priority for the consumers this year.

"Online business owners can better adapt and future-proof themselves by switching to partners that do not collect customer data for profit or by collecting data directly from consumers through conversational commerce, for instance," he said.

Source: The Manila Times

The Philippines: Tourism inquiries, bookings up as travel restrictions ease

Several members of the tourism industry have observed an increase in the number of bookings and inquiries they receive.

This follows the announcement of the government to reopen the sector for fully vaccinated foreigners from non-visa-required countries for tourism and business purposes starting Feb. 10. 

Cebu Pacific spokesperson Carmina Romero told CNN Philippines' The Exchange that they have seen higher bookings with the relaxation of restrictions. She said they are ready to support this through increases in flight frequencies in the coming months.

SM Hotels & Conventions Corp. SVP-Operations Walid Wafik said they have been also observing the same trend, especially from domestic travelers. 

In terms of events, Wafik said they are expecting these will come back this year as organizers confirm allocations and spaces for the resumption of their in-person activities.

Tourism Secretary Bernadette Romulo-Puyat said more tourists from the United States - especially balikbayans - are expected this year, as well as those from South Korea and Japan. Travelers are also inquiring in tourist spots like Cebu, Palawan, Bohol, and Boracay, she added.

However, she noted the reopening next week will be gradual and is more of a signal that the country is ready and health protocols are in place.

Romulo-Puyat also said they hope the US Centers for Disease Control and Prevention will reconsider its warning against traveling to the Philippines since this did not consider the current drop in local infections. 

Source: CNN Philippines

14.5% growth caps 2021 PH export, likely to double in the next five years

Philippine merchandise exports closed 2021 with a 14.5% growth with value reaching USD 74.6B, based on preliminary data from the Philippine Statistics Authority (PSA). Despite the emergence of a new COVID-19 variant that has impeded the full recovery of the global economy, Philippines exported goods increased in December which added USD 6.3B in the country’s export earnings, an increase of 7.1% from USD 5.9B in December 2020. Current exports also grew by 5.2% compared to USD 70.9B in the full year 2019 and 9.0% compared to USD 5.8B in December 2019.   

Department of Trade and Industry (DTI) Secretary Ramon M. Lopez reported, “December PSA data also showed that seven of the top 10 major commodity groups have recorded increases in annual export sales, in which five of these 7 gainers breached their pre-COVID export levels, led by coconut oil (135.2%). As sales of coconut oil continue to accelerate, other coconut products are also gaining traction in the global market.”  

According to Research and Markets, the demand for coconut products is expected to grow significantly in the future as the consumption of processed food products grows due to the rise in urban population.  

Other commodity groups that recorded large export growths include other manufactured goods (53.5%), chemicals (43.0%), machinery and transport equipment (19.2%), electronic equipment and parts (16.5%), other mineral products (4.9%), and electronic products (1.8%). 

Electronics exports amounted to USD 3.92B in December 2021 which brought the year-to-date (YTD) export figures to USD 45.92B 12.9% higher compared to January-December 2020.  Top Philippine electronics exports last month were components/devices (semiconductors), electronic data processing, other electronics, telecommunication, and consumer electronics.   

The World Semiconductor Trade Statistics (WSTS) expects the global semiconductor market to grow by 25.6% in 2021 with a market size reaching USD 553B. This will be the biggest jump in semiconductor sales since the 31.8% increase in 2010. Moreover, the robust global consumer demand pushed all major product categories to double-digit growth rates, except for optoelectronics. 

For December 2021, the US imported USD 1.0B worth of goods from the country while China imported USD 925.2 million. Philippine exports in the two markets accounted for 31.4% or USD 23.4B of the country’s total exports in 2021. 

Meanwhile, preliminary data for 2021 shows that Philippine exports grew in its top five markets: US (18.3%), China (17.5%), Japan (6.8%), Hong Kong (7.6%), and Singapore (11.2%). 

The Trade Secretary shared that more than half of Philippine commodity groups have recovered from the adverse economic impact of COVID-19 and have breached pre-pandemic export levels.  

