Gaining Ground On Japanese Investments
Ambassador Manuel M. Lopez Mission
By MYRNA M. VELASCO
April 30, 2012
Manila Bulletin
Banking on the revived interest of investors, Philippine Ambassador to Japan Manuel M. Lopez is embarking on a new and lofty mission – to make great strides in attracting foreign capitals that can help lift the country’s economic stature.
It is some sort of a ‘role-shift’ for him – considering that he is one of the ‘big boys’ in the Philippine business scene, and has always been a private sector player at that. Prior to his diplomatic assignment, he has been chairman and chief executive officer of the country’s biggest power distribution utility – the Manila Electric Company.
But in a sit-down interview with him at his office at the Philippine Embassy in Tokyo, one could easily forget his elite background back home once he starts talking emphatically about his job of convincing Japanese investors to put their money in the Philippines and as he narrates the routine task of looking after the welfare of the Filipinos working and residing there. And yes, he is relishing the fact that he is doing such mission as a service to his country and people.
During his watch, at least he’s reassuring that the Philippines will not sit idle and let itself surpassed by other countries when it comes to cornering its share of those Japanese yen investments.
“For some time, we have been losing out to our neighbors. We are being forgotten, so we have to regain some lost grounds. Thankfully, the Japanese investors are looking at the Philippines again with renewed interest and a lot of that has something to do with the promise of good governance plus transparency,” he stressed.
There have been myriad of in¬terests when it comes to Japanese investments in the country – includ¬ing the opportunities being offered via the public-private partnership (PPP) arrangements (i.e. those for rail system, energy projects, road network, water and even disaster management systems); semicon¬ductor and electronics; small and medium enterprises (SMEs) and tourism-related ventures.
While it is still falling behind Asean neighbors, the Philippines is certainly on a “rebound path” when it comes to foreign direct investments (FDIs) from Japan. Of the 771 billion yen worth of investments flowed to Asean countries last year, the Philippines cornered 80.7 billion yen in the pie (and mainly funneled to invest¬ments in the semiconductor and electronics sector). That registered an increase of 86.4% from 2010 level of 43.3 billion yen.
Focus on core competence
Mr. Lopez emphasizes though that the prudent step is “to focus on our core competence” – which he be¬lieves are in the areas of electronics, SMEs and tourism.
“The big boys like Marubeni and Mitsubishi are already familiar with the risks and how to do business in the Philippines … they will invest according to their assessments of risks and opportunities and the set of incentives being offered, so it would be less of a worry for us. What I’m telling my trade attaché is to concentrate on areas where we can be competitive,” he said.
The envoy is particularly latching on the experience of Japanese firms which already etched their own success stories as to their investments in the country – such as in the case of Tsuneishi Heavy Industries, a medium-sized firm which is into parts manufacturing, design and engineering service for shipbuilding industry that set up its business office in Cebu.
“Tsuneishi first put up its office in an abandoned area, and now they’re employing 12,000 to 13,000 Filipinos. They’re happy with their experience so they are now planning to expand. So it is one of the success stories that we can build up on,” Mr. Lopez noted. The others are Terumo Medical Cor¬poration at the Laguna Technopark; and Yazaki-Torres Manufacturing Inc. which is into the manufacturing of automotive wiring harness sets and is also sited in Calamba, Laguna.
Mr. Lopez shared that a recent investment roadshow to Osaka by Philippine Economic Zone Authority’s (PEZA) Director General Lilia de Lima may also generate additional investments for the country. He tipped off that four firms have committed to relocate in the country – two of which are into toys manufacturing.
The other FDIs they are counting on are the interest of Japanese inves¬tors to join the biddings for railway projects; and the recently-sealed contract with Takenaka Corporation for the civil works of the Ninoy Aquino International Airport (NAIA) 3 terminal; among others. The bit of good news on the Takenaka deal was on the project cost reduction won over by the Department of Transportation and Communication (DOTC), which according to Mr. Lopez, was pared to $45 million from $85 million originally.
Another area that Mr. Lopez is passionate about is positioning the Philippines as a tourism destination – primarily for the divers and golf en¬thusiasts. These ventures are being coupled with discussions of increasing airline flights between key cities of Japan and the Philippines.
