US Chips Act, IPEF seen PEZA positive
US companies have realized the chip supply chain is too concentrated in a few countries in the world.
After the Chips Act passed in the United States, as well as the Indo-Pacific Economic Framework, or IPEF, to diversify the chip supply chain, the Philippine Economic Zone Authority stressed that it will seek to leverage on both measures to entice more investments in local ecozones.
The Chips Act allocated $39 billion in direct grants plus loans and guarantees valued at $75 billion to persuade top semiconductor companies to return chips making on American soil.
IPEF, launched by US President Joe Biden in 2022 is an opportunity to strengthen economic cooperation with the United States among major Indo-Pacific economies in terms of stronger cooperation on trade, supply chain, clean economy, and fair trade.
During the recent high-level trade mission sent by US President Joe Biden to the Philippines led by US Secretary of Commerce Gina Raimondo last 11 to 12 March 2023, PEZA director-general Tereso Panga expressed that the Philippines is looking forward to taking advantage of the newly passed CHIPS Act and the IPEF in keeping with the US’ goal to diversify their chip supply chain.
According to US Commerce Secretary Raimondo, “US companies have realized the chip supply chain is too concentrated in a few countries in the world… You know the old adage, ‘Don’t put your eggs in one basket’. Why do we allow ourselves to be buying so many of our chips from one or two countries? That is why we need to diversify.”
With this, Panga expressed, “We are optimistic about our flourishing partnerships with American investors in various sectors most especially in the Electronic and Semiconductor Manufacturing Services, our bread and butter. This collaboration is expected to enhance our nation’s capabilities in assembly, packaging, and testing, and propel us into sophisticated integrated circuit design and, eventually, wafer fabrication.”
“We are also targeting leading American companies in the areas of regenerative agriculture, alternative and renewable energy, e-mobility, green ores processing, drug and medical equipment manufacturing, tourism, agriculture, and digital and frontier technology to locate their facilities in the Philippines,” he added.
Aside from this, the Philippines is also extending the invitation to other countries to come and look at the Philippines for their business and investment ventures.
“Other countries should not see the US Trade Mission as a threat, but rather see it in a positive light as it strengthens the resiliency of general trade in the region,” Panga added.
Hub for American capital
PEZA is positioning itself as a hub for US investments that will be a bridge between ASEAN and the IndoPacific as it moves towards creating a global value chain with an emphasis on investments from key sectors including manufacturing, renewable energy, science and technology, among others.
“All investments are welcome from all countries,” DG Panga noted right after his presentation at the PHUS Trade and Investment Mission Forum in Fairmont Makati where he also delivered the closing remarks.
The US Department of State and US Trade Administration have continually lauded PEZA, stating that “the business environment has been notably better in special economic zones, particularly those available for export businesses operated by PEZA.”
“PEZA has received positive feedback for its regulatory transparency, no red-tape policy, and onestop shop services for investors.”
The United States is the second largest foreign investor in the ecozones, Japan being number 1. US investments account for 355 companies in PEZA, contributing P404.368 billion of investments, $10.352 billion in exports, and 368,511 direct jobs as of date.
The PEZA chief likewise highlighted, “This partnership can strategically de-risk and diversify global value chains, positioning the Philippines as your +1 in Asia. With the Philippines as your ideal hub in the region, the ASEAN and Asia-Pacific could serve as your manufacturing and distribution gateway.”
Among the US companies that expressed interest in investing include Sol-Go Philippines Inc., a PEZA registered solar panel manufacturer that has facilities in Lima Technology Center – Special Economic Zone, with a plan to invest $5 million for expansion.
US private equity firm KKR & Co. will also expand its investments by another $400 million according to the US Department of Commerce.
The Apl.de.Ap Foundation International, in partnership with Arizona-based firm Legacy EV, will develop the country’s first electric mobility education and development center.
“The Philippines is not only prepared but eager to continue and expand our business ventures with the United States... We are ready to roll out the red carpet and are fully equipped to offer the optimal business environment, ecosystem, and a nurturing home for your business in Southeast Asia, throughout Asia, and across the Indo-Pacific,” DG Panga said.
Pharma zones unveiled
The Food and Drug Administration and PEZA are joining hands to enhance medical manufacturing as they unveiled pharmaceutical and medical device ecozones.
According to FDA, Pharma-Dev Zones will serve as specialized hubs for local and foreign companies involved in medical and drug manufacturing, including research and development as well as clinical testing and trials.
“This collaborative effort with the FDA ensures that product manufactured within these ecozones meet rigorous quality and regulatory standards,” PEZA noted.
“This will likewise address the development and manufacture of common generic drugs that will boost local supply and bring down the prices of medicines,” it added.
The FDA said the Pharma-Dev Zones can boost local supply and provide opportunities for Filipino small and medium enterprises to engage in the manufacturing and tolling of drugs, food, supplements, and other medical products.