ECCT visit to the Philippines
A five member ECCT delegation led by ECCT Chairman Giuseppe Izzo and CEO Freddie Höglund took a trip to the Philippines where they held a series of meetings with counterparts from the European Chamber of Commerce of the Philippines (ECCP), business leaders and business organisations. During the trip delegates from both chambers exchanged information on their respective chambers’ advocacy issues, activities and the business climate in their respective countries. The delegation had dinner with members of the ECCP board of directors and held a series of meetings with the Taipei Economic and Cultural Office in the Philippines, the Delegation of the EU to the Philippines, the Semiconductor and Electronics Industries in the Philippines Foundation (SEIPI), the Philippine Exporters Confederation (PHILEXPORT) and the Philippine Chamber of Commerce (PCCI). On the second day of the trip, the delegation took part in a site visit to the facilities of Lufthansa Technik Philippines, which conducts maintenance repair and operations procurement (MRO) for commercial aircraft. All of the accommodation, travel and meetings were kindly arranged by the ECCP secretariat, who also accompanied the ECCT delegation throughout the trip.
The visit was part of the ECCT’s ongoing interactions with other European chambers in the region. Regional trips are usually held once a year, although this was the first trip in three years since no trips were arranged in 2020 and 2021 due to the global coronavirus pandemic. (The ECCT visited the following European chambers that are part of the European Business Organisations Worldwide Network (EBO) in previous years: Kuala Lumpur in Malaysia in 2019, Beijing in China in 2018, Laos in 2017, Myanmar in 2016, Thailand in 2015, Indonesia in 2014, Vietnam in 2013, South Korea in 2012, Beijing in 2011 and Shanghai in 2010.)
The Philippines has one of the world’s fastest growing economies with a young and growing population. Despite the pandemic, GDP growth hit 5.7% in 2021 and 7.6% in 2022. However, GDP per capita is less than US$4,000 per annum and 20% of the population remains in poverty. Total official inbound FDI is less than US$10 billion. Europeans are the largest investors. Business services account for a large portion of the economy.
The ECCP currently has 730 members (mostly corporate with just 50 individual members). Like the ECCT, it is a European chamber (not limited to EU countries) with members from the UK, Switzerland, Norway and Turkey. It is the oldest European chamber in the world, established in 1978 (ECCT is the second oldest, founded in 1988).
The chamber has good access to government institutions and holds over 100 engagements with the government of the Philippines each year. The chamber also enjoys good relations with the media. The negative impression in the international media that the Philippines lacks press freedom has been exaggerated by a couple of high-profile cases (such as the jailing by former president Duterte of Nobel Prize-winning journalist, Maria Ressa). For the most part, the press is regarded as free and vibrant.
The ECCP has 23 committees, of which 10-11 are very active, and produce annual position papers. The chamber (including regional chapters) holds 150-200 events annually, either live, hybrid or online only. The most prominent (live) event is the annual “European-Philippine Dialogue”, to which the president is invited.
The political and economic situation has improved under the administration of Ferdinand "Bongbong" Romualdez Marcos Jr (who won election with a 59% majority and took office on 25 May 2022). While Marcos has been accused of whitewashing the human rights abuses and corruption that took place during his father’s rule, he has received praise for appointing competent technocrats (some of whom were political rivals) and introducing a number of pragmatic reforms and since he took office. Perhaps the most significant was lifting of foreign ownership restrictions to allow up to 100% foreign ownership of companies in several industry sectors, including telecoms, renewable energy, and others.
The Philippines has seen an improvement in its Ease of Doing Business rankings in recent years, but it is still relatively low globally (95th). This is expected to improve given recent reforms and the establishment of the Anti Red Tape Authority (a presidential office level entity set up by the Marcos administration, which allows organisations or companies to raise concerns about administrative problems). Another area of reform is the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act. Under the act, the corporate income tax rate was reduced from 30% to 25%.
The advantages of investing in the country include an English-speaking workforce and preferential tariffs and customs duties for goods manufactured in the Philippines granted under the Generalised System of Preferences (GSP, a scheme which allows products originating in certain developing countries preferential access to the markets of the EU). The Philippines is relatively open and not regarded as protectionist. Special economic zones in the Philippines also offer attractive benefits for foreign investors in addition to those granted by the GSP.
The top end of the higher education system (universities and technical colleges) in the Philippines is regarded as quite good, although there is still a problem in the quality of basic education. Given the fact that instruction is in English, graduates from the best universities and technical colleges are sought after and can often find jobs overseas. The Philippines is a major provider of blue-collar workers, including an estimated 30% of global seafarers.
The government is supporting the energy transition through legislation, such as banning new investments in coal power and opening up the renewable energy sector to foreign investors. However, the task will be made difficult by geography, given that it is country of 7,641 islands and it will be challenging to develop sufficient transmission and grid infrastructure.
In summary, there are great business opportunities in the Philippines for those willing to take some risks. However, there are a number of challenges to doing business. It can take up to 60 authorisations to set up a business. Other challenges are a lack of supply chains (which means having to rely on imports for supplies and components), inadequate infrastructure (power, internet and logistics), regulatory inconsistencies, corruption, a weak judicial system and a lack of double taxation agreements.
The following is a list of participants in meetings from the ECCT and ECCP:
- Giuseppe Izzo, ECCT Chairman & Managing Director, Taiwan and VP, Asia Pacific Region, STMicroelectronics Ltd.
- Freddie Höglund, CEO
- Laurent Chevalier, ECCT Executive Director & General Representative, Gas Renewables & Power, TotalEnergies Marketing Taiwan Ltd
- Jason Ho (Tsai-sheng), Co-Chair, ECCT Education committee & President & CEO, Taipei Language Institute
- Duncan Levine, Publications Editor
- Lars Wittig, President & Country Manager / SVP ASEAN, IWG Plc (Regus, Spaces)
- Florian Gottein, Executive Director
- Paulo Duarte, Vice President, Automotive Committee Co-Chair & Managing Director, Bosch Philippines
- Ruth Yu-Owen, RE & EE Committee Chair & President, Upgrade Energy Philippines
- Helen Grace Baisa, F&B Committee Chair & President & CEO, Charmant Ingredients Corporation
- Ruth Novales, Agriculture Committee Chair & Nestle Philippines Corporate Affairs Executive
- Michael Raeuber, Transportation and Logistics Committee Chair & Royal Cargo Group Chairman and CEO & Co-Vice Chairman, Integrity Initiative
- Yvonne Pan (Yi-Fang), Country Leader, Signify Philippines Inc
- Jonathan Webster, ECCP Director & Director, Head of Multinationals and International Subsidiaries Banking, Wholesale Banking, HSBC
- Gerry Constantino, Director, Projects, Events & Training
- Sophia Ordona, Associate Director for Government and International Affairs
- Gen Anaquita, Associate Director for Strategic Partnership and Communications
- Katrina Baligod, Manager, Industry & Government Affairs
- Arci Catalan, Events Manager
- Elena Tabbu, Advocacy Officer
- Chienie Patricia R Nethercott, Advocacy Officer