While the Marcos Jr. administration has been unrelenting in efforts to tap foreign investments through official and working visits to several countries since assuming office in mid-2022, it appears from a broader perspective, the Philippines is lagging behind other countries in the region in attracting precious investments shifting away from China.
That’s according to the Japanese investment bank Nomura, which recently described the Philippines as falling behind the flock of Asia’s “new flying geese.”
The investment bank pointed out the shift in supply chains away from China has set in motion what Japanese economist Kaname Akamatsu called the “wild-geese-flying pattern” of economic growth, whereby production shifts from the lead goose (advanced nation) to the next flock of geese (developing nations).
Nomura noted the Philippines and Indonesia do not appear to be the first choice for global companies looking for new production bases elsewhere, despite being among the fastest growing economies in the region with favorable demographics and strong reform prospects.
Among the new flock of Asian geese, Nomura said, Vietnam and Thailand are the clear winners based on the results of a survey of around 130 companies.
The two front-runners are expected to continue to build on these gains, despite Thailand facing a structural deterioration in competitiveness.
The bank cited at least two factors for the failure of the Philippines to corner a bigger chunk of foreign investments: barriers to entry in the local manufacturing sector and our geopolitical tensions with Beijing,
The Philippines has been unable to benefit significantly from supply chain relocations in the electronics sector despite the commodity accounting for nearly 60 percent of its total exports.
This reflects serious issues in the manufacturing sector, which is still small and even declining in its share of total output.
Power rates that remain the highest in the region and poor connectivity after decades of underspending in infrastructure keep transport and logistics costs high.
To make matters worse, Nomura said, our maritime dispute with China is hampering the inflows of Chinese investments: “Recent geopolitical concerns from the dispute in the South China Sea could be an impediment to Chinese companies looking to diversify supply chains into the Philippines.”
But there’s good news amid all this. The Philippines can tap investment opportunities particularly in industrial parks and nickel.
Property developers can put up industrial parks using foreign capital while mining firms could cash in on growing global demand for electric vehicle batteries relying heavily on nickel.
So what are we waiting for?
