ABSTRACT

The ASEAN regional integration visualizes the conversion of economies in Southeast Asia into a unified market and manufacturing base by promoting the unobstructed flow of goods and services. It signifies better chances of more market entries, lesser input costs, lower discharge expenditures, greater inflows of foreign investments, and wider options for quality commodities and services at reasonable prices. This research examines issues as to whether the benefits outweigh the costs of trade liberalization, its impacts on national economic growth, and the Philippines’ preparedness to overcome the impediments posed by the integration. Overall, the outcomes of the interviews show that the Philippines is not yet fully adapted to aligning domestic benchmarks with international standards although it has accomplished vital progress in certain sectors. The study also reveals that member affiliates and the Philippine economy can reap the benefits of the liberalization so long as they prevail upon their commitments to forge ahead with achieving the goals of the ASEAN Economic Community. Elimination of cross-border taxes, compliance with harmonized regulatory policies, and leaders’ steadfastness to attain the goals of the integration are the key factors for the success of the liberalization. Since the research deals more on the qualitative aspects, the authors recommend more statistical data gathering and in-depth quantitative analysis to obtain a more accurate gauge of the overall impacts of the regional integration.

I. Introduction The advent of regional trade alliances during the past several decades has received considerable attention because of the necessity for mutual cooperation among countries to attain economic progress(Austria,2004). There is also much evidence documented on the importance of trade pacts, most notable of which is the European Union trade consolidation that fared well internationally(Capannelli,2014).Consequently, the ASEAN regional integration was conceived with member countries working collectively to establish a unified market and a manufacturing base throughout Southeast Asia(ASEAN,2015). Data have been presented in the studies of Aldaba etal (2013) on the stability and cohesiveness of dynamic development within the ASEAN community. Despite the significant impacts of the regional integration on Philippine economic growth, prior studies conducted covered only a limited range of domestic industry sectors(Llanto,2014).The question remains whether other local industries including the economy as a whole, can truly benefit from the integration. Therefore, additional research that include a broader scope of domestic industry players are needed. It is also of interest to conduct an analysis of the possible benefits and imminent threats to assess the preparedness of the Philippines and its ASEAN neighbors on the demands of the integration(Riguer,2012). The objectives of this paper are to explore the implications of the ASEAN regional integration on Philippine economic advancement, and investigate whether the state is fully prepared to cope with the hurdles. It also evaluates how regional bloc members can potentially reaped strategic economic advantages from the trade liberalization. The approach used in this research reveals that economies can derive varying financial gains from the regional unification. Results also showed that the Philippine economy is affected considerably, and measures are being undertaken to maximize the benefits. The paper is divided into six sections as follows: Section II discusses the fundamental aspects of ASEAN regional integration including issues related to AEC implementation. Section III illustrates the current working plans and initiatives being adapted by certain industry sectors. Section IV briefly examines the benefits reaped by ASEAN members, and more specifically, economic advantages gained by the Philippines. Section V and VI enumerates the possible obstacles and risks, and the role of business sectors, respectively. Section VII outlines the conclusion and recommendations. Trade liberalization means immense opportunities for commerce and business. It also means broader options for quality commodities and services at much lower prices. Enterprises and human capital that are quick to recognize and embrace the opportunities will surely thrive and prosper. Hence, to achieve the productive goals of the ASEAN regional integration given such favorable opportunities, domestic entities should be competitive, local environment should be conducive for investment, and human capital should be competent.
