Guevarra, Czarina V.

MBA 3C
Business & Government Relations

Impact of ASEAN Economic Community (AEC) to Local Business

Introduction
The Association of Southeast Asian Nations (ASEAN) was formed by Indonesia, Malaysia,
Philippines, Singapore, and Thailand in 1967 mainly to foster regional peace and security. Brunei
Darussalam joined in 1984, and Cambodia, Lao People’s Democratic Republic (Lao PDR),
Myanmar, and Viet Nam (CLMV) joined between 1995 and 1999. Economic cooperation and
integration began modestly in 1977 with the Preferential Trading Arrangement and a number of
industrial cooperation schemes. Economic integration began with the 1992 ASEAN Free Trade
Area (AFTA) that covers trade in goods, complemented by the 1995 ASEAN Framework
Agreement on Services (AFAS) and the 1998 ASEAN Investment Area (AIA) agreement.

In 2003 it was agreed to deepen economic integration with the formation of the ASEAN
Economic Community (AEC), to create a unified market and production base via a free flow of
goods, services, foreign direct investment, skilled labor, and a freer flow of capital.

In assessing the success or shortfall of the AEC to date, benchmarks are important. The
“cup is half-full” when the achievements are measured against the backdrop of 1992. The “cup is
half-empty” when the shortfalls are measured against what is promised in the AEC Blueprint of
objectives and strategic actions and measures. In going forward, a SWOT analysis of ASEAN’s
current strengths, weaknesses, opportunities, and threats are shown below:

ASEAN’s strengths. Strategically located in dynamic Asian region; generally robust

economic growth; good macroeconomic fundamentals (especially among Indonesia, Malaysia,
Philippines, Singapore, Thailand and Viet Nam, known as (ASEAN6); market of 600 million
people; abundance of natural resources and biodiversity; wide-ranging productive capabilities (in
agriculture, manufacturing, and services); diversified exports by destination and product; mostly
young, growing populations and expanding middle class; strong foreign direct investment (FDI)
with strong production networks; progressive open trade and investment regimes; strong track
record of regional cooperation.
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ASEAN’s weaknesses. Development gaps between and within members in income, human
capital, institutions, and infrastructure and the absence of regional distributive mechanisms;
disparities in good governance and the rule of law; disparities in population growth and population
aging, that together with disparities in economic growth lead to large labor deficits and surpluses
among countries that spurred cross-border illegal migration; slow decision making and even
slower implementation of AEC commitments due to need for consensus building and slow
progress in domestic reforms; weak ASEAN Secretariat with inadequate human and financial
resources; weak links between ASEAN and subregional programs such as the Greater Mekong
Subregion (GMS) and ASEAN growth triangles.

ASEAN’s opportunities. Central strategic location, with high market potential in the PRC
and India; strong historical, cultural links throughout Asia; strong economic links with ASEAN+1
FTA markets in Australia, New Zealand, the PRC, India, Japan and the Republic of Korea;
potential development of region-wide FTA with the PRC, Japan, the Republic of Korea, India,
Australia and New Zealand (RCEP); and rapidly rising middle class; deep manufacturing and
technology links with Northeast Asia; financial cooperation with PRC–Japan–Republic of Korea
in reserve pooling through the multilateralized Chiang Mai Initiative (CMIM); and surveillance
through ASEAN+3 Macroeconomic Research Office (AMRO).

ASEAN’s threats. Political–security conflicts in Asian region arising from unresolved

intra- and extra-regional territorial disputes; vulnerability of export dependent economies to
external shocks from US and Europe; rise of the PRC and India overshadow ASEAN relevance;
lack of effective regional cooperation on climate change, water-energy-food security, and disaster
management (drought, floods, earthquakes, volcanic eruptions).

The AEC Blueprint and Progress

The AEC’s four pillars and core elements are shown below. The AEC Blueprint sets out
the measures to be taken and the schedule for implementation.
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1. AEC as single market and production base.

