APEC Bolsters Services Competitiveness to Achieve Inclusive Growth

In their endeavor to support the transition of the informal sector to the formal economy and to spur growth of services in the Asia-Pacific, member economies are strengthening capacity and collaboration across the APEC forum through structural reform.

Structural reforms are measures that remove barriers affecting the operation of markets and the capacity of international businesses to access those markets and operate efficiently. It refers to reforms of domestic policies to boost competitiveness, growth and job creation.

At a workshop held in Lima on Saturday, officials, experts and industry representatives from the services sector examined the role of structural reform in driving economic growth and regional integration. They also considered the nature of policy change in the services sector, its links to the structural reform agenda and the challenges involved in managing policy change.

APEC General Coordinator of Peru’s Ministry of Foreign Trade and Tourism Julio Chan called for APEC economies to harmonize services regulations or remove regulatory barriers, promote transparency and simplification of procedures, as well as facilitate labor mobility.

Setting the scene for the workshop, Chan noted that in addition to promoting the participation of economies in the APEC Index—indices comprising of regulatory information on trade barriers affecting services—it is also important to take advantage of the use of available tools to prioritize actions to improve business climate and trade in services in the region.

“In some cases, it might be necessary to make regulatory changes to remove or reduce certain restrictions on trade in services,” Chan added. “In such cases, it is essential that economies have the commitment and political will to implement such regulatory changes and create an increasingly favorable environment for the development of trade in services in the Asia-Pacific region.”

A new policy brief on services and structural reform was also launched at the workshop, reviewing the latest developments in services growth and trade as well as identifying what drives competitiveness in the services sector.

“In recent years, we continue to see the rapid growth of the global services trade and its increasing importance in the world's economy. This is especially true for the APEC region where trade in services contributes to over two-thirds of the collective GDP and makes up more than half of employment,” said James Ding, Chair of the APEC Economic Committee which oversees the forum’s work on structural reform.

Ding added that the performance of the service sector has implications across many economies in terms of growth and productivity, further calling on economies to put more effort into enhancing good regulatory practices and international cooperation to close regulatory divergence in the service sectors.

“The policy brief notes the rising importance of services to APEC economies and global trade, and the evolution of the use and delivery of services due to technology,” said Jillian DeLuna, convenor of the APEC Group on Services (GOS). “These trends contribute to making GOS’ work both more complex but also more significant.”

DeLuna highlighted the group’s initiatives and resources such as the APEC Services Competitiveness Roadmap which captures the wide range of issues critical to improving trade and services, significantly supporting structural reform through improving regulatory cooperation frameworks. She also cited the APEC Index, a unique tool that can help policymakers make better choices to drive economic recovery and empower a services-led growth model in the APEC region.

At the workshop, officials heard views from industry players who drew attention to difficulties faced by small businesses in the services industry to move into the formal economy and achieve greater competitiveness. In some cases, this is related to the complexities of regulations to formalize a business, as well as associated costs which make it unattractive for small businesses to pursue this effort.

To make formalization appealing, removing barriers and regulatory red tape are crucial across agencies in an economy to meet people where they are and support the growth of the services industry as it offers the biggest development opportunities.  

The workshop also spotlighted the importance of digitalization in transforming services, making it even more important for economies to ensure access to digital infrastructure and technology to boost competitiveness.

Read the full APEC Policy Brief – Drivers of Services Competitiveness and the Contribution of Structural Reform.