Amid US-China truce, the Philippines and Taiwan are forging a progressive partnership

(A commentary)

The Indo-Pacific region is entering an unprecedented stage of uncertainty as the U.S.-China trade war began to morph into a race for technological supremacy.

In a development following the two powers’ tit-for-tat tariff impositions on goods, the Trump administration has upped the ante by blacklisting 28 Chinese technology companies, adding to its previous efforts of preventing China’s access to American technologies. China, meanwhile, has also expressed its intention to release a national security management list to protect its own technology, while fast-tracking the development of its indigenous technological industries.

At the center of the intensifying rivalry are the Philippines and Taiwan, and the rest of other states in Southeast Asia, that will eventually face the tough choice between the U.S. and China. However, instead of waiting for the tensions to cool down, Taiwan and the Philippines can adopt proactive countermeasures to exert influence in the regional landscape. In fact, they have been taking advantage of the opportunities and risks of the escalating technological and trade war as recent trends in their bilateral relations evinced.

At the inaugural Yushan Forum 2019 held last week in Taipei, President Tsai-Ing wen called on Taiwan’s partners and neighboring states in Southeast Asia to cultivate far more progressive partnerships as the region undergoes a challenging transition. In the midst of trade conflicts in the international economy, Tsai called on Taiwan’s like-minded partners to work closely in developing supply chains and production bases that will facilitate closer links to the global markets through the New Southbound Policy or NSP.

As one of the first partners of Taiwan’s NSP—exemplified by the bilateral investment agreement signed in 2017—the Philippines continues to reap the benefits of closer economic ties. This upward trajectory sets the positive momentum to expand existing collaboration from the computer and electronics sector to transformative technologies centered on complementarity and people-to-people connection.

Last September, Cal-Comp Technology, the Philippine affiliate of Taiwan’s Kinpo Electronics Inc., has renewed its interest to raise an initial public offering amid the U.S.-China trade war. The estimated gross proceeds of $203.62 million are expected to expand Cal-Comp’s business operations in the computer and electronics sector in the country. As a leading exporter of semiconductors and electronics, this development will contribute to the Philippines’ export revenues up to 3% amounting to $38.7 billion for 2019 from $37.6 billion in 2018.

Taiwanese motorcycle company Kwang-Yang Motor Co. Ltd (KYMCO Philippines) is also expected to invest $19.3 million in the Philippines to build a new motorcycle plant expected to be completed in 2023. This investment will bolster KYMCO’s production capacity to produce 6,000 motorbikes per month. It will also start to introduce a line of electric scooters with smart dashboards and digital navigation.

Similarly, the Philippines is positioning itself as a formidable partner of supplying electronic solutions and materials to Taiwanese companies. During the semiconductor trade show last September in Taiwan, 44 Filipino companies showcased the Philippines’ competitive advantage in terms of market size,  raw materials, young workforce and skills in the global supply chain of electronics and semiconductors to advance industrial collaboration.

The Philippines and Taiwan have also started to explore cooperation in the area of transformative technologies. During the InnoVEX 2019 held in Taipei, 11 Filipino start-ups and two incubators showcased their tech on machine learning, geospatial mapping, e-commerce and cybersecurity, further setting the tempo for increased cooperation between the Taiwan-Philippines’ startup ecosystem. All this adds to the ongoing collaboration of the two countries toward innovative technologies, galvanized in the establishment of the Taiwan-Philippines Digital Corridor in March 2019.

The joint effort aims to leverage the power of blockchain technology for economic development in various industries such as agriculture, fisheries and financial technology. The Digital Corridor will also foster city to city cooperation between Taipei, Kaohsiung, Cagayan and Metro Manila.

As one of the countries with the highest internet usage and penetration, the Philippines is a strong contender in the global value chain of machine learning, a subfield of AI. The Philippines has the potential to become a leader in developing AI capabilities with its access to a tremendous reservoir of raw data. To capitalize on this opportunity, the Philippines has released its AI roadmap to focus on research and development, especially in developing the next generation of capable workforce that can navigate what has been called the “third wave” of the digital era.

Under the NSP, Taiwan has established a strong collaboration with India with almost 86 research programs and 180 research papers in the area of science and technology. Recently, they inaugurated a joint research center on AI that will further cooperation in AI, the Internet of Things, and information security between Taiwanese and Indian research institutions and universities. This type of technological partnership can also be replicated in the Philippines, encouraging mobility among Filipinos working in science, technology, engineering and mathematics to conduct research or study in Taiwan and vice-versa as a preliminary step.

These current collaborations set the stage for more collaborative opportunities in the growing and multi-faceted relations of Taiwan and the Philippines. The signing of the bilateral investment agreement in 2017 seems to have foreshadowed the instability which currently looms in the region. With the recent technological and trade truce unfolding in the backdrop of the Indo-Pacific, it is by no doubt, in the best interest of the two countries to forge a far more progressive relationship to prosecute their interests based on transparency and complementarity.

Mark Manantan is a research fellow at the Center of Southeast Asian Studies at the National Chengchi University and a Young Leader’s fellow at the Pacific Forum. Views expressed are entirely personal.