In the AEC, the single market is committed to free flow of goods, services, and skilled
labor and freer flow of capital for priority sectors by 2010 “to the extent feasible and agreeable to
all member countries” and a goal of national treatment for all service sectors is in the Roadmap
for Integration of ASEAN. On the harmonization of standards and technical regulations, working
groups have been established in some priority sectors to implement standard-related measures
while steps have been taken to set up a common intellectual property regime.

Progress in goods trade liberalization. AFTA was implemented in 1993 and succeeded by
ATIGA (ASEAN Trade in Goods Agreement) in May 2010, the latter to consolidate and synergize
various provisions on trade in goods into a single document. AFTA’s Common Effective
Preferential Tariff (CEPT) scheme for tariff reduction has an Inclusion List (IL), Temporary
Exclusion List (TEL), Sensitive List (SL), and General Exclusion List (GEL). The TEL would be
eliminated through five annual transfers to the IL, completed by 2000 for ASEAN6 and by 2003
for CLMV. The SL comprises unprocessed agricultural products with tariff liberalization delayed
to 2010 for ASEAN6 and 2013–2017 for CLMV. The GEL permanently excludes certain products
from liberalization for reasons of national security, protection of human, animal or plant life and
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health, and articles of artistic, historic and archaeological value. Several changes have been made
to the initial CEPT tariff reduction/elimination schedule. First, the time frame to reach the 0–5%
target was shortened. Second, it was agreed to further reduce tariffs from 0–5% level to zero level.
Third, for priority sectors, the target dates for eliminating tariffs were advanced. Table 5 shows
that from January 2010, all tariffs for CEPT ILs of ASEAN6 have been eliminated, representing
99% of ASEAN total tariff lines and the average tariff brought down to 0.9%. For the CLMV
countries, tariff levels were down to 0–5% level by 2010 and to be eliminated by 2015. The CEPT
Inclusion List coverage ranges from a high of 98.3% for Cambodia to a low of 78.4% for Indonesia.
15 There is difficulty in eliminating tariffs on the SL products, particularly rice and sugar, because
of national food security concerns in some ASEAN countries.

Progress in services trade liberalization. AFAS helps lock in the unilateral liberalization
measures already undertaken by ASEAN member states, and prepare them for further services
liberalization in the WTO and other FTAs. AFAS requires negotiations to be conducted sector by
sector, with negotiations originally based on the GATS approach of request and offer. However,
difficulty in reaching consensus led ASEAN to adopt in 2004 the flexible ASEAN minus X
approach whereby two or more ASEAN countries can start to negotiate services trade liberalization
for specific sectors and/or subsectors, while other members could join later.

Liberalization is to be achieved through consecutive biennial rounds of negotiations, so

that by 2015 substantially all restrictions would be removed. Each round of negotiation resulted in
a package of commitments in each agreed sector and/or subsector and mode of supply. The general
reluctance to liberalize services under Mode 3 (commercial presence) and Mode 4 (movement of
natural persons) led to modifications in subsequent services negotiations, which resulted in
liberalization of all limitations for Mode 1 (cross-border supply) and Mode 2 (consumption abroad)
but only progressive liberalization for Modes 3 and 4. For Mode 4, MRAs or MRA frameworks
for professional qualifications have been completed in architecture, accountancy, surveying,
engineering, medical practitioners, dental practitioners, and nursing. Other MRAs for professional
services are to be identified and negotiations completed by 2015.
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There have been five rounds of negotiations involving eight packages that cover business
services, professional services, construction, distribution, education, environmental services,
healthcare, maritime transport, telecommunications, and tourism. Criticisms of slow progress in
services liberalization include the following: AFAS has resulted only in marginal liberalization
when compared to GATS commitments; service negotiators are extremely cautious either because
of their uncertainty about the impact of liberalization and fear of the loss of regulatory control in
some service sectors (such as financial services) or because of the power of domestic interests;
Mode 3 liberalization envisions only a maximum of 70% of ASEAN equity share; Mode 4
liberalization is confined to movement of professionals only; and the pre-agreed flexibilities cover
subsectors totally excluded from liberalization and subsectors without agreed liberalization on all
the four modes of supply. In September 2005, ASEAN ministers declared 2015 as the end-date for
liberalization of all services sectors.

