Modern solutions provide the Philippines an opportunity to catch up with the rest of the world, given the country’s young workforce that is technology-driven and digitally-skilled.
Trade Secretary Alfredo Pascual expressed confidence the digital savvy Filipinos, the youngest in Asia, with a median age of 25, would propel the country into the upper-middle-income status soon.
“We started too late in the heavy industries. We may now have a chance to catch up in the creating a dynamic digital ecosystem. This is where we can leapfrog to advance our economy. There is a big opportunity for the young generation who are digitally-skilled and can easily adapt to the changing global value chain,” he said.
He said disruptive technologies reconfigured the global value chain, and a very important aspect of this is the shift in political forces.
Pascual said recent global events had major countries rethink their plans for food and political stability, “where major countries want to be assured of their major sources of supply by diversifying sources.”
“And we can be favored in that sense because of our strategic location, the availability of a large number of skilled manpower and the mobility we can give to companies that will set up here, given our geographical location.”
With a growing number of allies, the Philippines expects to be digitally connected to three of the world’s most dynamic economies. The digital ties to the US is of great significance to the Philippines and with the construction of an undersea cable linking the EU and Japan, the Philippines, as the EU suggested, may ride the connection.
No less than EU President Ursula con der Leyen offered the Philippines the opportunity to be digitally-linked with the EU and Japan, said Pascual.
“And this will give us direct linkage to Europe. From the Philippines, we can connect to the other ASEAN countries. This means there is big opportunity for the young generation who are digital-savvy and this will support the digital economy that we want to grow in the Philippines,” he said.
Trade agreements
The transformative journey to digitalization should be supported with bilateral agreements.
Pascual said the Philippines has great expectations to move forward with the proposed resumption of free trade talks with the EU.
A free trade agreement with the EU is a very important deal that will provide the continuity of preferential trade for the country’s micro, small and medium enterprises.
With the country’s growth trajectory towards reaching upper middle-income status, it is important for the Philippines and the EU to resume FTA negotiations. The FTA will serve as a more permanent basis for the Philippines’ economic relations with the EU beyond the time-bound GSP+ (Generalized System of Preferences Plus) coverage the Philippines enjoys as a lower middle-income country.
The Philippines is also set to formalize the Philippines-Korea Free Trade Agreement at the sidelines of the ASEAN Summit in Jakarta, Indonesia in September 2023.
So far, the Philippines has bilateral trade agreements with Japan under the Philippine-Japan Economic Partnership Agreement and with the four European countries under the Philippines- European Free Trade Association FTA.
The Philippines is also a participant in regional trade agreements such as the ASEAN Trade in Goods Agreement and the Regional Cooperation Economic Partnership . The country is also expected to sign another regional trade pact—the ASEAN-New Zealand FTA.
Simultaneous efforts are also being exerted to partner with the UAE as the Philippines works out a comprehensive economic partnership with the Middle East country.
Investments
The DTI is proactively seeking new investments to support the country’s bid to be the preferred investment destination of global companies.
In the first year of the Marcos administration, the DTI brokered investments amounting to $71 billion including new leads from the recent trade mission to Europe and Malaysia.
“Priority in our presidential trips, as we are trying to build the pipeline of investments into the Philippines, is renewable energy. It represents a sector that has the greatest interest because of the factors that are pushing us towards renewable energy. The Philippines has to have a reliable, indigenous source of energy so that we’re not dependent on oil or on imported coal,” Pascual said.
“The DTI noted a confluence of objectives that makes it auspicious to shift to renewable power. Europe is going net zero on carbon emission. Japan is also net zero carbon emission. And in order to export our products to them, we need to produce our products using renewable energy. There is that kind of push for us to go renewable,” he said.
Pascual cited Europe’s quick pivot to RE after it had problems with the supply of natural gas from from Russia.
Data from the Board of Investments show that the bulk of approved investments in the first semester are RE projects. RE has increasingly dominated the investment pledges at the BOI and accounted for 76.83 percent of total investments in the first half, with combined value of P536.5 billion from 30 solar, wind, hydro and biomass projects.
It also helped that the Department of Energy revised the foreign investment negative list and opened RE to full foreign ownership.
Meanwhile, Executive Order No. 18 created the green lanes for strategic investments where big ticket investments like RE projects are prioritized by giving them shorter lead time to build the project.
“The EO is meant to expedite, streamline and automate government approval and registration of priority and strategic investments,” Pascual said.
There are now 15 investment projects enrolled in the Green Lane, and more projects are seeking the same incentives under EO 18.