RP seeks soft loan from Taiwan

TAIPEI — The Philippines continues to seek concessional funding from Taiwan under its so-called Rong Phang facility to attract more Taiwanese investments in the Philippines.

This was revealed by Manila Economic and Cultural Office (MECO) chief executive officer Antonio I. Basilio in a recent briefing to business journalists visiting Taiwan.

He explained that the Rong Phang financing facility is a low-cost or concessionary funding facility for Taiwanese businessmen wishing to put up businesses in Central and South American countries with diplomatic relations with Taiwan.

The attractively priced fund is intended to encourage Taiwanese business people to put up businesses in Central and South American countries.

The attraction of the Rong Phang facility for the Philippines, Basilio said, is the growing realization among important sectors in Taiwan that a similar funding facility should be put in place to give real teeth to the "Go South" policy that the Taiwanese government has been trying very hard to sell to Taiwanese businessmen as a strategy to lessen their over-dependence on mainland China.

The Philippines has been trying to access the Rong Phang facility since last year.

This time around, the Philippine government is trying to link access to the Rong Phang facility with the still unconcluded Joint Economic Cooperation (JEC) talks with Taiwan on an economic corridor between the two countries.

The JEC talks started in October this year and is scheduled to resume in February 2007.

The establishment of an economic corridor between the Taiwanese economic processing zones of Kaohsiung and the Subic-Clark zones would provide a seamless connection between locators in both zones, facilitating complicated customs and even labor movement restrictions.

Funding from the Rong Phang facility is intended to help finance the development of the Subic Freeport and the Clark Special Economic Zone.

It is also being eyed to help refinance the outstanding loan of the Subic Bay Development and Management Corp. (SBDMC). The SBDMC secured a $23 million loan to develop 100 hectares of Phase I of an industrial park intended for Taiwanese locators.

While the "Go South" policy of Taiwan has been in place for quite some time now, no discernible uptake in investment in the Philippines has taken place.

The Philippines’ difficulty in tapping the facility, Basilio admitted, is the fact that the Philippines technically does not have diplomatic relations with Taiwan.

The Philippines broke off diplomatic ties with Taiwan in 1975 when it recognized the People’s Republic of China and adopted the "One China" policy.

However, the Philippines maintains informal economic, political and cultural ties with Taiwan.