Progress in investment liberalization, facilitation, promotion, and protection. The 1998

AIA agreement aims to facilitate FDI inflows and participation in global and regional production
networks. It grants national treatment to ASEAN investors by 2010 and to non-ASEAN investors
by 2020, with some exceptions specified in the TEL, SL, and GEL. In 2001 the date for full
realization of the AIA was advanced to 2010 for ASEAN6 and 2015 for CLMV, and differential
treatment of ASEAN and non-ASEAN investors was removed. Sectoral coverage includes
manufacturing, agriculture, fisheries, forestry, and mining, and services incidental to those sectors.
In 2003 this was expanded to include other services such as education, healthcare,
telecommunications, tourism, banking and finance, insurance, trading, e-commerce, distribution
and logistics, transportation and warehousing, and professional services such as accounting,
engineering, and advertising.

The extent and type of investment barriers are indicated by the TEL, SL, and GEL. The
deadlines for phasing out the TELs in manufacturing were advanced to January 2003 for the
ASEAN6 and Myanmar, and to January 2010 for Cambodia, Lao PDR and Vietnam. The deadlines
for phasing out TELs in agriculture, fishery, forestry, mining, and related services were 2010 for
the ASEAN6 and Cambodia, 2013 for Viet Nam, and 2015 for Lao PDR and Myanmar. As with
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services liberalization, the ASEAN minus X formula was introduced. The GEL comprises
industries and investment measures closed to FDI for reasons of national security, public morals,
public health, and environmental protection.

The ASEAN Comprehensive Investment Agreement (ACIA) superseded the AIA, with the
additional feature of investment protection. Although signed in 2009 it was ratified only in March
2012, due to delays by Thailand and Indonesia. ASEAN countries also delayed submission of their
reservations lists even though they are required to submit within six months after their signing.

Progress with freer flow of capital. Efforts to liberalize and integrate the financial markets
through initiatives such as financial services liberalization, capital market development, and capital
account liberalization have been further strengthened to support trade integration. On financial
services liberalization, based on a new approach of pre-agreed flexibilities, the sixth round of
negotiations was launched in May 2011. On capital market development, efforts to deepen equities
markets were strengthened and new working committees on dispute resolution and enforcement,
and taxation were established. The marketing and branding campaign for the ASEAN Exchanges
initiative that promotes ASEAN as an asset class was launched in May 2011 and an ASEAN Bond
Market Development Scorecard was developed. In line with the development of local currency
bond markets, the Credit Guarantee and Investment Facility (CGIF) was established in October
2011, while the agreement for the ASEAN Infrastructure Fund (AIF) was signed in September
2011. The Chiang Mai Initiative Multilateralized (CMIM) was finalized in December 2009,
providing for an enlarged $120 billion swap arrangement.

Progress with free flow of skilled labor. Factors driving skilled labor mobility in ASEAN
include large disparities in wages and employment opportunities, geographic proximity and socio-
cultural-linguistic environment, and disparities in educational developments. As more ASEAN
countries move up the technological ladder, liberalizing trade in goods and services and in FDI
would not be enough, and a larger pool of professional and skilled labor becomes necessary. Until
such time when domestic educational and training institutions are able to supply the necessary
high level manpower, and domestic economic growth is able to absorb this high level manpower,
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countries will still have to depend on foreign talent or export talent. However, even with adequate
domestic supply there is still need for foreign talent to provide competition, stimulation, and
synergy to improve the quality and productivity of domestic talent. Some countries like Singapore,
and to a lesser extent Malaysia, regard foreign talent as an upgrading and competitive tool and
have active policies to promote their inflows. Most ASEAN countries, however, have yet to move
away from protecting domestic professionals and skilled workers through constitutional
provisions, policies, regulations, and practices.

In The AEC Blueprint, strategic actions on free flow of skilled labor include facilitating
the issuance of visas and employment passes, MRAs for major professional services, core
concordance of services skills and qualifications. Enhanced cooperation for the movement of
natural persons was finalized in late 2012.

