Dubai: The Philippines and UAE are in the early stages of signing a free trade agreement, with the Southeast Asian country expecting a potential deal to give a significant boost to its services sector.
The UAE has been inking broad trade agreements with its closest trade partners as global economies recover from the effects of the pandemic. “Normally, before you go into the process, we would start with some kind of a joint committee on economic cooperation that will serve as a platform where we can talk about cooperation related to trade liberalisation efforts as well as fineune investment rules,” said Ramon Lopez, Secretary of the Department of Trade and Industry (DTI) of Philippines.
“We've also offered to have an investment promotion and protection agreement, which we started before the pandemic. We hope to conclude this early next year – the agreement can improve the confidence of UAE investors in the Philippines.”
UAE has been the Philippines’ largest trading partner in the Middle East. In 2019, UAE’s total exports to the Philippines totaled $1.33 billion and the main products were crude petroleum, refined petroleum and petroleum gas. According to Lopez, a trade deal with UAE will take awhile.
“Normally, an FTA would probably be a year or two and you really go into the details of the products - it has to be a win-win kind of agreement”
The official said apart from the traditional export items such as food and agriculture commodities, the Philippines will also focus on minerals and construction materials. “Hopefully, we can give the IT-BPM (Information Technology and business process management) sector a big push in the FTA”
The Philippines’ IT-BPM sector, which generated a revenue of about $26.2 billion in 2020 as per some estimates, has been one of the country’s best-performing and employment generating sectors.
Last year, the Philippines signed a regional comprehensive economic partnership agreement with ASEAN member states, helping form the world’s largest free trade area in terms of global trade, GDP, FDIs, and market size. “We look forward to having this facilitate an environment of trade and investment with UAE, said Lopez. “Gulf countries can also have some kind of a regional or bilateral dialogue.”
Attracting investments from UAE’s sovereign wealth funds is a top priority for Lopez. “We will be offering the Philippines as an investment destination to the sovereign wealth fund and that's the reason why we also want them to push through with the investment promotion and protection agreement,” said Lopez.
Despite the pandemic, the Philippines - one of the fastest growing economies in Southeast Asia - is projecting a GDP growth of 7 per cent for 2022 and that could translate to high returns for sovereign funds, said Lopez. “It will be good for UAE’s sovereign funds to look into the Philippines, if they're looking for alternative high growth places for their plans, while at the same time helping in developing the country,” he added.
The latest COVID-19 variant has prompted countries to suspend flights from ‘at risk’ countries and re-introduce lockdowns and Philippines has been no exception. The country’s pandemic task force has issued new protocols for travelers arriving from countries not on the government’s red-list.
“We believe this is maybe a temporary halt in our re-opening efforts,” said Lopez. “With more data suggesting that Omicron cases are bordering on the mild, it will give us more impetus to continue with the re-opening.”