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Philippines’ Competitive   Advantage on BusinessEnvironment in Comparison to    other Asian Countries                March...
CONTENTS1. Trend of Japanese Companies and its Background• Moving of production base and sales market to Asia• From “Selec...
Source of Japanese Listed Company’s Profits
Source of its Profits by Region     アジア大洋州で実に4分の3を稼ぐ日本企業                       内円;1998年度                       外円;2008年度( ...
CONTENTS1. Trend of Japanese Companies and its Background• Moving of production base and sales market to Asia• From “Selec...
1.1 Problems of increasing financial costs                                                                                ...
1.2Problems in shortage ofland/offices, rising land prices/rental                                          (%)            ...
1.3   Problems in skyrocketing payroll costs                                          (%)                                 ...
2.1   Difficulty in recruiting general staff                                          (%)                                 ...
2.2   Difficulty in recruiting executives                                            (%)                                  ...
2.3 Low rate of worker’s employment              retention           (%)                                    6
2.4   Problems of worker’s competency                                    (%)                                        7
2.5 Difficulty   in Quality Control      (Manufacturing only)            (%)                                      8
3.1 Salary Base up Rate     (2011-2012)          (%)                          9
3.2 Annual Salary *               Manufacturing Staff          (US $)* including bonuses, allowances, SSS, etc       10
3.3 Annual SalaryManufacturing Engineer                         (US $)                            11
3.4 Annual SalaryManufacturing Managers                         (US $)                         12
3.5 Annual SalaryNon-Manufacturing Staff                          (US $)                             13
3.6 Annual SalaryNon-Manufacturing Manager                            (US $)                               14
Reason for embarkation to each                   city                                   Jakarta   Manila   Bangkok   Hanoi...
CONTENTS1. Trend of Japanese Companies and its Background• Moving of production base and sales market to Asia• From “Selec...
Japanese Companies Contribution for            Employment                No. of No. of Covered No. of Filipino Average no....
Business Challenges in Asia                                                (Rated by Japanese Expats in each country)     ...
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The Philippines' Competitive Advantage on Business Environment in Comparison to other Asian countries

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A presentation made by JETRO to DTI and BOI

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The Philippines' Competitive Advantage on Business Environment in Comparison to other Asian countries

