Gregory L Domingo (4th left), the Philippines’ secretary of trade and industry, talks about investment opportunities with Chinese entrepreneurs in Nanning. (BenYue / China Daily Asia Weekly)
From rockets to road building, trade and investment with china benefits both nations
The Philippines remains open and welcoming to Chinese investment, despite tension over territorial disputes, according to a senior Philippine trade official.
Gregory L Domingo, the secretary of trade and industry, said that he hoped to attract more Chinese companies to the Philippines, and explained that his country offers significant opportunities to invest in infrastructure, agriculture, light industry and telecommunications.
He was speaking at the 10th China-ASEAN Business and Investment Summit that took place earlier this month in Nanning, capital of the Guangxi Zhuang autonomous region.
“The Philippines is becoming a bustling hub of trade and investment opportunities,” Domingo said. “We have much to offer, including opportunities in garment production, tourism, renewable energy, motor vehicle components, and shipbuilding and repair.”
The minister was a guest speaker at a roundtable discussion during the summit that also featured leaders from some of China’s biggest companies.
The forum took place as part of the 10th China-ASEAN Expo, where the Philippines has been named the “country of honor” for this year.
Trade between the two countries has been increasing since 2010. According to the National Statistics Office of the Philippines, major exports to China are electronic products, metal components and agricultural products. Major imports from China come from telecommunication products, computers, mineral fuels, lubricants and related materials, and some industrial machinery.
In 2012, China became the Philippines’ third-largest trade partner. China is the country’s third-largest export market and second-largest source of imports. But the investment flow between the two countries is not evenly balanced.
“In terms of investment, Philippine companies have invested more than $2.5 billion in China. However, the investment of Chinese companies in the Philippines still remains low at less than $1 billion,” said Domingo, although he is optimistic about the future.
“We are confident that the increasing exposure of China’s businessmen to the Philippines through this roundtable, and through doing business in each other’s countries will sow the seeds of a major increase in investments in the Philippines by Chinese companies.”
Bilateral trade reached a record high of $36.4 billion in 2012, up 12.8 percent year-on-year, according to Dong Songgen, vice-chairman of the China Council for the Promotion of International Trade.
Among member countries of the Association of Southeast Asian Nations (ASEAN), the Philippines is China’s sixth-largest trading partner. Out of 10 nations, this does not sound impressive. However, it does allow plenty of room for improvement.
In fact, Dong revealed that bilateral trade and investment relations have made much progress. For example, the Philippines was the first foreign buyer of China’s Xinzhou-60 aircraft, and it was also the first ASEAN country to use a Chinese rocket to launch a satellite.
Also, investment by the State Grid Corporation of China in the Philippines is one of the biggest investments China has made anywhere in ASEAN.
“China and the Philippines have many similarities, including our GDP growth,” Domingo said. In the first half of 2013, China and the Philippines shared the same GDP growth rate of 7.6 percent.
Another boost, the minister explained, has been international recognition of the country’s improving economy, as this year was the first time that the Philippines received an investment ratings increase from three international rating agencies — Fitch, Standard & Poor’s and the Japan Credit Rating Agency.
During the roundtable meeting, Chinese entrepreneurs from State-owned enterprises and the private sector expressed their willingness to make further investments in the Philippines.
Wang Yu, general manager at China International Water & Electric Corporation, said the Chinese State-owned overseas contractor already has 15 infrastructure projects in the Philippines.
These include a major water improvement project at Angat Dam, which supplies water to Manila. The project marked its completion in August last year with an opening ceremony attended by Philippine President Benigno Aquino. The company also recently won a construction contract for the Manila north and south road and highway project, amounting to $76 million.
Wang said his company is seeking more cooperation opportunities in this field.
“There are two ways of getting involved in Philippines’ roads construction,” Domingo explained. “Roads can be governed by the Department of Public Works and Highways, which is the government agency for building roads; or it can be won through the public-private partnership project, which is basically the toll roads.”
He said that over a thousand roads will be built between now and 2016, and that Chinese companies can participate in either the government or the public-private programs.
Domingo called for particular attention to the water projects in Philippines, since the country gets “enormous amount of water falls, especially in the north part of the country”.
He said the government has made a decision to improve management of the water resources, which means it plans to build many more dams above and below ground, and irrigation systems, offering plenty more opportunities for outside investment.
Domingo further discussed with Wang Xusheng, CEO of China National Machinery Import & Export Corporation, about promising areas in agriculture. He said the country hopes to cooperate with China on bamboo processing technologies. There are also good opportunities in rubber plantations, since the country has sizable demands for rubber from its growing tire industry.
Also, as the Philippines is an archipelago surrounded by the sea, there is huge potential for its aquaculture industry. For example, the best quality grouper fish comes from the Philippines, and there are already some joint ventures with countries like Thailand in this industry, the minister said.
Tang Yi, CEO of China National Technical Import & Export Corporation, says that after building a thermal power plant in the Philippines, they are eyeing the country’s light industry.
Domingo explained that the Philippine government has developed light industry primarily for export. “The Philippines has over 250 economic zones, accounting for 80 percent of all Philippine merchandise exports.”
Besides the traditional strength in electronic products, new industries in the light industry category have emerged, such as high-end garment manufacturing, as well as toys and medical equipment, he said.
The minister also pointed out that people in Philippines are becoming wealthier as the country’s GDP rises, with the demand for mobile phones and other telecom devices expected to increase fast.
He told Dai Zhihua, CEO of Huawei Technologies Philippines, that the Philippines has the world’s second biggest call center industry after India and 15-to-20-percent annual growth, which will result in a demand for telecom products such as handsets, network servers, and transmitters.
Ponciano C Manalo Jr, the Philippines’ undersecretary for trade and investment promotions, said economic ties between China and Philippines have existed for a long time. Being the country of honor this year is the best opportunity to encourage investors and businessmen from China to invest in the Philippines.