II. Fundamental Aspects of the ASEAN regional integration The ASEAN Economic Community (AEC) is one of the principal objectives of the 2015 economic integration. The organization endeavor to accomplish four key aspects, namely: (a)a single unified market and production base, (b)a superior competitive region, (c)a fair economic, advanced alliance group, (d)a region in sync with worldwide economy (Ryanhart&Chang,2014). Among the spheres of mutual cooperation include human capital development and skills training, assessment of labor qualifications, greater dialogues on financial rules and regulations, trade financing schemes, improved infrastructure and communication exchanges. The ASEAN Socio-Cultural Community (ASCC) blueprints were formally approved by the ASEAN leaders at the 14th ASEAN Summit on March 1, 2009 in Thailand (Dosch,2013). A number of factors may have contributed to the slow mobilization of the AEC such as the swift rotation of ASEAN chairmanship, and the snail-paced build-up of trust among member countries(Riguer,2012). Cases of ASEAN forerunners from inexperienced and less developed economies assuming the much higher positions may lead to ASEAN’s insufficient efforts to strive for integration in all mandated aspects(Wihardja,2013). Such perception needs the imposition of judicial bounds to ensure adherence to the fulfillment of the objectives of the AEC(Ledda,2012)
III. Current Working Plans and Initiatives The AEC Community has made huge improvements towards achieving its objectives. To date, duties and taxes on traded commodities between and among Brunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand have been abolished while a big percentage of tariffs in Burma, Cambodia, Laos, and Vietnam have been cut down to a large scale. It was noted that volumes of trade exchanges in the region have immeasureably escalated in recent years, and this signifies ASEAN’s capability to consolidate trade within the bloc. It is interesting to note that principal players in their respective industries in the Philippines are consistently formulating initiatives for the upcoming integration. Elwin Chan, expressed how his company has been framing strategies. According to him, his company allocated a huge budget for research and development so they can diversify into new products. They tapped the creative potentials of their research team, and arrived at better products well patronized by the public(Chan,2015). They also enjoined government assistance through public private partnerships to improve infrastructure so they can shipped goods on time and received raw materials right on target(Chan,2015). His company also urged government agencies to improve efficiency of regulating rules and trade services in order to create a suitable business climate for foreign investments(Chan,2015). Likewise, Henry also mentioned that they are investing a great deal on research to assist flour and sugar planters to grow crops resistant to pest control so they can improve the volume of harvests(Go,2015). The firm also educates farmers on modern planting techniques and hire agriculturists for soil analysis and adaptation systems(Go,2015). The company hopes to be self-sufficient in raw materials in the future by depending more on domestic harvests rather than on importations(Go,2015). George imparts the need to enhance the designs of notebooks to make them more attractive both for domestic consumption and for global export(Santos,2015). The CEO also emphasized the need to decrease overhead and production costs, and still maintains efficiency and excellent quality(Santos,2015). The cluster of ASEAN affiliates is optimistic that the 2015 allotted time frame can be positively conformed to. It was assessed during the 2012 ASEAN Ministers Meeting that most of the action plans identified in the blueprint had been properly positioned and effected (Sung&Sang,2014).
IV. Benefits and Advantages to Member Countries
A. Generally, ASEAN member affiliates may reaped any or all of the following advantages and benefits:
i. With respect to regional concurrence Greater regional reliance among members can boost the AEC’s competitiveness in the international trade arena. Worldwide linkages will make easier onshore access to foreign commodities. With the help of mutually beneficial exchange policies, and elimination of custom duties and taxes, mobilization of capital, goods, labor, and services can be further expedite.(Wihardja,2013) The more developed ASEAN members or less developed ones may not necessarily reap the most or the least opportunities because practically all economies have healthy, robust growth. Elwin stressed that the AEC will jointly establish itself as an attractive and suitable option for foreign direct investments(Chan,2015). On the contrary, Henry inferred that the more advanced ASEAN members will definitely gained the most benefits because they are equipped with the proper mechanisms(Go,2015). He cited that the financial strength of banks from more developed states is comparatively stronger than those from less developed counterparts(Go,2015). This usually redirects the flow of foreign investments from weaker affiliates to stronger ones during volatile markets and financial shocks(Go,2015). Lawrence believed that ASEAN economies will be affected in either way. It may be initially drag down when economy decelerates but later push up when strong growth gains back momentum(Go,2015). ii. With respect to worldwide investment Investors are more inclined to conduct trade exchanges with the ASEAN as a whole entity because it is more convenient to establish business relationships with the group rather than as individual economies. Additionally, the nil tariff consequences due to wider coverage of the 2015 ASEAN Free Trade Agreement (AFTA) will brace up more trade and greater free surge of commodities and services within countries(Riguer,2012). iii. With respect to tourism opportunities Tourists from all over the world are flocking in throngs to ASEAN destinations as vouched by the Pacific Asia Tourism Association (PATA) (Wattanakul,2010). Governments allocate large budget for tourism development such as attractive vacationers’ facilities, enticing leisure hubs, appealing entertainment spots, and the like. Aside from cultural, demographic and economic progress, advancement in infrastructure will play a major function in coaxing the direction of tourism towards the ASEAN community(Dosch,2013). iv. With respect to globalization of health and fitness care Millions of people visit India, Singapore, Thailand, and other ASEAN associate countries because of their high-quality, state-of-the-art medical technologies and healthcare systems. As a result, they benefit greatly from the medicinal healing, therapeutic, and restorative tourism market. But the task of setting up a complete globalization of the health and fitness industry can be very disheartening. Lack of harmonization on the judicial and licensing structures would entail much job and time of deliberation. (Dosch,2013)
