The Philippines and Germany successfully convened its inaugural Joint Economic Commission (JEC) recently (15 September 2020).
Philippine Trade Undersecretary for Industry Development and Trade Policy, Dr. Ceferino S. Rodolfo, and Germany’s Parliamentary State Secretary for Federal Ministry for Economic Affairs and Energy Marco Wanderwitz led the JEC meeting.
The inaugural JEC serves as a platform to discuss means to improve trade and investment relations. It also sets out cooperation initiatives in key fields of interest such as manufacturing, construction and infrastructure, and innovation, among others. Both sides likewise discussed updates on ongoing cooperation on Technical and Vocational Education and Training (TVET) and labor.
Over 90 participants from various government agencies and private sectors of both countries attended the meeting. Apart from government representatives, high-level members from the business sector from both sides took part in the JEC discussion, namely, Mr. Isidro Consunji, Chairman of the Philippine Overseas Construction Board (POCB) and DMCI Holdings; Dr. Danilo Lachica, President of the Semiconductor and Electronics Industries in the Philippines, Inc. (SEIPI), Mr. Arthur Tan, CEO of Integrated Microelectronics, Inc. (IMI); Mr. Ferdinand Ferrer, Chairman and Chairman and CEO of EMS Group; Mr. Miguel Encarnacion, Managing Director of Unifier Ventures; Managing Director Arnulf Christa, BAUER Group; President Peter Rankl, ASEAN Continental Automotive, President & CEO Elmar Lutter, Lufthansa Technik Philippines; and Executive Director Martin Henkelmann, German-Philippine Chamber of Commerce & Industry.
COVID-19 Response
This is the first bilateral meeting of the Philippine Department of Trade and Industry with a European Union (EU)-member state since the onset of the COVID19 pandemic.
Undersecretary Rodolfo remarked, “The convening of this JEC meeting presents an opportune time for us—for Germany and Philippines, for the government and private sector—to pursue stronger collaboration and cooperation at this difficult time.” Both sides tackled the challenges and opportunities presented by COVID19 and discussed how both countries could cooperate towards a post-pandemic recovery. Parliamentary State Secretary Wanderwitz stated, “Germany and the Philippines share long-standing and good economic relations. Our bilateral trade turnover has risen continuously in recent years. The coronavirus pandemic is currently causing considerable challenges for many companies. We want to face these challenges together. We want to talk about possible opportunities for a deeper bilateral engagement in general and maybe now in particular.”
Synergies on priority areas of cooperation—Manufacturing, Construction, Infrastructure sectors
Parliamentary State Secretary Wanderwitz emphasized, “The goal in establishing our Joint Economic Commission is more urgent than ever: we want to engage in regular dialogue with our Philippine partners and friends to keep each other informed about current developments and to identify areas in which we can establish or intensify cooperation.” Both government and business delegations took an active role in the discussions on how to enhance the existing cooperation between the Philippines and Germany. They likewise explored how Philippine and German businesses could create more synergies in sectors of interest.
On construction, Supervising Assistant Secretary Noel Prudente of the Construction Industry Authority of the Philippines highlighted the present administration’s Build Build Build infrastructure program as well as efforts to ease restrictions on foreign participation in the domestic construction industry to provide fair competition between local and foreign construction players. POCB Chairman Isidro Consunji also identified areas of collaboration in the construction industry, particularly in the fields of TVET and dual training, which are considered as “German center of excellence”. The German side was represented by BAUER, a company that has been active in the Philippines for 25 years with its expertise on tailor-made and economical special civil engineering solutions for subway and tunnel construction. BAUER CEO Arnulf Christa conveyed its interest to provide trainings in the field of construction and engineering services and looked forward to participating in the Philippines’ major projects for elevated highways, airports, and metro stations. With its experience in tunnel boring, drilling, piling, dredging and other demanding construction works, BAUER may play a bigger part in the country’s BBB Program. It has also formed strong ties with the Filipino construction firm San Miguel Corporation (SMC) with its involvement in the Metro Manila Skyway Project, including expansion of highway between the cities of Sucat and Alabang. With the opportune SC ruling, Philippine and German companies may forge more partnerships in the construction & infrastructure industry.