2. AEC as a competitive economic region

This AEC pillar has several behind-the-border action areas to reinforce ASEAN
competitiveness. These cover:

Competition Policy. Several initiatives have been undertaken, including the formation of
an ASEAN Experts’ Group on Competition, ASEAN Regional Guidelines on Competition Policy,
and a Handbook on Competition Policy and Laws in ASEAN for Business. The guidelines provide
a reference on country experiences and best practices at the international level, while the handbook
provides basic notions of substantive and procedural competition law applicable in ASEAN
countries.

Intellectual Property Rights (IPR). The ASEAN countries’ position is primarily that of
developing country users, although Singapore has significant interest in intellectual property (IP)
protection for its high tech and biomedical sectors, while other ASEAN countries are concerned
with the protection of their traditional and indigenous cultures, medicines, and plants. The
development of IP and IPR is crucial to build ASEAN as an innovative and competitive economic
region. Hence in August 2011, ASEAN endorsed its IPR Action Plan 2011–2015. ASEAN also
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collaborated with Dialogue Partners and international organizations to enhance capacity building
in IP. Conflicts of interest among ASEAN countries are rare and the main conflicts are enforcing
the IPR of developed countries and foreign MNCs in regard to manufactured branded products,
patented medicines, information technology (IT) software, and online music and movies.

Infrastructure Development. Transportation and IT infrastructure are essential for the

movement of goods, capital, labor, people, and ideas among ASEAN countries. The Brunei Action
Plan adopted in 2010 contains strategic actions to be implemented in 2011– 2015 toward the
realization of AEC as well as new priorities under the Master Plan on ASEAN Connectivity. The
signing of the ASEAN Multilateral Agreement on the Full Liberalization of Passenger Air Services
and its protocol provided a framework for the full realization of ASEAN Open Skies. To facilitate
ASEAN shipping services, the Strategy Toward the Integration of an ASEAN Single Shipping
Market was developed. The stocktaking of road inventory of all national route components of the
ASEAN Highway Network to strengthen the ASEAN regional infrastructure was completed The
ASEAN ICT Master Plan 2015 was adopted in January 2011,and a study on the adoption of an
ASEAN Technical Architecture Framework for e-commerce interoperability was completed. The
ASEAN Plan of Action on Energy Cooperation (APAEC) 2010–2015 consists of seven key areas
of cooperation to enhance energy security, accessibility, and sustainability for ASEAN: ASEAN
Power Grid, Trans-ASEAN Gas Pipeline, Coal and Clean Technology, Renewable Energy, Energy
Efficiency and Conservation, Regional Energy Policy and Planning, and Civilian Nuclear Energy.
The necessary domestic legislation has yet to be enacted for the ASEAN Framework Agreement
on Multilateral Transport, the ASEAN Framework Agreement on Inter-State Transport, the
ASEAN Multilateral Agreement on Full Liberalization of Passenger Air Services, the ASEAN
Single Shipping Market, and the ASEAN Interconnection Projects. In 2010 the Master Plan on
ASEAN Connectivity was adopted, with an estimated $60 billion annual infrastructure investment
needed for the 2010–2020 period. The ASEAN Infrastructure Fund commenced operation in May
2012.

A major challenge in ASEAN infrastructure development is coordinating the various

national needs with the regional vision and plans so as to obviate costly overlaps and missing links,
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harmonizing various national infrastructure standards, and effective monitoring of implementation

of infrastructure projects so as to facilitate the flows of goods and people. As infrastructure
financing needs are huge, ASEAN needs to explore various funding mechanisms and sources.
3. AEC with equitable economic development
The AEC Blueprint lists only two measures: SME (small or medium-sized enterprise)
development targeted to narrow intra-country development gaps; and the Initiative for ASEAN
Integration (IAI) targeted at narrowing the development gap between the ASEAN6 and CLMV.
The 19th ASEAN Summit in November 2011 endorsed the ASEAN Framework on Equitable
Economic Development (EED) as a new initiative.

