FOUR in every five Japanese firms in the Philippines expect sales to decrease this year on supply chain disruptions caused by the coronavirus pandemic.
About 80 percent of Japanese investors overseas said they anticipate sales to decline this year, according to a report by the Japan External Trade Organization (Jetro). In a reflecting of the business situation worldwide, the investors said their operations are hampered by the slowdown in international trade due to the pandemic.
“The main reason for the operational decline of Japanese companies in relation to Covid-19 was the decrease in both domestic and overseas demand,” the Jetro said in its annual Global Trade and Investment Report.
For the Philippines, 85.3 percent of Japanese firms here said they expect sales to go down for the full year of 2020. The survey, however, did not disclose how grave of a contraction they are staring at.
When placed in the Southeast Asian region, sales decline is projected to be worse in Malaysia and Thailand, but is viewed to be less severe in Indonesia and Vietnam especially.
Expectations of a sales decrease are at 89.4 percent in Thailand and 88.4 percent in Malaysia. On the other hand, 84.4 percent of Japanese investors in Indonesia anticipate their sales to fall, while 71 percent of those operating in Vietnam have a similar prospect.
“In terms of external shocks to global supply chains, it is said that the Great Japan Earthquake and the 2011 Thailand floods caused a ‘supply shock,’ while the Asian financial crisis and the global financial crisis caused a ‘demand shock,’” the report read.
“Although the Covid-19 crisis contains elements of a ‘supply shock,’ it seems that it has had a larger ‘demand shock’ impact,” it concluded. As to why, most of the respondents in the report anchored their expectation of a sales decline on the slowdown in local and foreign demand.
The survey for the Philippines gathered the insights of 226 Japanese firms and was conducted between June 8 and June 11, a period when the country’s quarantine restrictions were relaxed and most of business operations were allowed to reopen.
Last week President Duterte decided to revert Metro Manila and nearby provinces to modified enhanced community quarantine for until August 18. As such, most business activities were ordered to close again, including dine-in restaurants, gyms and Internet cafés.
Last year, Japan was the country’s fourth-largest foreign investor next to Singapore, China and South Korea.
Based on records from the Philippine Statistics Authority, Japanese investments grew nearly 1 percent to P19.88 billion, from P19.72 billion in 2018. As such, Tokyo accounted for more than 5 percent of the total foreign capital registered here last year.
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