CEBU, Philippines - Despite the active stance of the government to encourage Filipino companies to avail of the free trade agreements (FTAs) it entered into with different countries, most exporters are intimidated to avail of the benefits because of complication of rules and their macro-approach requirements.
Export Development Council (EDC) Visayas representative Allan Suarez said that exporters, particularly the small and medium players, are less inclined to avail of FTAs at present, while most of them do not get to understand how to fully take advantage of it.
"There's a lot of misconceptions, complications on the FTAs on trade practices in different countries. Harmonized codes within the Asian region are still unclear," he said.
Exporters' access to information on FTAs is not also constant, thus interest has yet to strengthen among Filipino firms.
A study conducted by the Asian Development Bank (ADB) showed that only about 20 percent of the companies the Philippines utilize the FTAs.
According to ADB, lack of information was the most important impediment in the utilization of FTAs, followed by delays and administrative cost.
The multiplicity of rules of origin (ROO) also hindered wider use of FTAs, particularly by small and medium enterprises (SMEs), because they raise transaction cost for firms, and SMEs have less ability to meet these high transaction cost.
ADB paper suggested that the Philippines should address the impediments on the use of FTAs so that the regional economy would be able to maximize the benefits offered by the agreement.
Based on the Central Visayas Regional Development Plan report, aside from low utilization of FTAs, another factor that slows down the expansion of region's productive sectors is the failure of agriculture, industry and services sectors to maximize the opportunities offered by the global market.
The report indicated that many of the local producers in Central Visayas have failed to generate new markets for their products thereby limiting their capacity to expand.
The challenge of the region now, while it is aiming to hit a remarkable growth in the next six years, is to develop new economic growth drivers that would generate full, decent, and productive employment.
The presence of the FTAs opened new markets for the country's goods and services, which businesses can tap to facilitate the expansion of their operations.
The FTAs have also provided preferential tariffs making it easier for local businesses to import intermediate materials needed in manufacturing their final products so that they can be competitive.
The Philippines has entered into FTA agreements with Japan, China, South Korea, Australia and New Zealand, including the 10 member-states of the Asean.
Earlier, Department of Trade and Industry-7 regional director Asteria Caberte urged the Cebuano business community to fully take advantage of the FTAs, saying despite previous series of information drive events held by the government led by DTI, Cebuano exporters and importers in particular still haven't maximized the incentives offered by FTAs.
Although, the Philippines, still has to sign bilateral agreements with giant economies like the United States and Europe, DTI earlier urged exporters or Filipino businessmen in general to find out the different bilateral agreements signed by the Philippines with other countries, as there are growing number of them.
At present, the biggest agreement the country has made is with Japan, through JPEPA. Soon the Philippines will have bilateral agreements with European Union (EU) and the United States, DTI vowed.
DTI admitted that the Philippines is the slowest in terms of availing of the tariff advantages offered by several agreements with countries.
"Exporters are not taking advantage of this, maybe for lack of knowledge or information," said DTI secretary Gregory Domingo in a separate earlier interview. /JMD (FREEMAN)