In the heart of Southeast Asia, the Philippines and Malaysia—two nations with a shared history of rich cultural and economic ties—are forging a path toward deeper collaboration. As founding members of ASEAN, both countries are well-positioned to strengthen their bilateral relations further.
With ASEAN 2025 approaching and Malaysia set to host, BusinessToday spoke with the Philippines’ Ambassador to Malaysia, Her Excellency Maria Angela Ponce, the first female ambassador to hold the position.
Reflecting on her role since assuming office in October last year, the seasoned diplomat shared her optimism about the boundless opportunities for collaboration between the two nations. She emphasised the potential to deepen ties in key areas such as trade, investment, and digital innovation.
A Promising Partnership: The State of Bilateral Relations
Under the leadership of newly elected President Ferdinand Marcos Jr. in the Philippines and Prime Minister Anwar Ibrahim in Malaysia, the bilateral relationship between these two nations has entered an exciting new chapter.
In an exclusive interview with BusinessToday, Ambassador Maria Angela describes the current state of relations as “strong and on a positive trajectory,” reflecting the close personal rapport between the leaders of both countries.
This dynamic political leadership has resulted in high-level exchanges, underscoring the commitment of both nations to enhance cooperation. Recently, Malaysia extended support to the Philippines during a natural disaster, sending helicopters to assist in rescue operations. Such gestures exemplify the enduring solidarity between the two nations, which continues to flourish across both economic and diplomatic fronts.
When it comes to economic ties, the Philippines and Malaysia are not simply partners—they are collaborators in growth. Both nations, as founding members of ASEAN and marking a momentous friendship of 60 years, have increasingly aligned their goals within the region, seeking opportunities to complement each other’s strengths.
Ambassador Maria Angela notes that the economic relations between the two countries are characterised by “cooperation and integration,” mirroring the broader ASEAN economic framework. Malaysia has been a significant trading partner for the Philippines, with trade relations spanning sectors such as infrastructure, banking, aviation, and real estate. However, what stands out today is the momentum for future collaborations.
In 2023, President Marcos’ state visit to Malaysia led to the announcement of USD 285 million in pledged investments from Malaysian companies. This signifies the growing interest of Malaysian investors in the Philippines, particularly in sectors where both countries have common interests and shared expertise.
Key Areas of Focus: The Halal Industry and Digital Economy
Two key sectors are emerging as the cornerstone of Philippines-Malaysia bilateral cooperation: the Halal industry and the digital economy.
Malaysia is globally recognised as a leader in the Halal industry, having maintained this position for eight consecutive years. The Philippines, with its large Muslim population, stands to benefit from this expertise. Ambassador Maria Angela emphasises that Malaysia’s leadership in Halal certification, Islamic banking, and Muslim-friendly tourism offers a golden opportunity for the Philippines to build its Halal economy.
The two nations are negotiating a Memorandum of Understanding (MOU) that would pave the way for increased collaboration in areas such as Halal certification and Islamic finance. Malaysia’s strength in this space could help the Philippines unlock the full potential of its Muslim-majority regions, creating a mutually beneficial ecosystem for both nations.
The industry, which includes agriculture, food production, tourism, and finance, is seen as a significant growth sector for the Philippines. In fact, the country has already begun exporting fresh durian to Malaysia, and other agricultural exports such as coconut oil are in high demand. As both nations work to deepen their bilateral ties, they are also exploring new avenues for collaboration, particularly in trade agreements like the Regional Comprehensive Economic Partnership (RCEP) and the ASEAN Free Trade Area (AFTA).
As for the digital economy, Philippines and Malaysia see immense growth potential. Both nations are focused on harnessing the power of digital transformation, with an emphasis on e-commerce and the startup ecosystem.
For the Philippines, a key area of cooperation lies in expanding e-commerce opportunities for small and medium-sized enterprises (SMEs), which play a crucial role in the economy. Malaysia’s robust digital infrastructure and thriving startup scene offer valuable lessons for the Philippines, where the tech ecosystem is rapidly growing.
Ambassador Maria Angela highlights that the two countries are exploring an MOU with Malaysia’s MDEC (Malaysia Digital Economy Corporation) to support SMEs and strengthen the startup ecosystem. This collaboration aims to foster innovation in digital content, further enhancing the Philippines’ digital creative industry.
