The Philippines’ first free trade agreement (FTA) with a Middle Eastern country is expected to be signed next month with the United Arab Emirates (UAE), which will likely set the stage for more substantial investments from sovereign wealth funds.
In a business forum hosted by the Dubai Chamber of Commerce, the Special Envoy of the President to the UAE for Trade and Investments Kathryna Yu-Pimentel confirmed that the comprehensive economic partnership agreement (CEPA) between the two countries is up for signing in June.
Based on data from the UAE’s website, it ranked 22nd among the Philippines’ sources of net foreign direct investments in 2022.
The Middle Eastern country is expecting that these investments will increase with the prospective signing of the CEPA.
Trade Undersecretary and Board of Investments (BOI) Managing Head Ceferino Rodolfo said these investments coming into the country will primarily come from the UAE’s sovereign wealth funds.
Rodolfo said these wealth funds have been investing heavily in private equities, which in turn are investing in the Philippines.
While these types of investments are already flowing into the country, CEPA will serve as a framework that will safeguard large-scale investments from potential
“For Dubai…they place a high importance on the CEPA as a way of also unraveling the potential for more investments, particularly from the sovereign wealth funds,” Rodolfo said in a chance interview.
The UAE, whose economy has been heavily reliant on oil, operates several sovereign wealth funds as a measure to diversify its economy and ultimately reduce its dependence on oil in the long term.
With the prospect of investments, Rodolfo said the government is particularly looking for greater interest in renewable energy, infrastructure, logistics, digital infrastructure, and high-tech agriculture.
The BOI head noted that the potential signing of CEPA will also give Filipino exporters access through the UAE and other countries in the six-member Gulf Cooperation Council (GCC).
He added that connecting businesses to GCC countries would also allow them to reach countries in Africa.
While the agreement is not yet finalized, Rodolfo said the private sector between the Philippines and the UAE is already actively working on deals related to commercial agreements.
Maharlika Investment Corp. (MIC) President and Chief Executive Officer (CEO) Rafael Consing Jr. said the country’s first and only sovereign wealth fund has recently tied up with Dubai-based logistics company DP World.
While there has been no investment yet, Consing said the MIC is currently studying the potential for a collaboration and even a possible investment in the company.
“It’s more collaborative and an opportunity for us to study opportunities for us to collaborate and see how we can in fact make the movement of goods and people across the nation more efficient,” Consing told reporters.
“We can make the recommendations by the end of the year, [including] expenses, investment and infrastructure,” he added.
Sought for comment, Dubai Chambers Vice President for International Relations Sector Salem Al Shamsi expressed optimism regarding the anticipated signing of CEPA with the Philippines next month.
“This is a promising information, because for us there’s a lot of opportunities for the bilateral trade to be increased both ways, from the Philippines to Dubai, and from Dubai to the Philippines,” said Al Shamsi.