DTI, ADB studies indicate less than half of Philippine firms use free trade deals

MANILA, Philippines - Despite a number of free trade agreements (FTAs) secured by the country to date, less than half of Philippine firms are aware and actually utilize the benefits of such deals, the Department of Trade and Industry (DTI) and the Asian Development Bank (ADB) said.

DTI Assistant Secretary Rafaelita Aldaba said yesterday a study is currently being conducted by the agency to measure the awareness and utilization rate of local small, medium, and large enterprises on FTAs.  

Based on the study’s preliminary results which covered 800 of the 1,000 firms to be surveyed, Aldaba said 50 percent of the companies are aware of the country’s existing FTAs while 40 percent utilize them.

“The survey is ongoing and although the numbers are still partial, I would say the results are encouraging relative to the figures we were getting in the past. Of course, we want it to be higher but we are seeing some improvement,” Aldaba said.

“We are not far behind in terms of utilization with countries such as Indonesia, Thailand, and Vietnam. More or less, some of the other countries have the same rate so I would not say that we are far behind,” she added.

The ADB, for its part, conducted a separate study covering a smaller sample which showed an almost similar result to that of the DTI.

ADB advisor for economic research and regional cooperation department Ganeshan Wignaraja said their study revealed only 23 percent of companies make use of FTA preferences while only 16 percent of SMEs utilize them.

“Trade agreements can be very useful but SMEs are seen less likely to utilize FTA preferences. The single biggest concern is the lack of information. This is no surprise because these agreements are complex documents. Even though it is there, many SMEs cannot understand these things,” Wignaraja said.

Aldaba said lack of information is also cited so far as the most prevalent factor why firms do not use FTA preferences based on its ongoing study.

DTI’s nationwide study covers companies in the manufacturing sector located mostly in the growth areas such as the National Capital Region, Cavite, Batangas, Laguna, Central Luzon, Cebu, Davao and Iloilo.

Aldaba said the complete and finalized report is targeted to be presented to stakeholders by the first quarter of next year.

“We want to measure the awareness because we want to find out if our information dissemination campaigns have an effect and also if there are really those who are utilizing the FTAs,” she said.

 “We need to do these types of assessment to help us also in designing what are the proper programs that we need to do and that we need to carry out so that we can assure that the benefits from the FTAs will go to the industries, specifically the SMEs,” the DTI official added.

Aldaba said among the frequently used FTAs by the companies surveyed are the Asean Trade in Goods Agreement (ATIGA) and the Asean-Japan Comprehensive Economic Partnership Agreement (AJCEPA).

The DTI assured the country is working on securing several more FTAs in the coming years, with the United States-led Trans-Pacific Partnership (TPP) one of its most sought-after targets.