Japanese manufacturers move to Philippines

Manila (Philippine Daily Inquirer/ANN) - Japanese manufacturers are making a beeline to the Philippines due to its young, English-speaking labour market following a rising yen at home and risk factors like floods and political changes in other hubs.

Electronics firm Furukawa Electric Co. Ltd. and adhesives maker Cemedine Co. Ltd. are the latest to invest with a combined 1.016 billion yen (US$12.9 million) in initial capitalisation alone. This brought new Philippine investments by major Japanese companies to at least 16.51 billion yen so far this year.

Furukawa Electric¿s subsidiary, Furukawa Automotive Systems Inc. (FAS), established a wholly owned unit called Furukawa Automotive Systems Lima Philippines Inc. with a capitalisation of 1 billion yen to make wire harnesses for Japan-made automobiles by March next year. FAS said in a report that increasing demand for its products made it put up a ¿first step¿ export hub in the Philippine for its Asian expansion.

Cemedine will establish Cemedine Philippines Corp. with a capitalisation of 16 million yen to manufacture and sell adhesive, ceiling and related products by April 2013.

Also setting up new facilities by 2013 are Bandai, the toy maker of Power Rangers and Gundam fame (744 million yen); Fujifilm Corp., which will make optical lenses for digital cameras, projectors and surveillance cameras in Laguna (2.3 billion yen); and electronics components maker Murata Manufacturing Co. Ltd. (620 million yen).

Expanding their Philippine presence are Canon Inc. and Brother Industries Ltd., which are set to make printers with initial investments of 6 billion yen and 4.23 million yen, respectively.

These companies are targeting Asia, Latin America and Europe for exports, according to the Japanese Chamber of Commerce and Industry of the Philippines (JCCIP), which has 500 member-companies. As Japanese manufacturers locate in the Philippines, their suppliers will follow suit. This would create a supply chain that would attract a wider range of manufacturers and suppliers, JCCIP vice president Nobuo Fujii said.

Analysts said the Philippines has high-quality labour with lower cost and more stable growth compared with China or Vietnam.

Transportation distance to Japan is also shorter from Manila and while Thailand has been a traditional choice for manufacturing expansion, the flooding that further hit supply chains that suffered from the triple tragedy in Japan in 2011 has made companies seek alternatives.

To nurture the Philippines¿ supply chain, Trade and Industry Undersecretary Cristino Panlilio said in a phone interview that the Department of Trade and Industry (DTI) helped in marketing not only the major manufacturers but also their suppliers in a bid to nurture the Philippines¿ supply chain. Exports zone locators also get incentives such as income tax holidays and exemption from duties on imported capital equipment.

Fujii also expressed hope that Japanese firms would soon be able to monetise billions of tax credits that were due way back in 2002 and 2003. He said the JCCPI was awaiting the schedule and rates to be provided by the Bureaus of Internal Revenue and of Customs.

A tax credit is a rebate or refund of import taxes and duties paid to the government by a firm or manufacturer registered with the Board of Investments for raw materials, supplies and semi-manufactured products it has brought abroad to produce the goods it will export thereafter. To facilitate the refunds, the JCCPI has long been urging the Philippine government to implement a more flexible tax rebate system by allowing cash refunds, cross utilisation and fast releases at par with those of other Asean economies.

The DTI and the Japanese Embassy have jointly reported that despite ¿difficult situations¿ the two countries faced, particularly in 2011, trade volume between the Philippines and Japan increased to 382.7 billion pesos from 335.4 billion pesos in 2010. Japan remains the biggest investor in the Philippines, with total investments of 77.4 billion pesos last year, 19.1 billion pesos more than 58.3 billion pesos in 2010.

Asian Development Bank senior country economist Norio Usui has said in a presentation that manufacturing investments are good for the

Philippines as these create more jobs than other sectors.

Nomura Research Institute¿s Kengo Mizuno and Yoshihiko Iwadare have recommended that the Philippines target non-semiconductor electronic products (printers, multifunction peripheral, projectors, scanners, digital cameras, etc.) makers, shipbuilders, and their suppliers as potential investors.

