ADB says BPO sector to benefit from RCEP but delay to have negative impact

Warren De Guzman, ABS-CBN News

Posted at Feb 09 2022 03:14 PM

MANILA - The Philippines' business process outsourcing industry and other sectors will benefit from the Regional Comprehensive Economic Partnership (RCEP) but a delay in the country's participation will have a negative impact on the country's digital economy, the Asian Development Bank said Wednesday.

RCEP is a free trade treaty which includes members of ASEAN, Australia, China, Japan, South Korea and New Zealand. Lawmakers deferred the ratification of the deal as the Philippines entered the campaign period for Halalan 2022. 

ADB Regional Cooperation and Integration Division head Cyn-Young Park said RCEP will provide transparent and consistent rules on trade in e-services, through e-commerce. 

Park said it will also help "investors feel more comfortable for the protection of intellectual property rights." 

"Especially in the Philippines, this will help greatly the BPO sector which has been a core business for creating jobs and incomes for many people," Cyn-Young Park said.

However, the delay in the Philippines' participation in the RCEP could have a negative impact on the economy, the Manila-based lender said. 

"It is unfortunate to delay that implementation. However, the agreement just went into force on Jan. 1st. The impact is gradual. They will unfold over time as companies understand and react to the changes in opportunities. I don’t think companies and workers should feel discouraged, as long as those opportunities become available," Cyn-Young Park said. 

For the country to benefit more from the proposed deal, it should be prioritized by the next administration, ADB Chief Economist Albert Park said. 

IT and Business Process Association of the Philippines (IBPAP) President Jack Madrid said the sector backs the ratification of the country's participation in the measure.

"This framework will benefit the IT & Business Process Management Industry by making the country a more attractive investment destination and help expedite the economic recovery from the pandemic by creating more job opportunities,” he said.

IBPAP has yet to respond to requests on how the delay in RCEP participation might impact job creation in BPO this year.

The last forecast of IBPAP on direct jobs for their sector was 1.43 million by the end of 2022, from around 1.3 million in 2020. 

The debate on RCEP had heated up prior to its deferral, with many in agriculture and labor warning of its negative effects.

Former Agriculture Secretary Leonardo Montemayor said the Agri sector remains "ill-prepared" for free trade in the global market due to high costs, inadequate infrastructure, and prohibitive marketing costs.

"Given these constraints, it will be difficult for us to compete with other RCEP members. Plus, we will be vulnerable to their cheaper exports, which are sometimes subsidized," Montemayor said.

Tariff adjustments under RCEP will also likely have a negative impact on local sugar, wool, silk-worm cocoons, wheat, electrical equipment and computer products, metals, machinery, and even apparel industries, Program Director of Labor Education and Research Network CJ Castillo said.

Domestic output will likely decline by .076 percent "that will make a big impact on employment," Castillo said.

But according to the ADB, participating countries are likely to benefit from participation in RCEP.

“I think Asia, Southeast Asia, have really been dynamic economies before the pandemic. With RCEP that is bolstering that dynamic. Prospects for trade should be very positive," Albert Park said.

ADB said Asia's trade in digital services remains lower compared to the other regions due to low productivity and tighter regulations. 

Greater regional cooperation will narrow the digital gap, the ADB said.

-- with reports from Jekki Pascual, ABS-CBN News

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