For Japanese companies, PH is 'most profitable' in Asia

Posted at 02/12/2013 5:48 PM | Updated as of 02/13/2013 12:39 PM

MANILA, Philippines - Japanese businessmen believe the Philippines is a top investment destination in Asia, according to a survey by the Japan External Trade Organization (JETRO) Manila.

JETRO Manila, a semi-governmental agency that promotes business between the Philippines and Japan, said the results of the latest survey showed the Philippines is a "desirable" investment and business destination for Japanese companies as compared to other Asian countries.

The survey was conducted from October to November 2012 on Japanese-affiliated companies in Asia and Oceania.

Japanese companies see the Philippines and Indonesia as the "most profitable", according to the survey. Philippines and Indonesia beat competitors in all industries with 71.9% and 74.4% profitability, respectively.

"This result came about specifically because of the very promising performance of the Philippines in export oriented business with a 72.4% profit as oppose to China in 5th place with a 54.6% profit and India at last with 55.3% revenue," JETRO Manila said.

When it comes to good management, the survey showed the Philippines had the least difficulty when it comes to recruiting general staff, with a 4.3% rating. This was followed by Indonesia with 6.8% and Vietnam at third with 13.8%.

China was seen as the most difficult with a 35.5% rating, due to the strict working environment compared to other countries.

The Philippines also had the least number of strikes and lockouts, with only 2 in 2011. This is compared to Vietnam with 857, and India with 389 in the same year.

The same survey showed most Japanese firms found Thailand to be the least troublesome when it comes to customs and administrative procedures. Surprisingly, the Philippines came in second.

"PEZA on the other hand, has played a vital role in providing assistance and smooth procedure in doing business resulting to the good ratings by the Japanese respondent companies in the Philippines," JETRO Manila said.

Cheap labor

JETRO Manila noted the survey highlights the Philippines' competitiveness when it comes to salaries. The Philippines' annual salary of $4,581 for manufacturing staff is neither too low or too high compared to Asian neighbors. China had the highest with $6,734, while Vietnam had the lowest with$2,602.

However, manufacturing engineers and managers in the Philippines and Vietnam get the lowest salaries in the region.

Manufacturing engineers in the, Philippines and Vietnam receive an annual salary of $7,636 and $5,441 respectively. Manufacturing managers in the Philippines and Vietnam get $17,498 and $12,245 respectively. Malaysia had the highest salary for both engineer and manager with $14,451 and $30,083 respectively.

For non-manufacturing managers, Philippines and Vietnam also had the lowest annual salaries with $20,169 and $16,422 respectively.

Challenges

According to the survey, Japanese businessmen see the Philippines with the least challenges.

But that doesn't mean there are no challenges. One of the biggest challenges for Japanese firms is the difficulty in local procurement of raw materials and parts. Another challenge is the Filipinos' perception of going abroad to work than stay in the Philippines.

"This still is a good performance for the Philippines as Japanese businesses in other countries had to deal with a lot more challenges such as wage increase and time consuming administrative procedures," JETRO Manila said.

PH ranks last?

Despite citing the advantages of the Philippines, Japanese businessmen still ranked the country last for its expansion plans.

"Philippines landed on the last rank with 48.2% rating for expansion plan, while India, Indonesia, and Vietnam emerges as the target domestic markets with 83.6% , 77.3% and 65.9% respectively," JETRO Manila said.

Many Japanese businessmen are looking to expand abroad due to difficulties in operating in Japan. Among the factors cited were the strong yen, high rate of corporate tax and shortage of electricity.