10 Japanese manufacturers set $3-B expansion projects in PH

Published July 15, 2021, 4:13 PM

by Bernie Cahiles-Magkilat

Initial committed investments of $3 billion from country’s top ten Japanese manufacturers are in peril as investors complained of operational and fiscal bottlenecks they are currently facing.

During an online roundtable meeting with Trade and Industry Secretary Ramon M. Lopez, the Philippines’ top Japanese investors in electronics and medical devices manufacturing reaffirmed their confidence in the country’s economy as they revealed plans to explore expansion and diversification of products in the country.

Trade and Industry Secretary Ramon M. Lopez

At the same time, these Japanese firms identified the fiscal and operational bottlenecks in pursuing these projects. These bottlenecks include timely issuance of travel visas for their executives and engineers, the processing and release of permits and licenses by regulatory agencies, VAT and other additional taxes by local government units (LGUs), and access to COVID-19 vaccinations.

In response, Lopez reported that these matters are being discussed with concerned government agencies in a whole-of-government approach. This is to ensure the realization of their business plans.

The ten Japanese locators that participated in the roundtable discussion organized and moderated by Commercial Counselor Dita Angara-Mathay include the biggest names in global image solutions, electronics components, and medical device manufacturing.

Brother Industries, Canon Inc., and Seiko Epson Corporation are among the top five vendors in the global multifunction printer market, according to a study by tech and advisory research firm Technavio.

Terumo Corporation and JMS Co., Ltd. are market leaders in the Asia Pacific medical device industry, specifically in the infusion therapy device segment.

ROHM Co., Ltd. commands an 80 percent share of the isolated gate driver integrated circuits market. Similarly, NIDEC Corporation and Minebea Mitsumi Inc. hold leading positions in the micro DC motors market. Murata Manufacturing Co., Ltd. commands about 40 percent of the global multilayer ceramic capacitors (MLCC) market, a key component of consumer electronics devices and automobiles, while IBIDEN is a market leader in the diesel particulate filter market.

The mentioned Japanese companies have chosen the Philippines as the manufacturing site of their most competitive products, leveraging mostly on the country’s high-quality human resources. Collectively, these companies represent $2.5 billion in investments, $6.9 billion in exports, and over 83,000 in total employment.

In addition, these firms also inquired if foreign investors with significant investment and expansion plans could be assisted by way of green or express lanes similarly provided by host governments in ASEAN for foreign investors struggling to remain competitive under the challenges of a COVID-19 and post-COVID-19 environment.

As critical members of the global supply chain, these locators are constantly reeling from the pressure of pandemic-related restrictions that have negatively impacted their bottomline, production, and delivery schedules.

The Japanese entities reiterated their desire to fully vaccinate their employees, echoing calls for speedier access to and distribution of vaccines for their entire workforce. Given the strategic role of their Philippine facilities in the global supply chain, they emphasized that any disruptions would result in dire consequences for essential industries.

For his part, Lopez reiterated the country’s efforts to deepen its economic relationship with Japan. “As the Philippines builds back better from the pandemic, we will strengthen trade and investment ties with other countries, particularly Japan. After all, Japan has been a strong and important trading partner and investment source of the Philippines. The country is an ideal host for Japanese manufacturing and R&D activities in electronics, printers, and medical devices,” said Lopez.

In 2020, Japan was the country’s top export market and second-biggest import supplier at $10.03 billion and $8.62 billion respectively, bringing total bilateral merchandise trade to $18.65 billion. It maintained its number one position in 2021, with exports to Japan hitting $2.69 billion from January to April 2021.

Japan has also traditionally ranked as among the leading sources of foreign direct investments into the Philippines. In Q1 2021, Japan topped foreign investment commitments, accounting for 54.8 percent of total approved FI during the quarter.

As the country’s biggest exporter, the electronics industry accounted for 62 percent of all Philippine exports to the world, at $39.7 billion in 2020. Despite heavy reliance on imports, experts project the Philippine medical devices sector to grow at a compound annual growth rate (CAGR) of 9.3 percent to $744.7 million in 2021.

Lastly, the locators expressed their desire to transition to renewable energy sources and bring their operations in line with the United Nations sustainable development goals. One locator that employs over 23,000 Filipinos across its three plants shared that a major customer is requiring its suppliers to switch to full renewable energy sources by 2023 and requested assistance to comply with this requirement.