  1. 1. Philippines’ Competitive Advantage on BusinessEnvironment in Comparison to other Asian Countries March 2012 Japan External Trade Organization (JETRO) Manila
  2. 2. CONTENTS1. Trend of Japanese Companies and its Background• Moving of production base and sales market to Asia• From “Selection & Concentration” to “Portfolio”• Following to Assembler2. Advantages of the Philippines• Cost Competitiveness• Quality of Human Resource• Incentives3. What shall we do?• Strengthening of Industrial Linkage• Strengthening of Manufacturing Sector• Improvement of Infrastructure
  3. 3. Source of Japanese Listed Company’s Profits
  4. 4. Source of its Profits by Region アジア大洋州で実に4分の3を稼ぐ日本企業 内円;1998年度 外円;2008年度( Source ) JETRO Headquarter 4
  5. 5. CONTENTS1. Trend of Japanese Companies and its Background• Moving of production base and sales market to Asia• From “Selection & Concentration” to “Portfolio”• Following to Assembler2. Advantages of the Philippines• Cost Competitiveness• Quality of Labor or Human Resource• Incentives3. What shall we do?• Strengthening of Industrial Linkage• Strengthening of Manufacturing Sector• Improvement of Infrastructure
  6. 6. 1.1 Problems of increasing financial costs (%)Source: JETRO, 2011 Survey of Japanese-Affiliated Firms in Asia and Oceania (Aug-Sept, 2011) 1 1* All the succeeding data has the same source.
  7. 7. 1.2Problems in shortage ofland/offices, rising land prices/rental (%) 2
  8. 8. 1.3 Problems in skyrocketing payroll costs (%) 3
  9. 9. 2.1 Difficulty in recruiting general staff (%) 4
  10. 10. 2.2 Difficulty in recruiting executives (%) 5
  11. 11. 2.3 Low rate of worker’s employment retention (%) 6
  12. 12. 2.4 Problems of worker’s competency (%) 7
  13. 13. 2.5 Difficulty in Quality Control (Manufacturing only) (%) 8
  14. 14. 3.1 Salary Base up Rate (2011-2012) (%) 9
  15. 15. 3.2 Annual Salary * Manufacturing Staff (US $)* including bonuses, allowances, SSS, etc 10
  16. 16. 3.3 Annual SalaryManufacturing Engineer (US $) 11
  17. 17. 3.4 Annual SalaryManufacturing Managers (US $) 12
  18. 18. 3.5 Annual SalaryNon-Manufacturing Staff (US $) 13
  19. 19. 3.6 Annual SalaryNon-Manufacturing Manager (US $) 14
  20. 20. Reason for embarkation to each city Jakarta Manila Bangkok Hanoi 1990s 3.1% 26.9% 21.4% 21.1% Incentives 2000s 2.8% 26.1% 8.1% 14.5% 1990s 0.0% 3.0% 3.6% 0.0% Free Trade Policy 2000s 2.8% 2.9% 5.4% 3.6%Well-maintained Traffic 1990s 25.0% 12.7% 5.4% 7.9% Infrastructure 2000s 22.2% 4.3% 2.7% 5.5% 1990s 9.4% 16.8% 26.8% 15.8% Market Volume 2000s 11.1% 27.5% 21.6% 18.2% Request from 1990s 9.4% 2.5% 8.9% 15.8% Assembler 2000s 5.6% 1.4% 5.4% 10.9% 1900s 0.0% 5.1% 1.8% 5.3% Cheap Labor Cost 2000s 0.0% 7.2% 5.4% 1.8%Source: Survey of ERIA, 2007 15
  21. 21. CONTENTS1. Trend of Japanese Companies and its Background• Moving of production base and sales market to Asia• From “Selection & Concentration” to “Portfolio”• Following to Assembler2. Advantages of the Philippines• Cost Competitiveness• Quality of Labor or Human Resource• Incentives3. What shall we do?• Strengthening of Industrial Linkage• Strengthening of Manufacturing Sector• Improvement of Infrastructure
  22. 22. Japanese Companies Contribution for Employment No. of No. of Covered No. of Filipino Average no. of More than 500 Companies Companies Employees Employees employees Total 731 608 209,942 345/firm 91 firmsManufacture 440 354 178,588 504/firm 80 firms Service 291 254 31,354 123/firm 11 firmsSource: JETRO Manila Survey, December 2011 16
  23. 23. Business Challenges in Asia (Rated by Japanese Expats in each country) India Vietnam Indonesia Thailand Malaysia China Philippines Fluctuation in the Increase in exchange rate of Salary Increase 80.3 Salary Increase 83.3 Salary Increase 75.2 Salary Increase 68.3 procurement costs 61.5 Salary Increase 84.9 local currency 55.4 against US$ Difficulty in the Ability and Emerging Increase in local Power Shortage and Ability and awareness 71.6 awareness of local 63.2 Burden on taxes 62.1 58.8 Competitors (cost 57.4 procurement 64.1 procurements of 54.7 brown outs of local employees employees competition) costs raw materials and parts Inadequate Cumbersome Ability and Ability and Inadequate Increase in Infrastructure for 64.8 procedures such as 62.4 60.5 56.7 Salary Increase awareness of 53.5 awareness of local 50.8 Infrastructure procurement costs 55.0 local employees logistics customs employees Difficulty in the local Fluctuation in the Emerging Complicated taxComplicated tax policies procurements of Emerging Competitors exchange rate of Competitors Inadequate 63.0 raw materials and 61.6 policies and 59.2 55.4 52.1 53.3 Infrastructure 50.4 and procedures (cost competition) local currency (cost procedures parts against US$ competition) EmergingEmerging Competitors Power Shortage and 62.3 61.6 Competitors (cost 57.8 (cost competition) brown outs competition) Ability and * Items described herein are considered major and serious issues/challenges Takes too much time in Increase in 57.4 procurement costs 53.6 awareness of local 56.4 by the managers of the Japanese firms in each country. Only the items with 50% or higher survey response customs clearance employees were included. Only the items with 50% or higher survey response were included. Insufficient Cumbersome Difficulty in hiring Legislative system * Specific answers are being shown for similar questions with the response procedures such as 56.2 future leader-class 52.8 54.8 rate of 50% or higher. and its opaque customs talent application Complicated Fluctuation in the * The survey was conducted from August 1 up to September 15, 2011 (1.5 months)Increase in procurement government exchange rate of 54.5 procedures (permits, 50.7 local currency 52.2 costs licenses, etc.) against US$ Difficulty in the local (Source) 2011 Business Activity Survey Among Japanese Companies in Asia Increase in procurements of raw 54.5 51.9 and Oceania, October 2011 by JETRO procurement costs materials and parts Complicated Inadequate systemgovernment procedures 52.5 of disseminating 51.3 (permits, licenses, etc.) notices and rules 17

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