Philippines among emerging manufacturing hotspots

MANILA, Philippines —  The Philippines is among the countries expected to benefit from manufacturing firms’ move to diversify production by setting up operations in locations outside of China, particularly for semiconductors, global commercial real estate and investment management firm JLL said.

According to JLL’s analysis, Southeast Asian countries including the Philippines, as well as India stand to be beneficiaries of companies diversifying manufacturing capabilities to complement existing bases in China, which has dominated global manufacturing.

Manufacturing companies are diversifying their operations to reduce supply chain disruptions.

“This diversification drive is fueling a boom in foreign direct investment for manufacturing in Southeast  Asia and India, with both areas vying to become the next manufacturing powerhouse,” JLL said.

For the Philippines in particular, JLL said there are opportunities in semiconductors  and electronics.

“The Philippines is one of the seven countries that the USA partnered with in line with their CHIPS Act, which aims to expand and diversify the US’ semiconductor supply chain,” JLL said.

It said key products in this area are integrated circuits, RF/microwave and assembly and testing services.

In terms of electronics, key products are  consumer and industrial electronics, as well as telecommunication equipment.

Electronic products are the country’s leading export.

Data from the Philippine Statistics Authority showed that total electronic products exported by the country dipped by 9.2 percent to $41.91 billion last year from $46.15 billion in 2022.

“Diversification within supply chains is a natural step for companies involved in manufacturing within the wider economic lifecycle of this region. We see Southeast Asia and India representing a natural complement to the existing production strength of China but feel that for companies to respond quickly to supply chain shifts, they need to adopt a flexible mindset toward land selection and funding options,” Michael Ignatiadis, head of manufacturing strategy for Asia Pacific at JLL said.

Citing multiple sources, JLL said  the diversification has been driven largely by rising costs in China.

In addition, higher demand for industrial land, coupled with rising wages and material costs, also pushed up land prices in China, which can be up to two times higher compared to some Southeast Asian countries and India.