Japanese firms upbeat on PH, survey shows

More Japanese manufacturers are interested to do business or expand existing operations in the Philippines in the medium term, a survey of the Japan Bank of International Cooperation (JBIC) showed.

JBIC’s “Fiscal Year (FY) 2014 Survey Report on Overseas Business Operations by Japanese Manufacturing Companies,” results of which were released last week, showed that the Philippines was the 11th most promising country for overseas business among Japan firms in the next three years or so, with 50 or 10 percent of total respondents saying so.

While the Philippines retained its 2013 ranking, the number of firms that found the country promising rose from 39 or 8 percent of respondents last year.

The Philippines was behind India, Indonesia, China, Thailand, Vietnam, Mexico, Brazil, United States, Russia and Burma (Myanmar), but ahead of Malaysia, Turkey, Singapore, Cambodia, South Korea, Taiwan, Germany, France, Saudi Arabia and South Africa.

Twenty firms said they had plans to establish operations in the Philippines over the medium term, an increase from 15 companies in 2013 and eight in 2012.

The Philippines is one of the top 10 countries where Japanese companies have real business plans, joining China, Thailand, Indonesia, India, Vietnam, Mexico, USA, Brazil and Russia.

In particular, nine companies producing and selling electrical equipment and electronics said mid-term prospects for the Philippines were rosy.

Among existing Japanese investors in the country, 52.1 percent said they would strengthen their businesses here over the medium-term, up from 50.6 percent last year. The remaining 47.3 percent of respondents with existing projects in the Philippines said they would maintain the present level of their investments, while only 0.7 percent plan to either scale down or withdraw their investments.

“The Philippines … has maintained an upward trend since FY2009 (22.3 percent)” in terms of Japanese firms eyeing expansion activities, JBIC noted.

Among Philippine locators engaged in manufacturing, 29 percent said they would bolster existing plants, 7 percent said they would establish new plants, while 1 percent would outsource to others.

For those in sales, 31 percent said they would tap more agencies to strengthen sales, 10 percent would bolster existing bases, and 6 percent would start new sales bases.

Also, Japanese automobile companies were most satisfied with their profits in the Philippines this year. The local auto industry has been breaking sales records month after month en route to hitting or breaching its 250,000-unit target.

Among infrastructure firms, the Philippines was seen as promising by those in the sectors of sewage systems, roads and bridges, water supply, smart grids, as well as smart communities and “eco-towns.”

Amid tensions over disputed territories in the South China Sea or what Manila calls West Philippine Sea, 50 percent of respondents said they expected political and diplomatic relations with Beijing as well as the rest of Asean affecting their operations here.

Also, 68.8 percent said they were closely monitoring developments in relation to the Asean economic integration with respect to their businesses in the Philippines.

Among Japanese mid-tier or small and medium enterprises, the Philippines was the 9th most promising country over the medium-term, in a tie with Malaysia. However, the Philippines did not figure in the top 10 countries that Japanese companies see as promising over the long-term.

The survey was conducted between July and September among 617 Japanese firms with production or sales operations overseas.