He said, “Our focus for the first half of 2022 is to unlock the unrealized export potential of the country and empower our exporters in seizing opportunities in the recovery of global markets. Unlocking trade barriers or frictions alone could add another USD 20B to our export earnings.”  

Based on a recent study conducted by the International Trade Centre (ITC), the Philippines has an unrealized export potential of USD 49B, of which USD 20B is due to product-market-specific frictions and USD 29B is based on the projected growth of the Philippines and its export markets. According to the study, these trade frictions are often linked to lack of market knowledge, difficulties in complying with market requirements, and difficulties in matching buyers with the right suppliers, among others.  

Reinforcing the importance of the coconut industry in Philippine exports, ITC’s Export Potential Assessment has also identified coconut as one of the products with the highest export potential among the agricultural products with more complex value chains. The DTI will focus its efforts on promoting high-value coconuts, targeting the health and wellness market and other non-food uses for coconut, aside from the traditional food product segments.  

“As part of our initiatives to assist coconut exporters to unlock the unrealized export potential, we will be providing technical and marketing support to selected MSMEs through training and coaching on export management and marketing, including support to their participation in international trade fairs and business matching sessions,” said DTI Undersecretary for Trade Promotion Abdulgani Macatoman.  

He added, “First for this year will be the export promotion activities in the Middle East/North Africa (MENA) region, including in-store promotion of Philippine food products in leading supermarkets in the United Arab Emirates (UAE), participation in Gulfood, and a business matching session in Dubai.” 

Other products with high export potential include are bananas, pineapple, and tuna. The study estimates that Philippine agriculture, food, and beverage exports still have an unrealized export potential of USD 5.2B. 

For manufacturing, the sub-sectors that are technologically advanced and exhibit important export growth opportunities are motor vehicles and parts, plastics and rubber; optical products, watches, medical instruments, and machinery and electricity. 

The ITC study was conducted as part of the ARISE Plus Philippines Project supported by the European Union. The Project aims to foster inclusive economic growth in the Philippines through improved international trade performance and competitiveness as well as economic integration.  

Sec. Lopez added, “The ITC Export Potential Assessment validates and quantifies the potential of our export industry to grow by nearly twice its export levels in the next five years if we invest in increasing our production capacities and unlock or address these trade frictions.” 

Source: Department of Trade and Industry Philippines

Sustainability is a key driver of innovation in South and Southeast Asia

Clarivate, a global leader in providing trusted information and insights to accelerate the pace of innovation, today released a new report 2021 Innovation in South and Southeast Asia, which identifies 276 leading innovative organizations in the region. Organizations can be genuinely sustainable and transform themselves from the inside out when they integrate sustainability into the core of their business, thus, heralding a new era of innovation, says the report.

Sustainability as a foundation to drive innovation will present an opportunity for leading innovators to work through the constraints of products and processes and identify practices that provide an alternate and better solution. It advises that protecting sustainable innovation with intellectual property (IP) is required to accelerate innovation that protects and regenerates the planet while driving business growth.

Clarivate analysts examined patents filed by organizations based in eight countries in South and Southeast Asia: India, Sri Lanka, Singapore, Malaysia, Thailand, Indonesia, Philippines, and Vietnam and selected the leading innovators.
Other key findings of the report include:

 - Among the 276 leading innovative organizations in the region, 58% are academic institutions and government research institutions, with 42% representing corporations.

 - India takes the lead in numbers, with 61% of them located in India and 39% from the rest of the region.

 - In this year’s report, 51 new entrants are added to the list of leading innovators from the previous 235 entities in 2020. Of the 51 newly featured innovators, 39% are located in India, 31% in Philippines, 18% in Indonesia, and 12% in Singapore.

Gordon Samson, Chief Product Officer, Clarivate, said, “South and Southeast Asia is one of the most dynamic and diverse regions in the world. Keeping innovation at front and center of its goals and prioritizing science, technology and innovation in policy, resource allocation, and international cooperation will pave a bright future for the region. At Clarivate, we are on a mission to improve the way the world creates, protects and advances innovation. We will work closely with our customers and partners in the region to support them in their journey of sustainable innovation.”

