TRADE-RELATED INTERNATIONAL PARTNERSHIPS
Trade-related International Partnerships
The Philippines maximizes opportunities for mutually beneficial economic partnership. As a member of the ASEAN Economic Community, the Philippines benefits from the free flow of goods, services, investments, capitals, and skills between the ASEAN Member States, the increase in trade and investment, and promotion and the expansion of regional production sharing and network.
In addition, the completion of the ratification process of the Regional Comprehensive Economic Partnership (RCEP) trade act will grant the country a certain level of reduction or elimination of customs duties for the signatories, duty-free temporary admission of goods, and lower tariffs, among others.
Outlook of FDI in the Philippines1
Foreign Direct Investment (FDI) inflows into ASEAN reached its highest ever level in 2019 at US$ 182 billion, making ASEAN the largest recipient of FDI in the developing world. Due to the unprecedented impact of the COVID-19 pandemic, FDI declined to US$ 137 billion in 2020, but compared to the decline of global FDI level, ASEAN still performed slightly better as its share of global FDI rose from 11.9 per cent in 2019 to 13.7 per cent in 2020.
FDI flows in ASEAN were more concentrated in 2020. The top 10 investors accounted for 75 percent of FDI in the region as compared with 71 per cent in 2019.
The top 10 industry recipients accounted for 95 per cent of FDI in 2019 and 2020, with the traditional top 3 (finance, wholesale and retail, and manufacturing) accounting for more than 70 per cent. Investment in infrastructure-related industries such as electricity, and in information and communication, as well as transportation and storage rose – underscoring the resilience of these industries in an economically challenging time.
Strong investment in the digital economy, the roll-out of 5G licenses and active investment in data centers and cloud computing, including relocation of factories to some ASEAN members, helped cushion the fall to some extent.
The following are some of the trade agreements participated and taken advantaged by the Philippines to encourage the steady inflow of investments and support businesses in breaking down barriers to progress:
- ASEAN Trade in Goods Agreement
- Philippines – Japan Economic Partnership Agreement
- Philippines – European Free Trade Association Free Trade Agreement
- Philippine – Korea Free Trade Agreement
- United States Generalized System of Preference (US GSP)
- European Union generalized System of Preference Plus (EU GSP+)