Philippines Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

EU-Philippines trade showed improvement in 2021, surpassing the overall level of trade compared to pre-pandemic bilateral trade performance. According to Eurostat, total EU-PH trade grew by 19% year-on-year in 2021. This reflects improved bilateral trade flows as economies recover from the economic impact of the COVID-19 pandemic. EU imports from the Philippines rose by 20% to €8.1 billion, while EU exports to the Philippines rose by 18% to almost €7.1 billion. The figures also show that the Philippines enjoys a trade surplus of more than €1 billion with the EU. Industrial products (mainly machinery, mechanical equipment and electronic products) remain the largest traded category between the EU and the Philippines. At the same time, agricultural products recorded the highest growth rate among categories. The EU’s share of the Philippines’ total exports was 11% in 2021.

2017 2018 2019 2020 2021
Exports from the EU (million EUR) 5,992.80 7,094.30 7,404.30 5,769.00 7,053.60
Imports into the EU (million EUR) 7,030.50 7,282.00 7,465.00 6,517.70 8,126.70
Balance with the EU (million EUR) 1,037.7 187.7 60.8 748.7 1073.0

Source: European Commission

Trade relations with the Czech Republic

The Czech-Philippines trade balance maintained an increasing trend even in the second year of the pandemic. Compared to the same period of the previous year, the turnover increased by 6.2% and exceeded the value of 630 million USD. Czech exports fell by 2.2% and ended just below the USD 120 million mark. Imports from the Philippines increased by 8.4%, which was also reflected in the deterioration of the trade balance, which amounts to – 390 million USD to the detriment of the Czech Republic. Trade in both directions is dominated by electronic integrated circuits and automatic data processing machines (movements within the supply chains of multinational corporations). Of the Czech export items, in a year-on-year comparison, the export of revolvers (+ 344%) and whey (+ 26%) did particularly well.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 8.7 2.5 2.6 2.8 ON
Imports to the Czech Republic (billion CZK) 3 9.8 10.5 10.9 ON
Balance with the Czech Republic (billion CZK) -6 7.4 7.9 8.1 ON

Source: businesscarriers.com

Trade relations with countries outside the EU

The biggest territorial recipients of Philippine exports are historical partners Japan, the USA and China. China remains the Philippines’ largest trading partner mainly because of the Philippines’ huge imports. The EU as a trading bloc is the 4th largest trading partner for the Philippines.

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 52,413.1 51,817.2 52,883.6 48,528.7 53,307.5
Imports to countries outside the EU (million EUR) 79,585.3 94 147.7 92 303.2 70,627.0 88,776.1
Balance with non-EU countries (million EUR) -27 172.2 -42,330.6 -39,419.6 -22,098.4 -35,468.7

Source: EIU, Eurostat

Foreign direct investment

Net foreign direct investment inflows for 2021 reached US$10.5 billion, according to the Philippine Central Bank. This represents a 54.2% increase over the US$billion inflows recorded in 2020. The growth is seen as continued positive sentiment among foreign investors regarding the expected recovery in domestic economic activity. The new investments are expected to generate 10,268 jobs. The manufacturing industry is expected to receive the largest share of new investment. A large part of the investments also goes into real estate. Most of the newly announced foreign investment came from Japan, followed by the Netherlands and the British Virgin Islands. The Philippines has traditionally ranked worst in the OECD FDI Regulatory Restrictiveness Index. Three key legislative initiatives aimed at opening the Philippine economy to foreign investors (Public Services Act – PSA, Retail Trade Liberalization Act – RTLA and Foreign Investment Act) were passed before the end of the Duterte administration. PSA now allows foreign investments in sectors in which they were previously prohibited (including telecommunications, airports or railways). The RTLA then reduces the minimum paid-up capital requirements for foreign companies operating in the retail sector.

Home Credit has been operating in the Philippines since 2013 and has since established itself as a consumer credit provider. This is the largest Czech investment in the Philippines.

FTAs and treaties

Treaties with the EU

The EU and the Philippines concluded a Framework Partnership and Cooperation Agreement (PCA) in January 2018, which entered into force on 1 March 2018. There is uncertainty regarding further developments on the EU-PH Free Trade Agreement. It is currently unclear when the talks will continue and to what extent. FTA negotiations have been suspended due to the human rights situation in the Philippines.