2021 Innovation in South and Southeast Asia report utilizes Clarivate patent solutions Derwent World Patents Index™ (DWPI) and Derwent Patent Citations Index™ (DPCI) to track innovation based on four factors: volume of patents, influence, success and globalization.

Read the  full and original article here: The Print

Key trends propelling PH growth in coming years cited

Attracting foreign investments will enable the Philippines to capture opportunities created by five key trends which could be an engine propelling its growth in the coming years, including advancing as manufacturing hubs and digital adoption.
 
“FDI (foreign direct investment) into the country has not grown in the past five years as structural challenges remain,” McKinsey & Co. Philippines Acting Managing Partner Jon Canto said during a virtual forum.
 
To accelerate FDI growth, Canto recommended that the Philippines reassess its FDI strategy and priority sectors, build unique deal-focused value propositions, focus on investment promotion activities, and ensure end-to-end support for investments.
 
He said the country can look into a potential niche as a manufacturing hub amid the planned shift of 67 percent European and 80 percent United States companies from China to other Asian countries, which Vietnam, Thailand, and Malaysia are already preparing for.
 
“What does this mean for our country and what we could achieve here knowing our starting point?,” he added.
 
Canto also cited opportunities for growth in increasing the country’s share of renewables in the power mix.
 
To ramp up investments in green infrastructure, he said it is imperative to reconsider foreign ownership limitations, put money on a broad range of sustainability levers, enhance financial incentives that encourage consumer and business investment, coordinate complicated and interdependent infrastructure rollout, and accelerate public sector uptake.
 
Canto likewise underscored the significant increase in penetration of active digital financial services.
 
“We have seen in our research that over the last four years alone, the regular use of digital banking and e-wallets in the country has increased (by) seven-folds and two-folds, respectively,” he said. “So we think about not just from the consumer lense but from the SME (small and medium enterprises) angle, how do we develop digital capabilities of companies?”
 
He added there is a need to redirect SME support toward digital capability-building programs, digitalize government processes to encourage adoption by companies and citizens, and provide financial incentives to boost digital adoption, such as tax incentives, grants, and loans.
 
Further, Canto highlighted the importance of intensified reskilling and redeployment at scale to address job disruptions as the future of work will accelerate skill shifts all around the world.
 
He said growth areas include healthcare; transport and logistics; and science, technology, engineering, and mathematics (STEM).
 
Partnerships between businesses, government, and educational institutions can offer specialized courses to get individuals started along new skill paths, he added.
 
Canto said building high-value food industries also offers opportunities.
 
“Raise farmers’ productivity to aid competitiveness of local upstream production e.g. via technology, connectivity,” he said. “Expand the agricultural sector into the downstream parts of the value chain, such as processing, packaging, and retail, to enable greater value creation.”

Sustainability in packaging pushed 

Countries can build infrastructure to manage increased recycling as they focus sustainability in packaging.

World Packaging Organization (WPO) president Pierre Pienaar said the group sees a future without waste by increasing plastic recycling and identifying alternatives.

“The packaging has a role to play in sustainability and that is through recycling,” he said.

Pienaar said packaging is necessary for food safety and quality, protecting food, extending its shelf-life, and reducing food waste; but there is a need to develop solutions that reduce packaging volume.

“We target unnecessary packaging. We encourage phasing out materials that are not recyclable,” he added.

Pienaar said food and packaging wastes have been reduced while packaging education has been increased.

“We need to start educational programs at the young level… This is the future of the industry, it’s the future of our economies around the world. We need to educate them,” he said.

To achieve this, Pienaar said WPO supports the design and implementation of affordable and effective mandatory Extended Producer Responsibility (EPR) schemes across the world.

