PH fails to 'get biggest chunk' of investments fleeing China;PHL not top choice for Japan firms moving from China; Indonesia to host US companies relocating from China
PHL not top choice for Japan firms moving from China - www.bworldonline.com
PH fails to 'get biggest chunk' of investments fleeing China due to infra lack: DTI - news.abs-cbn.com
Indonesia to host US companies relocating from China - aa.com.tr
US businesses are leaving China for India because of coronavirus - nypost.com
China scrambles to stem manufacturing exodus as 50 companies leave - asia.nikkei.com
New Data Shows U.S. Companies Are Definitely Leaving China - forbes.com
Uncertainty over Duterte alarms investors - business.inquirer.net
Neda chief sees 15-yr-high jobless rate amid recession - www.businessinquirer.net
Duterte’s Water Rants Threaten Philippine Pitch to Investors - www.bloomberg.com
Duterte's threats against business are driving investment away - asia.nikkei.com
ABS-CBN nears 10-year low as Duterte attacks continue - business.inquirer.net
100+ Countries Now Support an Independent Coronavirus Inquiry. The Philippines is Not One of Them - esquiremag.ph
PHL not top choice for Japan firms moving from China
THE Philippines is unlikely to be the top choice of Japanese manufacturing companies that are planning to shift production out of China, the Japanese Chamber of Commerce and Industry of the Philippines, Inc. (JCCIPI) said.
“They really want to move out from China to other countries, but unfortunately, they consider first Vietnam, Indonesia, and Thailand because of supply chain, resources, and raw material production,” JCCIPI Vice-President and Executive Director Nobuo Fujii said in an e-mail on Wednesday.
Japan is looking to reduce its reliance on China as a manufacturing base, amid supply chain disruptions caused by coronavirus disease 2019 (COVID-19) pandemic. The Japanese government earlier this month announced it has set aside $2.2 billion of its economic stimulus package to help its manufacturers move production out of China and into Japan or Southeast Asia.
Mr. Fujii said manpower resources is the best way to attract Japanese companies to the Philippines.
“But lack of supply chain and raw material production is a bottleneck. And furthermore, perception of country image. We have been trying to change this (for a) long time, but we cannot say success,” he said.
The JCCIPI currently has around 600 member companies.
Takashi Ishihara, executive director of the Japan External Trade Organization (JETRO) in Manila, said in an e-mail on Wednesday that their 2019 report found that 17 Japanese manufacturers in East Asian countries considered relocating their manufacturing base to the Philippines in response to US-China trade talks.
But 42.3% of companies in the report selected Vietnam as a transfer destination, followed by 20.6% that picked Thailand and 18.6% chose the Philippines.
“Meanwhile, under the impact of COVID-19, many Japanese manufacturers are facing problems on their supply chain as their key factories are located in the specific countries,” he said.
By Jenina P. IbañezReporter
PH fails to 'get biggest chunk' of investments fleeing China due to infra lack: DTI
The Philippines is "not getting the biggest chunk" of investments fleeing from coronavirus-epicenter China due to the country's lack of infrastructure, Trade Secretary Ramon Lopez said Thursday.
While the Philippines has "started to get the interest" of least 16 Wuhan-based companies and 119 other China-based firms, other investors from Asia's largest economy have opted to relocate to other Southeast Asian countries, Lopez told senators during a Senate Committee of the Whole hearing.
"I will admit, Mr. Senator, that we are not getting the biggest chunk. That can also be seen in the foreign direct investments," Lopez told Senate Minority Leader Franklin Drilon when asked about the Philippines' standing in the region as an alternative investment destination.
"Our effort to build the infrastructure, doon po tayo medyo talo," he said.
But the Philippines is "not entirely losing" as the country is still able to bag some new investments, the Trade chief said.
"Ang Pilipinas po nakakuha din tayo. (The Philippines is also getting some investments.) We started to talk already to companies in China," he said, without giving details on the number of new investors in the country.
Most Chinese investors seeking to relocate to Southeast Asia turn to Vietnam because of Hanoi's geographical proximity to mainland China, Lopez said.
"It is like an extension of China," he said.
PUSH FOR 'CREATE' LAW
The executive branch hopes Congress would pass its second tranche of tax reform which will "immediately" cut corporate income taxes in the Philippines to 25 percent to lure more investors to the country, Lopez said.
