DTI chief to Germans: Invest in IT-BPM, EVS

Trade Secretary Alfredo E. Pascual
Trade Secretary Alfredo E. Pascual

TRADE Secretary Alfredo E. Pascual encouraged German firms and government to invest in the Philippines, particularly in the IT and Business Process Management (IT-BPM) and electric vehicles (EVs) sectors, among others.

“I take this opportunity to underscore the Philippine government’s intention to offer our country as a manufacturing investment destination and an IT-BPO partner to German companies, especially those already doing business in the Philippines,” Pascual said at the 2022 Philippine-German Business Forum on Tuesday held in Makati City.

“We seek the potential expansion of German firms already in the Philippines,” the Trade chief added.

He bared the key priorities of the Philippines which he raised in his bilateral meeting with German Federal Minister for Economic Affairs and Climate Action Robert Habeck at the sidelines of the recent Asia Pacific Conference in Singapore.

Pascual said he drew the attention of the German government and private sector to the IT-BPM resources in the Philippines. The Trade chief said, “these can be put to bear to assist Germany achieve your digitization objectives.”

He pitched to the German government the Philippines’s key participation in the global business process outsourcing (BPO) industry, particularly the servicing the IT-BPM requirements of major Fortune 500 companies in the US and around the world.

Pascual also divulged the German industry leaders which are currently operating their own shared services centers (SSCs) in the Philippines including Bosch, Deutsche Bank, Daimler, Fresenius, Lufthansa, Boehringer, and Merck. The Trade chief stressed that these SSCs are manned by Filipino professionals.

Apart from the IT-BPM sector, Pascual revealed that he also opened a “potential engagement” between the two countries in the “sunrise industry of electric vehicles [EVs].”

The Trade chief said the German government and the German private sector can tap the Philippines’s “significant” green metal reserves of nickel and copper. Pascual said “doing so would ensure the supply of these critical resources in support of your country’s full-electrification objectives for your automobile industry by 2030.”

In exchange, Pascual noted, the Philippines will benefit from Germany’s “significant” experience and expertise in nickel and copper downstream processing.

The Trade chief also took the opportunity to raise in the bilateral meeting with Minister Habeck the “revived” private-public partnership (PPP) of the Philippines. He said the PPP arrangement was revived for infrastructure projects in the fields of water storage and management, renewables, waste management, logistics and transportation, and disaster mitigation.

“As Secretary of Trade and Industry, we are interested in the support of the €300-billion EU Global Gateway Fund,” Pascual said.

This available financing, he noted, “will allow EU companies including Germany’s private sector to participate in the various ongoing infrastructure developments here in the Philippines.”

Pascual pitched the PPP program to Germany because, he said, “Germany has the proven track record in the above-mentioned areas of work. PPPs offer a wide array of economic and social benefits. They improve access to public services.”

The Trade chief added that government spending is also “significantly less” under PPP arrangements. “PPPs free up public sector financing for other key socioeconomic areas, such as human capital development and employment generation—all while infrastructure development funding remains viable.”

Meanwhile, to encourage German firms to invest in the Philippines, Pascual highlighted the recent economic reforms which he said “have made the Philippines more attractive to foreign investors.”

These reforms, he said, include the amendments to the Foreign Investments Act, the Public Service Act, and the Retail Trade Liberalization Act, noting that these are among the “important policy changes that have liberalized foreign investment ownership restrictions in the Philippines.”

In addition, the trade chief cited the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law. The CREATE law, he said, reduces corporate income tax and provides “tier-specific incentives” to investors.

Another recent reform Pascual highlighted is the Department of Energy (DOE)’s amendment to the Renewable Energy Act implementing rules and regulations allowing up to 100-percent foreign equity investment in the solar, wind, and tidal energy projects.

The Trade chief said Philippine exports to Germany grew by 23.6 percent from $2.38 billion in 2020 to $2.94 billion in 2021. This uptick, he said, is mainly due to the growth in the exportation of digital monolithic integrated circuits, semiconductor devices, storage units, and video projectors.

He said Germany ranked as the Philippines’s 12th major trading partner, 7th export market, and 13th import source.

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