MANILA, Philippines–Trade officials are mulling over the creation of economic zones that will cater specifically to small- and medium-sized foreign enterprises, following the suggestion made by a visiting Japanese business delegation last week.
This move will enable the Philippines to complete the supply chain that is critical in boosting the competitiveness of local industries, and allow more local enterprises to become part of global value chains.
Lilia de Lima, Director General of the Philippine Economic Zone Authority (Peza), has shown interest in the said proposal.
“An SME ecozone is feasible given the standard Peza incentives. In fact, there are now many Japanese SMEs supplying the big companies in the same zone so they can be near the companies they supply,” De Lima said in a text message on Friday.
Trade Secretary Gregory L. Domingo, however, said the government had to look at the said proposal closely to determine if it was workable.
Akio Mimura, chair of the Japan Chamber of Commerce and Industry (JCCI), said the creation of an SME ecozone was one of the proposals they have presented to President Aquino and other trade officials in separate meetings last week.
Mimura is part of the visiting business delegation from Japan, composed of about 100 top level executives wanting to tap the trade and investment opportunities in construction, metal manufacturing, telecommunications, trading, banking, automotive and auto parts, travel, food, air transport, and electric power industries.
“SMEs are not like major corporations. They are highly vulnerable to fluctuations and any changes in outside environment, making them hesitant to make any new foreign investments. We have asked President Aquino about the possibility of setting up industrial parks dedicated to SMEs, and also of setting up so-called rental factories within ecozones to help make it easier for (foreign SMEs) to enter the country,” Mimura explained.
“The President did not make any direct response but in the dialogue with the government, there were two high ranking officials who showed interest in this idea. So, there is a likelihood this project will become a reality,” Mimura said.
Trade Undersecretary Ponciano C. Manalo Jr., who met with the Japanese business delegation last week, said the proposal would bode well with the Philippines’ thrust to boost local SMEs.
“The Japanese delegation said they noticed there was a big focus on SMEs in the Philippines and they would want to get their own SMEs here. There is a big push in Japan for their companies to invest abroad and SMEs in Japan would want to participate in that,” Manalo said.
“We could develop an SME ecozone or an SME park for manufacturing. Although this is still very conceptual. I thought this was a very good idea, personally… Maybe we can talk to other Japanese agencies on how to push this forward. The beauty in this is that the SMEs will be the suppliers of big industrial companies located or locating here,” he said.