PEZA: Philippines on radar of relocating firms

MANILA, Philippines — The Philippines is becoming a preferred investment destination in Southeast Asia by firms moving away from China, according to the Philippine Economic Zone Authority (PEZA).

“Under the current Trump 2.0 trade regime, the C+1 (China Plus One) strategy seemingly has evolved into C+1+1 (or C + 2), with the Philippines now being regarded as the new plus-one preferred destination in ASEAN (Association of Southeast Asian Nations) by relocating companies from China,” PEZA director general Tereso Panga said in a statement yesterday.

He said this was the manifestation made by some Chinese companies he met during investment meetings in Xiamen, Chongqing, Shenzhen and Dongguan.

When the United States imposed higher tariffs on products from China during the first term of President Donald Trump, he said many export manufacturers in China shifted their production operations to Vietnam to maintain access to the American market and enjoy benefits under the China+ASEAN free trade agreement.

“Clearly, in terms of the China+1 strategy, Vietnam has stood out among ASEAN as that plus-one manufacturing and export hub for China-based investors (particularly those into electronics),” he said.

He said the recent imposition of additional import tariffs by the US government on Chinese goods is putting pressure on manufacturers in China to shift parts of their supply chains and production processes to new investment hotspots in the region other than Vietnam.

During the investment meetings, he said a number of Chinese companies engaged in various manufacturing industries expressed their interest to locate in the PEZA zones.

“Other than exporting to the US, they want to sell their finished products to the domestic market,” he said.

He said some Chinese firms also announced expansion plans in the Philippines.

Among the firms expanding in the country is TE Connectivity, which is investing P1.7 billion for the manufacture of electro-optical components devices in a PEZA zone that will generate more than 2,000 direct jobs.

Panga said TE Connectivity has also committed to undertake more projects including expanding its information technology-business process management operations in the Philippines.

The Aoxing group based in Dongguan, which manufactures projector equipment, projector screen and audio-visual products for global brands like HP, Epson and Skyworth, has also chosen the Philippines for its redundant manufacturing facility intended for the US export market.

The Aoxing group and its supply chain providers are set to join an upcoming delegation led by the China Chamber of International Commerce - Dongguan visiting the Philippines.

“In PEZA, we continue to receive as well big ticket investments (in the pipeline) by new investors or global industry leaders out of China such as one of the largest producers of vitamins and dietary supplements, the biggest producer of solar cells or panels with the highest efficiency rating in the market and one of the biggest manufacturers of TV monitors and projector screens,” Panga said.

Given the recent developments, he said PEZA is banking on Chinese firms including those from Taiwan and Hong Kong, to bring in investments to the country this year and in the years to come.

To date, PEZA has registered 118 mainland Chinese companies, which have invested a total of P28.7 billion and created 16,327 direct jobs for Filipinos.