• H.E. Michel Parys – Belgium

•H.E. Franz-Michael Mellbin – Denmark

• H.E. Alain Gaschen – Switzerland

• H.E. Michèle Boccoz – France

• H.E Christian Lyster – Norway

• Mr. Jarostaw Szczepankiewicz – Poland

• Mr. Philipp Dupuis – Delegation of the European Union to the Philippines

• Ms. Ana Florentino – Royal Norwegian Embassy Manila

Lars Wittig – ECCP President (Country Manager, Regus & Spaces by IWG) members of the diplomatic corps, ECCP members, industry leaders, distinguished guests, ladies and gentlemen—good afternoon.

Thanks ECCP for inviting me to speak at your membership luncheon today. That this meeting is being held face-to-face indicates our conviction that we are now exiting the pandemic era.

As with many other countries, the Philippines’ recovery journey has not been easy. We still grapple with the pandemic’s lingering effects on particular industries and disruptions in the global supply chains.

But our country’s strong macroeconomic fundamentals and well-crafted structural reforms have cushioned the shocks of the pandemic on us. The Philippine economy ended 2022 with a 7.6% full-year growth, the fastest growth over four decades.

We in the Philippine government continue to nurture a more enabling business environment in the country. We have passed several game-changing economic reforms. The recently approved 2022 Strategic Investment Priority Plan (SIPP) lists activities eligible for tax breaks and other incentives under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act. We have also amended our Public Service Act, the Foreign Investments Act, and the Retail Trade Liberalization Act to ease restrictions on foreign ownership of certain businesses and facilitate the entry foreign investment.

Recently, our Department of Energy has also issued an amendment to the Renewable Energy Act IRR allowing up to 100% foreign equity ownership in solar, wind, and tidal energy projects. This liberalization of ownership has expedited the decisions of foreign companies in invest in the Philippine renewable energy sector.

To further promote ease of doing business in the country, President Marcos Jr. is set to sign an Executive Order mandating the creation of green lanes that will fast-track and streamline government processes that will facilitate strategic investments. The Department of Trade and Investment’s Board of Investments (BOI) will be the single point of entry for investors endorsed as nationally significant or highly desirable projects.

To bring focus and unity of action, we recently launched the Philippine Development Plan 2023-2028. It serves as a blueprint for the country’s economic and social transformation.

Looking ahead, the Philippines is poised to join the ranks of countries in the Asia-Pacific region with a GDP exceeding one trillion US dollars. This will transform the structure of the Philippine economy, substantially expanding the size of the domestic consumer market. As European businesses build up their local presence in a wide range of manufacturing and service industries, this graduation to the trillion-dollar league will also help attract more foreign direct investment flows into the Philippines.

In our drive to further expand the country’s market reach, we have adopted a more deliberate approach toward free trade agreements in our bilateral and regional engagements. Thus, we continue to push for the immediate ratification of the Regional Comprehensive Economic Partnership Agreement (RCEP) and other trade agreements. I was in the session of the Philippine Senate yesterday afternoon during which the Senate President himself delivered his sponsorship speech for the ratification of RCEP.

We have already concluded FTA negotiations with South Korea and will launch negotiations for a comprehensive economic partnership agreement with the United Arab Emirates and a potential preferential trade agreement with India. Similarly, the Philippines has expressed interest in acceding to the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership. Moreover, we are an active partner in the US-led Indo-Pacific Economic Framework.

The substantial contribution of European businesses to the Philippine economy is self-evident. Historically, the EU has been a significant trading partner of the Philippines and it is now ranked as the 4th largest trading partner of the country. The EU is also a major investment partner of the Philippines. Over the years, the EU has been one of the largest foreign investors to the Philippines, putting in over PHP 102 billion or around EUR 2 billion.

We thank the European Chamber of Commerce of the Philippines for your unwavering support for promoting Philippine-EU economic relations. We see ECCP as a key partner in lobbying for the Philippines’ retention the EU-GSP+ beyond 2023, as well as the resumption of the PH-EU FTA negotiations.

The Philippines has been the only ASEAN country to benefit from the EU-GSP+ since 2014. Philippine exports to the EU rose from EUR 5.3 billion in 2014 under the standard GSP to EUR 7.8 billion in 2021. The current GSP scheme, set to expire on December 2023, benefits Philippine exporters and EU importers alike.

Through the years, the Philippines has engaged the EU and completed four GSP+ monitoring dialogue cycles that review the country’s compliance with the 27 conventions covered under GSP+.

