The Philippines is wasting no time in pursing Taiwan’s new trade policy that will see new business looking for destinations away from China, the island’s largest trading partner. Last year, a quarter of all its goods went to the Mainland across the Taiwan Strait. But Cross-Strait trade, while it represents a high percentage for the island’s exports, the dollar value of those goods is continuing to slide as the Chinese economy continues to soften.
Concerned by this trend, newly elected Taiwanese President, Tsai Ing-wen, is urging her countrymen to seek fresh markets and investment potential across Asia, particularly within the Asean countries, of which the Philippines is a member. She believes that reliance on the Mainland could ultimately threaten Taiwan’s economy. In 2012, Taiwan funded businesses on the Mainland to the tune of US$11 billion.
The Manila Economic and Cultural Office (MECO) in the Taiwanese capital, Taipei, has already held initial discussions with the Southbound Policy Office, the Ministry of Economic Affairs and the Foreign Ministry, along with other government departments, on how the Philippines can implement Tsai’s ‘New Southbound Policy’.
In an interview with The China Post, a mass-circulation, English-language, Taipei daily, the Philippines top envoy in Taiwan, MECO Managing Director and Resident Representative, Antonio Basilio, said that he had discussed a wide range of subjects with the Taiwanese officials including economic, trade and industry, investment and cooperation issues and looks forward to further talks on the New Southbound Policy.
Under President Tsai’s predecessor, Ma Ying-jeou, Taiwan became increasingly inter-connected economically with China. His legacy includes the Economic Cooperation Framework Agreement (ECFA) which he signed into law on 1 January, 2011. The ECFA is an inter-government, preferential trade agreement that seeks to remove tariff and commercial barriers between the two countries. Hailed as a landmark deal, unfortunately it has not lived up to the hype of boosting Taiwan’s economy. The economic slowdown in China has resulted in a contraction of Cross-Strait trade.
Last year Taiwan shipped US$250 billion worth of goods around the world, representing 1.5% of total global exports. Of these 72%, by value, went to other Asian countries. Of total Taiwanese exports, China took 25.4%, valued at US$71.1 billion, followed by Hong Kong, 13.6%, US$38 billion; the US, 12.2%, US$34.3 billion, and Japan, 6.9%, US$19.3 billion.
These were followed by five Asean countries 5th place, Singapore, 6.2%, US$17.2 billion; 7th place, Vietnam, 3.4%, US$9.5 billion; 8th place, Philippines, 2.7%, US$7.4 billion; Malaysia, 9th, 2.5%, US$7.1 billion; 11th Thailand, 2.0%, US$5.7 billion, and 15th, Indonesia, 1.10%, US$3 billion.