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PH needs regional FTAs to recover – HSBC

British banking giant HSBC said the Philippines and other ASEAN members should pursue and finalize the regional-centric trade agreements – Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the China-backed Regional Comprehensive Economic Partnership (RCEP) – as part of economic stimulus.

HSBC in a statement said that with the economic difficulties in the region due to COVID-19 pandemic, ASEAN members need the two free trade agreements (FTAs) to ensure growth.

“When economies come under threat of recession, businesses will instinctively move to ground where there is commercial oxygen, and one air pocket immediately available to policymakers is to sign these FTAs,” said HSBC Philippines president and CEO Graham FitzGerald.

“The Philippines, Thailand, Indonesia and Vietnam have been weighing up the cost and rewards of joining the CPTPP. But with global economic prospects not as bright as they were six months ago, these markets may need to choose pragmatism over perfection when assessing the viability of CPTPP. The risks of missing out may prove too costly,” said FitzGerald.

On the other hand, FitzGerald said the RCEP agreement will provide a “timely economic boost for businesses seeking to offset the impact of the coronavirus outbreak.”

“HSBC encourages ASEAN members to conclude these negotiations ahead of the RCEP summit later this year,” said the bank official.

FitzGerald also said that Southeast Asian countries could take advantage of the two FTAs by making a “strong and far-reaching economic and trade policy action.”

“In more precarious times, such as we have now, the central scenario becomes more clear and pronounced: either we recognize, accept and embrace change and put ourselves in a position to seize opportunities, or face being left behind.  When positioned liked this, the choice is pretty clear,” he said.

FitzGerald stressed that for the Philippines, signing the two FTAs will benefit the country’s investment reform programs such as the infrastructure program “Build, Build, Build” and the Accelerated Recovery and Investments Stimulus for the Economy of the Philippines Act or ARISE Philippines Act for the small and medium-sized enterprises hit by the pandemic.

According to HSBC research, ASEAN’s potential growth over the next 10 years on average may decrease by 0.7 percentage points (ppt) from five percent pre-COVID 19 to 4.3 percent post-pandemic.

“The Philippines could also see a decline in its potential growth of about 0.6 ppt to 0.8 ppt as a result of reduced investment spending. The country has relied heavily on capital investment growth for the past 10 years, particularly on infrastructure,” said HSBC. 

RCEP, which includes not just the 10-member ASEAN but also China, Japan, South Korea, Australia and New Zealand, accounted for 30 percent of the world population and 29 percent of global GDP.

CPTPP, the repackaged Trans-Pacific Partnership Agreement, has 11 nations involved in the trade agreements and cover about 14 percent of the world economy. 

Source: Manila Bulletin (

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