The Philippines taught Vietnam how to build economic zones. Now, Vietnam is building what the world buys

For nearly three decades, a veteran of the Philippine Economic Zone Authority (PEZA) has observed the evolution of the Philippines' industrial ambitions while noting that a former student in the region has since surpassed the country. The Philippines once served as a regional model for attracting export-oriented manufacturing, but Vietnam has now overtaken the Philippines as a major manufacturing hub.

Vietnamese factories produce goods for global markets, while Filipino workers and managers help run those factories. This situation highlights a longstanding issue in the Philippine economy: the nation imports far more goods than it exports, making it heavily dependent on foreign products, capital, and energy. Tereso Panga, Director General of PEZA, emphasizes that the country now has a rare opportunity to reverse this trajectory.

Factors such as the surge in US investment in the region, Chinese companies seeking production bases in strategically neutral countries, and the need for the Philippines to become more competitive before losing out to rival destinations, all play a role in this opportunity. PEZA was created in 1995 to build on the Philippines' earlier experience with export-processing zones dating back to 1969.

When it was established, the agency aimed to create ready-to-use industrial locations for foreign companies to manufacture goods for export while offering incentives and a streamlined regulatory environment.