By Bernie Cahiles-Magkilat
The European Union (EU), under the presidency of Germany, will be prioritizing economic relations with individual ASEAN countries but the German ambassador to the Philippines noted that the Philippines faces very strong competition from Vietnam, which offers very friendly terms to foreign investors.
German Ambassador to the Philippines Anke Reiffenstuel told reporters at the recent Philippines-Germany Business Relations forum said that, as Germany takes over the presidency of the EU Council in the second half of this year, it will prioritize the forging of bilateral free trade deals with individual ASEAN member states rather than a regional FTA.
“You have a very strong competitor, everybody’s talking about Vietnam on their approach and how they are opening up towards foreign investors. Vietnam is very strong and of course there is Malaysia and Singapore,” the ambassador said.
Other ASEAN countries’ advantages are the reforms and actions they have undertaken to attract foreign investors. She also cited these countries’ one-stop shops with very smooth operations, especially in getting business registration done, and very attractive tax holidays for foreign investors.
In contrast, she said, there is a mixed picture in the minds of German investors in the Philippines.
Top challenges faced by German businesses are about economic policies, foreign exchange rate, skilled labor and infrastructure concerns. The country’s doing business environment is still difficult despite improvements, she said.
Investors also fear of the potential discontinuance of tax incentives under the current tax and incentives reform.
The lady ambassador noted that the recent review of government contracts with the two private water concessionaires is something that makes “potential investors think what are the circumstances and environment they are investing in.”
She said that the review of the water contract is something that EU investors “observed with great interest” as investment is a business decision that involves longer term horizon.
Amid all these, she said, the Philippines has a very strong and stable growth rate.
In addition, the ambassador cited that the Philippines’ competitive advantages lie on its English language proficiency, cultural affinity with EU and the huge 110 million consumer market.
“We share the same values, we are Christians and we have similar history unlike many other countries like Indonesia and Vietnam where you have to explain yourself to make yourself understood.”
As Germany is taking over the presidency of the EU, the ambassador said that EU is expected to put more focus on pursuing bilateral free trade deals with individual ASEAN member states.
“We hope we can bring it forward. We have identified this as a priority in our presidency,” she said noting that EU has already specifically prioritized not just ASEAN but on the potential FTAS with the individual countries to ensure connectivity of the region with EU. So far, only Singapore has an FTA with EU among ASEAN countries.
The ambassador said that the forging of bilateral FTAs with the individual ASEAN countries has been “on the radar of EU, but it has to mature,” noting the agenda had been discussed over the past three to five years already.