MAJOR gains are expected for both Korean and Filipino businessmen following the recent signing of the free trade agreement (FTA) between South Korea and the Philippines early this month, September, after four years of negotiation.

As a result of the FTA, more Korean products are expected to flood the Philippine market and vice-versa which can lead to business expansions and more investments in priority sectors and industries for both countries.

The Philippines-Korea FTA was signed at the 43rd Association of Southeast Asian Nations Summit and Related Summits in Jakarta, Indonesia, witnessed by President Ferdinand Marcos Jr.

Trade Secretary Alfredo Pascual said for the Philippines, the FTA serves as a “clear demonstration of the intent to elevate the current bilateral relations with South Korea to a stronger strategic partnership.”

“The Philippines’ engagement with South Korea is built on trade through market access, economic cooperation, and investments through collaboration in targeted sectors such as critical minerals and supply chains,” said Pascual.

In 2022, the Philippines exported US$3.12 billion worth of goods to South Korea, making it the country’s seventh-largest export market.

Countries like the Philippines enter into FTAs to participate in the global value chains.

Cebu, according to Philexport Cebu executive director Fred Escalona, stands to benefit from FTAs as they open opportunities for exporters to serve more markets.

However, exporters will need to be more competitive to fully enjoy the benefits that FTAs bring.

“We have been servicing exports to Korea, though the volume is very small for a long time now,” said Escalona.

Philexport is the umbrella organization of all exporters in the country.

He noted that FTAs are all opportunities but the threat that comes with FTAs is that it is not making exports competitive anymore.

“We cannot compete vis-a-vis our neighbors that also enjoy FTA status with our markets. Our products are just a bit expensive in comparison to those of our neighbors,” said Escalona.

“We are enjoying the benefits but what we need are more orders,” he added.

Central Visayas

Data from the Department of Trade and Industry-Export Marketing Bureau showed that Central Visayas exported US$327,475,409 worth of goods to South Korea in 2022 with a share of 6.06 percent of the total export value for the year which stood at $5,403,123,083.

In 2021, the region exported $298,058,220 worth of goods with a share of 5.03 percent of the $5,928,543,184 total export value.

The region, composed of four provinces—Cebu, Bohol, Siquijor, and Negros Oriental— exports copper, parts and accessories, machinery parts and apparatus, wooden furniture; fresh or dried guavas, mangoes, and mangosteens; dried peaches, pears, papaya, tamarinds, and other edible fruits; seaweeds, coconut oil, basketwork or wickerwork; prepared or preserved octopus; ice cream and other edible ice, whether or not containing cocoa; frozen shrimps and prawns in shells, and bamboo or rattan seats, among others, to South Korea.

More FDIs

Philippine Economic Zone Authority (Peza) chief Tereso Panga in a statement said the Philippines stands to benefit from this FTA which opens more opportunities for investors, increased market access, foreign direct investments (FDI) inflows, higher value-added production and export diversification combined with deeper economic cooperation and innovation partnership.

South Korea is said to be the 10th largest economy in the world and the second most technologically advanced nation next to Germany.

Panga said Peza is also seeing an influx of FDIs coming from South Korea for the year.

“We are seeing an increasing trend with more South Korean investments coming into the country. Last year, we approved a total of P1.019 billion in investments from South Korean projects, and for our performance this year, we already generated a total of P1.413 billion in investments from South Korea. We are looking forward to welcoming more investments from them, especially from industries unique to the country,” said Panga.

As of June 2023, Peza had a total of 246 registered projects from South Korea which generate P92.190 billion in investments, US$736.454 million in exports, and 40,688 employments.