“We are coordinating with the DOT (Department of Tourism) for them to do promotional activities here to raise awareness among the Japanese that we have excellent golf courses and diving spots,” he stressed.
As to sustaining the interest of the “big-ticket Japanese investors”, the envoy noted that the Keidanren mission who called on President Aquino last March has been an affirmation to that. Major league players such as Toyota Motor Corp., Sumitomo Corp.; Toshiba Corp.; Marubeni; East Japan Railway Company; Dai-ichi Life Insurance Co. Ltd.; Nippon Yusen Kaisha (NYK Line); Showa Denko, The Bank of Tokyo-Mitsubishi UFJ Ltd., and All Nippon Airways Co. Ltd. were all there scouring for new investment opportunities.
Dealing with ‘VIPs tough competition’
Not all investment-economies are created equal, so cornering the attention of the Japanese investors would not be easy, Mr. Lopez has admitted, noting that “we will be most challenged by our own Asean neighbors.”
“When it comes to competition, Thailand is the first choice for Japanese investors, so it’s difficult wrestling with them given the set of incentives that they can offer,” he averred.
Interestingly though, he rates that the country can still gain com¬petitive advantage against other Asean countries – or at least, it can be on a head-to-head race with Vietnam and Indonesia.
“We cannot compete with Thailand anymore. But the real compe¬tition is with the V-I-Ps,” he said, referring to Vietnam-Indonesia-Philippines. “Thailand is already saturated and Vietnam has been increasing its wages, so we might as well take advantage of those develop¬ments by making our own investment offers more attractive,” he stressed.
In a separate interview with the Japan External Trade Organization (JETRO), they acknowledged that “companies which have subsidiaries in the Philippines still find value in in¬vesting or expanding,” hinging more on the incentives being offered at the PEZA zones as well as the country’s highly-educated labor market. But the Japanese investors still complain of hurdles in the country’s “changing tax system” as well as the state of infrastructures which are relatively inferior to others.
The market size (or the lack of purchasing power because of smaller middle class base) may also serve as deterring factor, especially for companies which are gearing up for bigger sales. Such that when car parts manufacturing firms had to relocate because of the Thai floods, they have chosen Indonesia over the Philippines because of the former’s “richer” middle class.
The OFWs in the value chain
While reinvigorating investor confidence takes up a significant portion of the Tokyo embassy’s work, dealing with the needs of the Filipino workers in Japan is definitely not too low in the totem pole.
The ambassador ostensibly discussed the “policy matters” they have been taking up with the Japa¬nese government to improve the working conditions of Filipinos deployed there – including those that will be included in the fine-tuning of the Japan-Philippines Economic Partnership Agreement or JPEPA.
“The bulk of our OFWs here are seafarers, about 70%. And that may even increase to 75% because of higher demand,” Mr. Lopez has disclosed.
In the coming years, he is expecting that deployment of Filipino nurses and caregivers will also rise – yet there are hurdles that have yet to be addressed, including the overseas workers’ proficiency of the Japanese language.
A display of ‘selfless dedication to duty’ of at least four Filipino nurses when the double whammy of earthquake and tsunami ravaged Japan last year, which caught even the attention of the Japanese Prime Minister, has somehow been chang¬ing the ‘opportunity landscape’ for Filipinos in the profession, according to Mr. Lopez.
“It is what we’re telling the government of Japan, through their Foreign Ministry, that there is more to the nursing care than just passing the examinations – the extra care from the Filipinos and the loyalty,” he stressed.
In that same period when Japan was at its lowest point, there were other Filipino workers who were altruistic in extending their service even when confronted with extreme disasters – the information technology (IT) professionals who have not abandoned their jobs so they can help ensure some systems work – includ¬ing the banks’ automated teller machines (ATMs) because of the heavy withdrawals resorted to by people for survival.
“It’s a story that IBM told me. Many nationalities left, but the Filipinos stayed and they made the system work at the height of the calamity – especially those for the ATMs. You really have to expect those kind of chaos, but the Filipinos were there working,” he said.
The ambassador admitted “that has always been my lament that in everything that came out in the me¬dia, the dedication and the efforts of our Filipino workers in the face of the disaster were never highlighted – it should have been something that we should be proud of.”
Whether levering for investment flows or advancing opportunities for the overseas Filipino workers, Mr. Lopez noted that ultimately, the goal would be to move the Philippines out of obscurity and into the fast lane.