"We are actually offering or asking companies what [incentives] do they need to come over," he said.
"We have to continue to improve the environment sa atin through financial reforms and infrastructure," he said.
The Philippines' 30 percent corporate income tax rate is the highest in Southeast Asia, as its regional peers offer rates between 17 and 25 percent.
But under the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), an "improved version" of the Corporate Income Tax and Incentives Rationalization Act (CITIRA), a "sunset clause" will be placed on "unlimited" incentives to ensure that the government can profit from industries that have been enjoying tax breaks and holidays for decades.
The Philippine Economic Zone Authority earlier asked lawmakers to keep the status quo on incentives in economic zones which are "tried, tested and proven" to attract foreign investors, especially amid the global coronavirus pandemic.
While laws have yet to be finalized, the Philippines needs to settle uncertainties in its economic policies to benefit from the investor exodus from China, senators have said.
Indonesia to host US companies relocating from China
Indonesia is clearing up 4,000 hectares of land in Central Java to accommodate US companies planning to relocate from China in the wake of the coronavirus pandemic and an escalating trade war, a top official said.
Central Java Governor Ganjar Pranowo said the plan was a follow-up of a phone call between Indonesian President Joko Widodo and his US counterpart Donald Trump.
"But we have not had any report of the companies' names so far," Ganjar told Anadolu Agency.
On April 25, Trump in a phone call with the Indonesian president discussed plans to purchase ventilators and possible investment in the country, especially for pharmaceuticals.
In the first quarter of 2020, some $141 billion were invested in Indonesia, of which more than 46% was foreign investment, according to the country's investment body BKPM.
*Umar Idris from Jakarta contributed to this article.
US businesses are leaving China for India because of coronavirus
An Indian official said that as many as 100 companies want to leave China because of the coronavirus pandemic and relocate to India.
“US has significant investment in China. Prime Minister and Chief Minister want to use the opportunity where industries are moving out of China and see how they can be brought to India, especially to UP,” Uttar Pradesh cabinet minister Sidharth Nath Singh said, referring to his home state, according to the Hindustan Times.
“Video-conferencing was held with over 100 American companies yesterday, in a webinar. They’ve shown interest,” said Singh.
While not specifying which companies had expressed interest in moving to India, which shares a border with China, he said the companies included “big names” in the logistics, scientific instrumentation, electronics and automobile sectors.
“They already have investments in China. I’m hopeful we’ll be able to bring them to UP, given how we’re working by making changes in our industrial and sectorial policy,” Singh added about discussions during the webinar, hosted by the US-India Strategic Partnership Forum.
He did name some companies that participated in the session, including Adobe, Boston Scientific and UPS, but did not indicate whether they were among those thinking of bugging out over the deadly crisis.
While precise numbers are elusive, reports indicate that tens of thousands of US businesses have operations in China or use Chinese factories to produce their products.
China scrambles to stem manufacturing exodus as 50 companies leave
A Nikkei survey found that more than 50 global companies have shifted or are considering shifting production from China in response to the U.S. trade dispute. (Nikkei montage)
New Data Shows U.S. Companies Are Definitely Leaving China
U.S. companies are leaving China thanks to the trade war. They’ll leave even more thanks to the pandemic.
Sorry, Davos Man. Your China-led globalization is going out of style like bell bottoms.
Global manufacturing consulting firm Kearney released its seventh annual Reshoring Index on Tuesday, showing what it called a “dramatic reversal” of a five-year trend as domestic U.S. manufacturing in 2019 commanded a significantly greater share versus 14 Asian exporters tracked in the study. Manufacturing imports from China were the hardest hit.
Last year saw companies actively rethinking their supply chain, either convincing their Chinese partners to relocate to southeast Asia to avoid tariffs, or by opting out of sourcing from China altogether.
Uncertainty over Duterte alarms investors
Philippine President Rodrigo Duterte’s bloody anti-drug war and his foul-mouthed outbursts in defense of the campaign have unnerved foreign investors in one of Asia’s fastest-growing economies.
Analysts and businessmen point to uncertainties about Duterte’s policies and flip-flopping pronouncements as largely to blame for foreign selling in the stock market and the peso’s plunge to a seven-year low, reversing the initial optimism after his June 30 inauguration.
