Tokyo, Japan – The Philippines is outpacing Southeast Asian neighbors in attracting Japanese investments, with the usual challenges of putting up businesses a thing of the past.
While other Southeast Asian countries face a number of challenges, two main constraints in the Philippines are “difficulty in local procurement of raw materials and lack of employees,” said Isamu Wakamatsu, director of the overseas research department (Asia and Oceana) of the Japan External Trade Organization (Jetro).
Other members of the Association of Southeast Asian Nations (ASEAN) face other problems like wage issues and low quality of employees.
Jetro is a government-related organization that promotes mutual trade and investment between Japan and the rest of the world.
Wakamatsu said wage issue is the number one concern of Japanese investors planning to put up businesses in Vietnam, Thailand, Indonesia and Malaysia.
“The new trend is (that) Japanese investment is growing in the ASEAN,” Wakamatsu said.
In the past, the Philippines lagged behind ASEAN neighbors in attracting Japanese investments but recent robust economic development as well as a strong economic foundation is changing that.
Based on statistics, there will be a slowdown of Japanese investments in Thailand and Indonesia, Wakamatsu said.
As for the Philippines, the prospects “will continue in a high level,” he said.
Wakamatsu’s observation echoed a separate survey conducted last year on Japanese expatriates which rated business challenges in Asia.
In the Philippines, top two issues were mentioned: difficulty in procuring raw materials and lack of employee performance.
By comparison, the main challenges in Malaysia are wage increase, operational costs and quality of employees. In Thailand, the challenges are: wage increase, competitors’ market share are growing; lack of employee performance; difficulty in hiring executive staff and high prices.
In Indonesia, wage issues, competition, difficulty in hiring qualified staff and quality of employees are the main concerns. In Vietnam, wage increase, lack of raw materials, red tape, legal problems, tax procedures and lack of quality bug potential investments.
The survey also showed the Philippines beating China and India in all departments, with wage increase, high operational costs, and quality of employees among the many concerns.
Available data from select countries show that labor restiveness remains high but this has gone down in the Philippines.