The Organization for Economic Co-operation and Development (OECD) defines EPR as an environmental policy approach in which a producer’s responsibility for a product is extended to the post-consumer stage of a product’s life cycle.

Until 2023, Pienaar said their focus is identifying key countries that require WPO assistance in achieving these EPR outcomes.

Source: PHILEXPORT News and Features | January 21, 2022

Congress lifts foreign investment restrictions, except in some public utilities

Congress has passed a law lifting foreign investment restrictions on all sectors, except the transmission and distribution of electricity, water pipeline and sewerage, seaports, petroleum pipeline, and public utility vehicles.

The Senate and the House of Representatives ratified the bicameral conference committee report on House Bill 78 and Senate Bill 2094 — or the amendments to the Public Service Act — which redefines public utilities that remain sealed off to foreign investments.

One of the movers of the measure in the Lower House — House Ways and Means Committee Chair, Albay 2nd District Rep. Joey Salceda — lauded the passage of the bill, which will next be transmitted to President Rodrigo Duterte for signature.

On last SONA, Duterte calls for passage of bills to attract foreign investment
In a press release, Salceda explained that the measure effectively opens up to 100 percent foreign equity all economic sectors in the country, except the transmission and distribution of electricity, water pipeline and sewerage, seaports, petroleum pipeline, and public utility vehicles.

For Salceda, the measure is the closest that the country has been in overcoming the “growth overhang caused by the 1987 Constitution’s foreign equity restrictions.”

“It’s a massive reform because it opens us to foreign capital. We need a lot of foreign capital. We have plenty of domestic talent, but they leave for abroad because the capital required to hire them is invested abroad,” he said.

“It’s no surprise that we lag our neighbors behind in terms of foreign direct investment. We are the most restrictive economy in ASEAN, bar none. The PSA amendments change things massively.”

Salceda said he is happy that the bicameral panel for coming up with a more liberal version than the Senate version. “The final version no longer requires burdensome reviews by the entire national security council for so-called critical infrastructure, which the Senate introduced,” he said.

For Salceda, the proposal will yield “massive” impacts to job creation and investments

“We expect an increase in FDIs by around P299 billion over the next five years from the final version the sectors that will be opened up as a result of the PSA amendments. We also expect gross value added (GVA) growth in these areas to cause a GDP growth rate that is 0.47 percentage points higher than the baseline,” Salceda added.

“The main economic benefit of the PSA amendments is that it provides local (and oligopolistic) players in key sectors with a credible threat of external competition. Credible threat of competition is seen as a pro-competitive measure that reduces monopoly or oligopoly power (to set prices or provide services at low quality) and encourages local players to improve efficiency.

“Empirically, certain sectors appear to be responsive to the threat of new sectors by trying to generate customer loyalty among existing clients through lower prices.”

Salceda also maintained that the bill protects consumers.

“Apart from the fact that more competition means lower prices generally, we also imposed a provision that if public utilities and public services exceed the rates set by the regulators, they have to refund the excess collections from the public, and also pay fines,” Salceda said.

“Now we have something squarely and explicitly in the law that will allow us to punish public services that charge excessive rates.

“Consumers stand to benefit from the PSA amendments immediately. Of course, in the long run, we are also bound to create more jobs and maybe even be able to send many OFWs home, as we expect new FDI due to the reform to come from capital-starved public services.”

The House contingent of the Bicameral panel was composed of Econ Affairs Committee Chair Sharon Garin, Deputy Minority Leader Stella Luz Quimbo, Rep. John Reynald Tiangco, Rep. Joet Garcia, Deputy Speaker Rimpy Bondoc, and Deputy Speaker Kristine Singson-Meehan.

Like Salceda, another mover of the bill, Marikina 2nd District Rep. Stella Quimbo explained that the passage of these amendments will be a game-changer in liberalizing the public services market and providing new opportunities for investment and capital to enter the country. 

