20 global manufacturing firms fleeing China skip PH

By Bernie Cahiles-Magkilat

Some 20 global manufacturing giants fleeing from the trade war zone of China that eyed the Philippines as relocation site have already looked elsewhere in ASEAN because the uncertainty posed by the TRABAHO Bill continued to discourage foreign investors.

Charito B. Plaza Charito B. Plaza

Charito B. Plaza, Director-General of the Philippine Economic Zone Authority (PEZA), told reporters that these firms have approached them separately in March this year when the trade war between the US and China was reignited.

Plaza said these companies are a mixed of investors, including Japanese, Chinese, Americans and Europeans and have relocated to other ASEAN countries like Thailand, Indonesia and Vietnam.

Plaza has no estimate as to the magnitude of their investments but said these are big global firms engaged mostly in manufacturing like steel, electronics and garments.

At first, these companies were drawn by the attractiveness of the Philippines being eligible for zero duty on their exports to EU countries under the EU-GSP Plus scheme.

In addition, China is implementing a ban on highly-polluting manufacturing industries that some of these firms are relocating overseas.
Also, the salary in China is on the rise with the rate at sometimes four times higher than the Philippines’.

That is why, she said, the government should reconsider the current TRABAHO Bill to attract these companies affected by the trade war between US and China.
This debunked earlier by the Department of Trade and Industry that the trade war has very minimal impact, she said noting that China now wants companies Chinese manufacturers and their foreign locators to use locally-sourced inputs.

“The really want to come to the Philippines but with TRABAHO Bill the uncertainty will continue,” said Plaza adding she cannot also make promises to these investors regarding the outcome of the TRABAHO Bill, which seeks to overhaul the generous PEZA incentive packages.

Plaza, however, said they still continue to promote investments into the Philippines but said their job has become doubly difficult because these firms “do a lot of research because these are big investments and they are big capitalists with branches all over the world so they know. If they will relocate in Philippines will the rules will not be changed in the middle of the game?”

Meantime, existing locators are slowly transferring production quotas to their affiliates in the region instead of expanding here.

Plaza, however, saw a bit of a silver lining with the newly-elected senators saying they are a “friendlier” batch. Even the old senators, who helped craft the TRAIN 1, have also intimated to her of their moves to amend the first tax reform law to make its more friendly to investors.

Plaza said they were not consulted in the crafting of the tax reform measures by the Department of Finance and Department of Trade and Industry when they are the most affected government agency.

PEZA administers the tax and fiscal incentives of export-oriented companies located in various economic zones in the country.