Taipei: Taiwanese firms have ramped up their investments in the Philippines as Manila's relationship with Washington strengthens and global supply chains shift away from China, as stated by an expert from the Chung-Hua Institution for Economic Research (CIER).
According to Focus Taiwan, Kristy Hsu, director of the CIER's Taiwan ASEAN Studies Center, highlighted during a seminar in Taipei that while the Philippines had not historically been a top destination for Taiwanese investors in Southeast Asia, investment in the country has grown significantly since the COVID-19 pandemic. Taiwanese investment in the Philippines is projected to reach US$257 million by 2025, marking a notable increase in recent years. Despite this growth, total investment in the Philippines still trails behind Vietnam, a long-time favorite for Taiwanese businesses.
Hsu emphasized that the Philippines presents unique advantages in future collaborations with the United States, especially concerning non-China supply chains. This concept has become increasingly appealing as companies aim to reduce their dependency on China amid ongoing geopolitical tensions and U.S.-China trade disputes. Hsu's team conducted interviews with over ten Taiwanese companies, revealing that several have been encouraged by their U.S. clients to establish or expand operations in the Philippines to better serve the American market.
The Philippines offers several benefits to Taiwanese enterprises, including a youthful workforce, strong English-language skills, well-planned economic zones, streamlined investment procedures, and geographic proximity to Taiwan. However, challenges persist, such as a shortage of skilled talent for advanced chip processes, relatively high electricity costs compared to other Southeast Asian nations, and a heavy reliance on imported raw materials.
While Taiwanese manufacturing investments are primarily concentrated in the electronics and semiconductor packaging and testing sectors, some firms have recently entered the U.S. AI data center supply chain. Hsu's insights align with information provided to CNA in February by the Manila Economic and Cultural Office (MECO), the Philippines' de facto embassy in Taiwan. MECO's chairperson and resident representative, Corazon Avecilla-Padiernos, stated that the Philippines is actively encouraging Taiwanese investment in priority sectors like advanced manufacturing, electronics, semiconductors, and smart manufacturing.
Hsu also pointed out that Taiwanese investments in the Philippines are primarily located in Manila, the Calabarzon region just south of the capital, and Central Luzon to the north, where industrial clusters are gradually forming.