EU-GSP+

We at DTI are dedicated to directly engaging the EU’s core institutions—the European Commission, European Council, and Members of the European Parliament—to ensure our GSP+ status and to reapply in the next GSP scheme.

Testament to the Philippines’ high degree of openness and cooperation with the EU are the following undertakings over the past six months:

• DTI Technical Mission in Brussels on EU-GSP+ (27 August to 02 September 2022)
• DTI GSP+ High-Level Mission in Brussels on EU-GSP+ (27 to 28 October 2022)
• PH-EU Interparliamentary Meeting (27 October 2022)
• PH-EU Partnership and Cooperation Agreement (PH-EU PCA) 2nd Sub-Committee Meetings (October-November)

Through the One Country, One Voice (OCOV) mechanism, DTI has sought industries’ support for our GSP+ re-application. We requested trade and industry associations for testimonials and success stories. We also used our bilateral engagements and mechanisms with individual member states to obtain their support for the continuation of our GSP+ and re-application for the next GSP scheme.

Indeed, we set our sights on resuming PH-EU FTA negotiations. It is an essential mechanism in the Philippines’ relationship with the EU. It is consistent with the EU’s Indo-Pacific Strategy. And it supports the EU’s goal to diversify suppliers and enhance its cooperation on supply chains in the ASEAN region.

In addition, the timely conclusion of the PH-EU FTA negotiations will further expand the scope of market access for goods, services, and investments. To be included are other fields that would facilitate trade between our economies. Most importantly, this will increase and facilitate commercial exchanges among our economies’ business sectors.

It is one of the reasons why we appreciate and support the strong call on EU from the private sector to resume the FTA negotiations with the Philippines. A survey conducted by the German Philippine Chamber of Commerce in 2020 showed that 83% of German companies deem the resumption of the Philippine-EU FTA highly important. Many are set to expand their current investment.

The DTI would appreciate ECCP’s unified effort in pushing for the resumption of the FTA negotiations by conducting similar surveys supporting the PH-EU FTA negotiations. We request that you assist us in disseminating information to key European companies because we need their support to push for the conclusion of the FTA. It can be argued that as the Philippines implements existing FTAs and concludes new agreements, products from Europe will be competitively disadvantaged as they enter the PH market.

Cooperation Mechanisms

Complementing our engagements with the EU as a bloc and Europe as a region, DTI is also engaging individual member states with the EU through a Joint Economic Commission (or JEC). The JEC is DTI’s formal mechanism to discuss trade, investment, and economic cooperation with our European trading partners. To date, we have established JECs and cooperation mechanisms with Austria, Czech R, Hungary, Germany, and Turkey. Establishing JECs with Spain, Netherlands, Sweden, and Italy is also part of DTI’s regional priorities.

Apart from strengthening bilateral relations with individual EU member states through the JECs, DTI has enhanced dialogue with the EU through the Partnership Cooperation Agreement.

PH-EFTA FTA

At the same time, we have entered into the Philippines-EFTA Free Trade Agreement. EFTA consists of Switzerland, Norway, Iceland, and Liechtenstein. This FTA with EFTA is part of our government’s efforts to tap non-traditional markets with high potential for growth in trade and investments. It forms part of the broader strategy to gain a stronger foothold in the European market. We enjoin ECCP members to take advantage of this FTA.

Since the FTA entered into force on 1 June 2018, the Philippines has been able to turn around its perennial trade deficit with EFTA. In 2019, the Philippines posted a trade surplus of USD 47 million. This surplus grew to USD 101 million in 2020 and USD 130 million in 2021 despite the COVID-19 pandemic. Total trade between the Philippines and EFTA also increased by 2.4% from USD 802 million in 2018 to USD 821 million in 2019. This improved by 16% from USD 822 million in 2020 to USD 954 million in 2021.

With the PH-EFTA FTA in place, in 2020, around EUR 25 million worth of Philippine agricultural and industrial products were able to enter the EFTA market with reduced or zero tariff rates. These Philippine products include tunas, desiccated coconuts, fruits and nuts, processed foods and other food preparations, pasta, malt products, vacuum cleaners, new pneumatic tires, and hairdressing apparatus.

We are optimistic that these figures will increase further. The EFTA side is currently working on a PH-EFTA FTA online web tool, which is expected to be launched this year. The DTI is open to collaboration with ECCP members to further promote the PH-EFTA FTA to the Philippine and European business communities.

Preference utilization rates for the Philippines and the EFTA member states in 2020 were reported at 31% and 30%, respectively. There is much room for improvement.

