Taiwan firms eye Philippines amid shift to non-China supply chains: Expert

Taipei, June 2 (CNA) Taiwanese firms have increased investment in the Philippines in recent years as Manila's ties with Washington deepen and global supply chains continue to shift away from China, an expert at the Chung-Hua Institution for Economic Research (CIER) said Tuesday.

The Philippines had not been among Taiwanese investors' top choices in Southeast Asia, Kristy Hsu (徐遵慈), director of the CIER's Taiwan ASEAN Studies Center, said at a seminar in Taipei.

However, Taiwan's investment in the country has grown significantly since the COVID-19 pandemic, reaching US$257 million in 2025, a high in recent years, she said at the event hosted by the CIER, one of Taiwan's leading economic think tanks.

Although Taiwan's total investment in the Philippines still lags far behind that in Vietnam, which has long been a favored destination for Taiwanese businesses, more firms are now showing interest in the Philippines, Hsu said.

"Taiwanese businesses have realized that the Philippines has special advantages in future cooperation with the United States, especially in non-China supply chains," she explained.

The idea of "non-China supply chains" has gained traction in recent years as companies seek to reduce their exposure to China amid geopolitical tensions and U.S.-China trade frictions.

Citing interviews conducted by her team with more than 10 Taiwanese companies, Hsu said several had been asked by their U.S. clients to set up or expand factories in the Philippines to serve the American market.

The Philippines has other advantages for Taiwanese businesses including a young labor force, strong English-language ability, mature economic zone planning, one-stop investment procedures and proximity to Taiwan, Hsu added.

However, she noted that the country still faces challenges, including a shortage of talent for high-end and advanced chip processes, relatively high electricity prices compared with other Southeast Asian countries, and heavy dependence on imported raw materials.

Although Taiwanese manufacturing investment is mainly concentrated in the electronics and semiconductor packaging and testing sectors, some companies have entered the U.S. AI data center supply chain in recent years, Hsu said.

Her comments were consistent with information provided to CNA in February by the Manila Economic and Cultural Office (MECO), the Philippines' de facto embassy in Taiwan, following an interview with its chairperson and resident representative, Corazon Avecilla-Padiernos.

At the time, MECO told CNA that the Philippines was "encouraging" Taiwanese investment in several priority sectors, including advanced manufacturing and industrial development, covering electronics, semiconductors and smart manufacturing.

Regarding the locations of Taiwanese investments, Hsu said they are mainly concentrated in Manila, the Calabarzon region south of the capital, and Central Luzon to the north.

Industrial clusters have gradually taken shape in those areas, she added.