the philippines' competitive advantage on business environment in comparison to other asian...
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Philippines’ Competitive Advantage on Business
Environment in Comparison to other Asian Countries
March 2012Japan External Trade Organization (JETRO)
Manila
CONTENTS1. Trend of Japanese Companies and its Background• Moving of production base and sales market to Asia• From “Selection & Concentration” to “Portfolio”• Following to Assembler
2. Advantages of the Philippines• Cost Competitiveness• Quality of Human Resource• Incentives
3. What shall we do?• Strengthening of Industrial Linkage• Strengthening of Manufacturing Sector• Improvement of Infrastructure
Source of Japanese Listed Company’s Profits
Source of its Profits by Region
4
アジア大洋州で実に4分の3を稼ぐ日本企業
内円;1998年度
外円;2008年度
( Source ) JETRO Headquarter
CONTENTS1. Trend of Japanese Companies and its Background• Moving of production base and sales market to Asia• From “Selection & Concentration” to “Portfolio”• Following to Assembler
2. Advantages of the Philippines• Cost Competitiveness• Quality of Labor or Human Resource• Incentives
3. What shall we do?• Strengthening of Industrial Linkage• Strengthening of Manufacturing Sector• Improvement of Infrastructure
1.1 Problems of increasing financial costs(%)
Source: JETRO, 2011 Survey of Japanese-Affiliated Firms in Asia and Oceania (Aug-Sept, 2011)* All the succeeding data has the same source.
1 1
1.2 Problems in shortage of land/offices, rising land prices/rental
(%)
2
1.3 Problems in skyrocketing payroll costs(%)
3
2.1 Difficulty in recruiting general staff(%)
4
2.2 Difficulty in recruiting executives(%)
5
2.3 Low rate of worker’s employment retention
(%)
6
2.4 Problems of worker’s competency(%)
7
2.5 Difficulty in Quality Control (Manufacturing only) (%)
8
3.1 Salary Base up Rate (2011-2012) (%)
9
3.2 Annual Salary *Manufacturing Staff
(US $)
* including bonuses, allowances, SSS, etc 10
3.3 Annual Salary Manufacturing Engineer
(US $)
11
3.4 Annual Salary Manufacturing Managers
(US $)
12
3.5 Annual Salary Non-Manufacturing Staff
(US $)
13
3.6 Annual Salary Non-Manufacturing Manager
(US $)
14
Reason for embarkation to each city
Jakarta Manila Bangkok Hanoi
Incentives1990's 3.1% 26.9% 21.4% 21.1%2000's 2.8% 26.1% 8.1% 14.5%
Free Trade Policy1990's 0.0% 3.0% 3.6% 0.0%2000's 2.8% 2.9% 5.4% 3.6%
Well-maintained Traffic Infrastructure
1990's 25.0% 12.7% 5.4% 7.9%
2000's 22.2% 4.3% 2.7% 5.5%
Market Volume1990's 9.4% 16.8% 26.8% 15.8%2000's 11.1% 27.5% 21.6% 18.2%
Request from Assembler
1990's 9.4% 2.5% 8.9% 15.8%2000's 5.6% 1.4% 5.4% 10.9%
Cheap Labor Cost1900's 0.0% 5.1% 1.8% 5.3%2000's 0.0% 7.2% 5.4% 1.8%
Source: Survey of ERIA, 2007
15
CONTENTS1. Trend of Japanese Companies and its Background• Moving of production base and sales market to Asia• From “Selection & Concentration” to “Portfolio”• Following to Assembler
2. Advantages of the Philippines• Cost Competitiveness• Quality of Labor or Human Resource• Incentives
3. What shall we do?• Strengthening of Industrial Linkage• Strengthening of Manufacturing Sector• Improvement of Infrastructure
Japanese Companies Contribution for Employment
No. of
CompaniesNo. of Covered
CompaniesNo. of Filipino
EmployeesAverage no. of
EmployeesMore than 500
employees
Total 731 608 209,942 345/firm 91 firms
Manufacture 440 354 178,588 504/firm 80 firms
Service 291 254 31,354 123/firm 11 firms
Source: JETRO Manila Survey, December 2011
16
Business Challenges in Asia(Rated by Japanese Expats in each country)
India Vietnam Indonesia Thailand Malaysia China Philippines
Salary Increase 80.3 Salary Increase 83.3 Salary Increase 75.2 Salary Increase 68.3 Increase in procurement costs 61.5 Salary Increase 84.9
Fluctuation in the exchange rate of
local currency against US$
55.4
Power Shortage and brown outs 71.6
Ability and awareness of local
employees63.2 Burden on taxes 62.1 Ability and awareness
of local employees 58.8Emerging
Competitors (cost competition)
57.4Increase in
procurement costs
64.1
Difficulty in the local
procurements of raw materials and
parts
54.7
Inadequate Infrastructure for
logistics64.8
Cumbersome procedures such as
customs62.4 Inadequate
Infrastructure 60.5 Increase in procurement costs 56.7 Salary Increase
55.0
Ability and awareness of
local employees53.5
Ability and awareness of local
employees50.8
Complicated tax policies and procedures 63.0
Difficulty in the local procurements of
raw materials and parts
61.6Complicated tax
policies and procedures
59.2 Emerging Competitors (cost competition) 55.4
Fluctuation in the exchange rate of
local currency against US$
52.1
Emerging Competitors
(cost competition)
53.3 Inadequate Infrastructure 50.4
Emerging Competitors (cost competition) 62.3 Power Shortage and
brown outs 61.6Emerging
Competitors (cost competition)
57.8
Takes too much time in customs clearance 57.4 Increase in
procurement costs 53.6Ability and
awareness of local employees
56.4* Items described herein are considered major and serious issues/challenges by the managers of the Japanese firms in each country. Only the items with 50% or higher survey response were included.Only the items with 50% or higher survey response were included.
Cumbersome procedures such as
customs56.2
Difficulty in hiring future leader-class
talent52.8
Insufficient Legislative system
and its opaque application
54.8 * Specific answers are being shown for similar questions with the response rate of 50% or higher.
Increase in procurement costs 54.5
Complicated government
procedures (permits, licenses, etc.)
50.7
Fluctuation in the exchange rate of
local currency against US$
52.2
* The survey was conducted from August 1 up to September 15, 2011 (1.5 months)
Difficulty in the local procurements of raw materials and parts
54.5 Increase in procurement costs 51.9
(Source) 2011 Business Activity Survey Among Japanese Companies in Asia and Oceania, October 2011 by JETRO
Complicated government procedures (permits, licenses, etc.)
52.5Inadequate system
of disseminating notices and rules
51.3
17
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