PEZA to take advantage of US Chips Act, IPEF

Following the passage of the Chips Act in the United States, as well as the Indo-Pacific Economic Framework in keeping with the US’ goal to diversify their chip supply chain, the Philippine Economic Zone Authority stressed that they are willing to take advantage of the two laws to further entice more investments in the country’s ecozone.

The Chips Act set aside $39 billion in direct grants — plus loans and loan guarantees valued at $75 billion — to persuade the world's top semiconductor companies to make chips on American soil after decades of production abroad.

IPEF, launched by US President Joe Biden in 2022, on the other hand, is an opportunity to strengthen economic cooperation with the United States, as it creates opportunities with major Indo-Pacific economies to cooperate on trade, supply chains, clean economy, and fair economy.

During the recent high-level Trade Mission sent by US President Biden to the Philippines and led by US Secretary of Commerce Gina Raimondo last 11 to 12 March 2024, PEZA director-general Tereso Panga expressed that the Philippines is looking forward to taking advantage of the newly passed CHIPS Act and the IPEF in keeping with the US’ goal to diversify their chip supply chain.

According to US Commerce Secretary Raimondo, “US companies have realized our chip supply chain is way too concentrated in just a few countries in the world… You know the old adage, ‘Don’t put your eggs in one basket’. Why do we allow ourselves to be buying so many of our chips from one or two countries? That is why we need to diversify.”

With this, Panga expressed, “We are optimistic about our flourishing partnerships with American investors in various sectors most especially in the Electronic and Semiconductor Manufacturing Services, our bread and butter. This collaboration is expected to enhance our nation's capabilities in assembly, packaging, and testing, and propel us into sophisticated integrated circuit design and, eventually, wafer fabrication.”

“We are also eyeing leading American companies in the areas of regenerative agriculture, alternative and renewable energy, e-mobility, green ores processing, drug and medical equipment manufacturing, tourism, agriculture, and digital and frontier technology to locate their facilities in the Philippines,” he added.

Aside from this, the Philippines is also extending the invitation to other countries to come and look at the Philippines for their business and investment ventures. “Other countries should not see the US Trade Mission as a threat, but rather see it in a positive light as it strengthens the resiliency of general trade in the region,” said Panga.

PEZA is positioning itself as a hub for US investments that will be a bridge between ASEAN and the Indo-Pacific as it moves towards creating a global value chain with an emphasis on investments from key sectors including manufacturing, renewable energy, science and technology, among others.

“All investments are welcome from all countries!” DG Panga noted right after his presentation at the PH-US Trade and Investment Mission (PTIM) Forum in Fairmont Makati where he also delivered the closing remarks.

The US Department of State and US Trade Administration have continually lauded PEZA, stating that “the business environment has been notably better in special economic zones, particularly those available for export businesses operated by PEZA. PEZA has received positive feedback for its regulatory transparency, no red-tape policy, and one-stop shop services for investors.”

The United States is the 2nd largest foreign investor in the ecozones, Japan being number 1. US investments account for 355 companies in PEZA, contributing P404.368 billion of investments, $ 10.352 billion in exports, and 368,511 direct jobs as of date.

The PEZA Chief likewise highlighted, “This partnership can strategically de-risk and diversify global value chains, positioning the Philippines as your +1 in Asia. With the Philippines as your ideal hub in the region, the ASEAN and Asia-Pacific could serve as your manufacturing and distribution gateway.”

Among the US companies that have already expressed some form of interest include Sol-Go Philippines Inc., a PEZA-registered solar panel manufacturer that has facilities in Lima Technology Center – Special Economic Zone, with plans to invest $5 million to expand their local operations.

US private equity firm KKR & Co. will expand its investments in the Philippines by another $400 million according to the US Department of Commerce.

The Apl.de.Ap Foundation International in partnership with Arizona-based firm Legacy EV will develop the country’s first electric mobility education and development center.

“The Philippines is not only prepared but eager to continue and expand our business ventures with the United States... We are ready to roll out the red carpet and are fully equipped to offer the optimal business environment, ecosystem, and a nurturing home for your business in Southeast Asia, throughout Asia, and across the Indo-Pacific,” said DG Panga in his closing remarks.