“Trade and investments look promising, even amid the pandemic.”
“Trade and investments look promising, even amid the pandemic.”
Sustainable recovery was a shared objective among the country’s top thought leaders from the government, the private sector, and the academe.
In the recently held 2021 Pilipinas Conference of the Stratbase ADR Institute, they expressed an honest assessments of the government’s historical performance, the complexities of the current pandemic crisis, and the mistakes and gains, as the context for serious strategic propositions calling for reforms and actions with a long term and global outlook.
In the second session of the conference themed “Philippine Trade Relations in the Pandemic Context: A Part of EU-PH Trade and Sustainability Discussions 2021,” boosting trade relations with the European Union is seen as a great opportunity with the Philippines as the only ASEAN country given trade preference in the EU market to GSP+ (Generalized Scheme of Preference Plus). Under this incentive scheme, the Philippines could enjoy zero duties on its exports to the European Union of products falling under more than 6,000 tariff lines.
Dr. Ana Isabel Sánchez Ruiz, Deputy Head and Head of Political, Press and Information Section, Delegation of the European Union to the Philippines in her statement during the conference said that as the Philippines slowly recovers, foreign investors and entrepreneurs are eager to see substantial growth as in economic reform, further opening to foreign capital, and improvement in the business climate.
“The sobering reality we face now is an opportunity for the Philippines to adopt reforms and policies that will lead the country towards a resilient and sustainable recovery,” Dr. Ruiz said.
According to a published statement of the Department of Trade and Industry (DTI), the Philippines has enjoyed greater market access to the EU that boosted exports. The estimated worth of Philippine products eligible for GSP+ preferences in 2019 amounted to EUR2.7 billion, of which EUR1.95 billion were able to use GSP+ preferences. The top GSP+ exports then included: crude coconut oil, vacuum cleaners, prepared or preserved tunas, spectacle lenses, new pneumatic tires, bicycles, electro-thermic hair dressing apparatus, prepared or preserved pineapples, relays, and activated carbon.
However, Dr. Ruiz sees that “the EU-Philippines trade today is far from its full potential” as trade declined by 17%” compared to that of EU-Vietnam trade which is more than 3 times bigger than EU-Philippine trade and EU-Thailand trade which is 2.5 times bigger even while considering the impact of the pandemic.
Mr. Lars Wittig, President, European Chamber of Commerce in the Philippines (ECCP) for his part sees the Philippines improving when it comes to ease of doing business but lags in terms of attracting FDIs (Foreign Direct Investments). He observed that last year’s FDIs into the Philippines dropped by 24 percent, only 12 percent from European investors, whereas it dropped dramatically more into other ASEAN countries.
He sees that the enactment of the Corporate Recovery and Tax Incentive for Enterprises Act will strongly improve the overriding environment for foreign investors and will help the ECCP promote the Philippines.
Mr. Chris Humphrey, Executive Director, EU-ASEAN Business Council, stated that Europe is a large investor in the region and its countries actually have more FDI stock in the region than any other dialogue partner of ASEAN. Though he expressed concerns about ASEAN not being able to function as a bloc along with other issues such as: non-tariff barriers in the region, the harmonization of standards, simplification and automation of customs procedures, and the review and modernization of ASEAN Trade in Goods agreement, he is optimistic.
“Our members, European companies, still think ASEAN is a great place to invest… The opportunities are massive, the market is massive. Positioned correctly, you should be making sure you are a natural choice for businesses to come and invest in,” Mr. Humphrey said.
He also encouraged pursuing the possibility of an EU-ASEAN Investment Protection Agreement, a region-to-region FTA (Foreign Trade Agreements) and financing assistance for green energy transition from EU lending institutions.
Stratbase ADRi President Prof. Dindo Manhit in his opening statement said, “A global opportunity for the country is borne by strengthening its ties with partners such as the European Union (EU), where the trade gap is narrow while registering a trade surplus during the first nine months of 2021. This means that Philippine exports are competitive enough to be able to gain a foothold in this area.”
“To bounce back more quickly, the Philippines needs to recalibrate its growth trajectory by strengthening cooperation with its long-standing economic partners, including the EU, through trade and investments.”
A pivot to the EU’s member countries as major trading partners and for FDIs looks like a much better strategy than the administration’s preference to China which has proven to be un-reciprocal and even corrosive as we see no clear resolution to Beijing’s expansionist ambitions that now threatens the regions stability.
It’s time to pivot to the EU.