As we entered the 21st century, many predicted that one country would rise to become a global superpower. Today, it’s clear to everyone that China has become the world’s second-largest economy and is poised to take the top spot. This transformation was fueled by China’s ability to overhaul its entire economy, especially through developing its own educational system to become the world’s factory. One key factor behind this rise is investments. China, which once received significant foreign direct investments, is now investing heavily across the globe. These investments, ranging from tens to hundreds of billions of dollars, span from Western countries to Africa and neighboring nations. Among the most crucial regions for Chinese investments is Southeast Asia, a region brimming with opportunities and fitting China’s strategic needs. Over the next decade, Southeast Asia is expected to become one of China’s most important bilateral partners due to its large population. It is, therefore, essential for China to be an active investor in the region. However, when we think of China’s influence in Southeast Asia, it might surprise many that China is actually trailing behind Taiwan in some respects. Taiwan, often referred to as the other “China,” has been navigating a challenging political landscape but remains a significant player.
The Philippines is particularly important to both Taiwan and the People’s Republic of China. It’s geographically close to both nations and holds a strategic position in the region. Additionally, the Philippines is a key ally of the United States, which adds complexity to any potential conflict involving Taiwan and China. Given this strategic importance, one might assume that China’s massive financial resources would easily outmatch Taiwan’s influence in the Philippines. However, the reality is different. Taiwan’s investments in the Philippines actually overshadow those of China. According to reports from the Philippine Economic Zone Authority, Taiwanese investments in the country’s economic zones amount to a staggering 32.8 billion Philippine Pesos. These investments contribute over half a billion dollars in exports and create nearly 47,000 direct jobs. In contrast, Chinese investments are estimated at 24.7 billion pesos, supporting exports worth around 200 million dollars and employing 10,500 workers. While the difference may not seem huge, it highlights how a smaller country like Taiwan can have a significant impact compared to the world’s second-largest economy. This also dispels the myth that China has already “bought” the Philippines, as its investments in these economic zones are still outpaced by Taiwan’s.
So, why is Taiwan so interested in the Philippines, to the extent that its investments exceed those of the PRC? The answer lies in the nature of these investments, particularly in economic zones. These zones are designed for export-oriented manufacturing, which plays to Taiwan’s strengths. Unlike mainland China, Taiwan doesn’t have a large population and faces higher labor costs. Employing workers in Taiwan is more expensive than in China, making it more cost-effective for Taiwanese companies to outsource manufacturing. China, with its massive manufacturing industry, doesn’t have the same need to outsource, as it would undermine its status as the “factory of the world.” Taiwan, on the other hand, is evolving like Japan and South Korea, where outsourcing is more efficient. This strategy allows Taiwan to remain competitive globally, and the Philippines is an ideal destination for these investments, offering lower labor costs and proximity.
Taiwan’s investments in the Philippines are led by four major companies: Sunon Properties, Tong Shing Electronics, Kinpo Electronics, and Acbel Polytech. These companies have made substantial investments, ranging from 1.7 to 4.5 billion pesos. For example, Tong Shing Electronics has a strategically located plant in Luzon for substrate fabrication, module assembly, and image sensor packaging. In the electronics industry, Tong Shing is a leader in IC Hybrid Assembly, specializing in Chip Scale Packages. While Taiwan’s investments in export-oriented manufacturing are significant, we shouldn’t overlook China’s broader influence in the Philippines. In the long run, as China’s economy continues to grow, its investments are likely to surpass Taiwan’s. China’s potential, with its vast population and land, offers more opportunities for large-scale investments. Moreover, China’s investments extend beyond manufacturing. For instance, Dito Telecommunications, one of the three major telecom players in the Philippines, is partly owned by a Chinese company. Dito is the fastest-growing telecom provider in the country, demonstrating China’s significant presence in other industries. When we consider all Chinese investments in the Philippines, including those outside of economic zones, China likely plays a larger role than Taiwan. Research from institutions like William & Mary’s AidData database suggests that Chinese investments in the Philippines are often underestimated. These investments, which include aid, grants, and diplomatic contributions, have amounted to billions of dollars over the years.
Nevertheless, China’s importance to the Philippines is growing rapidly. While Taiwan remains a major player in manufacturing, China may eventually overtake Taiwan or continue to dominate in other sectors. Regardless of who is leading in investments, the Philippines benefits from the influx of money, jobs, and economic growth. These investments, whether politically or economically motivated, are crucial for the country’s development.
As a Filipino, it’s worth considering whether these investments should be welcomed or viewed with caution due to recent political tensions. Do you believe that Chinese investments should continue in the name of progress, or should they be limited based on foreign relations?