FOREIGN direct investments (FDIs) into the Philippines are expected to get a lift once the free trade agreements (FTAs) with the European Union (EU) and United Arab Emirates (UAE) are finalized, the Philippine Exporters Confederation, Inc. (Philexport) said.
Philexport President Sergio Ortiz-Luis, Jr. said the Philippines had one of the lowest number of new projects that received FDIs within the Asia-Pacific region last year.
“Still, there are reasons to remain hopeful; one is that the EU-Philippines FTA, expected to be finalized by 2027, will boost two-way trade and investment by 6 billion euros, or around P367.7 billion,” he said at the Philexport’s general membership meeting on July 9.
In 2023, FDI net inflows dropped by 6.6% to $8.9 billion from $9.5 billion in 2022. This was the second straight year of lower net inflows of FDI into the Philippines.
For the first four months of 2024, FDI net inflows jumped by 18.7% to $3.525 billion.
Mr. Ortiz-Luis said the sectors that are expected to benefit from the EU-Philippine FTA include renewable energy, electronic manufacturing, data analytics and software, agriculture, and fishery processing.
Earlier this year, the EU and the Philippines formally resumed FTA negotiations seven years after talks were stalled due to the trade bloc’s concern over human rights violations under the previous administration.
THIRD ROUND
Meanwhile, Trade Undersecretary for International Trade Group Allan B. Gepty said the next round of negotiations for the EU-Philippines FTA are scheduled to start on Oct. 14.
“You can look at it as the third round of negotiations because we already had two, or you can also refer to it as a new round, but of course the elements or chapters that will be discussed there will be more comprehensive,” he said in a press briefing on July 19.
At a minimum, Mr. Gepty said the Philippines will try to secure from the FTA the same benefits it gets from the EU Generalized Scheme of Preferences Plus (GSP+).
The GSP+ scheme, which was extended to run through 2023, grants the Philippines zero duties on 6,274 locally made products.
“And then, of course, we will negotiate to liberalize the rules of origin so we can at least source some raw materials from other countries and be able to export them to the EU,” Mr. Gepty said.
FREE TRADE DEAL WITH UAE
The Philippines also targets to conclude negotiations on the Comprehensive Economic Partnership Agreement (CEPA) with the UAE by October.
Mr. Gepty told BusinessWorld that the Philippines just recently concluded the second round of negotiations two weeks ago, while the third round is expected in the last week of August.
“So far, our progress is still on track. We achieved significant progress on several chapters in the second round, so we’ll focus now on market access negotiations in the third round,” he said.
“And hopefully on the fourth round, which will be in October, it will just be more of addressing the remaining issues,” he added.
If completed, the CEPA with the UAE will be the country’s first trade deal with a Middle Eastern country, which is expected to provide access to other Gulf Cooperation Council states.
“This FTA is important as our interest in the UAE is not just employment opportunities but also business opportunities … That is what we want to optimize with this FTA,” he said.
“Our target, hopefully, is to conclude this by October, which will be just before a state visit scheduled in November in time for the celebration of our 50th diplomatic anniversary with the UAE,” he added. — JIDT