After a decade, Manila has still failed to fully utilize the Japan-Philippines Economic Partnership Agreement (Jpepa) to expand its market access to Tokyo, according to a study released by the Philippine Institute for Development Studies (PIDS).
This was part of the discussion paper, titled “Jpepa, a Decade After: Evaluating the Effects in Philippine Exports using the Synthetic Control Method [SCM]” authored by PIDS Research Associate Mark Anthony A. Barral and Senior Research Fellow Francis Mark A. Quimba.
The study showed that sectors such as machinery and mechanical appliances even suffered from the trade pact while agricultural products, plastic and rubber, textiles, electrical machinery and others did not see immediate improvements in exports to Japan under Jpepa.
“The results also imply that tariffs are not the only determinants of Philippine exports to Japan. The delays in the improvement of exports imply there are other factors influencing the market access of Philippine exports to Japan,” the authors said. “It is recommended that the Philippines focus more on the nontariff barriers to the Japanese market using the mechanisms available in Jpepa.”
The authors said domestic issues must also be addressed. These include providing additional support for industries that were not doing well under Jpepa.
Support includes reducing logistics and doing business costs that make sending and receiving goods expensive, as well as streamlining business permits and licensing, particularly for micro, small and medium enterprises (MSMEs).
The authors also supported MSMEs participation in the Access of Small Enterprises to Sound Lending Opportunities (Asenso) Program which seeks to lower financing costs and easing requirements.
The study also echoed the National Economic and Development Authority (Neda) recommendation for the Department of Trade and Industry (DTI) to pursue targeted and time-bound initiatives to reduce business costs.
“The results show the potential of Philippine manufactured goods export to penetrate the Japanese market through Jpepa. It is important that the Philippines sustains this advantage by providing further support to these key sectors,” the authors said.
The country’s total exports to Japan only grew 1.9 percent to $8.89 billion in the January-to-October period in 2019, from $8.72 billion in 2018. In October, exports increased 4.5 percent to $971.68 million in 2019, from $930.23 million in 2018.
Japan was the country’s second-largest export market in October and the January-to-October period. Manila’s export earnings from Tokyo is second only to revenues coming from shipments sent to Washington.