Phl as top investment destination attainable, but will take time — Pascual

Department of Trade and Industry Secretary Alfredo Pascual said Thursday last week that the dream to make the Philippines a top investment haven in Southeast Asia will not happen in a blink of an eye, particularly since realizing investment pledges take time. Still, he said the country has advantages, where that objective is concerned.

Pascual, a former president of the Rotary Club of Makati, was the guest of honor during a meeting of the joint Rotary Clubs of Manila and Makati at the Manila Polo Club on 12 October 2033.

In his speech before members of both Clubs, Pascual underscored the country's economic advantages to achieving its goal of becoming a top investment destination region, particularly because of the resilience of Filipino small-scale entrepreneurs, outstanding industrial leaders, and creative and committed workforce.

"It is imperative that we work diligently to bolster trade, fortify our industrial base, and create an enabling business environment for investments. This, in turn, will generate high-quality employment opportunities for our burgeoning population and elevate the living standards of our people," Pascual said.

Earlier, the DTI chief said some $88 million worth of investment pledges from Marcos Jr.'s foreign trips are seen to materialize this year.

Earlier, in a press briefing at Malacañang in July, Pascual said, "It's (foreign investments) not so large as yet, but potentially, we have a pipeline that we were able to build up amounting to around $70 billion."

FDIs

With more than a year being at the helm of the DTI, Pascual said the government has already collated significant foreign direct investments, which have been playing a pivotal role in driving economic ascent.

"In the first half of 2023 alone, commitments from foreign sources surged by an astounding 750 percent compared to the preceding year. Our leading investment promotion agency — the Board of Investments — has already granted approval of a substantial P720 billion or $12.6 billion in investments from January to August 2023. This figure represents an impressive 48 percent progress towards BOI's annual target of P1.5 trillion in investment approvals," Pascual told Rotarians in his speech.

He said FDIs have been instrumental in propelling Philippine economic growth; between 2020 and 2022, the government recorded a cumulative influx of $28 billion in FDIs, with substantial investments in manufacturing, electricity, financial services, real estate, and information technology sectors.

These investments came from valued trading partners  Singapore, Japan, the Netherlands, the United Kingdom, the United States, South Korea, the British Virgin Islands, India, China and Taiwan.

"While the first half of 2023 saw a contraction of 20 percent in net FDI inflows compared to the previous year, we maintain an optimistic outlook for a resurgence in inward FDI, buoyed by a substantial surge in IPA approvals," he said.

Export development

Aside from making FDIs grow exponentially, Pascual also launched the 2023-2028 Philippine Export Development Plan approved by President Marcos Jr. which will define the country's export thrusts, strategies, programs, and projects.

He said that while the Philippines has seen an increase in export earnings, the Philippine still lags behind its ASEAN neighbors in export performance, except in the services sector, as the country faces challenges in its weak agriculture sector and underlying structural weaknesses.

"Philippine export competitiveness lies in the competitiveness of Philippine-based exporters and the ecosystem that supports it. Thus, it must develop reliable, design-driven, technology-driven, sustainable, and forward-looking exporters to become an Agile Export Powerhouse," he said.

He said that by promoting investments, facilitating trade, and developing key industry clusters, the plan aims to achieve substantial export growth and establish the Philippines as a producer of high-value products and services by 2028.

"Constituting an essential component of a supportive ecosystem for export are our preferential trade arrangements with other countries. Our country actively pursues partnerships through Free Trade Agreements and the Generalized System of Preference so that Philippine businesses and investors have preferential market access," Pascual said.

"Currently, we have access to the ASEAN market, the Regional Comprehensive Economic Partnership Agreement, the Philippines-Japan Economic Partnership Agreement, and the free trade agreement with the European Free Trade Association. We have recently signed an FTA with South Korea," he added.

In August 2023, the country's total external trade in goods amounted to $17.53 billion, which indicates an annual decline of 7.2 percent from the $18.89 billion total external trade in the same period of the previous year.

Of the total external trade in August 2023, 61.8 percent were imported goods, while the remaining were exported goods.

Food security

Meanwhile, Pascual said the DTI has pushed for the approval of President Ferdinand Marcos Jr. last August 2023 of its proposed three-year Food Logistics Action Agenda, in close collaboration with other government agencies, to sustain the country's food security.

Under the Action Agenda, which covers the next three years or until 2026,  the DTI, along with other agencies shall focus on six priorities, namely revolutionization of the Philippines' food distribution system, from farm to fork; reduction of transport and logistic costs; the increase investments in logistics infrastructure (transportation and storage); addressing other supply chain gaps, i.e. Logistics and Distribution, Post-Harvest Management, Market Linkages, Market Information, Access to Finance; heighten enforcement measures against hoarding, smuggling, overstaying food imports, and monitoring of warehouse/cold storage facilities, and the use ICT to improve logistics performance, from streamlining and automating government permits and licenses to integrating systems within the logistics ecosystem.

"The food supply chain involves multiple stages, from farm gate to storage, distribution, and retail. Implementing a control tower approach in the food sector could provide real-time visibility into food availability, pricing, demand and potential disruptions. This control tower could help manage food security issues, reduce food waste, and curb cartelization, among other benefits," he said.

Innovation, entrepreneurship development

In terms of innovation, Pascual said the DTI is currently negotiating a loan program with the Asian Development Bank for realizing a plan to establish the DTI Innovation Gateway in Manila which will stand as a luminary of integrated innovation for the Philippines.

It will signify the country's unwavering commitment to fostering a culture of innovation and entrepreneurship, he said.

"The DTI national innovation gateway will feature advanced technology centers, e.g., an Industry 4.0 pilot factory; the National Center for Artificial Intelligence Research Development; MSME Innovation Academy; startups, financial intermediaries, enterprise tenants, and innovation international collaboration space; academic and think tank space for forward-thinking education and tech policies and one-stop government solutions for businesses and investors," explained Pascual.

Halal industry development

Meanwhile, for the development of the halal industry, the DTI is leading a nine — government agency task force to position the Philippines as the most halal-friendly trade and investment hub in the Asia Pacific region.

Pascual said the government is eyeing a bigger share in the $7 trillion global halal market, from halal food, halal pharmaceuticals, halal-friendly tourism, and Islamic finance to modest fashion and halal cosmetics.

"We will tap the growing demand for halal products and services from the Philippine domestic market and the 57 countries that are members of the Organization of Islamic Cooperation — spanning Asia, the Middle East, Africa, Europe and the Americas. Considering the growing Muslim population of 1.9 billion people, the global halal market is estimated to reach $7.7 trillion in market value by 2025, up from $3.2 trillion in 2015. Over the next five years, we plan to grow halal-related trade and investments by double digits from P3 billion in 2022 to P12 billion pesos and add 20,000 jobs," he added.

Pascual said the country's halal industry development initiative forms part of DTI's four priorities, namely promoting regional development; attaining food security; upgrading, upskilling, and upsizing micro, small and medium enterprises; and enabling job skills matching and skills upgrading.

"Collectively, we can craft a narrative of hope for our nation — a narrative in which every Filipino enjoys the rewards of our combined progress — making the Philippines a premier investment hub. Let us all make this happen in the Philippines!" Pascual told Rotarians.