Investing in the Philippines
Economic and trade ties between Taiwan and the Philippines are getting closer all the time. Wallace Chow points out that for the Philippines, Taiwan is the eighth largest trading partner, eighth largest export market, and eighth largest source of imports.
Back in the 1990s numerous Taiwanese businesses responded to the Taiwan government’s Go South Policy (the forerunner of today’s New Southbound Policy) by setting up operations in the Philippines. But within just a few years the Chinese economy rapidly rose to prominence and firms moving offshore were much more inclined to head west to China than to the south. Taiwanese investments in the Philippines fell way off, but the initial round of companies that set up there did develop stably.
Tsai Sheng Lin, an administrative manager at Hudson Outdoor Industrial Inc., tells us that his father was among the first generation of Taiwanese businesspeople who invested in the Philippines in response to the Go South Policy. His family’s firm is active in a traditional economic sector, and in recent years business has not been going as well as in the past. After discussing the situation with his father, they agreed that Tsai should pursue his own career. He decided to stay in the Philippines because he felt optimistic about future prospects there.
Tsai now works at a Taiwanese-owned business whose parent company primarily produces sporting goods. Sometime around the year 2000 the company began manufacturing watertight bags for outdoor activities for a US brand. In 2012 the company set up a factory in Vietnam, and then in 2019, to diversify risk, it set up a production line in the Philippines.
The company decided to locate in the Subic Bay Freeport Zone (SBFZ). Says Tsai: “Subic Bay used to be a US naval base. It’s a deep-water port, which makes it convenient to unload incoming freight. There are more scheduled freighter services into Manila Bay, but if you land freight in Manila then it takes time and money to ship it overland from Manila to Subic Bay. The trip takes at least three to four hours. On top of that, the entire zone is a freeport, and our company processes imported materials, so we don’t have to deal with bonded zone procedures. This makes Subic Bay more advantageous for us, and more convenient.”
Best Chang originally went to the Philippines 11 years ago to learn English. He stayed on, and now manages a logistics company. He became president of the Subic Bay Taiwan Chamber of Commerce last year. In this capacity he constantly runs around meeting with visiting delegations and seeking to create more links between Taiwan and the Philippines. There are currently 85 Taiwanese-owned businesses operating in the SBFZ, and the number of Taiwanese (including their family members) living in Subic Bay totals about 500 people. “The China–US trade war was already underway in 2017, and many companies were being affected by demands from US manufacturers to move their production lines out of China.” For that reason, many companies have recently been exploring the possibility of investing in the SBFZ. It appears that there is a sure possibility of further development in the freeport zone.
Best Chang, president of the Subic Bay Taiwan Chamber of Commerce, says the US–China trade war has prompted many companies to explore the possibility of investing in the Philippines.
Tsai Sheng Lin, an administrative manager at Hudson Outdoor Industrial Inc., notes that Filipino employees enjoy the advantage of speaking good English, but adds that business owners still need to provide good training to develop their professional skills.