4/21/2010

THE PHILIPPINES THREATENED BY CLOSER CHINA-TAIWAN RELATIONS

Closer trade relations between Taiwan and mainland China may lure 135 Taiwanese export companies in Philippine economic zones and free ports to move out, threatening local exports, tourism and the jobs of Filipino based in Taiwan.

The Philippines could lose foreign direct investments from Taiwan as a result of a looming economic cooperation framework agreement between it and the China mainland.

Taiwanese companies invested $6.51 million in so-called brick and mortar enterprises here that generated jobs for thousands of Filipino in 2008, before dropping by 80% to $1.34 million in 2009 last year amid the global economic slump. As of january, foreign direct investment from Taiwan posted a net inflow of $430,000.

Fewer locators will result in fewer export.There was also a 14.7% drop in tourist arrivals from Taiwan last year, as Taiwanese tourists chose to travel to China, which has relaxed travel restrictions on them.

Filipino workers in Taiwan may lose their jobs if more Taiwanese factories move to mainland China.

Economic corridor.

Back in 2002, Taiwan proposed a free trade area with the Philippines, which cited the need for consultation first, and that the prevailing sentiment was to go slow on trade liberalization.
Taiwan commissioned a study of the free trade area, but this did not proceed ans discussions were suspended.

There was a proposal to revive of the Subic-Clark-Kaohsiung economic corridor proposed by the Philippines as an alternative in 2005, which could benefit the Philippines by attracting Taiwanese investments. It in turn benefits the Taiwanese by offering an offshore manufacturing base for Taiwan exporters, the corridor will facilitate trade and the movement of intra-company personnel between Subic and Clark and the export processing zones in Taiwan. It will also help develop banking and financial operations that will support trade and investment between the parties.

Taiwan is the top 7th destination for Filipino workers overseas. In 2008, there were 38,456 new hires and rehires in Taiwan, for a 4% share. There are about 94,055 Filipinos living in Taiwan.

Stronger relations.
Since Taiwan President Ma Ying-jeou came into power in 2008, economic ties between China and Taiwan have strengthened.
Taipei and Beijing have signed three deals so far:     
  • The launch of regular flights across the Taiwan strait,
  • Enhancing financial cooperation,
  • Cracking down on crimes and offering mutual judicial assistance.
The parties have also reached a consensus to boost investments by mainland companies on the island.
Taiwan's Ministry of Foreign Affairs announced on May 12 last year that Taiwan would open 99 industries and business lines in the manufacturing, services ans infra structure sectors to Chinese investments.

Taiwan's export-oriented economy had been badly devastated by the global crisis, and ''improving cross-strait economic relations and signing a free trade agreement of sorts is essential for the country economic revival''.

The talks also reflected President Ma's overall policy of easing tensions with Beijing by focusing on economic issues.

Taiwanese companies here in the Philippines are mostly found in the fields of information technology, electronic and software development.The danger is that with the economic cooperation framework agreement, some Taiwanese plants may move out of the Philippines to China.

The deal, which promote Taiwanese relations with the mainland to avoid marginalization as a result of regional integration, is expected to be signed in June.

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