The ASEAN Integration is just around the corner. Yet, many of the 600 million people in the ten ASEAN countries don't fully understand what it is or how it will impact their lives starting January 1, 2016.
In 1999 when I was President of the Personnel Management Association of the Philippines (PMAP), there was a similar phenomenon that made a lot of people around the world anxious. If you recall, the most common question asked and debated about at that time was "Are we Y2K ready?" On January 1, 2000, we all woke up and saw that life went on as usual. We were worried to death about Y2K, all for nothing.
The ASEAN integration seeks to form among the ten ASEAN countries a common manufacturing base and market, called the ASEAN Economic Community. Full integration will not happen on January 1, 2016, or in my lifetime. This will happen slowly, as countries prepare to change existing policies and structures.
Many years ago, the United States, Germany and Japan were the leading economies of the world. One day, everybody woke up in surprise that the sleeping giant China was becoming the hub for worldwide economic activities. Then we realized that God has stopped Creation on the sixth day. On the seventh day, God rested … and everything else was made in China.
The ten ASEAN nations today have half of China's population. But if they will band together, they can have more than a fair chance of competing with giants like China. As we speak today, the good news is that Foreign Direct Investments (FDIs) that recently went into the ASEAN countries have eclipsed those that went into China.
This is a good sign for countries like the Philippines. The reality, however, is that the Philippines does not get as much FDIs as Singapore, Malaysia, Thailand, and Vietnam. But the Philippines is in a sweet spot today. Many manufacturers earlier went China because of low labor cost. China's labor is no longer cheap today. ThePhilippines, with a great English speaking population and work force, could become a haven for manufacturing that once was located in China.
This translates into great career opportunities for Filipinos, especially the youth. Since time immemorial, investments equal employment. That formula has not changed. When investors, both foreign and domestic, choose to put their money in the country, thePhilippines will benefit in terms of increased employment opportunities.
Investments make up the demand side of the equation. The supply side consists of the quantity and quality of the workforce that can turn investments into economic activities for profit.
If we look at the business activity in the country today in relation to available job seekers, we will realize that the absorptive capacity of industry is roughly at 17%. For every 100 job seekers, only 17 jobs are available at the formal sector (companies registered with the SEC or DTI).
Many of the jobs available today are in the informal sector (or underground economy) - the self-employed, ambulant vendor, the kasambahay, unpaid family helpers, etc. The young students don't go to college only to end up in the informal sector. After graduation, they troop to the asphalt jungle to seek decent jobs in large multinationals.
In an integrated ASEAN, there will be freer exchange of investments, goods, services, and people. Tariffs, taxes, visa requirements, and other barriers will be eliminated or relaxed to allow this free exchange.
When more investments come to the Philippines, there will be more job opportunities. That is the good news. The bad news is that other ASEAN nationals will be free to look for jobs in the Philippinesas well. In reality, the ASEAN integration is not just about cooperation to form a more competitive market block. It will also be about competition for investments, for trade and for jobs.
Whether or not ASEAN integration will be good for the Filipinos or not is yet to be seen. Initially, I think that the country needs to change many of its existing policies to attract more investments that can create more jobs. Despite having a high quality workforce, thePhilippines today attracts lesser FDIs than other ASEAN countries because of its problems in infrastructure, energy, perceived corruption, kidnapping and other crimes, seeming government instability, etc. As a result, we have the highest unemployment rate in the ASEAN.
When these problems are resolved, foreign investors and the elite Filipinos and the rich Fil-Ams, Fil-Chis, and Fil Spans, will have more faith in investing in the Philippines. When this happens, the Filipino workforce should be ready to compete with foreigners for jobs in thePhilippines.
What will make a truly competitive Filipino workforce? Here are a few suggestions:
In the ASEAN integration, choose to compete, survive, and succeed!