Japan firms relocating to PH

By Ted P. Torres, The Philippine Star

Posted at Oct 26 2012 07:46 AM | Updated as of Oct 26 2012 10:19 PM

MANILA, Philippines - A growing number of Japanese manufacturers currently operating in China are relocating or planning to relocate to the Philippines.

According to Bank of the Philippine Islands (BPI) executive vice president and corporate banking group head Alfonso L. Salcedo Jr. they have existing Japanese clients, as well as potential borrowers, that have expressed interest in locating in Philippine economic zones (ecozones).

“Some of them are either expanding their Asian manufacturing operations aside from their existing locations in China, while others intimated said that they were pulling completely out of China and mulling the Philippines as their primary target for relocation,” Salcedo told newsmen yesterday.

The Japanese manufacturers/locators said that Chinese labor is becoming expensive in terms of wages, and in terms of training costs. The latter due to the fluidity of a “choosy” labor force that “are leisurely shopping around for jobs.”

“Employee loyalties are very low,” he added.

Constant changes in employment are forcing locators to regularly train “new” hires.

Other reasons are the increasing territorial disputes between Japan and China, which was aggravated by the mounting cases of reported vandalism against Japanese nationals in China.

Salcedo said that this was a golden opportunity for the Philippines to lure foreign direct investments (FDIs).

Last year, economists from both the private and multilateral funding agencies urged the Philippines to take advantage of the migration of the manufacturing locators from China.

However, experts warned that one of the major considerations of locators is the condition of the host country’s infrastructure system.

Last Tuesday, the World Bank and the International Finance Corp. (IFC) released its Ease of Doing Business 2013 report, which saw the country fall two notches lower from its 136th in the 2012 report to 138.

Salcedo said that its Japanese corporate account tops BPI’s foreign borrowers under its corporate banking group. It is worth a little over P10 billion of BPI’s total corporate banking loan portfolio of P350 billion.

“It is growing by an average 20 percent yearly,” the BPI executive vice president said.

The corporate banking group’s loan portfolio is composed of 80,000 accounts of which 70,000 are classified as small and medium enterprises (SMEs).

Salcedo said that its fastest growing sector is the services sector, followed by the utilities and the real estate sectors. All there sectors are averaging an annual growth rate of roughly 20 percent.