Contracts with the Czech Republic

  1. Agreement between the government of the Czech and Slovak Federative Republic and the government of the Republic of the Philippines on air transport, Prague, 23/04/1992 Entry into force: 23/04/1992
    2. Agreement between the Czech Republic and the Republic of the Philippines on the promotion and mutual protection of investments and Protocol, Manila, 04/05/1995 Entry into force: 04/04/1996
    3. Agreement between the Government of the Czech Republic and the Government of the Republic of the Philippines on succession to bilateral international treaties negotiated by exchange of notes, Pasay City, 08/28/1995 Entry into force: 08/28/1995
    4. Agreement between the Government of the Czech Republic of the Republic and the Government of the Republic of the Philippines on the abolition of the visa requirement for holders of diplomatic or official passports of the Czech Republic and for holders of diplomatic or official passports of the Republic of the Philippines, Manila, 11/13/2000 Entry into force: 10/29/2001
    5. Treaty between the Czech Republic and the Republic of the Philippines on the avoidance of double taxation and the prevention of tax evasion in the field of income taxes, Manila, 13.11.2000 Entry into force: 23.09.2003
    6. Agreement between the Government of the Czech Republic and the Government of the Republic of the Philippines on cooperation in the field of culture, education, science and sport, Manila, 25/07/2013 Entry into force: 1/4/2014
    7. Agreement between the Ministry of Defense of the Czech Republic and the Ministry of National Defense of the Republic of the Philippines on defense cooperation, Prague, 29 May 2017 Entry into force: 27 October 2017
    8. Agreement on Economic Cooperation between the Government of the Czech Republic and the Government of the Republic of the Philippines, Prague, 31 July 2017 Entry into force: 1 May 2018.

Developmental cooperation

The Philippines is not one of the priority countries of the Czech Republic’s foreign development cooperation, but in the past, several large development projects in the water and sanitation sector were implemented here, which can be followed up with business and economic cooperation. The largest bilateral project “Drinking water supplies for Manila after damage caused by typhoons” (Strojírny Brno, as) worth over 2 million USD was implemented in the years 2006 – 2011. The Czech Republic traditionally also provides humanitarian aid to the Philippines in connection with natural disasters to help after floods, devastating typhoons or earthquakes, including recovery and prevention of other disasters. E.g. in 2017, the Czech Republic provided humanitarian aid worth CZK 1 million to families affected by the devastating typhoon Nina in the Bikol region. In 2018, humanitarian aid for the reconstruction of dwellings in the amount of million was approved. CZK to the area of ​​northern Luzon affected by typhoon Mangkhut/Ompong. In 2019, the construction of alternative evacuation centers in the cities of Malabon, Navotas, Cebu City and Cagayan de Oro was financially supported. In 2020, the Czech Republic supported the education of youth in Manila’s largest slum, Baseco, due to the COVID-19 pandemic, the implementation of the project was extended until 2022. The Czech Republic also regularly implements so-called small local projects in the Philippines, which focus mainly on helping disadvantaged groups ( women, children) and environmental protection.  The People in Need organization operates in the Philippines with its headquarters on the island of Samar, whose Philippine branch focuses mainly on strengthening the capacities of agriculture and the development of renewable energy sources.

Prospective fields of study (MOP)

Defense industry

Rising tensions in the West Philippine/South China Sea, or region, will require the continuation of modernization programs of all branches of the Armed Forces of the Philippines. The Ministry of National Defense (DND) has allocated a budget of CZK 12 billion for this purpose this year. Opportunities for Czech companies exist in the field of supplying firearms and ammunition, ballistic protection, various military vehicles, aircraft and radar technology.

Civil aviation industry

Spread over 7,000 islands, 2,000 of which are inhabited, the country will always depend on the use of air transport. Despite its considerable limitations due to the COVID-19 pandemic, further investments in the sector can be expected in the coming period, which will create export opportunities for Czech manufacturers of hangars, modular airports, radars and air traffic control systems or small transport aircraft. Attractive natural conditions also offer opportunities for recreational/sport flying and ultralights.

Agricultural and food industry

Even though agriculture employs up to 22.5% of the workforce, production is insufficient and the country is dependent on food imports. In addition to agrarian imports, there are opportunities for Czech companies associated with programs for the mechanization and modernization of agriculture, transfers of technology and know-how. The growing popularity of Czech beer and wines is also noticeable, while the market consisting of the middle and upper class is certainly not saturated.

Healthcare and pharmaceutical industry

In the Philippines, almost 100% of medical equipment is imported and local production is limited. The growth of the middle class continues in the country, and the demographic development accelerates the construction of new hospitals and the refurbishing of old ones. Even in connection with the longer-term effects of the COVID-19 pandemic, an increase in insufficient capacities and an overall strengthening of the healthcare sector can be assumed. For this purpose, the Ministry of Health (DOH) intends to implement various programs with a total budget of CZK 76 billion.

Energy industry

With the continued development of the country, the consumption of energy, which the Philippines gets more than 80% from fossil sources, will also increase. Approximately 40% comes from coal, which is still on the rise and has not yet reached its peak. The global emphasis on the green transition will also resonate in the Philippines, and Czech companies will have the opportunity to participate in solar, wind and hydro power plant construction projects.

Water management and waste industry

Access to potable water, adequate sanitation technology and waste management are still among the challenges that the Philippines has not fully addressed. In accordance with the plan for the mass closure of surface landfills, the government plans to place materials recovery facilities (MRFs) in all more than 40,000 barangays (local villages/smallest administrative units), respectively. their clusters. Some barangays plan to build waste-to-energy (WTE) facilities through PPP projects after the closure of surface landfills. Due to frequent floods and climate changes, investments in flood protection systems and water management in the landscape are also necessary.

Philippines Trade