By Monsi A. Serrano
(Last of 2 parts)
In my last column (May 15, 2020), I had the pleasure to share the amazing foresight of my friend from Japan, Mr. Satoshi Tateno, about a rare opportunity to boost the Philippines-Japan trade amid a world trapped in pandemic paralysis.
For those who did not have the chance to read it, here is the link:
https://thephilbiznews.com/beyond-sight-covid19-spells-new-investments-in-phl/
Lounging at a restaurant in Makati with Tateno-san pre-ECQ (Enhance Community Quarantine), we had a detailed discussion of his view of the dawning of a great economic maneuver to benefit the Philippines. My Japanese friend has been doing business in different parts of the archipelago more than most of the accomplished Filipino businessmen I know in the last 20 years. So when he predicted big Japanese investments coming the Philippines’ way in the midst of this global crisis – it sounded to me as more like prophecy than opinion.
He said a wave of Japanese companies and businessmen were pulling out of China and moving back to Japan under an economic policy of Japan Prime Minister Shinzo Abe. Japan gives incentives to these companies returning to Japan, but there are those moving out of China that could be diverted to the Philippines, Tateno-san told me since the objective really is to plainly abandon China. For us to snare this wave of relocating Japanese businesses, the government must do its part to make foreign investments from Japan a-whole-new-world easier. In my last column I enumerated five of his list of 8 steps to capture new and big Japanese investments. To recap – first, business registration processes should be eased up; second, human resource development should be made dynamic; third, the foreign capital release policy should be reviewed; fourth, land ownership should be approved; and fifth, the liberalization of the Philippine market.
Next in line in this “Swan Dance” for the Philippines to woo Japan, according to Mr. Tateno, is the protection of intellectual property rights. What are the franchise rights and what are the limits and conditions for remittances of royalties overseas? We have to clearly define conditions for establishing a franchise company in the Philippines. For example, is foreign capital less than 40 percent? Can these companies make and/or receive loans?
These questions need to be answered with credible and implementable guidelines, because said requirements and regulations, rewards, protection for technologies, and big data are essential not only in the manufacturing industry but also in the retail industry, explained Tateno-san.
Seventh, our government should set up professional training on legal, tax, labor, import/export, advertising, etc. that are difficult for Japanese to manage.
Eighth is domestic industrial protection. Foreign capital regulations aimed at protecting the Philippine domestic industry are a right of the Philippine government, but in this case, foreign investment is not protected, so training of domestic investors is required as a set. The manufacturing industry needs to, not only invest, but also develop a system that can do product development, manufacturing technology, cost management, labor management, raw material procurement, sales, and so on.
At the moment, only a few Japanese companies want to place an order in the Philippines. Even in the distribution business including retail, modern technology is competitive with high-tech such as big data, so it is necessary to introduce at least know-how.
With so many business ventures done, some succeed, some fail because of betrayal. The palpable love of Mr. Tateno cannot be hidden as he remains hopeful that this pandemic will keep the minds of our government leaders open to bringing in more Japanese investors not just for now but also for future prospects.
“I think this is the biggest and last chance for the Philippines,” he opined. “If you deregulate foreign capital, open markets, and protect intellectual property rights, all kinds of industries would want to enter the Philippines not just Japanese.”
Tateno-san added: “The important thing is to select what industries to attract as a national policy of the Philippines which will be effective for economic growth at the national level. I also think it would be good to identify promising successful business models in the future and concentrate on releasing the negative list for each individual industry.”
Down the road, it is also empirical to welcome and introduce Japanese technology, basic technology, management skills, big data, development skills, etc. The Philippines should regain its old glory lording over the agriculture industry in the region.
“In Japan, the rich people are farmers, and I wish our young Filipino people will look at agri-business as an opportunity not just to earn money, but more importantly to stabilize the food security because we don’t know if another global crisis like this will happen again. When you have food security, there will be peace and harmony,” Mr. Tateno said.
From his own experience in dealing with the Philippine agriculture industry, he pointed out the commercialization of fishery resources by increasing the size and efficiency of fisheries. Like a call center, there is a high possibility that a large number of companies will enter the market simply by approving the operation of foreign fishing boats.
In addition, the protection of domestic fishers and the increase of tax revenue in the national treasury can be obtained at the same time by using fishery taxes. Introduction of advanced technology is indispensable to foster internationally competitive industries. By combining topography surrounded by the sea and advanced aquaculture technology, we can improve varieties and quality, and secure internationally competitive raw materials.
If foreign companies establish legislation that allows them to own land and conduct large-scale agriculture, many companies will enter. Improvements in agricultural technology increase productivity and competitiveness in terms of cost and quality. If the supply of raw materials for marine and agricultural products becomes stable, the processing industry will become more competitive.
Along with the abundant human resources that are now at a comparative advantage, processed products will also be more internationally competitive.
Read related columns on Japanese investors:
https://thephilbiznews.com/beyond-sight-quo-vadis-china/
https://thephilbiznews.com/beyond-sight-doing-business-with-the-japanese-part-1/
https://thephilbiznews.com/doing-business-with-the-japanese-part-2-2/