On the manufacturing sector, Board of Investments (BOI) Executive Director for Industry Development Services Ma. Corazon Halili Dichosa said, “The participation of C-level representatives from the private sector of both sides is a testament to the strength of Philippine-German economic relations, especially in manufacturing. We already have strong complementation in various sectors such as automotive, and electronics. What we are looking at is how to deepen and expand this in other sectors like e-vehicles, battery production, and PPE manufacturing. Apart from that, we are also supporting DTI Undersecretary Aldaba’s efforts on Industry 4.0 and innovation.” The JEC also covered updates on the ongoing cooperation between DTI and Siemens on Industry 4.0 and manufacturing. DTI Undersecretary for Competitiveness and Innovation Rafaelita Aldaba led the discussions for the Philippine side.
Presentations of the business companies further showcased Philippines-Germany two-way investments. According to the GPCCI, there are around 250 German companies operating in the Philippines in various sectors such as manufacturing, construction, and services. Inversely, there are also significant Philippine investments in Germany particularly in the automotive sector through the Ayala Corporation’s holding company—AC Industrials. AC Industrials Vice Chairman & IMI President/ CEO Arthur Tan presented its existing collaboration with Germany on next generation automotive mobility introduction. This partnership exemplified the Philippines’ capability to be a manufacturing base for high technologies coming from the German side.
Philippine investments are not only felt in the mittelstands (SMEs). Philippine venture capitalist, Unifier Ventures supports German startups in the fields of recruiting, growth marketing, and software development. Further collaborations on electronics manufacturing between the Philippines and Germany were also showcased, as Semiconductor and Electronics Industries in the Philippines (SEIPI) President Lachica shared the services they offered to German companies as well as activities conducted with the German business community.
“The presentations from the private sector indeed show that there is synergy between the Philippines and Germany. There are opportunities for creating more complementarities especially that we have Philippine and German companies working together,” Undersecretary Rodolfo added.
German’s businesses strong support on the continuation of the PH-EU Free Trade Agreement
GPCCI Executive Director Martin Henkelmann presented the results of the survey they conducted in support of the continuation of the PH-EU FTA negotiations. Survey results showed that 83% of German companies consider PH-EU FTA to be of high importance. Further, 45% of German companies stated that they would expand their current investments once FTA is in place while 26% of German companies would consider a first-time investment if the PH-EU FTA liberalizes the Philippines current investment regime.
Undersecretary Rodolfo expressed, “We are heartened by the overwhelming support of GPCCI for the continuation of the PH-EU FTA negotiations. We are the only ASEAN country with GSP+ preferences, which is time-bound and unilateral. In the long term, what we want is to facilitate more two-way exchanges—Philippine companies investing in Germany and vice versa. PH-EU FTA as a sustainable partnership will further allow more two-way investments and will bring in more trade-related investments in both our countries. There is also a big opportunity for German businesses to expand here in the Philippines not just for our huge domestic market, but equally important is to use the Philippines as a base for export manufacturing. During this pandemic, the swift manner by which our key manufacturing sectors where able to re-purpose to the production of internationally-certified medical-grade Personal Protective Equipment (PPEs) demonstrate the capability and flexibility not just of our manufacturing sector but more importantly, of the young and talented human resource base that supports it.”
DTI Secretary Lopez said that Germany being the 4th largest economy in the world is the Philippines’ largest economic partner in the European region. Undersecretary Rodolfo further remarked, “Germany is the Philippines’ strongest partner in the EU as it remains to be our 1st largest trading partner and 2nd GSP+ exports destination among the EU member states”.
The JEC was established through the signing of the Joint Declaration of Intent (JDI) between the Department of Trade and Industry and the German Federal Ministry for Economic Affairs and Energy on 20 August 2019 in Berlin.
In 2019, Germany is the Philippines’ 11th largest trading partner, 8th export market, and 12th import supplier. It is also the 2nd exports destination of PH products under GSP+. Likewise, Germany continued to be one the country’s top sources of investments, ranking as the 8th largest source of approved investments in 2019. Germany is the largest trading partner of the Philippines among the EU member states. ♦
Date of Release: 5 October 2020