How important is Taiwan for PH?

MANILA, Philippines – Tensions between Taiwan and the Philippines increased after the killing of a fisherman by Philippine coast guards on Thursday, May 9.

The Taiwanese government retaliated first by freezing the hiring of Philippine workers and recalling its envoy to Manila. Now Taiwan is further flexing its muscles by threatening to launch a second wave of sanctions that could include a red travel alert against the Philippines and suspension of exchanges between high-level officials from both sides.

Despite cutting diplomatic ties with Taiwan to recognize China in 1975, the Philippines has maintained close economic ties. But as economic sanctions loom over the Philippines, how much of an effect will it have on the country?

OFWs, remittances

On Tuesday, May 14, Taiwan issued a statement saying it had stopped issuing visas effectively freezing the hiring of OFW’s into the country.

According to government estimates, there are currently 87,000 Philippine workers in Taiwan with nearly 2,000 new applications submitted monthly, majority of them in the electronics industry.

Filipinos who are able to provide cheap labor, can speak English, and are knowledgeable not only in customer services and care-giving, but also in accounting, engineering and other skills make up the second largest foreign worker nationality group in Taiwan.

If working visas for Filipino workers are stopped, this could mean gaping holes in Taiwan’s workforce, which it will have to source from elsewhere.

From the Philippines’ point of view, this could have a big effect on the levels of remittances coming from OFW’s based in Taiwan.

According to figures by the Bangko Sentral ng Pilipinas (BSP) Taiwan is the Philippines’ 5th largest source of remittances from Asia below Japan ($1.009 billion), Singapore ($865.5 million), Hong Kong ($420.21 million) and Korea ($176.4 million).

In 2012, overseas remittances coming from Taiwan totaled $167.98 million.


Tourism

Because of the proximity between the two countries, Taiwan has been a major source of tourists for the Philippines.

According to the Department of Tourism (DOT), Taiwanese tourists ranked fifth in number of tourists arrivals in 2012. Taiwanese tourists who traveled to the Philippines rose 22.98% from 188,862 in 2011 to 216,511 in 2012.

Filipino travelers going to Taiwan has also slowly been increasing. In 2012, 105,130 Filipino tourists visited Taiwan, a slight increase from the 101,539 Filipino tourists in 2011 and the 87,944 in 2010.

There are currently direct flights from Taiwan to Manila, Cebu and the tourist island of Boracay offered by local low cost airline, Cebu Pacific, and legacy airline, Philipine Airlines (PAL).  So far there has not been any effect on tourism.

According to Candice Iyog, VP for Marketing and Distribution at Cebu Pacific, “CEB flights continue to operate as scheduled. As of now we have not observed any changes in booking to and from Taiwan.”

The low cost carrier currently offers 7 weekly flights from Manila to Taipei and on the back of strong traffic, is due to launch 4 weekly Cebu-Taipei flights starting July 5, 2013. 

However it’s still early days and the full effect is yet to be seen.

Trading and investment

While the Philippines recognizes the One China Policy, it still maintains economic relations to Taiwan through the Manila Economic and Cultural Office (MECO) in Taipei and the Taipei Economic and Cultural Office in Manila.

According to the Department of Trade and Industry, in 2012, Taiwan was the 9th biggest trading partner of the Philippines.

In 2012 exports totaled to $1.9 million and mad up 3.68% of the total amount. Total imports were $4,832,770,323 and made up 7.83% of the total amount and total trade was $6,748,081,461 or 5.93% of the total.

However, if these new economic sanctions are slapped onto the Philippines, this could damage a growing and budding trade relationship between the two countries. – Rappler.com