"Ultimately, the Filipino wins. This amendatory law is for the Filipino people. Opening up the economy will bring with it advanced technology, more jobs, and a more competitive business environment. Bababa ang presyo at tataas ang kalidad ng mga serbisying publiko; tiyak na maginhawa ang buhay ng lahat. With more foreign investments comes more jobs. A more open economy means greater competition. With more competition comes lower prices, better products and services, wider consumer choices and more innovation. Panalo ang consumer. Panalo ang Pilipino.” Quimbo said.

In a press release, Quimbo’s office explained that telecommunications, airports, railways, expressways, tollways, and shipping were among the industries excluded from the definition of "public utility" in the ratified amendments. 

"Therefore, these public service sectors shall be open to foreign investment and competition. This development would inevitably result in cheaper airfares and transportation costs, lower shipping costs that would benefit our exporters. With more investment and competition in the telecoms sector, the public can also expect faster and more affordable internet services.” Quimbo’s office said.

Her office cited that under the 1987 Constitution, public utilities must secure a legislative franchise and is subject to the 60-40 ownership limitation. “This has deterred foreign investment from entering industries that were considered ‘public utility’ in nature. Thus, providing a concrete and narrow definition of public utility shall effectively open up other public services to foreign investment,” she said.

Quimbo’s office also explained that in the PSA amendments, investments in public services that result in foreign control or ownership may be reviewed by the president particularly when it involves national security concerns. 

Gabriela Women’s Party Rep. Arlene Brosas said: “Mr. Speaker, ipinapahayag ng Gabriela Women’s Party ang pagtutol sa ratipikasyon sa amyenda sa Public Services Act (PSA) dahil binubukas nito ang tarangkahan para pagkopo ng dayuhan sa mga mahahalagang sektor ng ekonomiya, kabilang ang telekomunikasyon at transportasyon. “

“By providing a limited definition of public utility, this measure exploits the loophole in the 1987 Constitution to allow the circumvention of foreign ownership limits for all other types of public services. Pahihintulutan ang 100% foreign ownership ng telekomunikasyon, railways, airlines, at logistical facilities . Ironically, we are ratifying this measure on the anniversary of the 1987 Constitution,” Brosas added.

Bayan Muna Rep. Carlos Zarate said: “Ang pag-amyenda sa Public Service Act upang alisin ang ang mga negosyo o serbisyo bilang mga public utility ay ang pag-alis sa mga proteksyon ng publiko sa makatwirang singil para sa mga rito, at ang tuluyag pag-alis ng kontrol at otoridad ng gobyerno sa mga ito. Samakatwid, mahaharap ang mga konsumer sa walang kontrol na pagtaas na presyo at bayarin kung buong-buo na itong na itong kontrolado ng mga negosyo.

“Sa paglilimita sa mga mga serbisyong kabilang sa public utility, tinatangkang ikutan ng HB 78 ang pag-amyenda sa Saligang Batas upang makapagpasok ng dayuhang pamumuhunan sa public utilities. Kabilang na rito ang dayuhang pagmamay-ari, kontrol, at operasyon sa mga public utilities.”

Zarate pointed out that broadcast, telecommunications, power generation and supply may now be infiltrated by foreigners. 

"Ang broadcasting, telekomunikasyon, power generation at supply, ay ilan lamang sa mga public utilities na maaari nang pasukin ng mga dayuhan kung isasabatas ang panukalang batas na ito. Hindi ito ang gusto ng mamamayan. Humaling na humaling ang mga economic manager sa ‘dayuhang pamumuhunan’ na tila ito ang liligtas sa ating pabulusok at atrasadong ekonomiya ng Pilipinas," he said.

Source: ABS CBN News | February 3, 2022

ASEAN ICT AWARD 2021 Award Ceremony

 

The awarding ceremony of the ASEAN ICT Award 2021 was held virtually on 28 January 2022, hosted in Naypyitaw by the Republic of the Union of Myanmar during the day 2 of the 2nd ASEAN Digital Ministers Meeting 2021.

