MANILA, Philippines — Most Japanese firms in the Philippines expect sales to decline this year due to the pandemic, according to a survey conducted by Japan External Trade Organization (JETRO) and Japanese Chamber of Commerce and Industry of the Philippines Inc.
Based on the survey, 85.3 percent of 226 Japanese firms operating in the country expect their sales to decline this year due to the health crisis.
Respondents of the survey were composed of 101 companies engaged in manufacturing and 125 non-manufacturing firms.
JETRO Manila executive director Takashi Ishihara said among the reasons cited by Japanese companies for the expected cut in sales is the government’s imposition of mobility restrictions which greatly affected their operations.
He said manufacturers faced challenges to secure enough number of employees mainly because of the suspension of transportation or the isolation measures in barangays.
“As for logistics, many respondents attributed the expected drop in sales to the deterioration of port function and customs clearance,” he said.
Other reasons given by Japanese firms on the expected reduction in sales for this year are delays in delivery of products, parts or raw materials from suppliers, decreased working capacity, as well as lower purchasing power of consumers.
“To cope with this adverse challenge, they have been trying to optimize their stock or operating rate,” Ishihara said.
In order to address financial difficulties, he said 67.9 percent of manufacturing firms and 66.6 percent of non-manufacturing firms have asked the support of their parent companies.
He said Japanese firms have also tapped financing from banks in the Philippines and in Japan.
In particular, 41 percent of manufacturing firms and 27.8 percent of non-manufacturing firms have turned to local financial institutions for financing, while 14.3 percent of manufacturing firms and 14.8 percent of non-manufacturing companies sought loans from Japanese banks.
Adjustments to salary payments were also made by 25 percent of manufacturing firms and 27.8 percent of non-manufacturing companies.
In addition, 19.6 percent of manufacturing firms and 11 percent of non-manufacturing companies reduced production or operations given financial difficulties.