As Taiwan deepens its ties across Southeast Asia, the Philippines is emerging as both an increasingly important economic partner and a prospective strategic supporter.
Despite global economic headwinds in 2025, as of October last year the level of Taiwanese investment in the Philippines had already exceeded the previous annual record high of US$244 million. “The investment volume in 2025 has surpassed the combined total from India, Indonesia, Thailand, and Vietnam,” notes Edward Liu, a data strategy manager at the Taiwan branch of risk management and analytics company CRIF.
“The strengthening of economic ties is heavily shaped by geopolitics,” says Liu. “The deterioration in China-Philippines relations, coupled with U.S. initiatives such as the Luzon Economic Corridor, serves as a strong trigger for Taiwan’s increased engagement.”
The Luzon Economic Corridor (LEC), designed to help counter Chinese influence, is a major infrastructure and logistics plan by the Philippines, the United States, and Japan to boost economic growth on the Philippines’ main island of Luzon. It seeks to connect such key hubs as Batangas, Clark, Manila, and Subic through improved rail connections and port facilities, clean energy projects, and more developed supply chains. The initiative aims to attract US$100 billion in investments within the next 10 years, and a number of Taiwanese companies are looking at opportunities to participate.
One major Taiwanese electronics company that has already placed its bets on the LEC is Kinpo Electronics, a global electronic manufacturing services (EMS) and original design manufacturing business. In the LEC, Kinpo manufactures printers and storage devices, benefiting from a young workforce and regional market access. By 2025, Kinpo had shifted around 80% of its production from China to Thailand and the Philippines to mitigate U.S.-China tariff risks, according to YCP Group, an Asia-focused corporate strategy firm.
At the same time, prospective investors are aware of certain challenges in operating in the Philippines. They refer, for example, to the Philippines’ uneven consumer landscape, with economic and consumption demand concentrated in urban centers like Metro Manila, Cebu, and Davao. Outside these hubs, rural and remote areas remain less commercially integrated, despite expanding electricity access, and often have lower exposure to modern packaged goods.
William Tsoi, chief executive of Smartpack Technology Philippines, which sells and services Taiwan-made plastic-packaging and recycling machinery, cites hurdles in the Philippines market, where plastic waste is typically sent to landfills instead of being recycled. Unlike in Taiwan, where early education and strict regulations have supported the development of a formal recycling system, the Philippines offers few incentives for investment in recycling infrastructure.
“This is due to the high electricity and labor costs associated with recycling, with only about 5% of businesses currently being willing to invest in recycling plants,” Tsoi said at the PackPrintPlas Philippines 2025 trade show in Manila.
Tsoi also noted that business has declined compared to three years ago due to the global economic slowdown, which has reduced the number of overseas Filipino workers (OFWs) and consequently the amount of money being remitted back home — a major contributor to the Filipino economy.
Reshaping conditions
Taiwan’s exports are concentrated in intermediate goods used in the manufacture of finished products. According to the Philippine Trade & Investment Center in Taipei, Taiwanese foreign direct investment (FDI) in the Philippines remains focused on electronics and electrical manufacturing, including printed circuit boards, EMS, peripherals, cooling fans, and mini-motors.
Investment also extends to plastics, metal fabrication, and garments, with a smaller but growing presence in food processing, logistics, industrial parks, and renewable energy. The Philippine Economic Zone Authority hosts about 80 Taiwanese companies, with major clusters in Batangas, Cavite, Laguna, and Subic.
“Recent investment interest is expanding toward AI, data centers, EVs, and battery components, as well as solar and other renewable energy solutions, signaling a shift toward higher-value and technology-enabled operations,” adds Anthony B. Rivera, the Philippines’ trade representative in Taipei.
He says that “Taiwanese companies often highlight the Philippines’ competitive and English-speaking workforce, longstanding expertise in electronics assembly and back-end semiconductor operations, and improving investment conditions resulting from reforms.”
As examples of such reforms, Rivera names CREATE MORE, an amendment that streamlines the Philippines incentive regime, liberalization of the Public Service Act to support FDI in critical sectors, and the land-lease law that enables foreign investors to lease private land for up to 99 years.
Still, many projects remain in due-diligence or site-selection phases, with actual conversion dependent on policy clarity around CREATE MORE, infrastructure and energy reliability, and ease-of-doing-business reforms, says Rivera. The Philippines has Asia’s second-highest electricity prices after Singapore and has drawn criticism for low ease-of-doing-business rankings.
In terms of infrastructure, the Metro Manila Subway Project has been suffering prolonged delays, undermining efforts to ease worsening traffic congestion. The same is true for the North-South Commuter Railway project, which is designed to help commuters from Pampanga and Laguna provinces to access Manila more quickly.
Historically, “due to structural challenges — especially electricity costs, reliability, and a thin local supply chain — Taiwan’s FDI into the Philippines has been lower than into Vietnam, Thailand, and even Cambodia,” says Kristy Hsu, director of the Taiwan ASEAN Studies Center at the Chung-Hua Institution of Economic Research.