The awarding ceremony was graced by His Excellency Admiral Tin Aung San, the Union Minister for Ministry of Transport and Communications, Myanmar with the opening remarks followed by the welcoming remarks Excellency Madam Matsura Ahmad, the Deputy Secretary General, Strategic Communication and Creative Industry, Ministry of Communications and Mutltimedia, Malaysia.

ASEAN ICT Awards (AICTA) is an initiatives and recurring project under the ASEAN ICT Masterplan 2015, ASEAN ICT Masterplan 2020 and the ASEAN ICT Masterplan 2025 to recognize the best ICT achievements among entrepreneurs and organizations across the ASEAN region.  AICTA aims to be the benchmark for success in terms of innovation and creativity, offering business opportunities and trade relations, thus uplifting the strength of ICT and community awareness in the region. It also serves to provide the platform to promote ASEAN ICT products globally.

AICTA recognizes innovations in six categories – namely Public Sector, Private Sector, Corporate Social Responsibility, Digital Content, Start-Up Company, and Research and Development.

Total of 95 entries were received from all the ASEAN Member States for AICTA 2021.

The Gold Medal Winners awarded for ASEAN ICT Awards 2021 are Jarkata Smart City (Indoneisa), Nodeflux Teknologi  (Indonesia), VinBrain Joint Stock Company (Vietnam), Rumine Corporation (Brunei), PillTech Solutions Co., Ltd (Cambodia) and T-Net Co., Ltd (Thailand).

The first AICTA was held in Cebu, Philippines in November 2012 and Myanmar became the host for AICTA 2021 with Malaysia as the co-host.

Author : Myanmar Computer Federation

The launch of RCEP

The first day of 2022 began with a piece of exciting news – businesses in ten Regional Comprehensive Economic Partnership (RCEP) countries (Australia, Brunei, Cambodia, China, Japan, Laos, New Zealand, Singapore, Thailand and Vietnam) can use the agreement to more easily trade with each other. South Korea is set to follow next with entry into force on 1 February 2022. Indonesia, Malaysia, Myanmar, and the Philippines should be participants shortly. 

The RCEP agreement itself holds significant potential with a comprehensive scope stretching across 20 chapters including Rules of Origin, Customs Procedures and Trade Facilitation, Trade in Services and Investment. 

RCEP tariff benefits can seem modest compared to many other ASEAN agreements and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) due to a rather long tariff elimination period of up to 20 years or more.  It is, however, noteworthy to mention several benefits that RCEP can bring relative to existing agreements in this region particularly for manufacturers and services providers.

Asian manufacturers that were unable to take advantage of existing free trade agreements (FTAs) due to more complex supply chains may now be able to use RCEP to obtain tariff preferences, including duty-free or zero tariff treatment. RCEP provides a single rule of origin (ROO) for production, allowing manufacturers that meet this requirement to enable production and sale to all RCEP markets. 

Compared to existing ASEAN+1 agreements with China, Japan, Korea, Australia and New Zealand, RCEP can make it less challenging for manufacturers to produce and sell within the region without altering sourcing, manufacturing location or destination for goods. The use of a single preferential certificate of origin (PCO) document also lowers compliance costs for businesses and eliminates the need for separate paperwork when several FTAs are used.

RCEP can be relatively straightforward to use, especially for companies that are already familiar with taking advantage of FTA benefits.

However, manufacturers may need to carefully examine originating content for export to countries that apply what is called “tariff differentials:” China, Indonesia, Japan, Korea, Philippines, Thailand and Vietnam. These RCEP countries, such as Korea, can apply differing levels of tariffs for products that originate from China, Japan, ASEAN, Australia and New Zealand, with an additional rule that will need to be fulfilled for such products with different levels of import tariffs depending on the country of origin.

Henceforth, to obtain preferential tariffs meant for a certain country, manufacturers will need to ensure that products for export to RCEP countries that apply tariff differentials meet a minimum 20% local value requirement after excluding foreign raw materials listed in the country as shown in the Appendix on Tariff Differentials. For instance, a Singapore manufacturer exporting to Korea will require at least 20% of the total value of materials to be obtained locally or sourced within ASEAN (excluding ASEAN countries that have yet to ratify RCEP) for its importers in Korea to obtain ASEAN preferential tariffs.  

