Vietnam threatens position of Cebu as investment hub

Aside from India and China, the Philippines, or particularly Cebu, should look closely at Vietnam, as a close competitor as IT investment destination especially for Japanese companies.

"Now, Vietnam is becoming a threat to the Philippines, or Cebu in particular in terms of attracting IT related investments," said Cebu Investment and Promotions Center (CIPC) managing director Joel Mari S. Yu.

Not, only for IT, Yu said some Japanese manufacturing companies are also considering Vietnam as their second choice destination, next to China, making the Philippines in the tail end of their investment hub list in Asia.

According to Japan External Trade Organization (Jetro-Philippines) executive director Yasutomi Ota, although the Philippines has better IT infrastructure and relatively good IT talents, Japanese IT companies are inclined to go to Vietnam than the Philippines.

Based on the 16th Survey of Investment-Related Cost Comparison in Major Cities and Regions in Asia, conducted by Jetro, Vietnam has some advantages in terms of cost in doing business.

"In recent years, Vietnam has been attracting attention as a means for avoiding risks by excessive concentration in China, and many Japanese companies are now weighing investment environment in China and Vietnam. Comparing Shenzhen in southern China and Hanoi in northern Vietnam, which are geographically close to each other, wages are lower in Hanoi, public utility rates are even, and transportation costs to Japan are lower Shenzhen," the survey report stated.

Ota said Vietnam has an effective technique to lure Japanese investors to their country, compared to the Philippines.

"Vietnam is rising. But the Philippines still has a negative impression in Japan, because of political and peace and order instability," Ota said.

However, he said if Cebu will be able to brand in the Japanese market as a destination, not relating it to the Philippines, it has a good potential to attract more investments.

"Use Cebu as a brand, Cebu has a very strong name in Japan for safety, and it has also a very good IT infrastructure compared to Vietnam," Ota added.

The problem, he stressed is there is no aggressive campaign to convince Japanese companies to go to Cebu, while Vietnam is allocating huge amount in pushing Vietnam as an alternative IT destination of China, and India.

"The government in Vietnam is very active in promoting its country to the Japanese investors. Cebu should also do the same if it wants to compete and invite more investors from Japan," Ota added.

There are now three investment destinations, which are popular in Japan, as an alternative site to China- these are Vietnam, Thailand, and India. Unfortunately, the Philippines is not part of the list.