B. Benefits Gained by the Philippines from AEC Participation
i. With respect to strong competition among producers A single unified market in the AEC translates to free mobility of capital, commodities, manpower and services which can definitely spark competition among various sectors. Strong competition influences manufacturers to efficiently manage production processes in order to deliver consumer demands while furnishing a myriad of goods and services at less expensive prices. (Medalla,2012) ii. With respect to magnified production base frameworks The Philippines is distinguished from other ASEAN members for its less costly but highly skilled labor force, a comparative edge that constantly entice the inflows of foreign direct investments into the country (Aldaba,2013). With the investments, the economy can grow continuously, and robust growth through expanded production base will enable the Philippines including its ASEAN counterparts to lure more foreign investments. “Labor markets in Southeast Asia will be greatly more competitive considering that the AEC is a single level community that can be more resilient during worldwide crisis”, quoted by Elwin(Chan,2015). The firm empowers its professionals and laborers to upgrade their work skills so they can be at par with those of other ASEAN counterparts(Chan,2015). His company also encouraged its employees to invest in continuing professional education(Chan,2015). Enhancement of oral and written English proficiency is also a must for the company’s managerial and supervisory level officers and staff because they negotiate mostly with overseas suppliers and customers(Chan,2015). Henry affirmed that Filipinos are basically better speakers and writers of the English language vis-à-vis their ASEAN neighbors, and their proficiency is highly regarded by foreign counterparts(Go,2015). Filipino workers should, however, never be complacent with their competency because there are some positions in neighboring states that require more experiences in that country rather than mere mastery of the English dialect(Go,2015). This is particularly true with nations that require professionals with expertise on information technology, plant operations, exploration of oil drills, and the like(Go,2015).His company motivates their professionals and blue collar workers to participate in continuing education to keep abreast of the latest trends in their corresponding work fields(Go,2015). Lawrence revealed that they are not directly affected by the language competency because most of their labor forces are hired locally(Go,2015). But in a general perspective, especially professionals, employers normally select the ‘best among the best’ applicants from among a pool of recruits(Go,2015). iii. With respect to the speed up of liberalization in principal economy sectors Principal sectors of the economy include automotives, agriculture and aquatic resources, tourism, garments and textiles-these industries should be liberalized further as obliged by the AEC because they are catalysts that can expedite the integration procedure (Wihardja,2013). Others comprise information technology, business outsourcing, logistics, and infrastructure which are also perceived to ignite national spending and revenue generation. As a result, government would swiftly liberalize the aforementioned industries to impel economic development while the concerned industries would apply the required initiatives to push for heightened progress(Riguer,2012). Border limitations and trade barriers are the most common reasons that hinder liberalization but bureaucracy and government inefficiencies are also vital problems(Wihardja,2013). Most offshore investors are discouraged to perform businesses in the Philippines due to complicated rules and changing the policies in midstream(Pomfret&Sourdin,2014). The government should reduce red tapes for start-ups and operational activities of entities to create a favorable business environment that can ignite employment, increase consumption, and generate revenues(ASEAN,2015). iv. With respect to more foreign direct investment inflows and increase volume of exports The Philippines will potentially gain from the increase volume and value of export commodities to counterparts and other economies when the integration becomes completely realized by 2015(ASEAN,2015). The export of domestic commodities and services to other ASEAN affiliates will be less daunting because of nil custom taxes and border regulations. In a similar vein, foreign investments will increase considerably because of investors’ confidence in the sustained economic growth of the country.(Medalla,2012)
V. Possible Obstacles and Risks of Integration To Philippine Trade
One of the main agendas in the ASEAN heavily relies on the economic integration of its trade facilitation. The hand-in-hand effort among its member-states to eliminate both tariff and nontariff barriers to trade has become its primary objective. In most countries, national standards and technical regulations on domestically produced and imported products are enforced to guarantee quality products in the market while assuring the public’s welfare. Nevertheless, a hindrance in the flow of the trade in goods could possibly happen that would most likely be caused by extreme national product standards or strict application of these standards. In 1992 however, ASEAN founded the ASEAN Consultative Committee for Standards and Quality (ACCSQ) in order to decrease or even fully remove these technical barriers to trade (Medalla, 2012).