We celebrate the Philippines’ longstanding partnership with the private sector, together with ECCP and the businesses here today. These partnerships with the private sector are a centerpiece of the transformation of both our economies. It is an engagement that must not only be preserved but also strengthened and expanded.

Potential Areas for Cooperation and Joint Ventures

We at DTI regard ECCP as essential in supporting the Department’s Industrialization strategy. We are keen to facilitate our technical cooperation in areas that would benefit both the Philippines and the EU. We will be glad to hear more from the EU on its best practices. We are willing to collaborate for potential joint ventures and partnerships in critical areas of industrial development:

• Green Economy / Green Metals Processing – The Philippines is transitioning toward an innovative, greener economy. We are taking advantage of the increasing global demand for green metals and catching up with other countries in their production and processing. As the Philippines have a huge potential for green metal production and processing, we can be the EU’s strategic partner in supplying critical minerals required for European electric vehicles and battery production sectors.

Our country has abundant resources of green metals, such as nickel, cobalt, and copper. At the same time, we remain committed to environmental protection and responsible mining to ensure the long-term sustainability of these natural resources.

The Philippines also has a robust regime for strategic trade management, intellectual property protection, and labor protection. Apart from solid competencies in electronics, these strengths could be leveraged to support electric vehicle and battery manufacturing.

The Philippines welcomes EU investments in the country’s mining and downstream processing of minerals. This will contribute to the EU’s collective aspiration to resolve existing challenges in the e-mobility and electronics sector, particularly the long-term supply of the mentioned critical metals.

We are open to arrangements that will result in opportunities for EU companies to invest in the mining and processing our mineral resources. These will help us bring the cost of related finished products using these metals to more sustainable levels.

• Digitalization / IT-BPM – We wish to take this opportunity to draw the attention of European businesses to the Philippines’ globally recognized business process outsourcing (BPO) offerings. In particular, we can further assist in achieving Germany’s digitalization objectives.
• Renewable Energy – The Philippines invites the European companies to participate more in our country’s infrastructure development program, particularly in renewable energy development and e-mobility.

We have a lot going for us: our strategic location, young and capable talent pool, a wealth of natural energy resources (geothermal, natural gas, solar energy, offshore wind resources), and membership in the ASEAN regional economic grouping, and soon RCEP. Given these, we can be the Europe’s partner in achieving a clean and sustainable world. As I said earlier, the Philippines has opened renewal energy projects to 100% ownership of foreign capital.

• Sustainable Trade Initiatives – The Philippines recognizes the EU’s Green Deal package. Green economic development is also embedded in the Philippines’ main socio-economic agenda. Recognizing the EU’s advancement in this field, the Philippines wishes to explore cooperation with the EU to effectively navigate the dynamic landscape of the EU’s Green Deal package.
• Science, technology, and innovation – The DTI is embarking on an industrialization strategy driven by science, technology, and innovation to prepare our country for a better future. The goal is to grow our economy and develop globally competitive and innovative industries that support inclusive growth and quality of life for all Filipinos. DTI will likewise leverage the power of partnerships and collaborations, including with the EU, in developing and implementing its projects and programs.
• Innovation – DTI is building an Industry 4.0 Pilot Factory to host demonstrations and case applications of Industry 4.0 technologies for local enterprises. Siemens, a German company, is one of DTI’s initial partners for this pilot factory.
• Skilled Workforce – The Philippines also hopes to explore further collaboration on the skilled workforce in the EU’s manufacturing sectors. We have a significant pool of available engineers and skilled workers to help plug EU workforce shortages. We have existing hybrid outsourcing models with EU manufacturing companies. These models can be used as a template for assisting EU companies in responding to the challenges brought by the war in Ukraine. These can also address the continuing need to diversify operations and expand markets, particularly in the growth region of ASEAN.
• Defense – The Philippines also continues with the modernization program for all branches of our armed forces. We invite the EU to participate in this program so we will have a broader range of options. We would appreciate it if the EU could invest in some, if not all, of the manufacturing processes and equipment in the Philippines. This will ensure lower acquisition and maintenance costs to more reasonable levels.

In closing, let me reiterate that the Philippines counts on European businesses’ continued support for our re-application in the upcoming renewal of the EU-GSP+ scheme and our advocacy to resume the PH-EU FTA negotiation.

Your business presence here proves that the Philippines stands on sound economic and social reforms. It also attests to the consistency and openness in our engagements with the EU. Both are a solid foundation to expand further and deepen our trade relations.

Again, thank you for this opportunity to address you and exchange ideas on possible further engagements. Together, let us make more and better trade and investment opportunities from the EU happen in the Philippines!

Mabuhay! *

Date of release: 16 February 2023