Taiwan and Philippines to benefit from FTA, TIER president says
The China Post, 1 October 2005
Taiwan and Philippines to benefit from FTA, TIER president says
By William C. Pao
Taiwan and the Philippines can benefit from a free trade agreement that is currently being negotiated by both countries, as it would help boost two-way trade and encourage more investments from the Taiwanese, said David Hong, president of Taiwan Institute of Economic Research (TIER), yesterday.
Hong made the remarks at a panel discussion about prospects of the Philippine economy organized by the Manila Economic and Cultural Office (MECO) in Taipei.
The TIER president cited Taiwan’s signing of an FTA with Panama as an example, saying bilateral trade between the island and the Central American nation has increased by as much as 112 percent since the agreement was signed. He said an increase in trade is also expected between Taiwan and Guatemala, another Central American nation with which the Republic of China has signed an FTA.
As Taiwan and the Philippines are both members of the World Trade Organization (WTO), no diplomatic ties are needed for both countries to sign a free trade agreement, he said, adding the establishment of free trade — exchange of products without barriers such as tariffs and quotas — between Taiwan and the Philippines would only lead to a win-win situation for both.
"It would make both markets more accessible to each other, increase investment flow and create stronger incentives for Taiwan companies to do business in the Philippines," he said.
The Philippines is Taiwan’s second closest neighbor after mainland China. But what’s more important, in Hong’s words, is that both countries have developed comparative advantages over the other and could complement each other in goods and services. For example, the Philippines has developed a comparative advantage in the production of electronics — given its lower production and labor cost — and could see exports of IT and electronic parts and components surge if barriers were removed in trade with Taiwan, the world’s third largest IT maker.
"Taiwan is an appropriate candidate to be partner with the Philippines in a free trade agreement," he said.
Hong’s remarks met positive response from panelists at yesterday’s discussion. Bernardo M. Villegas, senior vice president of the Philippine University of Asia and the Pacific and main speaker at yesterday’s event, cited various Philippine industries that are ideal for Taiwan-Philippines join ventures. These include the food, telecom, electronics, logistics, health, metals, infrastructure and entertainment industries.
Specifically, Villegas mentioned the entertainment and health industries as those with bigger business potential for the Taiwanese. Born with an interest in singing, acting and other performing arts, Filipinos are among the best entertainers in Asia, if not in the world. In fact, Villegas said Disneyland Hong Kong had recruited 500 Filipinos to entertain the great number of tourists at the theme park. A joint venture between Taiwan movie production companies and Filipino talents would be a force to be reckoned with, he said.
Meanwhile, the Philippines is seeking to develop a medical tourism industry, like that of Thailand, in which tourists from the country’s wealthier North Asian neighbors such as Taiwan and Japan may check in to a local hospital and get an executive check-up at a cost about a tenth of what they have to pay in their home countries, Villegas said. With a more advanced medical industry, Taiwan can help the Philippines in this regard, he said.
Speaking on the future of the Philippine economy, Villegas said economic growth would continue to be in the 4.6 to 5.5 percent range from now till 2010, despite political turbulence and instability that sometimes roils the nation. He said the Filipinos are some of the most resilient people in the world when it comes to crises, as demonstrated by the fact that the country’s economic growth had beaten expectations even in the wake of the Asian Financial Crisis of the late 1990s and the ravages of the severe acute respiratory syndrome.
Still, there are internal and external factors that may hamper the country’s growth, he said. These factors include changes in the U.S. and Chinese economies — which the Philippines’ export sector relies heavily upon — the high energy cost, political gridlock and the specter of terrorism.
The panel discussion, moderated by Julius Caesar Parrenas, senior advisor to the chairman of Chinatrust Financial Holding Co., was sponsored by MECO to help Taiwan people better understand the Philippines’ economy. Panelists included Darson Chiu, TIER assistant research fellow; Clement Yang, chairman of Chinese-Philippine Business Council; and Wu Hsin-hsing, representative of Taipei Economic and Cultural Office in Manila.
