10 June 2019
Published also in Business Mirror
SEOUL—Trade Secretary Ramon M. Lopez highlighted the strong macroeconomic fundamentals, as well as the continuing growth story of the Philippines to South Korean business executives during a high-level roundtable meeting on June 4, 2019.
The trade chief emphasized the opportunities South Korean companies, particularly in the manufacturing industry, may explore when locating and expanding their operations in the country. Lopez underscored the wider market access for companies in the country through the preferential trade agreements the Philippines has with the United States (GSP), European Union (GSP+), as well as with the European Free Trade Association (Efta).
“The Philippines is an ideal geographic base for South Korean manufacturing companies, specifically those focusing on automotive and auto parts, electronics and semiconductors, food processing, agribusiness, and other labor-intensive industries. South Korea is a manufacturing powerhouse and expanding the business operations in the Philippines is a win-win, with businesses having greater market access for their products and being our partners,” Lopez told over 30 South Korean business executives from construction and infrastructure, tool and die, as well as energy industries.
Likewise, the trade chief discussed possible opportunities in the Philippines’s e-vehicle (EV) industry. He cited the tariff modification of EV products under the ASEAN Free Trade Agreement as well the consideration of a target date full EV utilization/registration in the Philippines.
The International Electric Vehicle Association and other companies in the e-vehicle industry in South Korea, such as Hyundai Motor, POSCO E and C, and Phillips Group are encouraging the Philippines to provide additional support to attract more investors in the e-vehicle and parts industry, aside from the usual fiscal incentives.
Tax incentives are not enough in developing an industry of the future. The association suggested to provide tax holidays and monetary support per unit produced, as well as government cost sharing in charging/battery replacement stations, the same package that are now being provided by the governments in South Korea and other Asean member-states. Accordingly, these countries have local programs to strengthen the industry to encourage the shift to e-vehicle, such as free registration and free parking for e-vehicles.
“This would have to be a special program similar to our CARS program, so it can quickly attract investors in the industry,” Lopez said.
Together with Department of Trade and Industry Undersecretary Ceferino S. Rodolfo, Lopez addressed the issues and clarified the concerns raised by existing locators on the Tax Reform for Attracting Better and Higher-Quality Opportunities (Trabaho) Bill, which rationalizes tax incentives to investments.
“The Trabaho Bill will offer modern and more relevant incentives,” Rodolfo said. The trade chief also assured investors that there will be a good transition period of the new tax system and there’s no reason for them to delay their expansion projects in the country.
During the meeting, DTI Undersecretary Rafaelita Aldaba also presented the Philippine government’s inclusive, innovation-led, industrial strategy (i3s) as support for the socioeconomic agenda of President Duterte. The i3s complements the government’s thrust to promote an innovation ecosystem in the Philippines, with different sectors partnering to generate more jobs and improved business opportunities. This removes obstacles to growth, attracts investments, and creates jobs. It also sets up the environment to strengthen MSMEs and the domestic supply chains, encouraging their participation in global and regional value chains, and link manufacturing with agriculture and services.
The roundtable meeting was attended by Philippine Ambassador to the Republic of Korea Noe Albano Wong, BOI Director Angelica Cayas, and high-level business executives from 16 South Korean companies. Aside from POSCO, Hyundai, Phillips, also present were Lotte E&C, Seohee Construction Co., Korea Western Power, Daeil Corp, International Electric Vehicle Expo, Daekyung Eng. Co. Ltd., Korea Agricultural Machinery Industry Cooperative, Pyungtaek Port, and Korea Importer Association.