Philippines says mild US tariff drove ‘strong' investor interest
New investors are considering setting up shop in the SouthEast Asian nation, while companies seeking to divert orders are looking to tap existing Philippine businesses with excess capacity, Trade Undersecretary Ceferino Rodolfo (pic) said in an interview on Thursday (July 3).
Trump's tariffs, which were paused for 90 days to July 9 to allow negotiations, included levies of 46% for Vietnam, 36% for Thailand, 32% for Indonesia and 24% for Malaysia.
In contrast, the Philippines was only threatened with a relatively low levy of 17%, making it attractive compared to its South-East Asian neighbours.
"In our discussions with investors, they are saying the investments in the Philippines will indeed happen. It's just a question of magnitude, depending on the result of July 9,' Rodolfo said.
Electronics, garments, wearables and sporting goods companies have expressed interest in investing in the Philippines since Trump's tariff announcement, the trade official added.
While Trump paused the higher tariffs, in general reducing them to 10% during the negotiation period, countries are racing to reach agreements as the tariff deadline looms.
Trump on Wednesday announced a deal with Vietnam that lowers the 46% levy announced in April to 20%.
Manila viewed the initial tariff imposed by the US as beneficial to President Ferdinand Marcos Jr's push to woo investments, with a lower rate compared to its Asian neighbours.
But challenges including poor infrastructure, high energy costs and regulatory unpredictability have been constant concerns among foreign investors looking at the Philippines.
The Philippines' approved foreign investments dropped in the first quarter, the most recent period for which data are available. The cloudy trade outlook has also prompted the government to slash its goal for economic growth this year.
But Rodolfo said that even with the US-Vietnam deal, investor interest in the Philippines will likely be sustained.
"The Philippines is a fair and decent country to trade with and invest in,' he said.
"Among the countries in the region, we stand out as the country that really espouses market-based approach.'
US trade with the Philippines totalled around US$23.5 billion in 2024, with Washington recording a deficit of $4.9 billion with Manila, according to US government data. That compares with a deficit of $45.6 billion with Thailand and $123.5 billion with Vietnam. - Bloomberg
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