Apart from tariff benefits, RCEP members (and even non-members) can benefit from more streamlined customs procedures to facilitate trade. Building on existing ASEAN+1 agreements, RCEP introduces additional guidelines on the issue of advance rulings and on the release of goods at customs that improves certainty and reduces likelihood of shipment delays at the customs. The Chapter on Customs Procedures and Trade Facilitation also includes a scheme for authorised operators to benefit from reduced paperwork requirements, faster clearance of goods, and deferred payments or clearance at the premises of the authorized provider.

While the assessment of benefits of FTAs are often fixated on tariff reductions for goods, it is equally important to recognize services and investment opportunities that RCEP offers to services providers and investors in Asia.

RCEP provides further liberalization to services sectors such as legal services, accounting, architecture, computer services, wholesale trade and insurance, that can go well beyond existing ASEAN+1 agreements. This includes better market access, reduced limitations, and terms and conditions for the provision of services or the establishment of commercial presence in RCEP markets. 

For most service sectors, RCEP allows foreign service providers to deliver services across the border without requiring a local presence in the domestic market. Any exceptions are indicated in the country schedules shown in Annex II and III.

Besides ensuring fair and equitable treatment to investment, the RCEP agreement further prohibits the imposition of a range of business performance requirements as a condition for investments and receipt of preferential treatment for investments in RCEP countries including local content requirements, restriction on sales and export of goods or requirements for technology transfer.

Moreover, services and investment commitments made in RCEP are binding.  Members used two different approaches for scheduling or writing down their specific commitments for services and investment.  Further details can be seen in our booklet with SICC on RCEP services and investment shown here.

As businesses start using the RCEP agreement or deliberate over whether the agreement can be used, they need to note that not all RCEP commitments will be delivered on the day of entry into force as legislative and administrative changes may take time to be communicated and implemented. Thus, at the initial implementation of RCEP, businesses may experience some discrepancies or lag between stated commitments and actual conditions, and it is advisable for businesses to be prepared to provide feedback and engage their governments or seek assistance from trade associations and business chambers to flag any inconsistencies and resolve possible implementation challenges.

Thailand: pact with Austria to help build smart cities

The Digital Economy Promotion Agency (Depa) has signed a memorandum of understanding (MoU) with Austrian Technology Corporation (ATC), the trade group for Austrian tech companies, to ramp up technology exchange and drive smart city development.

The MoU was signed as part of the launch of "Austrian Technology Days Southeast Asia 2022", a three-day online event that promotes Austrian tech for the Asean market.

Depa president and chief executive Nuttapon Nimmanphatcharin said the agency plays a critical role in promoting smart city development across seven dimensions: environment, economy, energy, mobility, living, people and governance. The agency was tasked with establishing guidelines and recommendations for Thai smart city roadmaps and blueprints as the secretariat of the National Steering Committee on Smart City Development.

In 2018, Urban Innovation Vienna, a think tank and smart city development agency, worked with Depa to organise a smart city framework development workshop to bring its best practices to Thailand. Gunther Sucher, a commercial counsellor from the Austrian Embassy in Thailand, said Austrian cities have been consistently recognised as among the world's smartest and most liveable cities, particularly Vienna.

According to Mr Nuttapon, Depa and ATC will work together to raise public awareness about the digital economy and its ecosystem as well as smart city development by forming a network of key stakeholders and interested parties. Moreover, Depa plans to push ahead with joint pilot projects and a proof of concept project on improving the industrial competitiveness of both countries, he said. "In the coming years, Depa is confident the collaboration will be effective and fruitful," said Mr Nuttapon.

Depa also outlined its missions in 2022, including a list of digital services for government procurement, the dVenture programme aimed at accelerating the growth of startups through its public and private network, smart city ambassadors, the eatsHUB delivery platform, as well as its d-Station sales agent for startups' products.

Source: Bangkok Post