Despite political woes, Southeast Asian state seen offering much
2005-10-01 / Taiwan News, Staff Reporter / By Marie Feliciano

Renowned Philippine economist Bernardo Villegas speaks at a panel discussion organized by the Manila Economic and Cultural Office in Taipei yesterday. / Keye Chang, Taiwan News

Taiwan and the Philippines will both reap significant gains from the inking of a bilateral Free Trade Agreement, the president of one of Taiwan's leading economic think tanks said yesterday.

"The positive impact of an FTA is tremendous," David Hong, president of the Taiwan Institute of Economic Research, told a panel discussion on the "Prospects for the Philippine Economy."

The event, which featured renowned Philippine economist Bernardo Villegas as key speaker, was organized by the Manila Economic and Cultural Office in Taipei. The panel was comprised of Julius Caesar Parrenas, senior advisor to the chairman of Chinatrust Financial Holding Co. Ltd.; TIER Assistant Research Fellow Darson Chiu; Clement Yang, chairman of the Chinese-Philippine Business Council; and Wu Hsin-hsing, representative of the Taipei Economic and Cultural Office in Manila. MECO Managing Director Antonio Basilio hosted the event.

"In 2003, Taiwan and Panama signed an FTA. One year after that (pact) was signed, the trade volume (between those two countries) more than doubled, or grew 112 percent," Hong told the panel.

"I trust that Taiwan is an ideal (FTA) partner for the Philippines. Taiwan is one of the top trading countries in the world, and the Philippines has a comparative advantage (when it comes to) labor- and capital-intensive industries."

Free trade is defined as the absence of tariffs and other restrictions on international trade, allowing each country to specialize in the goods that it can produce cheaply and efficiently compared with other countries.

A Philippine-Taiwan FTA, which could also be referred to as an "economic partnership agreement," would be a boon to both countries, said the TIER chief. A study conducted by the institute showed that an FTA with Taiwan would shore up the Philippines' GDP by at least 0.11 percent in the first year, and improve Taiwan's economy by 0.002 percent in the same time, he added.

Bernardo Villegas, senior vice president of the University of Asia and the Pacific, likewise lauded national leaders for pursuing an innovative approach to the advancement of free trade. Both sides would be "skillfully going around" the China issue, Villegas noted, by building export processing zones or free trade zones that would be integrated into the Taiwan and Philippines' "super corridors."

"(Those) free trade zones (could be in) Kaohsiung, (the Philippines') Subic and Clark, and even agro-processing zones in Tuguegarao and Laoag (in northern Philippines)," Villegas said.

"(You could have similar zones) in Taiwan's famous aquaculture or agricultural zones."

Yesterday, Taiwan and the Philippines entered into a memorandum of understanding that sought to facilitate greater cooperation in the fields of agriculture and aquaculture.

"(This would facilitate) the transfer of agriculture and fishery technologies from Taiwan to the Philippines," Villegas said.

Advancing free trade between Taiwan and the Philippines will also encourage Taiwanese manufacturers to pump in much-needed capital into the Southeast Asian nation. According to TECO Representative Wu Hsin-hsing, Taiwanese enterprises invested a total of US$1.3 billion in the Philippines - a tiny sum compared to the amount of Taiwanese capital that ended up in China (US$100 billion), Vietnam (US$11 billion), Indonesia (US$11 billion), and Malaysia (US$9.3 billion).

Astute Taiwanese entrepreneurs should not ignore potentially plum investment opportunities in the Philippines, Villegas said.

"In a less than bullish environment over the next four to five years, there will still be significant profits to be made in food, fashion, and furniture; tourism, telecom, and transport; logistics, IT-enabled services and education; health, wellness, and beauty; medium-cost housing and retirement villages; and mining and agribusiness," the economist said in a paper that he prepared for the discussion.

"Don't count the Philippines out because of the recent political scandals ... the usual flexibility and resilience of Filipinos will prevent a collapse of the economy. Investors and creditors are well advised to disregard the daily fare of political scandals and squabblings, and focus more on the opportunities of doing business in the Philippines."