South Africa wants mutual investment cooperation with PH

South Africa, which suffers a deficit in its bilateral trade with the Philippines, would like to start first with the determination of areas of common interest and forging a mutual investment promotion and protection agreement before going into full-blown bilateral free trade discussions.

Brian Soldaat, South Africa’s director of investment promotion and facilitation, said that while he cannot comment on the proposed bilateral FTA of the Philippines and South Africa he suggested that both countries should first determine on the common areas of interest that are beneficial for both economies.

Soldaat, who led an 18-man business delegation from South Africa, cited one area of cooperation would be on the establishment of economic zones in South Africa.

According to Soldaat, his government is establishing 9 economic zone centers in each provinces of the country and this is where the Philippine companies could possibly participate in and lend its percent or possibly invest in the development of these ecozones. He cited the Philippine government’s successful economic zone developments. These ecozones are being developed by the private sector.

“We have a lot of common in our economies,” he said.

Soldaat was also scheduled to meet with officials of the Department of Trade and Industry and the Philippine Chamber of Commerce and Industry (PCCI) wherein they may discuss the possibility of coming up first with a Mutual Investment Promotion and Protection Agreement.

Soldaat also seeks to further strengthen the existing South AfricaPhilippines Business Council and update the terms of reference for further cooperation.

Soldaat would like both countries to start first some cooperation agreements as he raised the caution that forging FTA deals could bring to partners. He noted that a bilateral FTA risks opening a partner’s market to become transshipment or as a staging ground to a larger market with countries it has existing FTA deals already.

The Philippines Department of Trade and Industry has already identified South Africa among countries that it plans to forge bilateral FTAs.

Soldaat, however, also said that the FTA as a trade tool could help balance or at least narrow down the trade gap with the Philippines. The balance of trade between the Philippines and South Africa has been in favor of the Philippines.

“Many South African companies are interested to invest here especially in partnership for distribution of their products,” said Soldaat, whose business delegation also visited Vietnam before coming over. South Africa has a better market presence in Vietnam than in any other ASEAN country.

The South African business delegation to the Philippines is the first in many years. Members of the delegation are engaged in chocolate making, wine production, mining consultancy services, cosmetics, food and beverage, among others. The group is looking for local distributors of their products.

South African firms are also interested in the countrys’ infrastructure, agro-processing, BPO-ICT, green projects, among others.

Alfredo Yao, president of the Philippine Chamber of Commerce and Industry (PCCI) also noted that both countries share a lot of things in common.

For instance, he cited both countries’ wealthy natural resources.

South Africa is the wealthiest mining jurisdiction in the world with non-energy mineral wealth being estimated at $2.5 trillion. Meanwhile, the Philippines is a minerals powerhouse in the world covering an estimated nine million hectares with mineral reserves estimated at $1.4 trillion.

“This is one plausible area of cooperation that we have to maximize as we share the same developmental goals as enshrined in South Africa’s Framework Agreement for a Sustainable Mining Industry and the Philippines’ Mining Act of 1995,” Yao said.

Trade bilateral trade in 2013 reached $361.358 million with the Philippines exporting electronics, electrical apparatus, generators, electrical circuits, accessories of motor vehicles, desiccated coconut to South Africa.

Imports from South Africa are composed mostly of corn seed, iron and steel, machineries, tobacco, cotton, and “smart” cards.