Sunday, November 06, 2005

RP eyes ‘economic corridor’ with Taiwan

By Marianne V. Go, The Philippine Star

The Philippine government will explore a possible economic corridor arrangement with Taiwan that would include the Subic and Clark economic zones, Trade Undersecretary Thomas Aquino said.

Aquino, who will leave tomorrow for Taiwan, said he will "explore" the possibility of establishing a "seamless economic corridor" that would involve not only Taiwan and Subic, but also Clark.

He explained that Clark must be included in any economic corridor with Taiwan since Subic no longer has space to expand.

Even though Subic wants to annex the adjacent Bataan Export and Technology Park (BETP), Aquino cited the difficulty of the BETP’s mountainous terrain for industrial parks.

However, Aquino is cautioning against a headlong rush into entering into any "economic corridor" agreement with Taiwan when all the details of such an arrangement have not yet been fully studied.

He said while Taiwanese officials may be "negotiating" with Subic authorities, they still have to officially communicate their position to the Department of Trade and industry and the Board of Investments.

During a recent media visit to Taipei, Taiwanese officials relayed their interest in establishing an economic corridor with Subic.

The Philippines and Taiwan hope to start negotiations before the end of the year for a special economic corridor between the Subic Freeport and the port city of Kaohsiung which would allow the free movement of goods, capital and people between the two points.

Taiwanese Economics Ministers Ho Mei-Yueh welcomed the proposal from Manila Economic and Cultural Office (MECO) chairman Tomas Alcantara and Subic Bay Metropolitan Authority (SBMA) administrator Armand Arreza during a courtesy call at her office.

In a brief interview with Filipino newsmen, Ho said he welcomes the creation of a free trade arrangement between Taiwan’s export processing zone in Kaohsiung and the Subic Freeport, noting the "very close distance" between Taiwan and the Philippines.

Ho expressed optimism that negotiations for the proposed economic corridor could start "as soon a possible."

However, Ho stressed that such an arrangement should not violate any provision of the World Trade Organization (WTO).

She acknowledged that with such a corridor, "it would be more convenient for the movement of goods and people."

However, Taiwanese Export Processing Zone Administration director-general Tzeng Sheng Bao, in a separate interview, relayed at least five of several requests of the Taiwanese government.

One request is for the Philippines to consider the possibility of lowering the current 40 percent local content to 25 percent, thus allowing such goods produced in Subic to be considered as part of the ASEAN free trade zone.

Secondly, the removal of tariff barriers between the two points so that there is less documentation required, ensuring a smooth flow of goods between the two ports.

Third is the one-step investment approval processing so that if a firm is already approved in Kaohsiung or in Subic, the firm is automatically approved in either port and should not be required to submit additional documents in the counterpart port.

Fourth, the liberalization of financial services which would allow Taiwanese banks to operate in Subic or Philippine banks to operate in Kaohsiung without having to get a banking license and perhaps even allowing the removal of foreign currency controls.

A fifth request is for the free flow of labor and removal of labor quotas.

Discussions on the economic corridor is expected to be taken up during the Dec. 5 and 6 Joint Economic Council (JEC) talks in Subic, MECO president Antonio Basilio said.

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