THE government is persuading at least 135 foreign manufacturers in China to relocate here as part of an industry strategy to present the Philippines as a complementary site to the Asian superpower.
According to the Board of Investments (BOI), the trajectory for the Philippines now is to become a complementary host country to China in terms of hosting foreign firms. This is the strategy that the government is implementing in light of moves from multinationals to move out of China after its weaknesses were exposed by the coronavirus pandemic.
The BOI is working to get 135 target companies—most of them affected by the pandemic and the trade conflict between the United States and China—to relocate to the Philippines.
Of this figure, 64 are China-based firms producing medical devices, optical lenses, appliances, bicycles and furniture, that were hit by the tariff race. Further, 55 are manufacturing firms that are being eyed for their capacity to make products crucial in the fight against Covid-19.
The remaining 16 are firms based in Wuhan, the origin of the virus, looking to move out of the city and China in general.
However, the BOI admitted it will be difficult to get these firms out of China in the immediate term. The ongoing crisis put on hold many business decision, it explained, and the smoke has to clear first before firms explore the option of relocation and expansion.
In spite of China’s exposed weaknesses, it is still hard to leave the country for its capacity and capability to produce requirements and inputs, as well as for its vast supply chains and availability of raw materials, the BOI said.
Competition
There’s also a rising competition between Asian nations in capturing fleeing firms. Likewise, firms are being encouraged to return to their home country to support domestic demand and supply, and some governments are willing to pay for this relocation.
“[The strategy is to] position the Philippines as a complementary host country—and not to steal investments of companies in China—in the manufacturing industry, specifically those that are looking at diversifying their business locations to sustain and enhance competitiveness,” the BOI said.
Such promotion is expected to shore up the country’s investment figures that are declining steeply due to the pandemic’s ill effects on the economy. The BOI, for one, suffered an over 70-percent drop in capital inflows from January to April, as local and foreign firms held on to their cash on uncertainties brought about by the health crisis.
Investments applied to the BOI for the period plunged 70.66 percent to P84.1 billion, from P286.7 billion during the same stretch in 2019.
Declines were recorded in inflows from sources both here and overseas, underlining the depth of the pandemic’s impact on business plans. BOI data showed that investments from local firms fell roughly 68 percent to P70.7 billion from P219.7 billion, while those from foreigners crashed by about 80 percent to P13.4 billion, from P66.9 billion.