By Ma. Stella F. Arnaldo @Pulitika2010 / Special to the BusinessMirror
A CHINESE firm is keen on investing in the Philippines, following the thawing of previously icy diplomatic ties between Manila and Beijing.
In a news statement, the Department of Tourism (DOT) said Bai Fan, CFO of the Beijing Tourism Group Co. Ltd. (BTG), expressed the company’s intent to invest in the Subic Bay free-port zone. “Subic has many beautiful types of scenery and has a lot of potential to the market, and it is also close to Manila. I think this is the best time to invest in the Philippines, since you have good relationship with China,” Fan said. The DOT did not say, however, in what area of the tourism industry BTG intends to sink in its money.
The new Chinese investment was revealed on the heels of an agreement signed between the DOT and the China National Tourism Administration of Beijing to implement a tourism cooperation program from 2017 to 2022. The agreement includes, among others, a framework to encourage investments in tourism infrastructure, and a scheme to increase tourism traffic in both countries. (See, “PHL, China ink tourism cooperation agreement,” in the BusinessMirror, October 20, 2016.)
BTG is a holding firm based in Beijing that operates hotels, restaurants, travel agencies and other tourism-related enterprises, as well as catering, entertainment, department stores and shopping malls, through several subsidiaries.
According to its web site, the company was founded in 1998 and, since then, has grown to be one of China’s top 10 tourism companies, and ranks among the country’s top 500 firms. A budget hotel subsidiary, the Home Inns Group, is listed on the Nasdaq stock exchange in New York.
BTG was among the Chinese companies that met with Tourism Secretary Wanda Corazon T. Teo on Thursday. The DOT chief was part of the official delegation of President Duterte on his first state visit to China. In their meeting, Teo highlighted investment opportunities in the Philippines’s fast-growing tourism sector, especially in the hotel sector. She said the Philippines would also welcome Chinese investments in infrastructure and aviation.
Teo pointed out that the Philippines will need over 100,000 rooms, especially in the four- and five-star categories, as the DOT targets to increase tourist arrivals to 12 million by the end of President Duterte’s term in 2022.
“We encourage you to invest in the Philippines now, as our country and China strengthen our bilateral trade and business relations,” she said, adding that the Philippines “enjoys the highest growth rate in international arrivals in Southeast Asia.”
In the same meeting, Tourism Infrastructure and Enterprise Zone Authority (Tieza) Chief Operating Officer lawyer Guiller Asido discussed fiscal incentives available to tourism zone investors.
“We are offering a tax holiday for six years to investors, as well as tax exemption on equipment that you will bring in,” he said. Formerly known as the Philippine Tourism Authority, Tieza is a unit of the DOT tasked to “develop, manage and supervise tourism-infrastructure projects in the country,” as well as set up tourism economic zones.
The DOT secretary also encouraged the Chinese investors to consider other destinations in the Philippines, such as Samal Island in Davao; Bataan; Bohol; and Siargao in Surigao del Norte.
According to the Bangko Sentral ng Pilipinas, net foreign direct investment (FDI) in accommodation and food-service activities dipped to $4.03 million in 2015, down 72 percent from 2014. From January to July 2016, however, investment in the sector hit $96.7 million, a leap of 2,302 percent from the same period in 2015.
Net FDI from China slumped to $500,000 in 2015, an almost 99-percent drop from $41.38 million in 2014. In the first half of 2016, net FDI from China jumped by 2,400 percent to $3.3 million.
Chinese investments in the Philippines hotel sector include Jin Jiang Inn, a budget- hotel brand in mainland China, through Double Dragon Properties of Mang Inasal Founder Injap Sia and Oishi snacks owner Carlos Chan. Also, Fort Ilocandia and Resort Casino and the Fontana Hot Springs Leisure Park are owned by Macau-based casino junket operator Jack Lam’s Jimei Group. The City of Dreams Manila was set up by Macau-based gaming firm Melco Crown Entertainment, coowned by Hong Kong’s Lawrence Ho and Australia’s James Packer.
The DOT said it is aiming to attract 2 million Chinese to travel to the Philippines every year, following the normalization of diplomatic ties between Manila and Beijing.
At the same meeting, the Chinese participants also disclosed that China Airlines plans to add one flight between Beijing and Manila due to the increasing demand from Chinese travelers. On the signing of the tourism cooperation pact, Teo said: “Doors to more opportunities for cooperation and capacity building between Manila and Beijing are now opulently wide.”
She added: “With the signing of the memorandum of understanding, we are assured of better market access, free flow of trade and people, and exchanges of best practices [in tourism].” She said this would certainly play a “crucial role for tourism to contribute significantly to regional economic growth, as well as pave the road toward the integration of Asean and realization of an open, dynamic and resilient Asean community.”
The Asean is composed of Brunei Darussalam, Myanmar, Cambodia, Indonesia, Lao PDR, Malaysia, Philippines, Singapore, Thailand and Vietnam. The regional group has a free-trade agreement with China, which was signed in November 2002.