Interview with Mr. Ebb Hinchliffe, Executive Director of The American Chamber of Commerce of the Philippines (AmCham)

10 Jun Interview with Mr. Ebb Hinchliffe, Executive Director of The American Chamber of Commerce of the Philippines (AmCham)

During a recent visit to the Philippine Center in New York, Trade Undersecretary Ceferino Rodolfo underscored the efforts being made towards a free trade agreement (FTA) with the United States. What are the potential benefits of the proposed FTA between the Philippines and the United States, and which sectors or groups stand to gain the most from such a deal?

The Biden administration has been firm on its stance against concessions and new free trade agreements. Despite efforts by key Philippine figures and AmCham to push for a trade deal, including discussions with USTR Ambassador Katherine Tai in early 2022, the administration remains resolute. Recent conversations in July 2023 reaffirmed the administration’s position against a bilateral agreement. It’s unlikely to change before the U.S. elections in 2024, potentially delaying any agreement until 2025-2026.

Despite this, trade between the U.S. and the Philippines remains significant. AmCham will persist in advocating for a free trade agreement, building on past efforts such as promoting the Transpacific Partnership (TPP) before its dissolution.

On April 11, President Biden, together with Philippine President Bongbong Marcos Jr. and Japanese Prime Minister Kishida Fumio, convened the inaugural U.S.-Japan-Philippines trilateral summit. Among the main topics of discussion, were the Philippines’ growing key industries, including electronics manufacturing, healthcare, and the semiconductor industry. How do you foresee the involvement of the United States in these innovative sectors in the Philippines and how can AmCham contribute to the development of these industries?

Almost one year ago, a pivotal ruling allowed 100% foreign ownership of renewable energy, opening avenues for American and European companies.. This decision spurred the formation of an offshore wind association. Additionally, the Philippines’ abundance of critical minerals, particularly in Palawan, has garnered attention from the U.S. due to its significance for national security and industries like semiconductors. Only two mining companies are AmCham members, indicating a growing but still relatively small sector. The driving force behind many initiatives is the demand for critical minerals, particularly for batteries used in vehicles such as those manufactured by Ford.

Infrastructure development is another major focus, highlighted by an American company’s construction of the largest bridge across the Gulf of Manila Bay, aiming to streamline transportation routes. President Biden’s recent meeting with President Marco and the Japanese Prime Minister emphasized plans for a significant infrastructure boost in the north of Manila, extending towards Clark and Subic, and connecting ports such as Subic and Batangas via a 200-kilometer rail system along the North-South Corridor.

AmCham doesn’t engage in military matters, though it’s a significant topic currently. My experience showed military contracts are often short-lived, with little direct benefit to AmCham. However, recent tensions in the South China Sea prompted discussions regarding the use of American bases as negotiation leverage.

The semiconductor industry, including three major American companies in the Philippines, is steadily expanding. With a strategy of ‘Taiwan plus one,’ these companies are looking to diversify their locations, including India, Malaysia, and the Philippines, indicating growth in this sector.

The health sector is also a key focus of the trilateral agreement between the U.S., Japan, and the Philippines. The Philippines actively seeks international pharmaceutical manufacturers like Pfizer, Moderna, and AstraZeneca, but faces challenges due to scale disparities with countries like India. While there’s interest in marketing, distribution, and warehousing, manufacturing interest remains low. However, there’s growth potential in creative industries spanning advertising, media, software development, music, film, TV and gaming.

Despite constitutional restrictions on foreign ownership in media and advertising, sectors like BPO (Business Process Outsourcing), particularly call centers, continue to expand, rebounding nearly to pre-pandemic levels. The main challenge is balancing work-from-home with traditional office setups, especially concerning incentives for call centers. Currently, call centers receive a 5% gross income earn taxation incentive, but to qualify, 80% of the workforce must be on-site. This setup made sense in 2008 but seems outdated in 2024, considering lessons learned during the pandemic. Despite challenges, the call center industry continues to grow, focusing on rebranding and reskilling. Future trends suggest a shift towards AI-driven solutions.

Additionally, there’s a push to liberalize education, currently restricted to 100% Filipino ownership, hindering progress. Amendments to these regulations may be pursued post the 2025-2026 elections.

What initiatives does AmCham organize and undertake to attract members and investors?

During the Duterte Administration, promoting the Philippines as an investment destination posed challenges due to political rhetoric. Despite this, the administration’s pro-business cabinet facilitated the passage of several favorable deals. To adapt, AmCham expanded its presence across Mindanao and Visayas, branching into new cities and regions. Additionally, a new office was established in Clark to cater to northern areas.

With nearly 900 members, AmCham hosts around 450 events annually, covering various sectors such as manufacturing, tourism, and healthcare. The organization also supports community initiatives through scholarships and corporate social responsibility (CSR) projects. A larger membership base enables AmCham to advocate effectively for its members’ interests with the Philippine government. AmCham is renowned for its advocacy work, providing invaluable legal representation in the House and Senate to influence business-related bills. Members benefit from timely updates on legislative matters, ensuring their interests are protected. Our advocacy efforts have saved members millions of pesos annually. Currently, we’re focused on the new CREATE bill, which addresses work-from-home regulations and amendments to the PEZA bill, allowing employees to work remotely. This shift reflects the evolving business landscape, where forcing employees to return to the office is increasingly impractical.

What is your final message for the millions of readers of USA Today about choosing the Philippines as their next business, tourism or investment destination?

The Philippines is experiencing its most business-friendly environment in decades, with a receptive government and liberalized legislation under both the Duterte and Marcos administrations. AmCham’s membership growth reflects this positive trend, with a significant increase in new members in recent years.

Before the pandemic, AmCham typically recruited around 60 new members annually. However, in 2022, we added 126 new members and in 2023, we added 135, indicating significant membership growth. Notably, many of these new members are not only American but also European, Japanese, Australian, and New Zealand companies.

The U.S. Embassy in the Philippines, led by Ambassador MaryKay L. Carlson, maintains a strong presence and support for business interests, with proactive engagement from key officials in the economic, commercial, and consular sectors. This collaborative effort underscores the current pro-business stance of the American government in the Philippines. President Marcos’s unexpected victory surprised many, given his unconventional campaign style. Despite his controversial background, his presidency ushered in surprising cooperation with the United States.

Following his election, President Marcos appointed cabinet secretaries who were familiar faces to many in AmCham, fostering a sense of familiarity and connection. Notably, individuals like Hon. Secretary Alfredo Pascual and Benjamin Diokno, who had long-standing relationships with AmCham members, were among his appointees. This familiarity eased concerns within AmCham and provided confidence in the new administration’s ability to maintain stability and foster economic growth. After President Marcos’s election, I visited Washington to address concerns about doing business in the Philippines under his leadership. Despite initial skepticism, Marcos’s subsequent visits to key American cities, along with positive legislative developments and a strong cabinet, have shifted perceptions. The alignment of a pro-Philippine administration in Washington and a pro-American stance in the Philippines has created an unprecedented opportunity for business cooperation. This convergence represents the most promising environment for business during my tenure at AmCham. Most businesses prioritize long-term economic factors over short-term geopolitical concerns.

The Philippines offers ample market access with a rapidly growing population, making it an attractive investment destination. Moreover, the country boasts a strong pro-American sentiment, with many Filipinos having family ties to the U.S. This preference for American products is evident in everyday consumer choices, such as favoring goods produced in the U.S. Brands like Coca-Cola, Pepsi, Colgate, and Procter & Gamble have historically thrived in this market due to these strong cultural ties. Overall, the Philippines stands out as a friendly and pro-American market for businesses.