Development of small or medium-sized enterprises (SMEs). This is necessary for equitable

development through mitigating market dominance by foreign MNCs and large state-owned
enterprises (SOEs) and fostering local entrepreneurship, innovation, and employment creation.
SMEs in ASEAN face several challenges, including limited access to finance and technology,
severe competition from SOEs and MNCs as well as SMEs from the PRC, Japan, and the Republic
of Korea, weak entrepreneurial and management skills, and difficulties in coping with AEC market
standards. ASEAN endorsed the Strategic Action Plan for the ASEAN SME Development (2010–
2015) in August 2010. The ASEAN SME Advisory Board provides strategic policy input on SME
development to the ministers and guidance on high priority matters to the ASEAN SME Working
Group. Work started on the Conceptual Framework for Regional SME Development Fund. Two
projects under the Strategic Action Plan have been completed. The Directory of Outstanding
ASEAN SMEs seeks to promote links of SMEs to the regional and global supply chains and
production networks.

Initiative for ASEAN Integration (IAI). The IAI serves as a platform for identifying and
implementing technical assistance and capacity building programs targeted at CLMV. The
ASEAN6, ASEAN dialogue partners, and the Asian Development Bank (ADB) are involved in
the IAI programs. The new IAI Strategic Framework and Work Plans I and II were endorsed to
facilitate implementation of CLMV projects. The scope of priority areas has expanded beyond the
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initial focus on infrastructure, human resource development, ICT, and capacity building for
regional integration to include tourism, poverty, and quality of life.

4. AEC having linkages with global economy.

Growth in intra-regional trade is a common measure of the extent of trade integration
achieved. However, unlike economic integration efforts elsewhere where the focus is on increasing
intra-regional trade and investment shares, ASEAN’s focus is on reducing barriers to intra-regional
trade and investment so as to compete more effectively in the global arena.

 USA: Trade and Investment Facilitation Arrangement (TIFA) and Enhanced Economic
Engagement (E3) Initiative.
 Canada: Trade and Investment Facilitation Agreement (TIFA)
 Russia: Roadmap for Trade and Investment Cooperation
 Hong Kong SAR: (On-going negotiations for ASEA– HK FTA

Summary
Serious efforts at economic integration among the Association of Southeast Asian Nations
(ASEAN) members started only in 1992. Initial obstacles included the widespread pursuit of
import substitution policies of industrialization, the small extent of intra-ASEAN trade, and the
wide differences in economic size, development level, and industrial competence giving rise to
widely divergent perceptions of benefits and costs of integration. The switch to outward-looking
development strategies and external pressures (such as the formation of the European Union Single
Market and the North American Free Trade Area) pressured ASEAN to form a free trade area
(FTA) in 1992. The challenges of globalization, slow recovery from the Asian financial crisis, and
the economic rise of the People’s Republic of China (PRC) and India further pressured ASEAN
into deep integration in 2003 with the formation of the ASEAN Economic Community (AEC).
The AEC has objectives of a single market and production base, a competitive economic region,
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equitable economic development, and integration into the global economy. It involves
liberalization and facilitation of trade in goods, services, and investment, as well as protection and
promotion of investment; narrowing the development gap; and free flow of skilled labor and freer
flow of capital. The AEC Blueprint outlines actions and measures and time lines for completion
by the 2015 deadline. However, by end-2011 only an implementation rate of 67.5% had been
achieved. While tariff elimination had largely been on schedule, there were difficulties with
removal of non-tariff barriers (NTBs) and services and investment liberalization.
In summary, the AEC has come a long way, but it has fallen short of the high standard and
time frame it has set for itself. ASEAN has to find the political will and management capability to
fulfill all goals in the AEC Blueprint and embark on further liberalization, rationalization, and
integration to seize the opportunities and successfully meet the economic challenges of the 21st
century.
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Department of Trade and Industry

Legal Basis
Presidential Decree 488 (June 21, 1974) created the Department of Industry whose
principal function was to promote and enhance the growth of the country's existing and thriving
industries.
Presidential Decree 721 (June 02, 1975) created the Department of Trade to pursue efforts
of the government toward strengthening the country's socio-economic development, particularly
in the area of commercial activities. It also established a Bureau of Foreign Trade to push for
domestic trade and marketing programs.
Executive Order 709 (July 27, 1981) created the Ministry of Trade and Industry which took
over the functions of the subsequently abolished Departments of Trade and of Industry.
Executive Order 133 (February 27, 1987) reorganized the Ministry of Trade and Industry
and renamed it the Department of Trade and Industry.

