Based on the JEC Provisional Agenda, Philippine government agencies involved in the proposed economic corridor with Taiwan are drafting a memorandum of agreement (MoA) for signing during the event.

The MoA shall spell out the automatic registration of companies located in the three areas involved in the economic corridor meaning that a Taiwanese project located in either Subic or Clark shall also be automatically registered in the Kaoshiung economic zone and vice-versa. The MoA shall also outline the establishment of a database on land cost.

The automatic registration of projects in the three involved economic zones is meant to facilitate exports between the neighboring freeports – Subic/Clark and Kaoshiung.

Government agencies involved in the crafting of the MOA are Subic Bay Metropolitan Authority, Clark Development Corp., Philippine Economic Zone Authority, Manila Economic and Cultural Office, Department of Finance, Bureau of Customs, the Board of Investments and Bureau of International Trade and Regulations.

Earlier, Ho cited the proposed economic corridor as a staging point towards a full free trade agreement between the two countries.

"It could have been easier under an FTA arrangement but we can start by linking our export processing zones," Ho said.

Tseng noted of a list of items that are have to be agreed upon by both parties before the signing of the "economic corridor" deal.

These are flow of goods, non-tariff barriers, treatment of investment application, financial services, and flow of labor.

SBMA administrator Armand C. Arreza explained both camps are looking at a minimum local content of 25 percent to enable goods to be granted the preferential tariff. ASEAN’s Common Effective Preferential Tariff scheme has a 40 percent minimum local content requirement.

On the non-tariff barriers, both parties are amenable to simplifying their procedure to facilitate the flow of goods.

To simplify registration, Arreza said that companies registered in Kaohsiung must be automatically be allowed to register in Subic.

"The issue of financial services is one area that we need to push," Arreza said noting this will enable Taiwanese investors easier access to their financing.

This means that Taiwanese banks may be allowed to operate in Subic.

The issue on the movement of people without visa restriction between Subic and Kaohsiung is something they have to iron out.

At present, entry of migrant workers into Taiwan is governed by a quota system.

"These issues have to be applied on a reciprocal basis," Arreza said.

There are more than 40 Taiwanese investors in the 153-hectare Taiwanese Industrial Park in Subic. The Taiwanese investors account for as much as 85 percent of Subic’s annual output or approximately $1.4 billion in export receipts annually with Wistron Corp. (formerly Acer Computers) as the largest exporter.

Overall, 2004 figure Taiwan exported $220 million to the Philippines as against Philippine exports to Taiwan of only $87 million.

MECO resident representative Antonio Basilio stressed the need to strengthen ties with Taiwan as the Philippines lagged behind in capturing Taiwan’s foreign direct investment in the region.

For the cumulative period 1997-2004, the Philippines accounts for only 11.1 percent of foreign direct investments of Taiwan in the ASEAN region with Singapore getting the highest FDI with 44.5 percent, Vietnam with 17.2 percent, Thailand with 13.8 percent, Malaysia 8.7 percent and Indonesia 4.7 percent.

Basilio said that total registered Taiwanese investments in the country for the 1997-2004 period amounted to $1.5 billion. This does not include the small ventures in aqua farming that Taiwanese have poured into the regions.

Another factor that could attract Taiwanese investors into the Philippines is the huge ASEAN market plus the three other countries, China, Korea and Japan, that the region is negotiating with for similar free trade agreements.

This means that a nonASEAN investor would have hurdled the 40 percent local content requirement under the AFTA to be enable its product to avail of the preferential tariff arrangement in the ASEAN.

The creation of the economic corridor will also be good for the Filipino migrant workers.

At present, the Philippines deploys an average of 3,000 workers a week to Taiwan, 60 percent of whom are factory workers.

Now that Taiwan is on the road to economic recovery, its requirement of foreign workers is placed at 300,000 annually, which are divided among Thailand, Vietnam and the Philippines.(BCM)