Philippines seen as option for manufacturing relocation

June 20, 2017

HONG KONG - For manufacturers seeking alternative production bases to relocate or diversify production because of soaring costs in the Mainland, the Philippines is an alternative, according to an HKTDC Research study released today.

Dickson Ho, HKTDC Principal Economist (Asian and Emerging Markets), said that the skilled and trainable workforce and burgeoning retail market in the Philippines offer opportunities.

“The Philippines as a manufacturing base enjoys a distinct edge compared with other relocation hotspots in Southeast Asia with its English-speaking workers,” Ho said. “This presents an attractive option to foreign investors confronted with the challenge of labour management and training in alternative production bases.”

The Philippines registered strong economic growth of 6.8% in 2016, driven by robust manufacturing and business processing services, amid strong investment and consumption buttressed by hefty overseas remittances.

“Fast income growth and a surge in purchasing power have combined to transform this archipelago State of more than 100 million people into a burgeoning modern consumer market. Foreign manufacturers can find local sales opportunities while also serving the export market,” Ho said.

HKTDC Research found that businesses were optimistic about the country’s future development.

“They were generally supportive of the Government’s economic policy and believe President Rodrigo Duterte’s strong Government could better tackle the long-standing problems of red tape and bureaucracy in the Philippines,” Ho said. “Iinfrastructure is also showing encouraging signs of improvement in areas within and near Metro Manila,” he said.

More than 70 per cent of Hong Kong’s imports from the Philippines in 2016 were re-exported to the Chinese mainland.  www.hktdc.com (ATI).