In the Philippines, a basic approach was undertaken in order to easily facilitate trade. They planned to have two independent but integrated systems working simultaneously while being able to trade information electronically. This approach was initiated in order to make the National Single Window (NSW) program, which will facilitate trade through efficiencies in the customs and authorization processes, more achievable and attainable for the Philippines. By doing this, it could be an example for other countries facing struggles in creating their own NSW systems. However, there could be problems in this approach that may hold back the implementation of the NSW.
There are still spaces to be filled in many important areas specifically in export declaration, support documentations, inspection and release of goods. In able to fill these, the efficient risk management system will have to play a role. The system will be able to avoid genuine exporters and importers from getting unwarranted procedures and possible harassment. Certain segments still need some interruption in automation even in the most advanced systems because this can happen particularly in problems related to classification, valuation, and inspection procedures. Indeed, an efficient risk management system can be incorporated in e-customs and NSW that will help lessen such interruptions (Medalla, 2012).
Although the integration contains the best intentions to trade, it is still inevitable for a cause and effect situation to take place. George Santos and Elwin Chan have both mentioned that the opening of trade will definitely create a loss of jobs among its employers. Henry Go advises that the professionals and blue-collar workers should be the ones to progressively engage in continuing their education, in order to keep up with the latest trends and developments in their respective fields of work.
VI. Role of business organizations/private sector in the integration Private sectors play a huge role in the economic integration. In most ASEAN member countries, the private sector is the driver of economic growth. Primarily through its investments, the ASEAN business community fosters economic growth therefore providing income to the economy, making job opportunities, and conveying technology and innovation. The government’s main role on the other hand, is to deliver a beneficial business environment in order to urge investment. In the process of global and regional economic integration, the same roles apply. Development of the integration procedure primarily comes from the collaboration between governments, and to a lesser extent, the private sector. In order for ASEAN economic integration to grow, the public and private sector consultations should be able to continue. Operation of businesses should also apply the private sector’s obligation to support economic integration in the ASEAN region (Aldabba et al, 2013). One of the areas of cooperation for the construction of the AEC is improving private sector participation. The effective implementation of the programs and procedures in the integration process include partnership arrangements with the private sector. Elwin has mentioned that the AEC will establish itself as an attractive and suitable option for foreign direct investments, implying that private sectors do have a distinct role in the integration, specifically in the economic growth. The role of the private sector in ASEAN economic integration is precise, however, an evaluation is still needed in order to test the capability of the private sector in the Philippines. Critical development constraints that limit private sector investment and entrepreneurship would also play a role in the integration (Aldabba et al, 2013). Even though the private sector has conquered the Philippine economy, it has still not lived up to its potential. The Philippines was not able to experience the awaited private sector participation and economic transformation that usually complement the openness model of development as compared to other economies in East Asia. The constant fall of the investment rate from 2000 to 2009 was able to cause this. ADB (2005) also attributed this to the deteriorating investment climate in the Philippines, branded by increasing fiscal deficits, interests that seem to gradually impact both legislative and judicial proceedings, and the weakness of the public sector in generating and implementing freely competitive and/or regulated markets (Aldabba et al, 2013).

VII. Conclusion
Although large improvements were already accomplished towards fulfilling the goals of the ASEAN integration, private industries and government agencies should continue to sustain their collective efforts in order to gain the optimum benefits. The Philippines can absolutely reap economic advantages and enhance competitiveness through greater participation in regional production chains and in technology level-up. However, it is unavoidable to encounter risks in opening new ways for the integration to happen. There will always be a pros and cons situation that will eventually lead up to a certain degree of disagreement towards integration. Indeed, the Philippines is ready to take on these economic opportunities, but it all really varies whether or not they will take the initiative to pursue them.
In conducting this research regarding the ASEAN integration, it was inevitable to encounter limitations. One of the limitations of the research was that the interviews were limited to businessmen who were not fully aware of the aspects of the integration. It was challenging to implement their inputs regarding the integration because some of them do not entirely relate to the AEC Blueprint. Moreover, the research merely examined the general implications of the integration on one economy sector- the private industries. Other industries like agriculture, education, e-commerce, health, and infrastructure are affected in distinct ways by the liberalization.
Although these limitations exist, it is still possible to create a way in order for the research to push through with its intent and purpose. One recommendation is to conduct more interviews and gather data with statistical information regarding the integration in order to improve the already present material. Another recommendation is to extend this research into the analysis of the quantitative effects of the integration on the Philippine economy. It can provide a better measure of the Philippines’ readiness to face the hurdles of the integration.

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