Hong Kong toy makers interested in Philippines

MANILA, Philippines — Hong Kong toy manufacturers are considering investing in the Philippines, according to the Board of Investments (BOI).

In a statement, the BOI said the interest was disclosed by officers and members of the Toys Manufacturers’ Association of Hong Kong (TMHK), which recently had an online information session with the agency on investment opportunities in the country.

Composed of 250 members, mainly toy manufacturers with factories both in Hong Kong and China, TMHK seeks to develop the Hong Kong toy industry and brand.

Citing the members’ rising production costs, TMHK president Samson Ko said the firms are seriously looking at the Philippines for possible relocation and expansion plans.

Trade Undersecretary and BOI managing head Ceferino Rodolfo said TMHK’s interest shows the country’s competitive advantage as an ideal investment destination.

“We are positioning the Philippines as a complementary host country to target companies, particularly those looking into diversifying their business locations to sustain and enhance competitiveness. The Hong Kong toy association’s gesture of seriously considering expansion plans additionally strengthens this positioning,” he said.

During the information session, Rodolfo emphasized the government’s commitment to make the Philippines a competitive place for doing business.

“We have put in place incentives that create an investor-friendly landscape, allowing investors to set up their business at a lower cost. Foreign companies can also benefit from corporate income tax exemptions where new and better rates are embodied in the recently-approved Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act,” he said.

CREATE, which just needs President Duterte’s signature to become a law, will lower corporate income tax rate to 25 percent from the current 30 percent.

In addition, the proposed measure will introduce changes to the incentives system to make it transparent, time-bound, targeted and performance-based.

Rodolfo said Hong Kong toy manufacturers that set up operations in the Philippines, could also gain access to other markets through the country’s free trade agreements (FTAs) and trade preference scheme.

At present, Philippine exports enjoy preferential tariff rates in destinations such as Japan, India, Australia, New Zealand, and European Free Trade Association members like Switzerland, Norway, Liechtenstein and Iceland.

Certain Philippine exports can also enter the European Union at zero duty through the Generalized Scheme of Preferences Plus.

“Aside from market access, the Philippines can also provide for a broader production network for the manufacture of toys given the existing manufacturers in the Philippines as well as the sources of raw materials that the FTAs can provide. Existing toy manufacturers include Academy Plastic Model Toy Co. Inc., Dunlop International (Philippines), Bandai Namco Philippines, Tanika Philippines, and Hansa Toy International Inc. The downstream industry for toy manufacturing is also established with the presence of suppliers such as plastics, rubber, cotton, textiles and others,” Rodolfo said.

With 74 operating and five newly-proclaimed manufacturing economic zones, the country has many locations that can host toy production operations.

To date, 125 firms engaged in toy manufacturing have registered with the BOI with total investments amounting to P450 million.

Philippine exports of toys, games and sports requisites reached $176.1 million in 2019.

In the same year, Philippine toy imports were valued at $487.3 million, with China as the biggest source accounting for $226.2 million or 46.4 percent of the total, followed by Hong Kong with $52.7 million or a 10.8 percent share.