The government expects foreign direct investments (FDI) to jump to as high as $11 billion this year on the back of robust interest of Chinese investors in the Philippines brought about by improving Manila-Beijing ties.
Board of Investments (BOI) Managing Head and Trade Undersecretary Ceferino S. Rodolfo, in a business-matching forum arranged for Filipino and Chinese businesses in Makati Shangri-La on Wednesday, said this will help sustain the expansion of one of the best-performing economies in the Asia, as FDI have been “driving part of the Philippines’s economic growth”.
“In 2010 FDI in the Philippines was just at about $1 billion. In 2016 we’ve already increased to $7.9 billion; and for this year, we’re foreseeing we can even hit between $10 billion to $11 billion due to the strong interest of China in the Philippines,” Rodolfo told local businesses and Guangxi-based firms during the forum.
The first quarter of the year saw a flurry of massive investments from Chinese businesses into the country, notably in infrastructure.
In March five Chinese firms submitted letters of intent to the BOI to pour in as much as $10 billion in various projects—from aerospace parts manufacturing, oil storage terminal and refinery to a solid waste-gasification project.
During the first meeting of Philippines-China Joint Commission on Economic and Trade Cooperation (JCTEC) under the Duterte administration, the Chinese government identified three infrastructure projects that will be funded by a $9-billion credit facility extended to the Philippine government last year. These projects have a combined cost of at least $1.7 billion.
The JCTEC, which did not convene during the Aquino administration, serves as the official bilateral mechanism for the discussion of trade, investments and economic cooperation between Manila and Beijing.
During that meeting, Trade Secretary Ramon M. Lopez and Chinese Minister for Commerce Zhong Shan signed a six-year development program for economic and trade cooperation. This program will serve as the underlying framework for strengthening economic framework during the Duterte administration.
Rodolfo is pushing for the Chinese to look at the Philippines as a manufacturing hub, especially its export-oriented companies.
“The Philippines can serve as an alternative location for your manufacturing facilities, especially if you’re export oriented because of our very good market access to the likes of the United States and the European Union,” the government official added.
Rodolfo claims that with the EU not yet revoking the generalized system of preferences plus (EU-GSP+) trade privileges of the Philippines and the US flagging trade-remedy measures to almost all the country’s rival neighbors, the Philippines is in a prime spot to be an export base for goods going to the US and EU markets.
“China is being targeted by trade remedy measures due to its strong exports. A bicycle maker in China that wants to export to Europe can be slapped duties of about 65 percent, while bicycles produced here are charged zero-percent duty if it goes to Europe. We encourage you to locate your production facilities here,” Rodolfo said. The Philippines can also serve as China’s jump-off point for other markets in the region in light of the progress in the negotiations for the Regional Comprehensive Economic Partnership agreement.
First quarter Philippine exports to China jumped by 29.6 percent, while those to Hong Kong saw an increase of 41.5 percent. Together, these account for a quarter of the Philippines’s total exports.
China’s exports to the Philippines during the same period, on the other hand, increased by 25 percent. China and Hong Kong have a 20-percent share in the country’s total import bill.