THE PHILIPPINES can leverage its free trade agreements (FTAs) and proximity to Taiwan to attract multinational companies (MNCs) looking to de-risk global supply chain away from greater China, the Philippine Economic Zone Authority (PEZA) said.
In a Facebook post, PEZA Director General Tereso O. Panga said Taiwan is also looking to strengthen its Southbound Policy, which aims to make Taiwan less dependent on China.
“With the Taiwan government’s resolve to further strengthen its New Southbound Policy, the current administration of President William Lai Ching-te is looking beyond cooperation and exchange between Taiwan and 18 countries in Southeast Asia, South Asia, and Australasia,” he said over the weekend.
“Taiwan companies operating in China and even Taiwan have adopted the China+1 and Taiwan+1 strategies to de-risk the global supply chain through the establishment of alternative manufacturing sites, diversification of supply chains, and improvement of domestic production,” he added.
The trend is for Taiwan companies set up offshore facilities in ASEAN to avail of lower tariffs on exports to the European Union and the US but also to take advantage of the host economy’s domestic markets.
“As such, PEZA aims to target strategic and high-tech industries from Taiwan that will provide for ecozone product sophistication, export diversification, labor-intensive and highly skilled jobs, knowledge transfer, enhanced local supply chain, and creation of industry clusters,” said Mr. Panga.
To attract these investments, he said that the Philippines can leverage the Indo-Pacific Framework, the Regional Comprehensive Economic Partnership, and other FTAs.
He added that the trilateral agreement with the US and Japan in developing the Luzon Economic Corridor as well as the US CHIPS & Science Act can also help steer these investments to the Philippines.
“We need to capture as well those MNCs that relocate their export-manufacturing facilities from China to ASEAN,” Mr. Panga said.
PEZA and other investment promotion agencies can capture business from these MNCs by promoting their economic zones’ strategic locations, thriving business ecosystems, and the fiscal incentives package on offer under the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy regime.
Mr. Panga also sees proximity to Taiwan as one of the reasons why the Philippines could be a beneficiary of the Taiwan+1 Strategy and New Southbound Policy.
“With our bigger landmass and natural and human resources, the Philippines can be an ideal alternative site for Taiwan manufacturing,” he said. — Justine Irish D. Tabile