The Philippines, how well is it prepared for ASEAN Economic integration?

The big day for the ASEAN countries is approaching more and more. The Philippines was one of the founding fathers of ASEAN in 1967. Yet, how well are they prepared to enter this economic integration, and, should they enter it? This snapshot analysis will give an insight into these questions.
The Philippines is a democratic republic, with a multi-party bi-cameral system of governance with Benigno Aquino as the President. After its independence from the US in 1946, the Philippines had different Presidents. Most of these Presidents have been corrupt or part of an elite family. The Aquino administration aims to change this history of corruption and have only ethical, honest and true public servants by his side . In addition to his fight against corruption, Aquino’s also wants to create jobs and invest heavily into infrastructure to make the country more competitive (Aquino,2010).

Besides corruption, another political challenge that the country is facing is the territorial dispute between Philippines and China. Both countries claim to have the territory in the Scarborough Shoal (The South China Sea; Shoal mates, 2012). This area is rich for fishery and contains oil reserves. Therefore, it is attractive to both countries. Apart from this dispute, China and Philippines have had good alliances and China is the biggest trading partner of the Philippines.

Other strategic allies to the Philippines are Japan, Australia and New Zeeland for their free trade agreements. Strong relations between the Philippines and US can also be experienced. The US is among Philippines five top trading partners, and they are military allies. This is explained by their history as being a colony of the US.

On economic area, the country is not doing well compared to its ASEAN neighbors. The GDP per capita is $ 2014 and the country suffers of a high unemployment rate. Most people work in the service industry. The country suffers of a trade deficit and is reliant on remittances from migrant workers. The foreign direct investment in the country is also rather low; however the country offers cheap labor that can be a stimulus for FDI (ASEAN Secretariat, 2011) (Asian Development Bank , 2011). Most investment is currently being made in infrastructure to boost the economy and further create jobs.
A competitive advantage that the Philippines has over other countries is its young, highly educated English speaking population. However this young society is characterized by being migrants as the country suffers of high unemployment rate and low wages. This brings in many social concerns ranging from brain drain, increase in secondary school dropout, and violation of children’s rights among others.

The healthcare is also in a deplorable situation. There are insufficient medical professionals available, and those available are in the urban area (Datamonitor , 2011).

The two main environmental concerns are loss of biodiversity and air pollution. Nevertheless, the government has many policies and actions in place to preserve the biodiversity and lower the air pollution (Datamonitor , 2011).
Looking at all these aspects, it can be said that the Philippines is not ready yet for the ASEAN integration; however with some changes to its policies and focus points it has great potential. ASEAN is beneficial for the Philippines especially taking into consideration the culture of migration that the country has.

In my opinion there are many actions that can be taken to take advantage of ASEAN and increase the benefits of it. On the short term the government should solve the territorial disputes with China. If it cannot happen diplomatically, they should abide to the International court of Arbitration. The government should promote more entrepreneurship by spending more on R&D. By increasing the availability of public transport; the air pollution can also be minimized. To help solve the healthcare problems, medical students should work mandatory for a specific period of time in the rural area. Free trade agreements between the Philippines and European Union should also be signed.

On long term the government should stimulate more migration to create jobs and stimulate the economy through remittances. Foreign direct investment can be stimulated through tax reductions, and safety nets. In addition, it should be easier to open a company in the Philippines. Since the country is surrounded by sea and has yearlong sun, green energy should be used more. In the rural areas where there is high illiteracy rate, free vocational schools should be created.