Japan International Cooperation Agency economist Toru Yoshida said that although foreign direct investments across Asia plunged in 2009 during the global financial crisis, the Philippines lagged behind its neighbours in terms of attracting investors.

However, the Philippines could take advantage of rapidly changing global conditions (labour issues in traditional manufacturing hubs, supply chain disruption due to Asian floods, hyper-appreciation of the yen that made firms look for new sites) to present itself as a new growt'h area.

US$1 = 78 yen; 41 pesos


Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • ‘Get SAF 44 killers before BBL passage’
    ‘Get SAF 44 killers before BBL passage’

    Lawmakers are demanding the arrest of the Moro Islamic Liberation Front (MILF) fighters involved in the killing of 44 policemen in Mamasapano before the approval of the proposed Bangsamoro Basic Law (BBL) in Congress. Cagayan de Oro Rep. Rufus Rodriguez, chairman of the 75-member ad hoc committee in the House of Representatives deliberating on the BBL, prodded the Department of Justice (DOJ) to speed up its investigation and file charges against the MILF guerrillas as the Aquino administration …

  • Pinoys dance for Earth Hour
    Pinoys dance for Earth Hour

    The Philippines once again displayed its support Saturday night for the worldwide observance of Earth Hour by hosting a dance party after turning the lights off from 8:30 to 9:30 p.m. to save energy and make a statement on various environmental issues. The World Wide Fund for Nature (WWF) said widespread participation proved anew that no individual action on climate change is too small and that no collective vision is too big with celebrations in over 7,000 hubs in 170 countries. The WWF said …

  • Phl offers Sabah to win Malaysia’s support for UN case vs China
    Phl offers Sabah to win Malaysia’s support for UN case vs China

    The Philippines has offered to downgrade its claim on Sabah in exchange for Malaysia’s support for its case against China before the United Nations. …

  • Maysak to enter Phl Wednesday
    Maysak to enter Phl Wednesday

    A typhoon with international name Maysak is expected to enter the Philippine area of responsibility (PAR) on Wednesday and bring rains over Northern Luzon by weekend, the state weather bureau said yesterday. Aldczar Aurelio, weather forecaster of the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA), said the typhoon was 2,810 kilometers east of Mindanao as of 10 a.m. yesterday. “This typhoon is still too far to affect any part of the country,” the weather …

  • Nonviolent disciplining of kids pushed

    Child rights advocates called on senators to pass and strongly endorse a law that will institutionalize positive and nonviolent methods of disciplining children.The Child Rights Network (CRN), Plan International Philippines (PIP), Philippine Legislators’ Committee on Population and Development (PLPCD), and Lihok Pilipinas Foundation led the call for the enactment of the Positive Discipline Bill.Several Quezon City Council members led by Majority Floor Leader Jesus Manuel Suntay, Victor Ferrer …

  • Method to their madness

    [caption id="attachment_256768" align="alignright" width="212"] Illustration by Rod Cañalita[/caption] EMMANUEL PORTUGAL Country Manager for the Philippines, VMware I look after the garden. I’d like to think that I have a green thumb—no plants have died so far! The ones I like now that I planted a few months ago is the Blue Iris. Like the town in the movie, my Blue Iris shows up in the morning and only appears for one day. …

  • JGFP Summer Tour on today

    The summer tour for local junior golfers kicks off with the holding of the ICTSI-JGFP Baguio Junior Open today and tomorrow at the treacherous Baguio Country Club course in Baguio.Sixty players aged 6 to 17 years old are entered in the 36-hole tourney serving as the opening leg of the summer circuit organized by the Junior Golf Foundation of the Philippines with the International Container Terminal Services, Inc. Foundation as main sponsor. ... …

  • PH now market ready to absorb infra bonds

    The Philippine market is now ready to absorb infrastructure bonds that will be issued by private companies amid a growing pipeline of infra-related projects under the government’s Public-Private Partnership (PPP) program. President Benigno Aquino III last week said the government is still committed to spend more on the country’s infrastructure, with 16 PPP projects currently on the pipeline and nine that have already been awarded. Over the years, some of the country’s biggest infrastructure …


Should Aquino be held accountable over the Mamasapano operations?

Poll Choice Options