DTI Mandate
The DTI is responsible for realizing the country’s goal of globally competitive and
innovative industry and services sector that contribute to inclusive growth and employment
generation.

Pursuant to the Philippine Development Plan (PDP) 2017-2022, it shall endeavor to reduce
inequality and poverty by expanding economic opportunities in industry and services, and by
increasing the access particularly of micro, small and medium enterprises (MSMEs), cooperatives
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and overseas Filipinos (OFs) to these opportunities. To attain these sector outcomes by 2022, there
is a need to:
 Increase local and foreign direct investments
 Increase competitiveness, innovativeness and resilience of industries and services
 Improve access to finance, to production networks, and to markets
 Enhance productivity, efficiency, and resilience
 Ensure consumer access to safe and quality goods and services

These will be accomplished through six major programs:

 Exports and Investment Development Program
 Industry Development Program
 SME Development Program
 Consumer Protection Program
 Consumer Education and Advocacy Program
 Good Governance Program

Organizational Outcomes
The DTI Roadmap subscribes to a market-driven economic growth, which harnesses
potential MSMEs, promotes trade as well as domestic and foreign investments, and ensures value
for money, through globally competitive exports and industries and a bureaucracy that is
committed to operational efficiency.

These priorities are expected to contribute to the achievement of national goals of sustained
economic growth and an improved quality of life of every Filipino, through poverty reduction.

Given its mandate and priorities, which are recurring themes that overall make up DTI's
thrusts, the following are the Department's organizational outcomes:

Export of Goods and Services Increased. Increased exports is the key to economic growth.
The nature of global trade is changing amidst moderate world economic growth. To embark on
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this goal, the DTI must enhance trade expansion through policy negotiations and export trade
promotion.

Investments Increased. The investment-led growth strategy espoused in the 2004-2010 Medium
Term Philippine Development Plan (MIPDP) is expected to boost industry and services, the key
growth drivers of the economy. Attraction of foreign and domestic investments, through a positive
investment climate, would translate to increased capital, infusion of new technologies, and
generation of more jobs.

Competitiveness of MSMEs Increased. Developing MSMEs means creation of employment which

gives a tremendous boost to the diversification of industries and equitable distribution of wealth.
It is nationally significant to properly address Philippine micro, small, and medium enterprise
development by creating dynamic and progressive MSMEs, given their critical contribution to
economic growth.

Consumer Welfare Ensured. The proliferation of uncertified products, both locally-manufactured

and imported; increasing violations of Fair Trade Laws; rising number of consumers seeking
redress due to a more informed citizenry; the high cost of distribution, resulting in higher prices of
basic commodities; and the evolving complexity of consumer transactions all necessitate more
pro-active government initiatives. The challenge is to create an environment where the interest of
consumers is protected through a fair and competitive marketplace. The DIV's role is to ensure a
market that is more receptive to the standards of conduct of business and industry, that allows the
efficient distribution of basic commodities and the speedy resolution of consumer concerns.

MAJOR FINAL OUTPUTS

The Major Final Outputs (MFOs) of the DTI highlight the Department's contributions to
the achievement of the country's key societal goals of national economic growth and poverty
reduction; and to the twin sectoral (industry and services) goals, which are job generation and
global competitiveness.
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The functions of the DTI are performed with improved delivery of services by transparency
and accountability consistent with the Department's mantra: Consumer Matters, Business Gains.
It has adopted four (4) MFOs:

1. International trade policy negotiation, facilitation, and promotion services

The DTI's crucial role in trade policy negotiation, facilitation, and promotion is clear and
evident. In recent years, the Philippines took a more pro-active stance in trade policy negotiations,
making sure we protect and further our national interests and aligning our product and market
strategies with the dynamics of the world trading system. We need to expand our exports through
market access and product diversification. We need to face the challenges in the international front.
The Department recognizes that it should avoid fully embracing unbridled liberalization but
instead face the legitimate challenge of international competitiveness.

