Japanese firms urged to invest in PH medical devices manufacturing

Published September 8, 2021, 4:41 PM

by Bernie Cahiles-Magkilat

Trade and Industry Secretary Ramon M. Lopez has urged Japanese manufacturers to invest in the country’s medical device electronics manufacturing sector on top of their investments in the traditional electronics and semiconductor sectors.

Trade and Industry Secretary Ramon M. Lopez

At the Sumitomo Mitsui Banking Corporation (SMBC) Nikko Securities, Inc. Virtual Roadshow Tuesday, Sept. 7, Lopez stressed that aside from semiconductor, the country’s medical devices electronics manufacturing is a growing industry supported by existing supply chain for manufacturing.

“There are several investment opportunities for you in manufacturing and a few subsectors that you may seriously consider,” said Lopez.

Growth in the field of medical devices in the PH is expected to be driven by government’s initiative to upgrade and build more healthcare facilities to support the projected demand from 2025-2040.

The local medical device market is projected to have a compound
annual growth rate of 8.8% and would rise to USD884.3 million (PHP 44,004.54 million;
JPY 97,261.33 million) by end of 2024.
The Philippines’ prime attributes of cost efficiencies, intellectual talent, and market accessibility are well aligned with the challenges of the electronics industry, in terms of Design and Innovation through Research and Development; and Trade
Redirection and market access.
Moreover, manufacturing companies in the Philippines were able to shift operations and produce surgical masks, coveralls and ventilators. As of December 2020, Lopez said, the country has production capacity of 10.2 million medical-use coveralls, 22.6 million pieces. of N95 masks, 57.7 M pcs. of N88 masks, and more than 6,000 units of ventilators per month. “These have passed international PPE testing standards,” he stressed.

In addition, the medical devices manufacturing is backed by the presence of supply chain for manufacturing such as tool and die, chemicals, semiconductors, plastics, and metal parts necessary in the production of medical devices and its parts. We also have
industries and existing facilities like the Electronics Product Development Center and

Advanced Device and Materials Testing Laboratory also supports manufacturing, product design and research and development.

“While our industry is better known for backend semiconductor assembly, testing and packaging (ATP), the Philippines has already proven its competence in Electronics Manufacturing Services (EMS) and Original Design Manufacturing (ODM),” he noted.
Among the Philippines capabilities in EMS are components and sub-assembly, box-build assembly, new product introduction and complex equipment assembly. This covers products on sectors such as computers/peripheral, office equipment, telecommunication equipment, communications and radar, control and instrumentation, medical and industrial, automotive electronics, e-vehicle, and consumer electronics.
Capabilities in Design and Development services are also being developed and
implemented by the industry such as design for manufacturing, digital front-end design,
full custom analog design and layout, test development, product engineering, die and
wafer processing, die design, layout and verification and automation capabilities.
Moreover, IC Design is the next frontier of the semiconductor and electronics industry in
the Philippines with the vision to become a globally competitive electronics hub by 2030.
In addition, the Semiconductor and Electronics Industries in the Philippines, Inc. (SEIPI) is pursuing the Product and Technology Holistic Strategy (PATHS) project. Over the next 5 to 10 years, we are focusing on the manufacturing of the following: drones, autonomous vehicles, smart home devices, virtual reality devices, digital health devices, micro satellite, wearable solar devices, augmented medical devices, 3D printer, and collaborative robots.
Zooming in on the manufacturing industry, Lopez said the Philippines’ strong linkages in the global supply chain make us an ideal complementary location for manufacturing activities, especially in electronics, automotive, aerospace, medical devices, appliances, bicycles, among others.
Through the years, he said, Japan has contributed to the manufacturing industry of the Philippines, ranking as the 3rd source of Board of Investments (BOI)-approved investments in manufacturing from 2014 to July 2021.

From January to July this year, Japan placed 4th on the top foreign sources of BOI-approved projects. Japanese pledges amounted to $16.99 million which were
intended to fund real estate as well as transportation & storage activities.
Japan has consistently been among Philippines top five sources of investment pledges for years now.
In terms of investment promotion agencies (IPA)-approved investments in 2020, Japan ranked as the 5th top source of foreign investments with pledges amounting to $188.95 million (P9.376 billion; JPY20,176.67 million) or a share of 8.4% of the total IPA-approved investments of the country.

For the first quarter of 2021, Japan was the top source of IPA-approved investments and started strong with $215.36 million worth of investment commitments. This is a 738.63 percent increase from the approved investments during the same period in 2020.
Among the Japanese electronics companies in the Philippines that have been with us for more than 20 years such as ROHM, Sharp, Panasonic, Tsukiden, Nidec, Epson, and Canon.
Already, he said, Philippines country has maintained its Manufacturing Purchasing Managers’ Index (PMI) above the 50 neutral mark in July, i.e., at 50.4, coming from the 32 level last year.

“The Philippines is your ideal gateway within the ASEAN, being strategically located in the region and offering preferential trade arrangements through our bilateral and regional free trade agreements (FTA) to the rest of key Asian countries (Japan, Korea, India, Australia, New Zealand) and through the Generalized Scheme of Preferences (GSPs) with the EU, Canada, and Russia,” he said.