Philippines rank in global factory risk index jumps to 17th

MANILA, Philippines — While the Philippines improved its ranking significantly in a global manufacturing risk index (MRI), more still needs to be done to make the country’s manufacturing sector more attractive, according to a global property consultancy firm.

Based on Cushman & Wakefield’s Global Manufacturing Risk index, the Philippines ranked 17th in the baseline scenario among 45 countries, higher than its 28th ranking in the previous year.

“While the Philippines have continued to move up in the rank of countries in the MRI index, there are several factors that will strengthen the attractiveness of the country as a manufacturing destination” Cushman & Wakefield said.

The report ranked the countries based on cost, risk and general business conditions.

“Overall, the Philippines need to clearly demonstrate its strength and arrest the weaknesses by dismantling the barriers that make it less competitive in any of the aforementioned factors. In order to increase its level of competitiveness, the enablers of the local manufacturing sector should institute needed structural reforms,” the global property consultancy firm said.

While the Philippines maintains strong and growing domestic consumer markets, it said that the country is also beset by lack of qualified labor supply, such new skills given advancements in technology, ageing infrastructure networks and facilities, low commitment on renewable energy sources and still opaque level of business transparency.

Similar to the Philippines, the report noted that other Asian markets also ranked high in this year’s index.

“Asia markets have dominated an annual study ranking top manufacturing destinations according to baseline, cost and risk scenarios, holding the most top quartile rankings of any region across each of the scenarios,” Cushman & Wakefield said.

China remained the top destination across all three scenarios in this year’s MRI.

The countries were assessed in three key areas particularly conditions, costs and risks.

Under the conditions area, countries were assessed based on business environment, including the availability of talent or labor and access to markets, while in the cost area evaluates nations on operating costs including labor, electricity and real estate.

In the risks area, countries are assessed on political, economic, and environmental risks.

Cushman & Wakefield pointed out that in the baseline scenario, which attributes 40 percent weight to both business conditions and cost, and 20 percent to risk, Asia Pacific claims half of the 12 locations in the top quartile.

The Philippines was among these countries, as it was placed in the second quartile.

In addition, the country also landed on the first quartile in terms of cost and was placed under the third quartile in terms of risks.

The report noted that India, Indonesia, Malaysia and Thailand all benefited from the availability of relatively low-cost labor combined with governments actively seeking both domestic and foreign investment in manufacturing and production.

“These markets have also benefited from the China+ approach, which has seen companies looking to improve supply chain resilience by diversifying their production bases beyond China,” Cushman & Wakefield added.