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A golden opportunity for the Philippines

LAST Tuesday, we had the privilege to hear the views on economic and investment prospects in the Philippines from the leaders of the European Chamber of Commerce in the Philippines (ECCP), President Paulo Duarte and Executive Director Florian Gottein. The ECCP is one of the oldest, largest and most influential business organizations in the Philippines and exercises a great deal of influence in the EU as well, so what it has to say matters. Our takeaway from the ECCP's message is that the Philippines has a profound, and perhaps unprecedented opportunity to ramp up economic growth and development beyond anyone's wildest expectations, provided our policymakers recognize that opportunity and move quickly to forge the deeper partnership Europe is offering.

(From left) European Chamber of Commerce of the Philippines (ECCP) President Paulo Duarte, The Manila Times (TMT) President and Chief Operating Officer (COO) Blanca Mercado and ECCP Executive Director Florian Gottein sign a memorandum of agreement (MoA) at the Times' office in Intramuros, Manila, on Tuesday, Aug. 22, 2023. Under the MoA, the ECCP will write a weekly column in the paper's business section. PHOTO BY MIKE ALQUINTO(From left) European Chamber of Commerce of the Philippines (ECCP) President Paulo Duarte, The Manila Times (TMT) President and Chief Operating Officer (COO) Blanca Mercado and ECCP Executive Director Florian Gottein sign a memorandum of agreement (MoA) at the Times' office in Intramuros, Manila, on Tuesday, Aug. 22, 2023. Under the MoA, the ECCP will write a weekly column in the paper's business section. PHOTO BY MIKE ALQUINTO

(From left) European Chamber of Commerce of the Philippines (ECCP) President Paulo Duarte, The Manila Times (TMT) President and Chief Operating Officer (COO) Blanca Mercado and ECCP Executive Director Florian Gottein sign a memorandum of agreement (MoA) at the Times’ office in Intramuros, Manila, on Tuesday, Aug. 22, 2023. Under the MoA, the ECCP will write a weekly column in the paper’s business section. PHOTO BY MIKE ALQUINTO

As Duarte and Gottein explained it, the opportunity is a product of favorable European impressions of the Philippines, and a number of global and regional conditions that are not necessarily favorable in a broader sense but happen to work to the Philippines' advantage.

Many of the positive attributes of the country as seen by Europe are things we have heard before. The Philippines is a large market, the second-largest behind Indonesia in the Association of Southeast Asian Nations. The economy is sound; the lower-than-expected GDP growth of 4.3 percent in the second quarter of the year, while perhaps disappointing in some respects, was nevertheless among the highest in the region. We have a young, technology-savvy population. And the Philippines is viewed as already being strong in a couple of areas of interest to European investors, such as the business process outsourcing (BPO) industry and electronics manufacturing.

However, the ECCP leaders also shared some impressions that we have frankly not heard for a long time. EU business and political leaders are evidently quite impressed with President Ferdinand Marcos Jr. and his administration, citing efforts made by the government to open up key sectors such as renewable energy and make some progress on untangling the Philippines' legendary red tape. The three-week investment roadshow to the EU carried out by the Department of Trade and Industry Secretary Alfredo Pascual earlier in the year was apparently a great hit. It was because of this, as well as the engagement of President Marcos himself, that European Commission President Ursula von der Leyen recently made the first-ever visit to the Philippines by a leader of the EU.

In terms of external factors favoring the Philippines, the country has appeared on the radar of EU business interests because of the global trend of “de-risking” or “decoupling,” where businesses operating on a multinational level are seeking to diversify and be less reliant on single and perhaps problematic economic and political environments. The name “China” was not mentioned in this explanation, but anyone assuming that it is one of the “problematic” environments is most likely correct. At the same time this is happening, other parts of our region that might benefit from investors seeking greener pastures are becoming problematic in their own ways. Rising labor costs in Vietnam, political uncertainty in Thailand, and contentious trade issues in Indonesia and Malaysia are giving the EU reasons to take a second look at the Philippines, which is almost virgin territory; despite otherwise good relations, only about 5 percent of the EU's investment in the Asean region can be found here now. The ECCP leadership would like that to change, and they have an enthusiastic belief that it soon will.

Of course, much of that depends on how the Philippines responds to the opportunity. Partly stirred by the efforts of the Marcos administration to reach out to Europe and von der Leyen's visit, and partly by the imminent expiry of the Philippines' GSP+ (Generalized Scheme of Preferences) tariff privileges with the EU in 2027, long-dormant talks toward a Philippine-EU free trade agreement (FTA) have restarted. If these can be concluded relatively quickly — within a couple of years — the Philippines could very well go from a minor trading economy to a leader in Asia almost overnight. And the FTA does not mean opportunities in the trade of goods alone; it will include trade in services, technology transfer, and technical and institutional assistance as well.

Having already invested much time and energy in building good relations with the EU, our leaders surely appreciate the importance of the FTA talks. But the possible rewards for the Philippines are so great that it certainly doesn't hurt to remind them.

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Credit belongs to : www.manilatimes.net

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