The Role of Philippine Companies in Malaysia
Philippine companies are already making a significant impact in Malaysia, particularly in the food and real estate sectors. Notable examples include Jollibee, the fast-food giant, and Ayala Corporation, one of the Philippines’ largest property developers.
Jollibee, with its plans to open 120 stores across Malaysia, is a testament to the growing demand for Philippine brands in the region.
While Philippine companies are establishing a stronger footprint in Malaysia, the Philippines is equally eager to attract Malaysian investments, particularly in infrastructure, manufacturing, aviation, and real estate.
In 2023, Malaysia became the sixth-largest source of Foreign Direct Investment (FDI) in the Philippines, with figures expected to rise as both nations strengthen their economic ties.
The Philippine government has implemented key reforms to make the country more attractive to foreign investors, including tax incentives for companies under the CREATE (Corporate Recovery and Tax Incentives for Enterprises) law and initiatives to streamline the bureaucratic process through the introduction of “green lanes” for investors.
In particular, the Philippines is targeting Malaysia as a key partner for investments in Mindanao, specifically the Bangsamoro Autonomous Region (BARMM), which is emerging as a new growth area. Given the cultural and historical ties between Malaysia and this region, the Philippines sees Malaysia as an ideal partner to invest in the development of BARMM, particularly in Islamic finance and the Halal industry.
The Philippines, with its youthful population and expanding middle class, is already one of Southeast Asia’s rising economic stars. At the heart of the country’s economic strategy is a focus on leveraging its human resources, technological infrastructure, and digital transformation to position itself as a leading player in ASEAN and beyond.
“We want to be known not only for our highly skilled workforce but also as a major hub for the digital economy,” says the Ambassador. With a median age of just 25 and a population that exceeds 120 million, the Philippines offers a demographic dividend that can drive economic expansion. But beyond human capital, the government is keen to tap into high-growth sectors like digital technology, manufacturing, and renewable energy
The Philippines’ Global Strategy: Expanding FDI and Strengthening Supply Chains
The Philippine government recognizes the importance of Foreign Direct Investment (FDI) as a key driver of economic growth. However, the country faces stiff competition from other ASEAN nations like Vietnam and Indonesia, which have been successful in attracting investments in sectors like manufacturing and technology. According to the Ambassador, there are several factors hindering the Philippines from fully capitalizing on its potential.
“Labour costs in the Philippines have risen, and we face challenges like high electricity costs and connectivity issues,” the Ambassador acknowledges. “Our political system, while democratic and stable, also presents challenges for long-term investors due to changes in leadership every six years.”
To address these issues, the Philippine government is focusing on economic reforms, including tax incentives, the liberalisation of key sectors like energy, and a series of infrastructure projects under the “Build, Build, Build” program. This initiative includes 286 infrastructure projects across the country, particularly targeting transportation, energy, and digital infrastructure.
One sector that has been a point of focus is renewable energy. In a significant move, the Philippine government recently passed a law allowing 100% foreign ownership of renewable energy projects like solar, wind, and hydropower. This is seen as a vital step to attract foreign capital and expertise in the green energy space, where Malaysia is also a strong player.
The Philippines continues to promote intra-ASEAN trade through agreements like RCEP and AFTA, which allow for greater market access within the region. “What sets ASEAN apart is our ability to leverage our complementary economies rather than compete directly with one another,” the Ambassador tells BusinessToday. “For example, while the Philippines plays a key role in the semiconductor supply chain, Malaysia is a leader in the electronics and digital space.”
Key Sectors for Growth: Trade and Investment Opportunities
Despite the challenges, the Philippines and Malaysia continue to expand their economic relationship, with both countries looking to diversify trade and investment opportunities. According to the Philippine Embassy, Malaysia is the Philippines’ ninth-largest trading partner, with trade between the two nations valued at USD 6.15 billion in 2023. Top exports from the Philippines to Malaysia include semiconductor devices, electronics, and natural rubber, while the Philippines imports petroleum, palm oil, and electronic components from Malaysia.
Both nations are particularly keen to boost trade in electronics, semiconductors, coconut products, and agribusiness. The Philippines also sees opportunities in construction, with Malaysia’s leading role in infrastructure development providing a perfect complement to the Philippine government’s massive infrastructure drive.
In this two part interview series, we discuss on ASEAN and South China Sea on the second article
