The Philippines and Australia have agreed to double bilateral trade and investments in the next five to seven years as both parties enjoy very friendly relations with the Philippines benefitting from strong exports in aircraft parts, automotive, agricultural products and Australia’s huge contribution in the country’s IT-BPM sector.
Trade and Industry Secretary Gregory L. Domingo told reporters Thursday at the 40th Anniversary of ASEAN-Australia Dialogue Relations in Makati the agreement was forged with Australian Minister for Trade and Investment Andrew Robb, who is in the country for a visit together with Australian Foreign Minister Julie Bishop, for the Philippines-Australia Ministerial Meeting.
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“In the spirit of stronger partnership and very friendly relations with Australia, we deserve to significantly increase our bilateral trade and investments,” Domingo said citing Australian outsourcing companies that are here in the country.
The visit of Australia’s top government leaders was also accompanied by a huge Australian business delegation comprising of CEOs from the top 20 Australian firms engaged in mining, IT BPO, food and engineering services.
Domingo noted that Australia, the world’s 12th largest economy despite a small population, has been a great contributor to the country’s IT-BPO sector and the Philippines enjoying a big boost in trade.
In a speech before the Makati Business Club on Friday, Minister Robb noted that TELSTRA, Australia’s leading provider of mobile phones, mobile devices, home homes and broadband internet, employs 7,000 Filipinos for its BPO operation here. There are also an estimated 45,000 Filipinos employed across Australian BPO firms in the country.
Official data showed that for the January-October period 2013, the Philippines exported $732 million worth of goods to Australia and imported $886 million worth of goods only, thus cutting trade deficit against the Philippines significantly to $154 million only from a high of $1 billion in 2012.
Philippine trade attache to Sydney Emmanuel Ang told reporters that the Philippines biggest exports to Australia are automotive parts like batteries, wiring harness and tires.
But the biggest transaction in 2013 was the Philippine exports of “aero planes” worth $240 million as reported by the National Statistics Office. Ang, however, said the aero plane exports need to be broken down specifically as this could be exports of aircraft parts and hydraulic components but are classified under the aero plane export category of the NSO export data.
Ang also noted of the strong opportunity for the automotive sector because the three biggest car companies GM, Toyota and Ford Motors have already announced plans to pull out their manufacturing operations in Australia.
Australia has already allowed the exports of fresh pineapple and mangoes but not yet on bananas. Australian exports to the Philippines include copper, oil, wheat, beef and dairy products.
In terms of investments, Ang said that Australian investments approved by the investment promotion agencies for the period January-September 2013 reached P2.4 billion or 200 percent increase over P667 million in the same period in 2012.
Aside from IT-BPMs, Australian firms in the country are engaged in mining, manufacturing, engineering and construction sectors.
While Robb cited the strong investment opportunities in the country, he also noted some challenges like the changes in mining tax rules which is affecting stability of investment rules in the country.
“It (change in rules) confused the market and then stability goes out of the window,” he said. Australia has 150 year history in mining, which has contributed $10 billion in revenues in the past 10 years.
He, however, said that these challenges are being addressed by the Philippine government and there are huge potentials to be realized.
Robb also admitted that Australia’s manufacturing sector is facing challenges but noted there are still good opportunities for niche goods.
In terms of aid, Australian granted AU$170 million in 2013-2014 for the recovery and reconstruction challenges following Typhoon Yolanda (Haiyan).
Australia also provided AU$150 million in Basic Education Sector Transformation program to support the introduction of the K to 12 Basic Education Program, transforming children’s lives and supporting efforts to harmonize education standards across ASEAN.
Australia also contributed an additional US$2.5 million from Australia to expand Public Private Partnership projects to deliver better services to Filipinos and increase private sector investment in key infrastructure projects. This will enhance the engines of economic growth by connecting people to markets through vital infrastructure.
He also reiterated Australia’s commitment to bilateral and regional free trade agreements with ASEAN.
Australia is also positioning itself in the region, which has a growing strong middle class in the next 20 to 30 years.
Based on the Joint Ministerial Statement from the conclusion of the Philippines-Australia Ministerial Meeting, both parties agreed to provide an enabling environment for trade and investment by streamlining business regulations, boosting productivity and competitiveness, promoting greater utilization of the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA), and ensuring frequent government dialogue to address trade and investment concerns.