Still, Hsu notes that this pattern is gradually reshaping as Taiwanese companies diversify supply chains due to labor shortages and transshipment scrutiny issues. As a result, “the Philippines is improving its investment climate and actively courting Taiwanese firms in electronics and renewable energy,” she says.
She notes that Philippine political support for stronger business ties with Taiwan has been consistent, even under former President Rodrigo Duterte. His 2016-2022 presidency marked a sharp shift in foreign policy, moving the Philippines away from its traditional alliance with the United States and toward closer ties with China, driven by a bid for Chinese investment, loans, and infrastructure financing.
Even so, the Duterte administration upgraded the Philippines’ bilateral investment agreement with Taiwan, making it the first of Taiwan’s New Southbound Policy partners to do so. “Although Duterte was perceived as more China-leaning and [the incumbent] Ferdinand Marcos Jr. as more U.S.-leaning, both administrations treated Taiwan as a vital partner,” Hsu explains.
Philippine investment in Taiwan remains modest, but activity is beginning to emerge in the food and beverage sector, led by the Jollibee Group, according to findings by YCP Group. In 2021, Jollibee acquired a 51% stake in Milksha, a Taiwanese bubble tea chain, using its global network to support the brand’s expansion.
That push continued in 2025, when Milksha acquired a 70% stake in Moon Moon Food, strengthening its position in the Taiwanese market. Potato Corner, a popular Philippine snack franchise, also entered Taiwan in August 2025.
“More business activity is expected as Philippine F&B firms explore growth opportunities in Taiwan, suggesting the potential for stronger two-way investment flows,” says Kei Hasegawa, partner and office manager for Hong Kong and Taiwan at YCP Group.
It’s in the manuals
Another strong area of Taiwan-Philippine cooperation is the importation of Filipino workers into Taiwan. There were more than 160,000 OFWs employed in Taiwan in 2024, making the Philippines Taiwan’s third-largest source of foreign labor after Indonesia (around 325,000) and Vietnam (nearly 300,000). While Indonesians and Vietnamese are typically employed in caregiving, agriculture, and fisheries due to labor policy restrictions, the Philippines constitutes the largest source of migrant workers in Taiwan’s technology sector.
“Given that equipment manuals are in English, Taiwanese tech firms value OFWs’ English proficiency,” says Hsu. She adds that “whereas heavy upfront fees via labor agencies often translate into Vietnamese and Indonesian workers arriving in Taiwan deeply indebted, Filipinos face fewer such problems due to more organized protections.”
Illustrating the Philippine perspective, trade representative Rivera notes that Taiwan continues to offer competitive wages and strong labor protections relative to other destinations. Moreover, its aging population and labor shortages in manufacturing and eldercare point to sustained demand for Filipino workers.
“The outlook for OFWs remains broadly positive, especially in manufacturing, teaching professions, care services, and select technical roles,” Rivera says. “Another segment to watch out in the near future are hotels, restaurants, and services related to such professions.”
Collective defense?
Beyond the business connections, it is no secret that Taiwan’s and the Philippines’ security situations are closely related. Many security analysts note that the Philippines would likely be drawn into a U.S.-China conflict over Taiwan, given its close geographical proximity.
Besides the Philippines constituting a supply hub, “U.S. military forces involved in such a conflict would probably operate from the Philippines to some degree, which might make the Philippines a co-belligerent and thus a war participant,” says Timothy R. Heath, a senior international defense researcher at the U.S.-based think tank RAND Corporation.
Heath adds that “the Philippines is also within range of Chinese missiles and thus Beijing could target those U.S. assets or otherwise punish the Philippines for helping the U.S. military.” Moreover, even if Manila sought to remain on the sidelines, doing so would be difficult, as both China and the United States would press the Philippines to take a position.
While no formal defense ties exist between the Philippines and Taiwan, informal security dialogues reportedly have been increasing. “Recent examples include a Taiwan Coast Guard visit to Manila and participation by Philippine Navy and Coast Guard officials in the Taiwan International Ocean Forum [in July], where they met President Lai Ching-te,” says Lucio Blanco Pitlo III, president of the Philippine Association for Chinese Studies.
“These build on a 2015 fisheries law enforcement cooperation agreement, enabling discreet talks often kept quiet to avoid backlash from Beijing,” he says.
According to Pitlo, the Philippines is increasingly receptive to the possibility of assisting the United States in the event of a Taiwan contingency. He points to the Marcos administration’s 2023 decision to allow U.S. forces access to a naval base in Cagayan, which faces Taiwan, under the Enhanced Defense Cooperation Agreement (EDCA), as well as the deployment of a U.S. Typhon missile system in Ilocos Norte.
The issue drew renewed attention in November 2025, when the U.S.-China Economic and Security Review Commission recommended that Taiwan help finance upgrades to EDCA sites in the Philippines, arguing that such investments would strengthen the United States’ ability to defend Taiwan.
Pitlo cautions that the Marcos administration would be well-advised to adopt a “speak less, do more” approach.
“Under the Marcos administration, high-level security dialogues with Beijing are in a deep freeze, as Beijing views Manila’s Taiwan-related actions as crossing a red line,” he says. “The government should be more ambiguous and discreet — military modernization and joint Philippines-Taiwan activities are routine and need not be loudly announced.”
