The reliance on China may be reduced by the United States’ investments in the Philippines, according to experts.
Taipei, Taiwan —
During a trade mission visit to Manila this week, U.S. Commerce Secretary Gina Raimondo announced plans to invest more than $1 billion in the Philippines’ tech sector and help double the number of semiconductor factories in the country.
According to analysts, the act of taking the pledge and visiting signifies the increasing significance of the Southeast Asian country to the United States. It will also aid in lessening the Philippine economy’s dependence on China.
During a business conference on Tuesday, Raimondo stated that American companies have recognized the issue of our chip supply chain being heavily centered in a small number of countries worldwide.
Raimondo suggests that we should diversify our chip purchases because relying too heavily on one or two countries is risky, as the saying goes, “Don’t put all your eggs in one basket.” Let’s focus on concentration rather than geopolitics.
Twenty-two American companies, such as Google (owned by Alphabet), Visa, and Microsoft, accompanied Raimondo on the journey.
There is potential for growth in the chip manufacturing sector.
According to JC Punongbayan, a prominent economist and writer for Rappler.com, the Philippines plays an important role in the global electronics industry, but currently lacks the technology needed to produce smartphone and computer chips. The country currently has 13 semiconductor plants that specialize in assembly, packaging, and testing.
According to Punongbayan from VOA’s Mandarin Service, the recent decision by the U.S. government to support the domestic semiconductor industry is encouraging. Currently, semiconductors play a significant role in trade figures, but do not contribute much value. Essentially, we import various components and then export them after assembling and packaging.
He stated that the goal is for these investments from the U.S. government and private sector collaborators to assist the Philippines in exporting goods with increased value in the coming years.
Punongbayan believes that the Philippines is currently focused on improving its regulations and aiming to attract a greater amount of foreign direct investment. The anticipated investment from U.S. companies has the potential to greatly benefit the country, which is currently facing a shortage of capital.
According to Punongbayan, we have faced challenges in drawing foreign investments. In fact, between 2020 and 2023, there has been a yearly decline of over 6% in foreign direct investments. We greatly rely on these investments to stimulate the economy and are in dire need of them.
The United States has promised a huge investment of one billion dollars, which is significantly more than the current amount of foreign direct investment received in recent years. In fact, it is nearly nine times the amount of foreign direct investment from the U.S. in 2023. This investment is crucial for the development of the Philippines.
According to Punongbayan, Raimondo’s two-day trip resulted in American companies pledging to make investments in the digital and energy industries. These areas align with Manila’s larger development goals and will support the Philippines’ efforts in enhancing and transforming its industrial sector.
Defense and economy
Dindo Manhit, the head of the Stratbase ADR Institute for Strategic and International Studies, a Philippines-based policy think tank, stated that the country’s economic progress has largely been fueled by robust consumption over time.
According to Manhit, the financial promises made by American companies will speed up the growth of the economy in the area, resulting in benefits for both the government and private businesses. This will have a positive impact on industries such as manufacturing and business process outsourcing in the Philippines.
According to him, these investments could also help Manila to comprehend that enhancing its alliance with Washington will not only result in defense support but also financial stability.
“We all have a common set of values, specifically those of democracy. One of these values is the importance of job creation for the people. The Philippines, for instance, can greatly benefit from an increase in job opportunities that would lead to a better income for its citizens,” stated Manhit. “This would further strengthen the partnership with the U.S. not just in terms of national security, but also in terms of economic security.”
Personnel from the Philippine coast guard recorded a China coast guard ship while carrying out a supply task in the contested South China Sea on March 5, 2024. According to Philippine authorities, China coast guard ships were responsible for two accidents involving Philippine boats and also aimed a water cannon at one of them.
The promises of financial assistance from Washington to the Philippines coincides with increasing tensions between Manila and Beijing regarding conflicts over ownership in the South China Sea.
At the beginning of this month, Enrique Manalo, the Secretary of Foreign Affairs in the Philippines, cautioned that Manila is being subjected to strong pressure from China to make certain economic decisions. He mentioned that the Philippines heavily depends on trade ties with China and desires to enhance their economic and trade partnerships with other nations. This includes initiating official talks for a free trade agreement with the European Union at the earliest opportunity.
According to Punongbayan, despite tensions in the South China Sea, Manila still heavily relies on China for imports, making it the main contributor to the country’s trade deficit. This highlights the challenge of separating the country’s economy from China and emphasizes the urgency for Manila to reduce its reliance on Beijing.
He stated that an increased interest from the US to invest in the Philippines is a positive development.
“Through substantial imports from China, the Philippines is inadvertently contributing to the growth of China’s economy. Furthermore, a portion of the profits from these financial transactions will inevitably end up in the hands of the Chinese government,” stated Punongbayan. “This means that, in a roundabout way, the Philippines is essentially funding China’s aggressive actions in the West Philippine Sea.”
According to Manhit, the Philippine economy is less reliant on China compared to other Southeast Asian countries.
A recent survey by Stratbase ADR Institute for Strategic and International Studies revealed that the majority of Filipinos prioritize maintaining positive economic ties with the U.S., with Japan coming in second. However, China was ranked last in the list.
According to him, the survey reveals that China’s claimed economic dominance over the Philippines is not as strong as perceived. It also demonstrates that the Filipino population is in favor of fostering economic partnerships with nations that uphold democratic values and principles of human rights and the rule of law.
Source: voanews.com
