The Philippines and United Arab Emirates (UAE) are finalizing the Investment Promotion and Protection Agreement (IPPA) and will also launch the Comprehensive Economic Partnership Agreement (CEPA) discussions to further strengthen economic relations between the two countries.
This was revealed by Trade and Industry Secretary Ramon M. Lopez in a speech during the Country Business Briefing at the Expo 2020 Dubai. He said these two initiatives are being undertaken with the Ministry Economy of the UAE.
In pushing for these agreements, Lopez has encouraged UAE-based startup firms involved in advanced technology to make the Philippines their second home. The amended Retail Trade Liberalization Act (RTLA) and the Foreign Investment Act (FIA) are expected to establish reforms to remove barriers for foreign entry, he said.
A foreign startup with capital requirement of only $100,000 and only 15 employees from the local workforce can already do business in the Philippines, he said.
“Our country’s digital landscape makes it an ideal setting to support the growth hyperscalers,” he said. Last year, the DTI launched a campaign highlighting the Philippines as the next strategic hyperscaler hub in the Asia Pacific region.
Lopez noted that with the continuous improvement on the country’s economy, coupled by our relevant legislations, promising economic profile, and strong government support, hyperscalers are envisioned to help propel the Philippine economic growth even further,” he added.
“We invite you all to look at the Philippines more closely as a valuable contributor to your global business growth, and as a partner in rebuilding, knowing that the Philippines can definitely complement UAE’s strengths,” he added noting that while the pandemic remains to be very challenging, there are already seeing signs of recovery, with some indicators even already exceeding pre-pandemic 2019 levels.
He further reported the legislative economic reforms having passed and enacted that are expected to further help propel the country’s recovery from the pandemic.
In particular, Lopez cited the CREATE Act that rationalizes, modernizes, and offers more relevant incentives to investors, making the investment climate in the Philippines significantly more attractive.
CREATE reduces the Corporate Income Tax rate from 30 percent to 25 percent for large corporations and down to 20 percent for Micro, Small, and Medium Enterprises (MSMEs).
The Philippines aims to attract a higher level of technology in the industry sectors, such as in electronics, aerospace, and automotive. That is the reason the government is giving more favorable terms and incentives to those industries with high technology and to entice more FDIs in that particular field. These industries are listed in the Strategic Investment Priorities Plan.
In terms of trade, Lopez cited the Philippines various preferential access in major markets through Free Trade Agreements (FTAs) and Generalized System of Preferences (GSP). This makes exports from the Philippines enter other markets at zero duty, if not preferential tariffs.
In fact, the Philippine is the only nation in ASEAN eligible of the European Union’s EU GSP+, which grants zero tariff on the country’s exports to EU-member countries. The Philippines is also working for more product inclusion in the talks for the US GSP.
The Philippines is also part of the Regional Comprehensive Economic Partnership (RCEP) Agreement which is intended to create a more business-friendly environment in the ASEAN region. RCEP will likewise encourage closer integration of economies and provide a more stable and predictable rules-based system of trade.
And amidst the pandemic, the Philippines has also been proactive in enhancing strategic bilateral and regional relations with other trade partners, like the continuation of the Philippine-EU FTA monitoring missions and the recent conclusion of the negotiation for the Philippine-South Korea FTA.
Other FTAs include that with Japan and the EFTA countries. The Philippines is also pushing for other FTA deals with more countries.