Some experts say unpredictability is slowing longer-term foreign investment in the Philippines. Photos and reports in the media of killings of suspected drug dealers and users — more than 3,000 since July 1 — have contributed to sagging confidence.
“We can all deal with risks. We can put measures in place to provide for risks,” said Guenter Taus, the head of the European Chamber of Commerce in the Philippines. “But uncertainty is a factor that we do not like in business, and that is exactly what we’re experiencing right now because we don’t know where we are heading.”
Taus said several companies that had intended to establish operations to the Philippines now prefer to wait and see what happens under Duterte. He declined to say which companies had changed their plans.
He said investors unsure about the Philippines may choose to look at other Southeast Asian countries to gain access to the region’s common market of more than 600 million people.
The American Chamber of Commerce of the Philippines said in September that while the country’s economic fundamentals are strong and its potential high, there is growing concern that Duterte’s policies and behavior could affect long-standing optimism by American businesses in the Philippines.
The chamber said that the large number of deaths in the anti-drug campaign is harming the Philippines’ image, and that some investors are asking if the drug war “reduces the rule of law.”
“In addition, traditionally excellent bilateral relations between the U.S. and the Philippines have recently been strained by language from Philippine leaders,” the chamber said.
Last month, before heading to a regional summit in Laos where he had been scheduled to meet with President Barack Obama, Duterte used the Tagalog phrase for “son of a b****” as he told Philippine reporters he wouldn’t accept questions from Obama about extrajudicial killings that have occurred during the drug crackdown. Obama cancelled the meeting.
After the European Parliament recently called for an end to the drug killings and expressed concern over the scale of deaths, Duterte hit back with a profane insult and raised a fist with his middle finger thrust out. And this week Duterte said U.S.-Philippine joint military exercises end this year, though his foreign minister said later that they will continue until 2017 as previously agreed.
On several fronts, Duterte has had an uneasy relationship with Western countries, including the United States, an important treaty ally. He has said he’s charting a foreign policy that is not dependent on the U.S., and has taken steps to bolster relations with Russia and revive ties with China that had been strained under his predecessor, Benigno Aquino III, over territorial conflicts.
He said he won’t allow government forces to conduct joint patrols of disputed waters near the South China Sea with foreign powers, apparently scrapping a deal Aquino reached with the U.S. military earlier this year. Duterte has also said he wants U.S. forces out of the southern Philippines, saying minority Muslims there resent the presence of American troops.
All of this has raised concerns about a Philippine economy that grew 7 percent in the second quarter and 6.9 percent over the first half of the year compared to the same periods last year — among the fastest rates in the region.
The credit-rating agency S&P Global warned Sept. 20 that the stability and predictability of policymaking in the Philippines “has diminished somewhat under the new presidency.” It kept the country’s credit rating at investment grade, with a stable outlook, but said that rating was unlikely to rise over the next two years.
Last Monday, the peso hit its lowest level against the dollar since September 2009. It fell further Friday, closing at 48.50 pesos per U.S. dollar.
Central bank Deputy Gov. Diwa Guinigundo said foreign direct investment continues to grow. It stood at $4 billion for January to June this year compared to $2.2 billion for the same period a year ago. He noted that while Duterte became president June 30, his election victory came nearly two months earlier.
“As far as fundamentals are concerned I think they are outstanding fundamentals, but then the sentiment is something else,” he told reporters late Wednesday on the sidelines of an economic forum. Sentiment is driven by both external and domestic factors and it’s difficult to attribute negative sentiment to a specific factor like Duterte’s statements, he added.
Guinigundo said the government’s economic program follows the broad strokes that have produced 70 quarters of economic growth, low and stable inflation and a healthy banking system. “And yet the stock market is dropping and the exchange rate is moving consecutively down such as we are now the worst-performing currency in the region,” he said.
Budget Secretary Benjamin Diokno said Wednesday that the depreciation of the peso is a result of the strengthening of the dollar more than the weakening of the local currency, and should not be a cause for concern.
But Joey Cuyegkeng, ING Bank’s senior economist in Manila, said the peso was the only Asian currency that slid in the third week of September, despite favorable economic reports, including an increased balance of payment surplus in August.
Presidential spokesman Martin Andanar said that the fundamentals of the economy are solid and strong, and that the anti-drug campaign will enhance the Philippines’ image to attract more foreign investment.
In a speech to troops the day after the S&P Global warning was released, Duterte shrugged off the agency’s remarks. He said if business and the economy are affected, “so be it.”
