MALACAÑAN – According to Trade Secretary Ramon Lopez, the government needs to pursue more reforms to take advantage of opportunities resulting from the ongoing US-China trade war.
Sec. Lopez said that the Cabinet decided to adopt the recommendations of the Department of Trade and Industry (DTI) and the National Economic Development Authority (NEDA) during a joint presentation at the 41st Cabinet meeting last 4 September. The proposed solutions require a whole-of-government approach and involve several government agencies aside from DTI and NEDA.
PH is the second-best Asian export performer, with a merchandise export growth of 1.2% in the 2nd quarter of 2019. Among 11 Asian countries measured, PH, Vietnam, and Malaysia were the only countries with positive growth. Meanwhile, China, Chinese Taipei, Japan, Thailand, Singapore, Hong Kong, South Korea, and Indonesia reported contractions in merchandise exports.
“The Philippines is not as vulnerable as other countries, as exports only account for 15% of our GDP. But a prolonged trade war will eventually affect our export growth,” said Sec. Lopez.
Sec. Lopez added that the trade war is “an opportunity for the Philippines to attract more export-oriented manufacturing foreign direct investments. However, it is necessary to address key constraints in attracting investors to the country.”
Board of Investments-approved projects from the US and China are growing, albeit at different rates. US investments grew by 7.3% from PHP583 million in 2017 to PHP625 million in 2018. Meanwhile, Chinese investments grew by 8,364% from PHP576 million in 2017 to PHP48.74 billion in 2018.
To achieve this goal, DTI and NEDA proposed recommendations, ranging from short-term to long-term strategies, said the Secretary.
DTI is already implementing some of the short-term strategies, like eliminating investor uncertainty by supporting the passage of the Corporate Income Tax and Incentives Rationalization (CITIRA) Act, and to further liberalize the market through amending the Foreign Investment Act, Public Service Act, and Retail Trade Liberalization Act.
To improve ease of doing business, Sec. Lopez said the gov't is seeking to expedite web-based solutions by establishing a Central Business Portal and fully-operationalizing TradeNet, the government’s online platform for trading permits.
In tandem with these are recommendations to ensure national security and peace and order considering the rising investments from China and to assist local workers who will be displaced due to the trade war.
Lastly, Sec. Lopez said DTI will continue its “Last Touch” trade strategy, which aims to integrate PH in regional value chain production networks to enhance local value-added and attain the best access to major markets. The agency does this by deepening regional partnership through the Regional Comprehensive Economic Partnership (RCEP), while pursuing trade agreements with countries outside the Asia-Pacific region.
The Secretary likewise related long-term strategies like the collaboration of different government agencies to improve the country’s business climate. By developing state-of-the-art ports, airports and guaranteeing affordable and reliable energy throughout the country, investors will be encouraged to locate in emerging hubs outside of Metro Manila.
To improve the Philippine human capital, DTI and NEDA suggested to equip students and workers with the skills needed the Fourth Industrial Revolution (Industry 4.0). There should also be a government-led effort to promote innovation by building regional inclusive innovation centers (RIICs) in major cities and provinces. These RIICs will serve as a hub for startups and partnership projects among the industry, government, and academe.
DTI will also lead in linking domestic Micro, Small, and Medium Enterprises (MSMEs) with global businesses. The agency will also partner with other concerned agencies to strengthen national quality infrastructure for standards setting, testing and accreditation, and metrology to create more competitive products and industries.
Sec. Lopez said that these initiatives will not only shield the Philippines from the worst effects of the US-China trade war but will also improve the country’s attractiveness to foreign investors in other countries in general.
He added that attracting foreign investments is part of President Rodrigo Duterte’s promise of a more comfortable life for all Filipinos by providing decent job and livelihood opportunities. ♦
Date of Release: 11 September 2019