BEIJING, China – A recent World Bank study tested how geoeconomics can reshape the geography of foreign direct investment (FDI) and, in turn, how FDI fragmentation can affect the global economy. The Organisation for Economic Co-operation and Development describes FDI as the centre of globalisation and is a vital channel for the movement of capital, goods, facilities and data between economies.
The rise of geoeconomics in an interconnected world has brought more opportunities for greater prosperity and economic festival between countries. This is exemplified through China’s Belt and Road Initiative (BRI), as well as the United States’ “Creating Useful Incentives for Semiconductor Production” or CHIPS and Science Act.
The BRI continued in 2013 through the Chinese government under the leadership of new President Xi Jinping as a global infrastructure progression strategy making investments in more than 150 countries and foreign organizations. The CHIPS Act of 2022 signed by US President Joe Biden is a major legal investment. to bring to life the studies and production of semiconductor fabrics and devices. Both policies are brilliant geoeconomic strategies.
Two Beijing-based institutions have very significant investments in the Philippines: the Asian Infrastructure Investment Bank (AIIB) and the State Grid Corp. of China (SGCC). The AIIB headquarters is in the Chaoyang district, which is home to Beijing’s main foreign embassies and a developing central business district. SGCC is headquartered in the neighboring Xicheng district, where China’s regulatory agencies and primary banks are located along Beijing’s monetary street.
The AIIB began operations in 2016 as a multilateral progress bank whose project is to finance the so-called “infrastructure of tomorrow” with the aim of ensuring prosperity and economic progress in Asia. Since then, the organization has grown to 109 chartered members worldwide, adding non-Asian countries and multilateral organizations that account for more than 80% of the world’s population and two-thirds of the world’s gross domestic product.
Among its 59 founding members is the Philippines, which joined the AIIB in December 2015 when President Benigno Aquino III approved the country’s club on the recommendation of the Ministry of Finance. Let us remember that in 1965, another multilateral monetary institution, the Asian Development Bank (ADB), chose Manila as its headquarters after beating Tokyo, Bangkok, Kuala Lumpur, Singapore, Kabul, Tehran and Phnom Penh in the tender that was held. took place in the last weeks of President Diosdado Macapagal’s mandate in December 1965.
In less than a decade of existence, the AIIB has surpassed the half-century-old AfDB in terms of members. So far, eight projects have been approved in the Philippines, including the $207. 6 million Metro Manila Flood Management Project, five $2. 5 billion Covid-related projects and the first span of the upcoming interconnection bridge. Bataan-Cavite of 350 million dollars.
On the other hand, SGCC owns a 40% stake in National Grid Corp. of the Philippines (NGCP), the personal transmission service provider that has a congressional franchise to operate, maintain and expand the country’s power grid. SGCC is part of the consortium that won the auction of the national company National Transmission Corp. in 2007. The Philippine companies owned through Taipans Henry Sy Jr. and Robert Coyiuto Jr. together 60% of the NGCP, with a period of concession. which will end in December 2058.
Founded in 2002, SGCC is the world’s largest electric power company with total assets of more than $500 billion. It accounts for 80% of China’s entire national grid, while the remaining 20% is under the jurisdiction of China Southern Power Grid Co. In addition to NGCP, SGCC’s other investments include stakes in China’s national power grids. Portugal, Australia, Brazil, Chile and Italy.
To discuss the difficult situations facing the Philippines amid a changing regional order, the German think tank Friedrich Ebert Stiftung (FES) brought together a diverse organization of policymakers, academics, industry unionists, civil society representatives, retired diplomats, and former members of the military. The workshop was facilitated through the Lee Kuan Yew School of Public Policy at the National University of Singapore.
“The archipelagic country is at the forefront of many key dynamics that will shape the long-term Asia-Pacific region in the 21st century,” says the FES report, titled “The Philippines in Asia’s New Geopolitics. “Economic geography places the country at the centre of geo-economic developments in trade, supply chains and shipping routes. “
With such an important role to play in the coming decades, our country’s leaders will be able to navigate between geoeconomics and geopolitics so that the Philippines can grow and succeed in the global marketplace.
Joseph A. Gamboa is Vice Chairman of the Ethics Committee of the Institute of Financial Executives of the Philippines (Finex) and a Director of Noble Asia Industrial Corp. The perspectives expressed here necessarily reflect the perspectives of Finex and BusinessMirror. #FinexPhilswww. finex. org. ph.
Joseph Gamboa is Co-Chair of Finex Annual Conferences for 2020-2021, Chairman of Finex Business Columns Subcommittee, and Director of Noble Asia Industrial Corp. The views expressed here necessarily reflect the views of those establishments and the BusinessMirror. Training
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