New Delhi, Dec. 19: The Philippines and Indonesia may join the India-Asean free trade agreement on services and investments later as they continue to have reservations regarding the opening up of the IT and the BPO sectors.
Trade ministers held parleys to iron out the differences on the eve of the India-Asean Commemorative Summit.
The Philippines and Indonesia maintained that the opening up of the IT and the BPO sectors would impact their economy and social fabric, sources said.
According to officials, efforts would be made to reach out to the leaders of these nations to come to an agreement. As other countries have agreed to the pact, the summit will announce the conclusion of the free trade agreement with the option of allowing the Philippines and Indonesia to join it at a later date.
The services sector constitutes more than half of the Philippines’ economic output, and its BPO industry accounts for about 15 per cent of the global outsourcing market.
Out of the total 35.06 million workforce in the Philippines, 51 per cent are engaged in the services sector. It is, therefore, a strong competitor for India in the BPO market.
Officials said, “The agreement on services and investments will be a game-changer for the nature of economic relations between the countries in the region. Though the agreement is expected to be announced formally during the summit, its implementation could take up to a year.”
Rajeev Kher, additional secretary in the commerce ministry, said the government was formulating a strategy to boost services exports and an inter-ministerial mechanism had been created.
In 2011-12, India’s services exports stood at about $142 billion, while merchandise exports amounted to around $307 billion.
The services sector contributes over 55 per cent to the country’s GDP. India is the tenth largest services exporter in the world, while Asean is a net importer.
India is hosting the summit to mark the 20th anniversary of dialogue-level partnership and the 10th anniversary of the summit-level partnership with the Asean.
The Summit 'ASEAN-India Partnership for Peace and Shared Prosperity' will be attended by the Prime Ministers of Cambodia, Lao PDR, Malaysia, Singapore, Thailand and Vietnam, the Sultan of Brunei, the Presidents of Indonesia and Myanmar and the Vice President of the Philippines.