By Beting Laygo Dolor, Contributing Editor
China’s niche as the global go-to manufacturing and trading hub is eroding.
Countries in the region are expected to engage in a fierce competition to entice those plants and businesses to re-locate to their shores.
The Philippines wants to grab a slice of the pie with incentives equal to or even better than what its neighbors have to offer.
Unfortunately for the Philippines, the perception remains that Vietnam, Indonesia and Thailand are better places to re-locate to “because of supply chain, resources and raw material production,” Nabuo Fujii, president and executive director of the 600-member Japanese Chamber of Commerce and Industry of the Philippines, Inc. told media recently.
Fujii said that while the Philippines has an adequate supply of manpower, the country still had a problem with its “image.” But the lack of supply chain and raw material production are also serious issues that result in manufacturers looking to relocate elsewhere.
Last week, a pro-administration lawmaker pointed out what she said were the country’s shortcomings in luring investors, especially now that manufacturers from the US, the UE and Japan have been looking to move their China operations to alternative shores.
Even Chinese companies are considering moving out of China in light of the on-going US-China trade war that has caused substantial increases in tariffs from both sides.
Sen. Imee Marcos said that the Philippines may have a competitive edge in its skilled, English-speaking workforce but “our economic managers must study more closely and quickly the incentives offered by Vietnam, Thailand, Malaysia and Indonesia, which are ahead in the race to attract foreign investors.”
Marcos said she would like to see amendments to the Foreign Investments Act, specifically the setting-up of and the Investments Promotion Council.
Her proposed bill includes such amendments as raising foreign ownership limits’ lowering the US$2.5-million capital requirement to set up operations in the country and simplifying requirements for all national-level permits.
These are “long-delayed incentives” for foreign investors, she said.
Sen. Bong Go also sought to grant incentives for foreign companies to relocate to the Philippines, on the condition that they should set up operations in less developed regions of the country.
This will go hand-in-hand with his Balik Probinsya program, which Go wants implemented after the coronavirus crisis ends.
For his part, Sen. Sonny Angara said the government must minimize red tape while also expanding air- and sea-ports if it wants to pull in investors leaving China for greener pastures.
Angara said Japanese companies were not too interested in relocating to the Philippines because of the seeming “lack of interest” in manufacturing by both the government and the private sector.
Earlier, the Philippine Chamber of Commerce and Industry (PCCI) also asked the government to offer more generous incentives to those relocating.
PCCI President Benedicto Yujuico noted that manufacturers started an exodus from China because they believe “that the supply chain there is not dependable.”
Yujuico said the government should reconsider its plan to lessen or even remove incentives presently enjoyed by foreign companies, as this is not the best time to do so.
The Covid-19 pandemic has exposed some serious flaws in China’s supply chain.
Japanese companies operating out of China were among the worst hit. As a result, Japanese Prime Minister Shinzo Abe called on Japanese companies to look for other places to manufacture their goods, as the pandemic had exposed “grave vulnerabilities” in the supply chain of Japanese companies.
Japan set aside US$2.2 billion to help companies relocate.