RP, Taiwan to ink pact on economic corridor

The Philippines and Taiwan are expected to sign a memorandum of agreement (MOA) this week that would start the ball rolling on the establishment of an economic corridor between the two countries, thus creating a seamless connection between the special economic zones of Subic and Clark in the Philippines and Kaohsiung in Taiwan.

The MOA was supposed to be signed last night.

Earlier, in a speech at the 19th Joint Meeting of the Philippine-Chinese Business Council and the Chinese-Philippine Business Council, Trade and Industry Secretary Peter B. Favila had expressed optimism that the signing of the MOA would be the catalyst towards a more vibrant economic partnership between the Philippines and Taiwan.

Through the Philippines-Taiwan Joint Economic Conference currently meeting in Manila, Favila said, the two countries are taking parallel steps to facilitate a more intensive engagement between Philippine and Taiwanese industries through cluster industries.

The Philippines and Taiwan, Favila said, are looking at the production and trading of goods and services and investments in manufacturing, services and utilities.

The mechanism for the economic engagement would be through the economic corridor between Subic-Clark and Kaohsiung.

With the economic zone, Favila said, both countries would be able to benefit from existing complementaries, lower production costs and tariff arbitration.

"The entry of cluster industries from Taiwan will contribute to the full development of Subic and Clark as a major manufacturing and logistics hub," Favila said.

Taiwan, Favila said, "can further expand and develop both Subic and Clark to make them more viable offshore platforms for cluster industries, particularly an alternative to China for electronics manufacturing, and a possible extension for heavy industries."

The MOA signing would start more intensive negotiations regarding the terms of the economic corridor.

At least two ticklish issues would have to be resolved such as the free movement of Filipino and Taiwanese workers between the special economic zones and financial transactions.

The economic corridor is intended to allow automatic and parallel registration of locators in the special economic zones enjoying similar incentives and benefits.

The corridor is also envisioned to allow the free movement of goods, human resources and exports.

At the same time, the arrangement would allow Taiwan to tap into the ASEAN Free Trade Agreement (AFTA) and the ASEAN + 3 arrangement with Japan, China and Korea.

The economic corridor was initially discussed during the time of former Trade and Industry Secretary Juan B. Santos and has continued under the new term of Trade and Industry Secretary Peter B. Favila.

The benefit of such an arrangement for the Philippines would be more investments from Taiwan, more employment and the transfer of manufacturing technology, specifically optoelectronic technology which involves the manufacture of liquid crystal displays, polymers and semiconductors.

At present, there are about $1.5 billion registered Taiwanese investments in the Philippines.