“Get out, then we start on our own,” he said, apparently referring to Western investors. “I can go to China. I can go to Russia. I had a talk with them. They are waiting for me. So what the hell."
Neda chief sees 15-yr-high jobless rate amid recession
The Philippines’ jobless rate may hit double digits and rise to a 15-year high amid an ongoing recession, the country’s chief economist said on Friday (May 15).
Asked in an interview with Bloomberg TV if the Philippines was already in recession, or two straight quarters of economic contraction, acting Socioeconomic Planning Secretary Karl Kendrick T. Chua replied: “The textbook answer is yes we are, and this is something that all countries are going through.”
“We hope to recover very soon once we open the economy in the coming months,” added Chua, who heads the state planning agency National Economic and Development Authority (Neda).
Gross domestic product (GDP) contracted by 0.2 percent during the first quarter, and the second quarter was expected to shrink faster given the extended COVID-19 lockdown in April and May.
Chua said the recession will likely bring the unemployment rate to double digits during this quarter.
A double-digit unemployment rate shall be the highest in 15 years or since April 2005’s 8.4 percent, the year that the government adopted the current metrics in measuring employment, National Statistician Claire Dennis S. Mapa told the Inquirer.
The Philippine Statistics Authority (PSA) will release official employment data through the results of the April labor force survey (LFS) on June 5, but Chua said the government addressed the job losses during the pandemic by providing dole outs and wage subsidies.
The Department of Labor and Employment (DOLE) last Thursday said its latest estimates showed that 2.5 million workers had been displaced by work suspension, flexible working arrangements and business closures amid the lockdown.
This reversed the latest job gains when the unemployment rate was only 5.3 percent in January.
At the start of the lockdown in mid-March, 80 percent of the economy stopped, but more than half already resumed activity this month, Chua said.
By next month, two-thirds of the economic engine will be humming under relaxed restrictions poised to become the new normal during the second half, Chua added.
Duterte’s Water Rants Threaten Philippine Pitch to Investors
Soon after he became president of the Philippines in 2016, Rodrigo Duterte ordered government officials “to refrain from changing and bending the rules of government contracts.” Halfway through his six-year term, Duterte’s commitment is under question. In December, the firebrand leader ordered the renegotiation of long-agreed contracts for Manila Water Co. and Maynilad Water Services Inc. to supply the capital until 2037. He also said his government will not pay billions of pesos to Manila Water for delayed tariff increases as ordered by a court, while threatening to jail owners of both water providers.
Duterte's threats against business are driving investment away
In an attempt to protect the public interest against those he calls "oligarchs," Philippine President Rodrigo Duterte recently threatened to overturn decades-old water supply contracts held by prominent businessmen the Ayala brothers and Manuel Pangilinan, known for their liberal leanings.
ABS-CBN nears 10-year low as Duterte attacks continue
ABS-CBN Corp.’s shares are headed to a 10-year low after Philippine President Rodrigo R. Duterte continued his attacks on the television network he has accused of bias, urging its owners to sell before its franchise expires in March.
Shares of the media company dropped as much as 6.3% on the first trading day in Manila this year, poised for its lowest close since March 2009. The stock ended 2019 with a 21% loss compared with the local benchmark index’s 4.7% gain for the year.
In a televised speech on Dec. 30, Mr. Duterte suggested the media firm’s franchise renewal is uncertain. He had earlier threatened to block the network’s bid to extend the franchise for 25 years. ABS-CBN has not issued a statement about Duterte’s remarks, a spokesman said.
100+ Countries Now Support an Independent Coronavirus Inquiry. The Philippines is Not One of Them
A draft resolution initiated by Australia and supported by 61 other countries proposed creating an independent inquiry into the coronavirus pandemic and the World Health Organization’s response to it. The resolution calls for “an impartial, independent and comprehensive evaluation, including using existing mechanisms, as appropriate, to review experience gained and lessons learned from the WHO-coordinated international health response to COVID-19, including (i) the effectiveness of the mechanisms at WHO’s disposal.”
On Monday (May 18), dozens of other countries have thrown its support behind the resolution, bringing the total number to 116.
Noticeably absent in the list is China and the Philippines.
100+ Countries Now Support an Independent Coronavirus Inquiry. The Philippines is Not One of Them
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