WE recently attended the Philippines-Taiwan Joint Economic Conference held in Taipei. Part of discussions among government and private sector representatives was the promotion and facilitation of trade among neighboring economies. In particular, agreements were made on the promotion of the Subic-Clark economic corridor as an investment hub for Taiwan companies.
As nearest neighbors in this part of the world, Taiwan and the Philippines have strong commonalities that indicate opportunities for growth and development through economic cooperation between the two economies.
The Philippines has an abundant pool of skilled labor, land and natural resources, and access to preferential trading arrangements with various geopolitical groups in the region. Taiwan, on the other hand, has an abundance of capital resources and an upper hand in high technology industries; but it suffers from tight labor supplies, shrinking land resources, and reliance on imported power supply.
Trade between Taiwan and the Philippines totaled US$30 billion in 2005, with Taiwan enjoying a trade surplus of US$1 billion. Taiwanese investment in the Philippines reached more than US$1.3 billion. Overseas Filipino workers in Taiwan are estimated at 160,672 in 2006, more than quadruple the number in 2005.
Memorandum of Understanding
Sometime November 2005, a Memorandum of Understanding (MOU) was entered into by Subic Bay Metropolitan Authority (SBMA), and Clark Development Corp (CDC) in the Philippines, and the Export Processing Zone (EPZ) in Taiwan.
The MOU aimed to promote the free flow of goods and persons among and within the ports and, in general, enhance trade and investment opportunities among port users and locators. The objective is to create a seamless unitary economic corridor to enable enterprises established in the economic zones to smoothly and easily establish and maintain operations involving inter-zone exchange and cooperation. The Subic-Clark economic corridor is also seen as a possible gateway or hub for preferential trading of Taiwan-sourced products (manufactured in Subic or Clark) to ASEAN countries and other countries in the region.
Article 1 (Enhancing and Facilitating Trade in Goods) and Article 2 (Cooperation in the Movement of Natural Persons) of the MOU specifically seek to harmonize and standardize the pertinent customs and admission formalities, systems and procedures among the economic zones of the two economies and promote the free flow of goods and persons among and within the ports.
In the last nine months, we have been working with Subic and Clark officials in implementing the MOU and in particular, in preparing an Immigration-Quarantine-Customs (ICQ) Manual for the two economic zones. Under the guidance of the Subic-Clark Alliance for Development Council (SCADC), substantial efforts have been made to harmonize and simplify the existing free port rules as follows:
- Automation of Customs and Admission procedures (e-TAPS)
- Common Operational Guidelines for Discharge of Goods in Subic and Clark
- Common Set of Rules and Procedures on Work Permit and Visa systems
- Common Manual on the ICQ system
Established under Executive Order No. 504-2006 and presently chaired by Secretary Ed Pamintuan, SCADC is the agency mandated to rationalize resources and harmonize strategies that will ensure an integrated and coordinated approach for the development of the Subic-Clark economic corridor as a world-class logistics center in the Asia Pacific Region.
Benefits to Traders
In the coming months, locators in the Subic-Clark economic corridor will continue to experience major reforms in the existing customs, labor and immigration systems. For the import permits issued by Clark and Subic authorities, the present system is fully automated and now takes 2 minutes to process online (previous manual process was about 4 days). For goods discharged in NAIA but bound for Subic or Clark, the filing of entry is now automated and documentation is now substantially reduced.
For work permits and visas, the new system to be implemented in March 1 will greatly reduce documentary requirements (from 12 to 4 documents) and processing time (from 7 days average to 2 days). In addition, visas issued for foreign workers in Subic and Clark are now deemed valid even outside the economic zones.
By and large, the reforms implemented will result directly in the facilitation of trade and the reduction of business cost in the Subic-Clark economic corridor.
The author is an international trade consultant and a licensed customs broker. He is a lecturer on logistics, indirect tax and customs, and a lecturer of Ateneo and BayanTrade on Supply Chain Management. Please contact firstname.lastname@example.org for your comments.