JAPANESE firms are keen on investing $3 billion for expansion and diversification projects but are concerned about the operational and fiscal bottlenecks that could hamper their plans.
In a recent dialogue with the Department of Trade and Industry (DTI), the 10 Japanese firms who were in the meeting raised concerns regarding the timely issuance of travel visas for their executives and engineers.
They also expressed concern over the processing and release of permits and licenses by regulatory agencies, VAT and other additional taxes by LGUs, and access to Covid-19 vaccinations.
“They 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,” DTI said in a statement.
“As critical members of the global supply chain, locators are constantly reeling from the pressure of pandemic-related restrictions that have negatively impacted their bottom-line, production, and delivery schedules,” it added.
DTI said the locators also 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.
DTI said Trade Secretary Ramon M. Lopez replied that these matters are already being discussed with concerned government agencies in a whole-of-government approach.
Lopez said this is being done in order to ensure the realization of their business plans in the Philippines. He also 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,” Lopez said.
The 10 Japanese locators that participated in the roundtable discussion organized and moderated by Commercial Counselor Dita Angara-Mathay included the biggest names in global image solutions, electronics components, and medical device manufacturing.
The locators are Brother Industries, Canon Inc., and Seiko Epson Corporation, which are among the top five vendors in the global multifunction printer market, according to a study by tech and advisory research firm Technavio.
The list included Terumo Corporation and JMS Co. Ltd., market leaders in the Asia Pacific medical device industry, specifically in the infusion therapy device segment.
Other firms are ROHM Co., Ltd. which commands an 80-percent share of the isolated gate driver integrated circuits market and NIDEC Corporation and MinebeaMitsumi Inc. which holds a leading position in the micro DC motors market.
The dialogue also included Murata Manufacturing Co., Ltd. which commands about 40 percent of the global multilayer ceramic capacitors (MLCC) market, a key component of consumer electronics devices and automobiles, as well as IBIDEN, a market leader in the diesel particulate filter market.
DTI said the 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 employ over 83,000 Filipinos.
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 No. 1 position in 2021, with exports to Japan hitting $2.69 billion from January to April 2021. Japan has also traditionally ranked among the leading sources of foreign direct investments into the Philippines.
In the first quarter of 2021, Japan topped foreign investment commitments, accounting for 54.8 percent of total approved foreign investments in the first three months of the year.
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.