Philippines and Israel signed three agreements which are expected to bring in Israeli investments of $150 million initially as both countries agreed to further boost bilateral economic relations.
The three agreements are Investment Promotion and Protection Agreement (IPPA), the memorandum of understanding on Economic and Technical Cooperation for the creation of the Joint Economic Commission (JEC), and the Cooperation Agreement with the Israel Innovation Authority.
Trade and Industry Secretary Ramon M. Lopez and Israel Finance Minister Avigdor Lieberman signed the IPPA on Tuesday, June 7, in Israel. Lopez also just signed with Israel Economy and Industry Minister Orna Barbivay the MOU on Economic and Technical Cooperation.
“Early harvest could be around $150 million this year,” reported Lopez from Tel Aviv.
At the “Make it Happen in the Philippines Investment” forum, Lopez said “solid letters of intent” were signed and presented to the Philippine side by Israeli firms engaged in agribusiness, software development and IT Business process management.
There were also inquiries on food and beverage, satellite images and water desalination and treatment, Lopez said.
The IPPA covers the investment protection elements such as national treatment, most favored nation treatment, free transfers, rules-based expropriation and compensation, and investor-state dispute settlement.
The IPPA with Israel provides a key opportunity to tap into the industries of agro-tech, life sciences and healthcare, water technologies, high-technology and semiconductors, cybersecurity, financial technology, defense industry, smart transportation, clean technology, smart manufacturing, and the diamond industry.
Lopez said the IPPA as an important arrangement in encouraging more investments.
“The Philippines eyes Israel's expertise on innovation, especially in new and smart technologies that will bring about more competitive and efficient products. On the other hand, Israeli investors expressed interest in investing in the infrastructure, agriculture and water, and business process outsourcing (BPO) sectors in the Philippines,” said Lopez.
Meantime, the MOU on Economic and Technical Cooperation seeks the establishment of a bilateral consultative mechanism or the Joint Economic Cooperation (JEC) that will develop and strengthen trade, enhance investments, and advance economic ties between the Philippines and Israel. The MOU is an outcome of the Presidential visit of President Duterte in 2018.
In establishing a JEC, the two countries agree to exchange information on economic issues, identify and implement cooperative projects, organize consultations, missions, and official visits and enhance cooperation and linkages with their respective private sector.
Lopez recognized the importance of the newly signed JEC as a platform to further improve the Philippine-Israel economic relations, especially in the post-COVID-19 pandemic recovery period. He said, “As the country accelerates its efforts for continued recovery from the pandemic and managed to sustain inclusive growth, we continue to actively pursue new partnerships, either through JECs agreements and free trade agreements (FTAs) with strategic and non-traditional partners.”
Israel Minister Barbivay lauded the initiatives pushed by the outgoing administration of President Duterte to liberalize the Philippine economy and attract more foreign investments. Further, she expressed hope that more Israeli companies would invest in the Philippines which would result in economic gains for both countries.
Moreover, the MOU aims to explore and identify sectors where cooperation may be intensified and accordingly propose recommendations with the intent of expanding and diversifying trade and investments.
During the meeting, Lopez shared its list of priority sectors for investment promotion, including agribusiness/agriculture production, energy efficiency technologies and renewable energy, infrastructure and public private partnership PPP projects (such as infrastructure, real estate development, logistics), innovation (artificial intelligence), IT-BPM (including shared services), and manufacturing (electronics and digital infrastructure).
The Philippine trade chief also highlighted the country’s economic reforms and key legislations necessary that positions the country as a hub for investment, manufacturing, and innovation, through ease of doing business (EODB), Public Service Act (PSA), and Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law. He added, “With the economic reforms instituted over the past six years and the strong domestic rebound, the country is on track to post 7-9% growth this year and hopefully achieve upper-middle-income status by next year.”
Philippine Ambassador to Israel Macairog Alberto highlighted that the investment agreement lays down the framework for a closer investment relation between the countries deepening our shared historical ties.
Lopez reiterated a more conducive investment environment between the Philippines and Israel this coming administration, “Israeli investors can certainly look forward to maximizing the gains from the game-changing legislative amendments such as the liberalization of the public services act, retail trade liberalization law, and the foreign investments act and now is the most opportune time to do so.”
In 2021, Israel ranked 35th among the Philippines’ trading partners, 35th among export markets, and 31st among import suppliers. During the same year, Israel also ranked 12th among the Philippines’ sources of approved investments, with such amounting to P829.9 million focusing on the real estate activities industry.