The Department, together with other government agencies and the private sector, as
enshrined in the Philippine Export Development Plan (PEDP) 2004-2007, shall intensify the
linkage between market access negotiations and trade promotion activities. Effective combination
of these two enables better matching between RP export supply capabilities and market demand.
Such alignment would maximize the country's limited resources and have a higher impact on
export performance. Geographic markets would be ASEAN, China, Japan, USA, and EU.

In addition to the key markets as specified in the PEDP, secondary markets shall be
addressed based on the opportunities that are presented by trade agreements, business matching,
and those resulting from developmental activities of government and the private sector.
Opportunities provided by specific market segments such as those defined along cultural bounds
shall likewise be tapped. These culture- based markets that will provide opportunities to Philippine
exports include, but are not limited to, halal, kosher, and overseas Filipinos. Also, as provided in
the PEDP, the key concern from the supply side is the country's capability to meet the demands of
markets. Specific interventions are necessary along the supply chain of each Revenue Stream
(priority sector) to ensure one or combinations of the following:
 Compliance with market regulations;
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 Achievement of critical supply levels;

 Integration of widely-accepted technological innovations;
 Improvement of competitiveness; and
 Creation of high-impact strategic partnerships.

Other specific strategies and interventions would include: promoting service-oriented exports
and nurturing the capabilities of globally competitive enterprises that produce high quality
products; accelerating industry clustering programs to enhance competitiveness; pursuing a
country branding program to promote the Philippines as a source of quality and competitive
products; and strengthening strategic alliances and partnerships with the export sector, business
support organizations, other government entities, and embassies and foreign trade offices to
address the proper valuation of exports and imports, thereby increasing revenues. The Department
shall also guarantee a policy and financing environment that is conducive to export growth.

Programs/Activities/Projects (PAPs)
 Formulation of plans, programs, and policies for the promotion and facilitation of exports
 Policy advocacy/enabling environment
 Implementation of trade remedy measures against unfair trade practices and/or surges in
imports
 Negotiation of bilateral/multilateral/international agreement
 Commercial intelligence
 Accreditation of certifying bodies/conformity assessment bodies/testing and calibration
laboratories
 Participation in international/regional standardization program (e.g. International
Organization for Standardization/International Electrotechnical Commission)
 Provision of information through servicing of trade inquiries, rendering export advisory
services, development of information of products and markets, and conduct of information
sessions
 Alignment of Philippine National Standards (PNS) with international standards
 Resolution of trade complaints
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 Issuance of export clearance and accreditation of exporters

 Participation in conduct of local/international fairs, trade missions and exhibits
 Conduct of business matching activities
 Provision of cargo consolidation networking services
 Participation/coordination with international counterparts for policy coordination and
formulation relative to shipping logistics interests

2. Industry development and investment promotion and facilitation services

The DTI's agenda is to create economic activity. The focus is to make the economy more robust
by implementing measures that shall attract more investments and allow businesses to grow and
expand. As the vanguard of investment promotion, the Department undertakes initiatives to
address investor concerns in the areas of labor, immigration, bureaucracy and red tape, security
and peace and order, taxation, and tariff. It continuously contributes to the creation of a conducive
business environment by developing measures and action plans to attract more investors in the
country. Through public and private partnerships, the DTI aggressively pursues the provision of
necessary infrastructure support to entice more investors and to retain them in the country. To
enhance the country's investment promotion program, the DTI aggressively pursues the Retention,
Expansion, and Diversification (RED) Program to encourage the growth and stability of
businesses. Other strategies include: rationalization of the incentives system; revitalization of the
mining industry; focus on high-end, high-value investments; aggressive promotion of the country
as a provider of services in IT, medical tourism, eco-tourism, and logistics hubs; and completion
of ongoing and pipeline infrastructure projects (through the Philippine Infrastructure Corporation)
to spur further economic activity; and initiating policy reforms, among others.

