By Madelaine B. Miraflor
There are fewer Japanese companies in the Philippines that are hoping to book higher income for the year, but all of them remained satisfied with the low wage rate in the country.
The initial result of the latest survey conducted by Japan External Trade Organization (JETRO) showed that in terms of profitability, less Japanese companies in the Philippines expect “further profit increase in the near future.”
To be specific, only 69 percent of Philippine respondents of the survey from 76 percent last year are expecting profit for this year, while only 44 percent of the respondents expect higher profit for 2020.
44 percent think that they would keep the same level of profit as previous year.
Though the survey didn’t cite any reason for the cautious optimism among Japanese firms, it said that the reasons for profit increase would be sales expansion in local or overseas market, among others.
Meanwhile, the wage growth rate (on the local currency basis) in the Philippines is still lower than that in Vietnam and Indonesia.
“As for production cost and productivity, Philippines is superior to other ASEAN countries because of its competitive labor cost,” JETRO said.
In the Philippines, JETRO has been conducted this survey annually since 2004. 139 Japanese companies, mostly from the manufacturing sector, participated in this year’s survey.
Just like the previous survey, only about a half of these are planning to expand their business in a few years.
They will also likely keep the same number of Japanese staffs, while a half of them will increase the number of Filipino staffs.
From business point of view, “abundant, talented, English-speaking human resources for competitive compensation” is one of the important strength of the Philippines, the summery of the survey results said.
However, year by year, the survey noted that it gets harder for the Japanese companies to secure skilled engineers and capable middle management. Besides, high rate of personal turnover and ongoing labor issues are likely to reduce the advantage of Philippines as an investment destination.
The full survey report will be made public in January, 2020.