Japanese manufacturers set up plants in PH

MANILA, Philippines – More Japanese manufacturers are setting up facilities in the Philippines, said analysts at global real estate services provider Colliers International.

According to Julius Guevara, associate director for research and advisory at Colliers, they have received a number of inquiries from Japanese companies interested in putting up manufacturing facilities in industrial areas in and around Manila.

“In the past 6 to 12 months there has been an increased activity of Japanese moving manufacturing to the Philippines,” said Guevara.

“We received inquiries during the past year asking about locations. Mostly different industrial properties close to Metro Manila,” he added.

Japanese investors are moving operations to the Philippines following a number of natural and geopolitical incidents that affected their businesses. The 2011 earthquake-tsunami destroyed many facilities in Japan. The flooding in Thailand also affected Japanese investments and manufacturing plants located mostly in Bangkok. The most recent issue affecting investments is the territorial dispute between Japan and China.

According to Guevara, this interest is a “small bright spot in a sector that has been in the doldrums in the past 10 years.”

High electricity rates and labor costs pushed most of the manufacturing facilities out of the Philippines and into neighboring countries like China and Thailand.

“Ever since then the industrial sector hasn’t picked up,” said Guevara.

High power cost remains to be a major concern for investors, but “if the situation between Japan and China continues to escalate we will see more interest from Japan,” he said.

A challenge however is finding a strategic place to set up facilities. Guevara said there was some expansion of industrial areas in the Laguna area but because of the lack of activity in the sector in the past, many developers in the Philippines turned their land into residential and commercial developments.

“It makes more sense for developers to turn their idle land into developments,” he said.

Japanese investments

A number of Japanese companies have recently made the transition to the Philippines. New investments by major Japanese companies amounted to roughly 6.51 billion yen at end-September 2012.

Electronics firm Furukawa Electric Co. Ltd. and adhesives maker Cemedine Co. Ltd invested a combined 1.016 billion yen in initial capitalization in the Philippines. Cemedine’s Philippine unit will be operational by April 2013.

Fujifilm Corp., which makes optical lenses for digital cameras, projectors and surveillance cameras, is also expected to build a facility in Laguna in 2013.

Japan is also looking at other competitive countries such as Indonesia and Malaysia. – Rappler.com