China-Taiwan pact to hurt RP - NEDA

MANILA, Philippines - The historic move of China and Taiwan to forge an economic partnership poses a serious threat to the country’s economy, officials warned yesterday.

National Economic and Development Authority (NEDA) Director Dennis Arroyo briefed President Arroyo and the Cabinet on the implications of the move of China and Taiwan to sign in June an Economic Cooperation Framework Agreement (ECFA) that some analysts believe would pave the way for the reunification of the two states since their split in 1949 following a civil war.

“Why is this a threat to the Philippine economy? You have more than 135 Taiwanese firms in the Philippines, often in IT, electronics, software development. With ECFA, they may move out of the Philippines to China. With fewer investors or companies, you have fewer exports,” Arroyo told a news briefing.

“The President asked us to look into that (China-Taiwan free trade agreement) so we flagged it in the Cabinet meeting. That is the new event in our radar, which we should watch and take action on,” he said.

He said the ECFA was not yet inputed in the country’s growth forecasts for this year, adding any effects from the agreement could be felt in 2011 onwards.

Prior to working on the ECFA, Taipei and Beijing had already signed three agreements, including launching regular flights across the Taiwan Straits; enhancing financial cooperation and jointly cracking down on crimes and offering mutual judicial assistance, he said.

He said Taiwan also committed to open 99 industries and businesses to Chinese investments.

As of January this year, total direct investments from Taiwan is estimated at $430 million.

Arroyo said the ECFA could also result in fewer Taiwanese tourists to the Philippines. He pointed out tourist arrivals from Taiwan already fell by 14.7 percent in 2009 as Taiwanese chose to travel to China because of liberalized travel between the two countries.

He said Filipino workers in Taiwan may also lose their jobs if more Taiwanese factories move to China. There are 38,546 Filipino workers in Taiwan, the seventh top destination for overseas Filipino workers (OFWs). The deployment accounts for four percent of the total number of OFWs.

Arroyo said he recommended to the President that the government find out which Taiwanese firms in the country are now considering transferring to China, and what factories in Taiwan are the top employers of Filipino workers and check if these factories are planning to transfer to mainland China.

“These are steps which we an take. Although on the longer term, remember that China really is the future. So we should look at the greater China area, meaning mainland China, Taiwan, Hong Kong, Macau. We look to them for more investment, more tourism, more exports on the longer term,” he said.