Business leaders from Japan and the Philippines, my fellow workers in government—a pleasant afternoon to all.
As President Marcos has highlighted on several occasions, the Philippines is on a path to solid recovery from the COVID-19 pandemic. Our country is moving toward robust economic expansion. Vital to our government’s efforts is engaging investors from the private sector—like many of you—so we may encourage you to consider and find the Philippines to be a place where your businesses can thrive. For a long time, our economic growth has been consumer-driven. Now, our goal is to achieve an investment-led economy that brings shared prosperity to all Filipinos. We seek to harness foreign direct investments as drivers of export growth, sources of vital technology, and critical enablers of the country’s long-term climate action.
To achieve our mission, we have set out on a path to industrialization. We are building modern and dynamic industries driven by science, technology, and innovation (STI). We are keen on investments that bring in advancements in STI.
With STI, Philippine industries can become more productive, and can better compete in the market, be it domestic or global. STI enables improved efficiency, new industries, and new goods and services. In turn, these new industries create higher quality, more stable, and better-paying jobs for our people. Globally competitive and innovative industries support our country’s inclusive growth, improve its environmental sustainability, and generate business and livelihood opportunities.
To a great extent, Japan has helped boost business confidence and economic activity in the Philippines. Our two countries have had strong investment and trade relations. In 2021, Japan was the Philippines’ second major trading partner. In the same year, it was also our third export market and second import supplier.
Our trade in goods with Japan would not have been actualized without science, technology, and innovation. Among the Philippines’ top imports from Japan in 2021 were digital monolithic integrated circuits; and materials, accessories, and supplies for the manufacture of electrical and electronic machinery, equipment, and parts. In the same year, Japan was a destination for the Philippines’ ignition wiring sets, other wiring sets of a kind used in vehicles, aircraft, and ships; and digital monolithic integrated circuits.
Approved investments from Japan in 2021 included manufacturing, real estate, construction, wholesale and retail trade; repair of motor vehicles, and motorcycles.
Let me take this opportunity to share with you our priority industries. We hope that you will consider these as prospective investments as the Philippines leverages on Industry 4.0 technologies, and the existing industrial strengths and competencies of our businesses and people, we see four clusters as sources of growth:
1. The Industrial, Manufacturing and Transport (IMT) cluster;
2. The Technology, Media and Telecommunication (TMT) cluster;
3. The Health and Life Science (HLS) cluster; and
4. The Modern Basic Needs and Resilient Economy cluster.
The COVID-19 pandemic, the emergence of disruptive technologies, and the current geopolitical developments are reconfiguring the global value chains of the first three clusters that I enumerated. This situation is creating opportunities for investments in the Philippines. Because this reconfiguration will open up opportunities for Philippine businesses to participate in the changing global value chains of the first three industry clusters.
In the Industrial, Manufacturing, and Transport cluster, we are keen on investments in aerospace, automotive, semiconductors, and electronics. Aerospace is one of the Philippines’ strong suits. Our country hosts the number one aircraft interiors company in the world, that’s Collins Aerospace. We also host the world’s leading aircraft maintenance, repair, and overhaul service company, the Lufthansa Technik. It has just expanded recently and is planning to further introduce additional facilities in their location in Metro Manila.
Our country is also looking to enter the global electric vehicle (EV) value chain. Climate change has compelled the shift to green products such as electric vehicles. The Philippines welcomes foreign investments that bring EV technologies. EV battery manufacturing, for example, can make use of our abundant mineral ore reserves of green metals such as nickel, copper, and cobalt. We prefer that these ores be processed in the Philippines and values added in them before we export semi-finished or finished products.
In the Technology, Media and Telecommunication cluster, we aim to engage Japanese investors in the development of our digital economy. We encourage you to consider investments in sub-sectors such as IT-BPM services or BPOs, telecommunications and digital technologies, data centers, and hyperscalers.
For the third cluster, the Health and Life Sciences, our goal is to enable the cluster to reinforce a strategic security role while it creates opportunities for our country. We encourage investments in pharmaceutical products, medical devices including personal protective equipment, and health management systems.
Finally, the Modern Basic Needs and a Resilient Economy cluster. This cluster responds to Filipino consumers’ needs for food and other basic goods, among others. With food security being vital to sustainable and inclusive economic growth, we invite investments in agriculture and industries that will process our agricultural outputs, food processing, agribusiness, and aquaculture.
As we forge commitments in our priority industries, we want to assure foreign investors and businesses that the Philippines will continue to nurture an enabling environment. The Corporate Recovery and Tax Incentives for Enterprises Act or CREATE offers more attractive and rationalized incentives to foreign investors, and this also offers flexibility that our President can exercise with respect to businesses that we want to attract into the
country for strategic reasons. We have also amended our Public Service Act, our Foreign Investments Act, and Retail Trade Liberalization Act. These changes and amendments ease restrictions on foreign ownership of certain businesses in the country. So, the number of restricted ownerships to foreign investors before has been lifted for industries, so foreigners can now own up to 100% of telecoms, ships, airports, subways, expressways and etc.
As an example, it is full speed ahead for the 147-kilometer commuter rail that will connect our technology industrial sites in CALABARZON south of Manila to Clark Airport north of Manila. The rail spans close to double the driving route from Tokyo to Narita International Airport. Also, among the big-ticket projects that are being completed are close-to-74- kilometer Metro Cebu Expressway, a public-private partnership (PPP) project; and Iloilo- Capiz-Aklan Expressway. Both connect places and communities in the middle or central Philippines in the Visayas.
Public-private partnerships or PPPs—with their potential to drive infrastructure expansion and innovation, as President Marcos Jr. once put it —are also paving the way for our plans in aviation, railroad, and maritime transport. We are looking for investments so that we can transform our transportation sector to be at par with global standards.
PPPs are further instrumental in complementing our Official Development Assistance (ODA) projects in public works and highways. Japan has been a major source for ODA (Official Development Assistance Financing), but with PPP, we can do more. BBM (Build, Better, More). These PPP projects range from expressways and road networks, to inter- island bridges, to disaster preparedness and risk mitigation projects.
In terms of digital infrastructure to promote investments, our government is leading in our Digital Cities Program. The initiative aims to set up IT-business process management locators in 31 cities throughout the country by 2025. We are aligning similar efforts towards the digital transformation of government, which should help in robust data systems for programming, efficient service delivery, and more transparency in transactions with the government.
Digital transformation is also vital in our strategy to upgrade, upskill, and upsize micro, small, and medium enterprises (MSMEs). With digital mindsets and technologies, MSMEs can operate efficiently, reduce costs, reach bigger markets, and earn efficient profits. Our government agencies are also working together to launch an e-commerce platform that will enable small businesses to put up virtual or online storefronts and transact digitally.
That’s the very brief overview of what’s in store for our prospective foreign investors and for our existing investors who are thinking of expanding their operations in our country.
Thank you very much! *
Date of release: 11 February 2023