Programs/Activities/Projects (PAPs)
 Formulation of plans, programs and policies for industry development and investment
promotion and facilitation
 Policy advocacy/enabling environment
 Conduct of focused investment promotion campaign, investor servicing and awareness
activities
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 Registration of investment projects

 Operation and maintenance of Build - Operate -Transfer Center (BOT)
 Development of new approaches to enhance Labor-Management Cooperation for Quality
and Productivity
 Activation of quick reaction teams
 Conduct of plant-level productivity training/seminars
 Administration of Philippine Quality Award/s Program
 Monitoring of industrial training programs

3. Development and promotion services for MSMEs

The DTI is the primary agency in the promotion and development of MSMEs through the
provision of various assistance and interventions, e.g., financing, marketing and promotion,
human resource development, product development, and advocacy. The focus on MSME
promotion and development is geared towards the graduation to higher levels of undertaking,
from micro to small and from small to medium enterprises. A stable framework has been
developed for the proper implementation of MSME development policies, programs, and
strategies consistent with the provisions of the Small and Medium Enterprise (SME)
Development Agenda.

Programs/Activities/Projects (PAPs)
 Formulation of plans, programs, and policies for MSME development and promotion
 Policy advocacy/enabling environment Conduct of business matching activities
 Conduct of selling missions and domestic/local trade fairs
 Operation of trade houses/centers
 Organization of product showcase
 Promotion of indigenous raw materials
 Conduct of resource mapping activities
 Conduct of training/seminars
 Conduct of business counseling and consultancy services to MSMEs
 Facilitation in the conduct of product research, development, and design services
Guevarra, Czarina V.
MBA 3C
Business & Government Relations

 Facilitation in the conduct of design promotion activities

 Facilitation in accessing credit for MSMEs Maintenance/operation of SME Centers

4. Consumer welfare and protection services

Guaranteeing consumer welfare entails an unyielding quest for strategic policies and
interventions that would result in better consumer protection. To attain this goal, the DTI serves
as a catalyst in promoting a vibrant and sustainable trading environment through the
development and enforcement of policies, trade regulations, and world class product standards
while promoting the efficient distribution of goods and services through regular monitoring of
supply and price levels of basic and prime commodities. The DTI goes beyond the traditional
scope of consumer welfare by being an advocate on behalf of consumers. Over the past years,
the Department has been strengthening its linkage with private consumer organizations,
increasing media awareness of the general public on specific consumer issues, and providing
speedy resolution on consumer complaints. The Department also undertakes aggressive price
monitoring and conducts regular market visits to ensure that basic and prime commodities are
made available to consumers at reasonable prices.

Programs/Activities/Projects (PAPs)
 Formulation of plans, programs, and policies for consumer welfare and protection
 Policy advocacy/enabling environment
 Price and supply stabilization
 Business regulation (e.g., business name registration)
 Enforcement/promotion/monitoring of Fair Trade Laws
 Consumer assistance/response and mediation/arbitration of consumer complaints/cases
 Development of PNS
 Product certification scheme and product testing
 Accreditation of freight forwarders
 Implementation of PD 1466 (Cargo Reservation Law)
 Consumer protection advocacy, training, and education/information programs
 Organization/Strengthening of consumer organizations
Guevarra, Czarina V.
MBA 3C
Business & Government Relations

 Regulation of importation of used motor vehicles and spare parts

It is emphasized that the DTI functions using the "soup-to-nuts" approach where the whole
gamut of required services, from enterprise formation to production, sale/distribution of goods in
either the domestic and/or export markets, shall involve the intervention of the appropriate
operating units in the entire business process. The services, which range from investments
facilitation, generation and promotion, MSME development and promotion, trade negotiation,
development and promotion, as well as consumer protection, highlight the equal importance given
by the Department to both the producers (firms) and consumers of the goods and services.
To reiterate: in DTI, Consumer Matters, Business Gains.