After years of strengthening economic relations, Taiwan and the Philippines are expected to continue experiencing increasing amounts of bilateral trade, according to Taiwan’s Ministry of Economic Affairs, with trade volume between the two countries doubling from US$6.05 billion in 2009 to nearly US$12 billion in 2013.
Current figures make the Philippines the seventh largest export destination for Taiwan, as well as its 11th largest trading partner. Conversely, Taiwan is the fifth largest source of imports and 11th largest destination of exports for the Philippines.
In 2012, trade between the two countries totaled US$6.8 billion. The Philippines exported US$1.94 billion in goods to Taiwan, while imports from Taiwan stood at US$4.86 billion.
Bilateral trade figures looked promising at the start of 2013 as well, totaling US$3.1 billion after only a few months, but trade halted later that year when relations between these nations were put to the test.
On May 9th, 2013, the Philippine Coast Guard fired upon a Taiwanese fishing boat, killing Taiwanese national Hung Shih-cheng. Taiwan subsequently imposed sanctions on the Philippines and ceased all hiring of Filipino workers.
The sanctions were lifted in August of that year after the Philippines made an official apology to the victim’s family. Although trade resumed, the relationship between the countries had been marred by the tragedy and many wondered if it was possible to restore political and economic ties to their former statuses.
Relations did recover, and excelled. Amidst tensions, the two nations still saw the strategic importance of maintaining economic ties. Last November, the Philippines hosted the Philippines-Taiwan Joint Economic Conference in Makati. At this conference, the Taiwan External Trade Development Council (TAITRA) and the Philippines’ Center for International Trade Exposition and Missions (CITEM) signed a letter of intent to promote bilateral trade and investments, as well as to identify mutually beneficial investment projects.
Peter W. J. Huang, president and CEO of TAITRA, said at the conference that the Philippines is a natural destination for Taiwanese businessmen because of the nations’ close proximity to each other. “Not only we are the close neighbor but we are also the most close trading partner and the Philippines is our second largest market in ASEAN countries,” he stated.
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Of the event, Philippines’ Department of Trade and Industry (DTI) Undersecretary Ponciano C. Manalo Jr. said, “With this letter of intent, both institutions will work more closely and identify specific projects for cooperation.”
Following the opening of Taiwan Trade Center’s (TTC) 60th overseas office in Manila last December, the DTI expects increasing amounts of trade and investment with Taiwan. Dr. Chih-Kang Wang, chairman of TTC, said that the opening of the TTC in Manila will reinforce Taiwan’s economic ties with the Philippines, noting that Taiwan sees the Philippines as a source of abundant young labor and natural resources.
Filipino laborers make up a considerable portion of Taiwan’s workforce. Now growing 60 percent annually, the population of Filipino guest workers is reported to be 100,203 as of this June, according to Taiwan’s Ministry of Labor. “With their English proficiency, these workers make up an integral part of Taiwan’s electronics manufacturing workforce,” according to the Ministry.
Incidentally, Philippine imports from Taiwan are primarily electronics, parts and components. At the TTC opening last December, Manalo said the Philippines can produce those imports one day.
“We hope to get that kind of technology, high-value tech because it is best we do it either by ourselves or we invite those that can produce those to come over. We can also do healthcare, data analytics, data research and data mining for them,” he said.
He also said Taiwanese companies have expressed interest in investing in his country. At a seminar on investing in the Philippines last March, Manalo gave a presentation to nearly 100 representatives from 75 Taiwanese companies on the investment environment and business opportunities in the Philippines.
Among the advantages of investing in the Philippines, he lauded robust infrastructure, a strategic location with easy access to other Asian countries and tax benefits. Manalo also noted the Philippines’ economic growth, effective tax system and resourceful population.
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Manalo shared in an interview after the seminar that the Philippines largely depend on Taiwan to supply them with components and materials across many industries, including electronics manufacturing.
“Bolstered by its rapidly increasing population, which just topped 100 million this month, the Philippines market has shown strong demand for Taiwan’s building products, such as aluminum window frames, light fixtures and office furniture,” said TAITRA’s Manila branch head, Harrison Lan.
“Demand for information and communications products is also rising in line with incomes,” he added.
Investments from Taiwan permeate many industries in the Philippines, says Lan. Notable investments are coming from the likes of restaurant group Wowprime, as well as President Chain Store Corp., which operates the 7-Eleven franchise within Taiwan. From convenience stores to restaurants, all are expected to break into the Philippine market.
“We expect Taiwan businesses to scale up local operations by tapping into expanding market demand, especially in the areas of daily necessities and infrastructure construction,” further commented Lan.
Taiwan is the Philippines’ closest neighbor and has been an important partner for the Southeast Asian country. Although the trade balance is heavily in favor of Taiwan, bilateral trade and investment relations of both economies have been growing through the years.
Taiwan and the Philippines have also been discussing an agreement on maritime law enforcement cooperation after the death of Taiwanese fisherman Hung Shih-cheng. The mutual effort put forth by both countries to maintain and build relations can only suggest economic ties and trade will continue growing between them for the foreseeable future.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email asia@dezshira.com or visit www.dezshira.com.
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