MANILA, Philippines – More Japanese companies are expected to move their manufacturing operations from China and Vietnam to the Philippines, according to a property consultant.
CBRE Philippines chairman Rick Santos said there’s a resurgence of the industrial sector in the Philippines, with more manufacturing companies coming in.
“We’ve seen a lot of Japanese companies coming back in. I think Japanese companies are not happy with the way they’ve been treated in China, I think the Japanese also had some challenges with China like sovereignty issues, with regards to taking away some islands, similar to our own situation with Scarborough Shoal and Mischief Reef. What we’re seeing now is more groups coming to the Philippines for manufacturing,” he said in a briefing in Makati City on Tuesday.
Japanese companies already in the country are also expanding operations, he added.
Foreign investors are now more bullish about the Philippines, which is one of the fastest growing economies in Asia.
“The Philippines is the best alternative investment site for investors,” Santos said. “We’re working with a couple of large Japanese car companies that are looking to move more of their manufacturing here. They have a lot of confidence in the country.”
“Apart from having one of the lowest land values for industrial properties, the international investment
community has shown renewed interest in the country following the investment grade ratings achieved during the year,” Santos said.
Manila has one of the lowest land values for industrial properties in Asia. CBRE data showed the Philippines is about $8.66 per square foot per annum, while Singapore is at $187.42. The Philippines’ rates are comparable to Chinese cities, such as Chengdu $8.54 and Dalian $7.84, but cheaper than Bangkok $13.38 and Chennai $9.97.
Industrial parks are benefiting from the growing manufacturing industry.
“Most of the existing industrial parks are in expansion phase right now. They’re actively looking for properties to develop to put up or expand industrial parks… Most of the industrial parks in the south (of Metro Manila) are pretty filled,” CBRE senior director for research and consultancy Jan Paul Custodio said.
“Lately we had inquiries from Japanese investors asking about the industrial sector, where can they put up industrial parks… In the long term, they’re looking to relocate most of their manufacturing plants from China and Vietnam, where they currently have some labor issues hounding them,” he added.
CBRE noted that regions VIII, IV and III are the top 3 locations of upcoming industrial economic zones. There is also high take-up of industrial space in Clark and Subic freeport zones.
However, the government has to beef up infrastructure, as well as implement public private partnership projects.
“I think it’s just a matter of the government implementing its PPP projects… Accessibility to different locations is one of the big issues when putting up an industrial park,” Custodio said.