Date: April 2003

Europe Wants Philippines Services Opened

Like the agriculture and industrial sectors, the country's services sector is now being eyed as an area where liberalization should take root. Unlike the case in the agriculture and industrial sectors where liberalization could result in loss of jobs, the liberalization of the country's services offers the prospect of greater employment opportunities for Filipinos.

The European Commission had earlier requested the Philippine government to honor its commitment to the General Agreement on Trade in Services (GATS) under the World Trade Organization (WTO). The agreement, which was adopted during the Ministerial Conference in Doha, Qatar in 2001 calls for the opening of the services sector to foreign participation.

While the Department of Trade and Industry (DTI) said it will support the further liberalization of Philippines services, it has yet to identify the specific areas where it has a comparative advantage. The GATS allows the Philippines to prescribe conditions and limitations with respect to market access for services.

Among the sectors where the country is believed to have an advantage are information technology, professional services, labor and personal services.

The European Commission wants the Philippines to remove remaining market barriers in professional services such as accounting, auditing and bookkeeping, taxation, engineering and architecture. It has also asked the country to open up computer related services, real estate professions, research and development services, banking, insurance, securities and other related professions.

Other areas being eyed for liberalization are postal and courier services, telecommunications, construction and related engineering, distribution, environmental, tourism, transport, news agencies and energy services.

While the "Stop the New Round! Coalition" opposes the country's participation in GATS for fear that it might displace local businesses, many believe that the liberalization of the services sector could actually be the long awaited cure to the country's unemployment and poverty problems.

According to analysts, there are ten major reasons why the Philippines would benefit from the further liberalization of its services sector. These analysts are convinced that the opening of Philippine services to foreigners would:

• Provide more employment opportunities for Filipinos in the country;
  
  
• Open more employment opportunities for Filipinos abroad;
  
  
• Improve services in the Philippines in general;
  
  
• Bring in more foreign capital and technology;
  
  
• Enhance and put to maximum use, the skills of Filipinos;
  
  
• Inspire business confidence in the country;
  
  
• Stimulate consumer spending;
  
  
• Boost the tourism sector;
  
  
• Develop more growth potential in the country;
  
  
• Lessen graft and corruption and improve management.

For one, the Philippine government has identified the information and communication technology (ICT) sector as the one that will bring greatest progress to the country. This becomes possible by enticing foreign call and data centers into the country where there is seen to be an abundance of IT skills. It appears that the government's strategy is to bring in foreign capital and technology in order to tap local talent.

Fears that liberalization of Philippine services would be disadvantageous to Filipinos may be misleading. Several services, like construction, energy development, and courier are already virtually open to foreigners and are a major source of recent foreign investment in the Philippines. Foreigners can now own up to 100 percent of a tourism project or a retail store.

Foreign participation in the banking, telecommunication, news agency, research and development and education areas are expected to upgrade the quality of such services in the country. Filipinos are not going to lose their jobs because foreign establishments would rather hire them than foreign professionals who are paid much higher.

Studies show that Filipino engineers and other IT professionals are among the most competitive - yet the least paid in Asia.

With around 7 million Filipinos already living and working in other countries, Filipinos are probably the best-prepared people in international services. The real benefit, in other words, starts when Filipinos look beyond their borders and towards the liberalized services of other countries.

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