The Philippines and South Korea have signed a new free trade agreement (FTA), which is expected to boost investment relations between the two nations and generate jobs.
While talks on an agreement were completed some time ago, the formal signing of the deal took place earlier this month on the sidelines of the annual Association of Southeast Asian Nations (Asean) Summit in Jakarta, with both Philippine president Ferdinand Marcos Jr and his South Korean counterpart Yoon Suk-yeol in attendance.
Mr Marcos said the agreement demonstrates both countries' commitment to "mutual economic growth and development".
He added: “The FTA will strengthen our bilateral trade and investment relations with the Republic of Korea, especially as it generates jobs and contributes to the Philippines' value proposition as an ideal regional hub for smart and sustainable investments.”
So what will the impact of the deal be on bilateral trade between the two east Asian nations, and which parts of the economy could see the biggest benefits?
What does the deal include?
A key part of the FTA will be significant reductions in tariffs across the board. Asean Briefing reports that South Korea has agreed to remove customs duties from 94.8 percent of Philippine products, while 96.5 of Korean goods headed to the Philippines will be tariff-free.
As well as the reduced tariffs, there are provisions in the agreement that will aim to expand technical cooperation between the two nations, as well as increase capacity for bilateral trade. Particular areas of focus for this include smart farming technology, electric vehicle manufacturing and film production.
The Philippines has also been able to gain assurances for increased support with future public health emergencies. This will see South Korea pledge to collaborate on areas such as vaccine production and defense industries.
What sectors are set to benefit?
Among the sectors poised to enjoy easier trading conditions as a result of the deal are South Korea's automotive industry. Under the new rules, manufacturers such as Hyundai and Kia and part suppliers will be able to expand their presence in the Philippines due to the elimination of tariffs on many automotive units and components. Until now, these brands have only had a limited presence in the nation.
Elsewhere, the Philippines' agricultural sector is also set to benefit. For instance, shipments of bananas to South Korea will be tariff-free in five years, which offers a significant advantage over the existing Asean-Korea FTA, which specifically excluded these products from tariff-tree access. Other items including tinned pineapples will also attract zero duty in seven years.
South Korea's IT and electronics companies, which are traditionally among the biggest drivers of the country's economy, will also be able to explore new opportunities in the Philippines, which could lead to increased investments and technological exchange, while service sector providers including finance, telecommunications and professional services firms will also benefit from increased cooperation.
Mr Marcos added: "The signing of the FTA is a testament to the realization of the many opportunities for complementation and collaboration between the Philippines and South Korea and an even greater milestone for our economic friendship."