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(Updated 8:04 p.m.) The hiring freeze imposed by Taiwan against overseas Filipino workers (OFWs) in the aftermath of the killing of fisherman Hung Shih-cheng in disputed waters should have no significant impact on the Philippine economy, a top government official and an economist both said Thursday.
“There are only around 2,500 Filipinos deployed monthly [to Taiwan],” Labor Secretary Rosalinda Baldoz told GMA News Online in a phone interview on Thursday when asked to comment on a Taiwanese media report.
She agreed with the report that imposing other sanctions, such as sending the OFWs back home, would do more harm to Taiwan's economy than the Philippines'.
Baldoz estimated that there are around 85,000 OFWs working in Taiwan, a mere 0.0085 percent of the estimated 10 million Filipino workers around the world.
Of the 85,000, some 75 percent work in the manufacturing industry. The rest work in the personal service sector or in the fishing industry as fishermen.
Pulling out Filipino workers could make an impact on Taiwan's economy, especially the manufacturing industry, where they dominate the specialized work force, said Baldoz. There are Filipinos who have set up manufacturing and production companies there, she added.
Not very significant economically
“I don't think this [the job freeze] will be very significant economically,” agreed University of Asia and the Pacific senior economist Victor Abola, citing Taiwan's contribution to remittance and foreign direct investments (FDI).
“Investments or trade could be delayed, but that's just it. This is not something we will lose sleep about,” the economist added.
On May 9, Taiwanese fisherman Hung Shih-cheng was killed by Philippine law enforcers in the Balintang Channel, near Batanes, when his fishing vessel allegedly tried to ram the government's patrol boat.
The Taiwanese government on Wednesday "froze" the hiring of Filipino workers along with nine other retaliatory measures, including a travel red alert and a halt to exchanges on trade and academic affairs.
Taipei had threatened the freeze if its four demands were not met: a formal apology from the Philippine government, compensation to be awarded to the family of the slain fisherman, an impartial investigation on the incident and bilateral talks between the Philippines and Taiwan to avoid similar incidents.
The Philippines has already agreed to the latter two, and President Benigno S. Aquino III issued an apology to Taiwan on Wednesday.
However, Taiwan rejected Aquino's apology as “insufficient in sincerity.”
Baldoz suggested that the Philippines could shift the Taiwan job orders to an alternative market like South Korea or the Middle East—one of the top 10 markets for Filipino workers—which also cater to the manufacturing industry and personal services sector.
Taiwan was the 10th largest investor in the Philippines in 2012, contributing $58.54 million, according to a report from Taiwan News. The sum accounted for 0.85 percent of the total foreign investment to the Philippines.
In the five years to 2010, Taiwanese firms ranked eighth in the list of approved investments by country but account for less than 2 percent of total approved foreign direct investments during the period, according to Department of Trade and Industry data. Trade relations "Taiwan is a good economic partner and we will continue to treat them as one," DTI secretary Gregory Domingo said in a statement, without elaborating on how the conflict will affect trade between the two economies. However, he said, trade between Taiwan and the Philippines be treated with "reason and prudence." "It's essential that all parties act with reason and prudence towards a mutually beneficial economic partnership," Domingo said. Based on the latest National Statistics Office data, Taiwan was the ninth top exporter to the Philippines with a total value of exports of $1.92 billion, and was fourth top import country with a total value of imports of $4.83 billion in 2012. For January 2013, Taiwan was the Philippines' eighth top export market, with exports amounting to $134 million. It was also the Philippines' fifth biggest source of imports, accounting for 7.1 percent of the month's total import bill with imports amounting to $337.03 million. The top Philippine exports to Taiwan are mostly electronic components like digital monolithic integrated circuits, semiconductor devices, electrical and electronic machinery. Meanwhile, the top import products from Taiwan are petroleum oils, materials for semiconductor devices, digital monolithic integrated circuits, liquified petroleum gases, and copper products.
In 2012, money transfers to the Philippines primarily came from the US, Canada, Saudi Arabia, UK , Japan, UAE and Singapore. These countries accounted for 78.2 percent of total money sent home by overseas Filipinos, Bangko Sentral ng Pilipinas data showed.
Cash remittances totaled $21.4 billion in 2012, with Taiwan accounting for $167.97 million or 0.79 percent of total money transfers by overseas Pinoys. Moreover, remittance growth from Taiwan even contracted by -0.41 percent last year.
“Imposing economic sanctions on the Philippines might not necessarily be in Taiwan's favor, and the Philippine economy might not be hurt as much as we expect,” Taiwan News quoted Gordon Sun, director of a macroeconomic forecasting center.
“What is happening now is a political reaction of the Taiwanese government,” said Abola. “It's an issue that will stay as long as there will be political clamor for it.”
“Businesswise, Taiwanese traders and businessmen have long kept relationships with other countries which their government has locked horns with. A lot of them still do business in China,” he added.
Baldoz said the hiring freeze from Taipei is technically more of a “slowdown.” Visa processing has not stopped, but the 7-day processing period has lengthened to 14 days. There were also additional requirements such as a unified card that combines social security, housing and healthcare IDs in one card issued by the Philippine government.
Her advice to OFWs and recruitment agencies: keep calm, be patient and comply with the requirements.
“The key is to keep diplomatic channels open while looking at other economic opportunities,” UA&P's Abola said. — VS/BM, GMA News