Malaysia has sought closer economic ties and increased bilateral trade and investments with the Philippines, which is deemed to hold significant business potential given its strong economy, huge population and growing middle class.
“We will do more work to promote closer economic ties between Malaysia and the Philippines. We see a lot of potential in the Philippines. The growth has been robust and has good prospects,” noted Dato’ Sri Mustapa Mohamed, Minister of International Trade and Industry in Malaysia.
“You have done well in the business process outsourcing (BPO) industry, agriculture, manufacturing and electronics. As the economy grows, we see that there’s more potential for trade between Malaysia and the Philippines and we’re expecting more investments from the Philippines, as well,” Mohamed said in a briefing held on the sidelines of the World Economic Forum on East Asia (WEF-EA) last week.
Total bilateral trade between Malaysia and the Philippines stood at $4.47 billion as of end-2013, reflecting close to 10 percent decline compared to the previous year. Malaysian exports to the Philippines, comprising mainly of electrical and electronics products, chemicals, and processed food, fell 12.5 percent to $2.965 billion. Imports, comprising mainly of electrical and electronics products, processed food, crude rubber and refined petroleum products, similarly fell 3.1 percent to $1.505 billion.
Mohamed was bullish of increased trade between Malaysia and the Philippines this year, given the two countries’ sizes and income levels.
“We expect a recovery in trade between Malaysia and the Philippines. There’s a lot of underutilized potential. The Philippines is a growing economy, a huge population, with a growing middle class,” Mohamed added.
In terms of investments, Mohamed was likewise bullish of the opportunities particularly in tourism, Islamic banking, agriculture, rubber and oil palm, among others.
“We’ve got tourism. It’s a big business in Malaysia and an important sector in the Philippines. I’m hoping there will closer collaboration in tourism,” Mohamed said.
“I know there is a lot of interest in the Philippines to develop Islamic banking and finance. Malaysia has the expertise and human capital; can provide training facilities; and has the products and debt instruments. If the Philippines is interested, our people are keen to further discuss this subject including the possibility of providing cooperation with banks in this country,” he further said.
According to Mohamed, there are also ongoing discussions on agriculture, oil palm and rubber, particularly in Mindanao.
At present, Malaysian firms in the country are engaged in infrastructure and banking and finance, among other sectors. The biggest investment, so far, by a Filipino firm in Malaysia was the $1.2-billion acquisition of the Esso Malaysia Berhad, its 600 petrol stations and refinery, which was made by conglomerate San Miguel Corp. through Petron Corp.
Prospects are significant particularly in Mindanao, with the Brunei-Indonesia-Malaysia-Philippines East Asean Growth Area (BIMP-EAGA) subregional economic cooperation initiative, and with the signing of the Bangsamoro Peace Agreement.