TRADE Secretary Alfredo E. Pascual said the Philippines will be banking on foreign direct investments (FDI) to develop production capability for its export market.
Looking at the Philippines’s neighboring countries, Pascual said the export products in these countries are produced by factories put up by foreign investors.
“Based on my experience, you have to build a domestic base to support your foray into the export market. That’s one thing. Hindi pwede ’yung jump agad at export. [You can’t jump right away and export.],” the Trade Secretary said.
“You have to develop the production capability, produce quality, improve productivity so you can be competitive in pricing. That’s one thing that I thought should be highlighted,” he added.
Hence, Pascual said that the country would need to develop exports through FDIs, “not internally.”
“Look at Vietnam and Thailand: they have big exports. The export products coming from our neighboring countries are produced by factories put up by foreign investors. Kaya ang bilis ’nung growth in their export.” [Hence the growth in their respective exports market was fast.]
Limited ability
THE Trade chief also underscored the role of investments in developing the “Philippine-based industry.”
“’Yung export natin naka-link doon sa integration: ’yung trade, ’yung export and the industry, limited ang capability natin to develop industry because you need capital, you need technology,” Pascual said. [Our export is linked to the integration of trade, export and the industry. Our ability to develop industry is limited because we need capital and technology.]
The country’s trade chief stressed that the word “investors” does not focus on money alone. He said beyond financial support, there’s technology, management and, more importantly, market.
As he was explaining the difference between relying on the country’s local industry and attracting FDI to target export markets, Pascual said the country will still “worry about many things” such as production, technology, productivity, product quality, finance and market.
Pascual’s approach
PASCUAL emphasized that the foreign investments that the country would attempt to attract will come in with a “built-in” market such as technology, adding that it’s a matter of just setting the factory in the country and employing people.
“So that’s the approach that I’m trying to push: we integrate trade, industry and investments.”
Once the factories are set up in the Philippines, Pascual said his challenge is to ensure that local labor will be trained well so they can be “as productive as the labor in competing countries.”
Further, the official underscored the importance of diversifying supply, noting that it’s risky to just rely on a single source country especially with the recent “geopolitical developments.”
The Trade chief said that Philippines is looking at capitalizing on investors that have production operations in China to have alternative production operations in the Philippines.
“We want them to consider the operation here so we will provide alternative supply source for their components and inputs to their assembly operation; majority are on assembly operations,” he said.
Pledges from China
DURING the state visit to Beijing last week of President Ferdinand R. Marcos Jr., the DTI said that about $7.32-billion investment pledges from Chinese firms were secured in the sectors of nickel processing, power batteries, electric vehicles (EVs), electronics manufacturing and steel manufacturing.
Further, the statement issued by the DTI last Friday said the Philippines has been the supplier of 60 percent to 70 percent of China’s total imports of nickel ore and concentrates. It added that Chinese companies are also “increasingly interested” in the reported Philippine policy discussions on discouraging the export of unprocessed nickel ore.
“The processing of nickel and manufacturing of battery and e-vehicles are vital to the Philippines’ economic transformation,” Pascual was quoted in the statement as saying. “Both sectors can create lasting impact on our country’s industrialization, economic development, clean-energy future and climate resilience.”
The Trade chief also noted that the Philippines has over nine million hectares of land with mineral potential, 92 percent of which have yet to be “responsibly utilized.”
As he pitched the metals industry to Chinese firms, Pascual said the Philippines also have over 450 million metric tons of nickel reserves.
“Our country is home to nickel mines, nickel processing plants and copper mines. And we are keen to have investments in value-adding mineral activities,” he said during a roundtable meeting during the President’s state visit, as stated in the DTI statement.