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Land of Opportunity
2017-09-04

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Dancers perform at the opening ceremony for the first Philippine branch of Taiwan-based Hua Nan Bank in June. The branch is located on Ayala Avenue in the Makati financial district. (Photo courtesy of Hua Nan Bank)

 

Taiwan enterprises are flocking to the Philippines, a beacon of potential in Southeast Asia.

On a sunny afternoon at an 8-hectare compound in the city of Bocaue, situated on Luzon Island about 25 kilometers north of Manila, Tayson Hsieh (謝世英‬) walks among rows of humming equipment at his pig feed facility. “This country’s economy is improving at a fast pace, so its people are increasingly able to afford food items like pork,” said the 73-year-old Taiwan-born owner of Atlas Nutrition. With pig farmers clamoring for more feed to meet this demand, he is currently working to ramp up production.

Hsieh began his career in the Southeast Asian nation in 1983, spending the next seven years learning the ropes before setting up his own firm. Having built up his business and branched out to other endeavors such as raising breeder pigs, Hsieh has seen Atlas Nutrition’s revenues grow to about NT$5 billion (US$164.5 million) annually.
 

 


Visitors attend the inaugural 2014 Taiwan Excellence Exhibition in the Philippines at the SM Megamall in Metro Manila. (Photo courtesy of Taiwan Trade Center, Manila)


To the west, in the region of Subic Bay, Sung Yueh Construction Corp. President Simon Su (蘇國芳) is busy overseeing the company’s largest ever project—renovating a high-end apartment building and hotel that served as the venue for the Asia-Pacific Economic Cooperation Economic Leaders’ Meeting in 1996. “This country is home to people that want and can increasingly afford better lives,” Su said, adding that he has faith in the Subic Bay area’s potential given its lack of traffic and other problems associated with major cities. Formerly home to a U.S. military base, Subic Bay was designated a free port in 1992, attracting businesses with incentives like substantial tax breaks.

Over the past 12 years, Sung Yueh has been constructing factory-office buildings in Subic Bay Gateway Park, which has been jointly developed by Taiwan enterprises and the Philippine government since 1994. As nearly all the land covered by the industrial park’s first and second phases—around 155 hectares in total—is being utilized, the facility is ready to enter its third phase. This expansion comes at a time when Taiwan businesses, as well as manufacturers in mainland China, are increasingly looking to Southeast Asia for their next projects.

Pearl of the Orient Seas

With a population of 100 million and relatively low gross domestic product per capita of less than US$3,000, the Philippines has substantial potential for growth. Manila is currently working to improve the country’s outlook via efforts ranging from an ambitious infrastructure development plan—budgeted at US$16.67 billion for 2017, nearly 14 percent higher than the previous year—to anti-corruption drives, with the latter helping improve the country’s ranking in the corruption perceptions index published by Transparency International from 141 in 2008 to 101 in 2016.

 


The Philippines, home to many famed historic sites such as Fort Santiago in Manila, boasts one of the fastest growing economies in the world. (Photo by Oscar Chung)


Dubbed the “pearl of the Orient seas,” the archipelago nation posted 6.9 percent economic growth in 2016, the highest in Southeast Asia. Additionally, the country ranked ninth globally on the list of top prospective investment destinations in the latest edition of World Investment Report released in June 2017 by the U.N. Conference on Trade and Investment.

Taiwan has long looked to the U.S., Japan and mainland China for investment opportunities, said Gary Song-huann Lin (林松煥), head of the Taipei Economic and Cultural Office in the Philippines. It is time to fully explore this country, a potential treasure trove located so near to Taiwan, he added. Total trade volume between the two nations reached US$10.8 billion last year, making the Philippines Taiwan’s 10th largest trading partner worldwide and fourth largest in Southeast Asia.

With an eye toward increasing the prevalence of Taiwan-made products in the Philippines, the government-supported Taiwan External Trade Development Council (TAITRA) organized the first edition of the Taiwan Excellence Exhibition in Metro Manila in 2014. The trade show displays products that have received the Taiwan Excellence Award, an honor created by the Ministry of Economic Affairs to recognize high-quality merchandise. Every year, the flagship exhibition takes place as an independent event or part of larger shows at venues such as the SM Mall of Asia, according to Harrison Lan (藍科銘), director of TAITRA’s Taiwan Trade Center, Manila. “The Philippine market is distinguished by the speed with which consumers make purchasing decisions,” he said. “This represents a boon for Taiwan firms selling high-quality and competitively priced products.”
 

 


Workers carry sacks of pig feed at Atlas Nutrition’s plant in Bocaue. (Photo by Oscar Chung)


Spending Power

This consumer behavior has not gone unnoticed by members of Taiwan’s business elite including Delight Chen (陳昶任), CEO of e-commerce firm Nineder Technology Co. The company launched its online shopping platform Shopping99 in Taiwan in 2002 and expanded it to the Philippine market in 2013. The entrepreneur said that his revenue from the Southeast Asian nation has been growing by 100 percent annually. Chen noted that this market currently makes up around 14 percent of his total earnings, but he expects it to be his top source of income in just a few years. His experiences in the Philippines are encouraging him to explore other regional opportunities in such countries as Malaysia and Indonesia, he added.

Restaurateurs and businesses in the hospitality industry have also been relishing the spending power of Filipino consumers in recent years. Some have chosen to build up a presence in the country, such as Din Tai Fung, a popular restaurant chain based in Taipei City that opened its first operation in the Philippines in December 2015. Others have chosen to cater to the increasing number of Filipino tourists visiting Taiwan. According to the Tourism Bureau, the nation has seen a largely steady rise in the number of Filipino visitors over the past decade, reaching a record high of 172,475 in 2016.
 

 


Subic Bay Gateway Park, a Taiwan-Philippine joint venture launched in 1994, is expected to initiate its third-phase expansion project in the near future. (Photo by Oscar Chung)


Risk and Reward

As businesses are increasingly flocking to the Philippines, so too are Taiwan banks eager to offer financial support and expand their international reach. Hua Nan Bank, for example, opened its doors in Metro Manila’s financial district of Makati in June. “Considering the fierce competition in Taiwan’s banking sector, Hua Nan needs to explore overseas markets, especially countries like the Philippines, a vibrant nation that is attractive to Taiwan manufacturers relocating from mainland China,” said Jeff Lai (賴坤賢), general manager of the bank’s Philippine branch. “We support Taiwan companies setting up shop here in line with the government’s policy of encouraging interactions with Southeast Asian nations.”

Hua Nan’s strong suit in Taiwan lies in corporate banking, and it is this specialty that the company is putting to good use in the Philippine market. The bank is currently focusing on offering syndicated loans to Taiwan businesses operating in the country.

There are of course still stumbling blocks for firms setting up operations in the Philippines, TAITRA’s Lan said, citing issues ranging from substantial red tape to inadequate infrastructure. But those seeking evidence that fortunes can be made need look no further than entrepreneurs like Tayson Hsieh, and consider the country’s overall economic performance in recent years. “You have to stay here for a while, observing how things work,” Lan noted. “But in the end, your patience will pay off.” 
 

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