The Philippines is seeking technical and funding assistance from three Japanese government agencies to help upgrade the capabilities of local supply chain industries, as the country makes a pitch to become the manufacturing and human resource development hub of Japanese firms.
Trade Assistant Secretary Ceferino S. Rodolfo said in a briefing on Monday that the proposal to tap technical assistance from the Japanese Ministry of Economy, Trade and Industry (Meti), Japan International Cooperation Agency (Jica), and Japan External Trade Organization (Jetro) was meant to fund collaborative industrial projects on manufacturing, services, SME (small and medium enterprises) development, and human resource development that will harmonize the working environment between the two countries.
Rodolfo added that the Philippines wanted to tap a portion of the $10-million funding provided to the Association of Southeast Asian Nations by METI.
The funding can be used to, among others, improve the capabilities small and medium sized enterprises (SMEs), hold business matching activities and enhance education and training.
According to Rodolfo, the Philippines is becoming a more preferred investment destination for Japanese companies engaged in services and manufacturing, given the strong economic growth and rising per capita income of Filipinos.
External factors such as political turmoil and rising wages in neighboring countries are also helping improve the country’s viability.
As it is, investment flows from Japan to other countries in Asia, like Thailand and China, have already begun to decline.
Discussions during the Industrial Cooperation Dialogue held between the Philippines and Japan yesterday focused largely on the local automotive manufacturing sector, the advancement of which is expected to result in inclusive growth for the country.
“We’re putting emphasis on sectors that can have great impact on inclusive growth and employment. Between Japan and the Philippines, [that] would be the automotive industry,” Rodolfo said.
“It’s not just about attracting the assemblers, but we also want to attract the supplier network, which will enable us to develop capabilities in other sectors. There are linkages for example in textile, iron and steel, plastics, electrical wiring, petrochemical and aluminum,” he added.
According to Rodolfo, the Philippines wants to tap the so-called third tier of suppliers that these Japanese automotive firms could bring to the country.
Tier 1 consisted of the suppliers of functional parts, while tier 2 comprised of companies engaged in parts processing.
The third tier, in which there are some 30,000 Japanese SMEs, refers to the suppliers to the tier 2 or those that provide the raw materials.
Rodolfo added that there was great potential for the Philippines to forge agreements with the tier 3 SMEs.