Philippines seeks Asia logistics hub status, banking on US ties

MANILA (Bloomberg): The Philippines is setting its sights on becoming the next manufacturing and logistics hub in Asia, President Ferdinand Marcos Jr. said, as Manila capitalises on its growing ties with Washington.

Under Marcos’s administration, the South-East Asian nation has increased defence and economic engagements with Washington. The US last month pledged to help accelerate investments in transport infrastructure, clean energy and semiconductor supply chains in the Philippines through the Luzon Economic Corridor.

"These initiatives will enhance freight transport services, mobility and access to key economic zones, ensuring business continuity and positioning the Philippines as a regional hub for agribusiness and logistics in the Asia Pacific,” Marcos said at the 6th Indo-Pacific Business Forum in Manila on Tuesday.

Marcos said the country’s infrastructure program that includes 185 priority projects worth 9.5 trillion pesos ($163 billion) would help the nation become the next logistics center in Asia.

This aspiration puts the Philippines in competition with neighbors that have deepened their push in these areas like Vietnam and Indonesia. Southeast Asian countries, with its pool of skilled and affordable talent, are racing to get a slice of the billions of dollars of investment that may spread out in the region as part of de-risking efforts by the US and its allies away from China.

While the Philippines, one of the fastest-growing economies in the region, has opened up more sectors to foreign investors, including renewable energy, it has lagged neighbors in attracting overseas funds to build more factories. Net inflows of foreign direct investments to the country dropped 7% to $8.9 billion last year from 2022.

The business forum is part of Washington’s efforts to tighten economic relations with the Philippines, as the allies bolster defense ties amid growing tensions with Beijing over the disputed South China Sea. It comes after last month’s first-ever trilateral summit between the US, Philippines and Japan at the White House where the long-time allies pledged to grow investment partnerships after rekindling security ties.

"We believe fundamentally that the prosperity of everyday Americans is inextricably linked to the Indo-Pacific,” US Assistant Secretary of State for East Asian and Pacific Affairs Daniel Kritenbrink said in the same forum.

Marcos said the Philippines is seeking greater participation in global value chains and increased foreign direct investments to sustain economic growth. "An economically strong Philippines will be a valuable ally in the region,” he added.

-- ©2024 Bloomberg L.P.

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Philippines , Hub Status , Asia


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