By Justine Irish P. Tabile, Reporter

THE PHILIPPINES’ free trade agreement (FTA) with South Korea is expected to continue encouraging Korean companies to make investments here and help bilateral trade rebound despite a challenging global environment, according to the Embassy of the Republic of Korea in the Philippines.

“Despite current fluctuations in Korea-Philippines trade, driven by geopolitical uncertainties and a downturn in global demand, the FTA is expected to significantly mitigate downward pressures,” Korean Embassy Commercial Attaché Taehyung Kim told BusinessWorld.

Philippine exports to South Korea declined by 20.1% year on year to $1.29 billion in the first five months of the year, data from the Philippine Statistics Authority showed.

Mr. Kim said he expects the FTA to help bilateral trade between the two countries recover once the global environment improves.

“With geopolitical uncertainties easing and global demand rebounding, we anticipate that the growth in Philippine exports to Korea, coupled with increased Korean investment, will positively impact trade between our two countries,” he said.

“In this evolving landscape, the Korea-Philippines FTA will play a crucial role by providing institutional stability for the mutually beneficial growth of both nations.”

Mr. Kim added that he has observed “a notable upward trend in investments from Korean companies into the Philippines.”

Citing data from the Philippine Economic Zone Authority (PEZA), he said, “Korea is the number one and most significant investor country for the first half of this year.”

“This surge in Korean investment is largely attributed to the Korea-Philippines FTA coming into effect, coupled with the Philippine government’s strong commitment to improving the investment climate,” said Mr. Kim.

In particular, he said that the government’s initiatives like the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy Act and the Luzon Economic Corridor have helped spur interest.

In the first semester, the PEZA approved 133 projects worth P72.36 billion, of which 14.87% came from South Korea.

PEZA Director-General Tereso O. Panga also said that increasing Korean investments can be partly attributed to the FTA.

“This agreement is anchored on expanding trade through enhanced market access, fostering robust economic cooperation, and attracting investments — particularly in key sectors such as critical minerals and supply-chain development,” Mr. Panga said in a Viber message.

“The Philippines stands to benefit from this FTA, which opens more opportunities for investors, increased market access, FDI (foreign direct investment) inflows, higher value-added production, and export diversification combined with deeper economic cooperation and innovation partnership,” he added.

Mr. Kim said the Philippines’ workforce, strategic location, and dynamic economy have helped attract Korean firms.

“Already, many Korean companies in sectors like semiconductors, auto parts, and apparel are achieving mutually beneficial growth here in the Philippines. Notably, last year also saw significant new investments from a Korean company in the shipbuilding sector,” he said.

“We expect Korean companies to continue bolstering reciprocal economic cooperation by contributing to the creation of quality jobs, revitalizing local economies, and advancing industrial structures within the Philippines.”