The Philippines’ top Japanese investors in electronics and medical devices manufacturing reaffirmed their confidence in the country’s economy even as they pledged to continue their operations during an online roundtable meeting with Department of Trade and Industry (DTI) Secretary Ramon Lopez and the agency’s senior management in an online roundtable meeting at the start of the second semester of the year.
In response, Sec. Lopez 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.”
In 2020, Japan was the country’s top export market and second-biggest import supplier at USD 10.03 billion and USD 8.62 billion respectively, bringing total bilateral merchandise trade to USD 18.65 billion. It maintained its number one position in 2021, with exports to Japan hitting USD2.69 billion from January to April 2021. Japan has also traditionally ranked as among the leading sources of foreign direct investments into the Philippines. In Q1 2021, Japan topped foreign investment commitments, accounting for 54.8% of total approved FI during the quarter.
As the country’s biggest exporter, the electronics industry accounted for 62% of all Philippine exports to the world, at USD 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% to USD 744.7 million in 2021.
The ten 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.
Brother Industries, Canon Inc., and Seiko Epson Corporation are among the top five vendors in the global multifunction printer market, according to a study by tech and advisory research firm Technavio.
Terumo Corporation and JMS Co., Ltd. are market leaders in the Asia Pacific medical device industry, specifically in the infusion therapy device segment.
ROHM Co., Ltd. commands an 80% share of the isolated gate driver integrated circuits market. Similarly, NIDEC Corporation and MinebeaMitsumi Inc. hold leading positions in the micro DC motors market. Murata Manufacturing Co., Ltd. commands about 40% of the global multilayer ceramic capacitors (MLCC) market, a key component of consumer electronics devices and automobiles, while IBIDEN is a market leader in the diesel particulate filter market.
The mentioned 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 USD 2.5 billion in investments, USD 6.9 billion in exports, and over 83,000 in total employment.
During the business dialogue, the companies also discussed their interest to explore expansion and diversification projects tentatively valued in the amount of over USD 3 billion. However, they expressed concerns and said these plans are facing operational and fiscal bottlenecks. They cited as examples the timely issuance of travel visas for their executives and engineers, 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. 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.
Sec. Lopez reported that these matters are being discussed with concerned government agencies in a whole-of-government approach. This is to ensure the realization of their business plans.
Lastly, the locators 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.
Director Mylene C. Capongcol of the Department of Energy (DOE)’s Renewable Energy Management Bureau who formed part of the speaking panel, assured the locators that the Philippines is doubling down on its goal to increase the share of renewables to 35% by 2030 and more than half of the country’s power mix by 2040. With the government setting the foundation for a sustainable transition to renewables, she emphasized rich wide opportunities for foreign investments in energy both for the upstream and downstream sectors.