It is some sort of a ‘role-shift’ for him – considering that he is one of the ‘big boys’ in the Philippine business scene, and has always been a private sector player at that. Prior to his diplomatic assignment, he has been chairman and chief executive officer of the country’s biggest power distribution utility – the Manila Electric Company.
But in a sit-down interview with him at his office at the Philippine Embassy in Tokyo, one could easily forget his elite background back home once he starts talking emphatically about his job of convincing Japanese investors to put their money in the Philippines and as he narrates the routine task of looking after the welfare of the Filipinos working and residing there. And yes, he is relishing the fact that he is doing such mission as a service to his country and people.
During his watch, at least he’s reassuring that the Philippines will not sit idle and let itself surpassed by other countries when it comes to cornering its share of those Japanese yen investments.
“For some time, we have been losing out to our neighbors. We are being forgotten, so we have to regain some lost grounds. Thankfully, the Japanese investors are looking at the Philippines again with renewed interest and a lot of that has something to do with the promise of good governance plus transparency,” he stressed.
There have been myriad of in¬terests when it comes to Japanese investments in the country – includ¬ing the opportunities being offered via the public-private partnership (PPP) arrangements (i.e. those for rail system, energy projects, road network, water and even disaster management systems); semicon¬ductor and electronics; small and medium enterprises (SMEs) and tourism-related ventures.
While it is still falling behind Asean neighbors, the Philippines is certainly on a “rebound path” when it comes to foreign direct investments (FDIs) from Japan. Of the 771 billion yen worth of investments flowed to Asean countries last year, the Philippines cornered 80.7 billion yen in the pie (and mainly funneled to invest¬ments in the semiconductor and electronics sector). That registered an increase of 86.4% from 2010 level of 43.3 billion yen.
Focus on core competence
Mr. Lopez emphasizes though that the prudent step is “to focus on our core competence” – which he be¬lieves are in the areas of electronics, SMEs and tourism.
“The big boys like Marubeni and Mitsubishi are already familiar with the risks and how to do business in the Philippines … they will invest according to their assessments of risks and opportunities and the set of incentives being offered, so it would be less of a worry for us. What I’m telling my trade attaché is to concentrate on areas where we can be competitive,” he said.
The envoy is particularly latching on the experience of Japanese firms which already etched their own success stories as to their investments in the country – such as in the case of Tsuneishi Heavy Industries, a medium-sized firm which is into parts manufacturing, design and engineering service for shipbuilding industry that set up its business office in Cebu.
“Tsuneishi first put up its office in an abandoned area, and now they’re employing 12,000 to 13,000 Filipinos. They’re happy with their experience so they are now planning to expand. So it is one of the success stories that we can build up on,” Mr. Lopez noted. The others are Terumo Medical Cor¬poration at the Laguna Technopark; and Yazaki-Torres Manufacturing Inc. which is into the manufacturing of automotive wiring harness sets and is also sited in Calamba, Laguna.
Mr. Lopez shared that a recent investment roadshow to Osaka by Philippine Economic Zone Authority’s (PEZA) Director General Lilia de Lima may also generate additional investments for the country. He tipped off that four firms have committed to relocate in the country – two of which are into toys manufacturing.
The other FDIs they are counting on are the interest of Japanese inves¬tors to join the biddings for railway projects; and the recently-sealed contract with Takenaka Corporation for the civil works of the Ninoy Aquino International Airport (NAIA) 3 terminal; among others. The bit of good news on the Takenaka deal was on the project cost reduction won over by the Department of Transportation and Communication (DOTC), which according to Mr. Lopez, was pared to $45 million from $85 million originally.
Another area that Mr. Lopez is passionate about is positioning the Philippines as a tourism destination – primarily for the divers and golf en¬thusiasts. These ventures are being coupled with discussions of increasing airline flights between key cities of Japan and the Philippines.
“We are coordinating with the DOT (Department of Tourism) for them to do promotional activities here to raise awareness among the Japanese that we have excellent golf courses and diving spots,” he stressed.
As to sustaining the interest of the “big-ticket Japanese investors”, the envoy noted that the Keidanren mission who called on President Aquino last March has been an affirmation to that. Major league players such as Toyota Motor Corp., Sumitomo Corp.; Toshiba Corp.; Marubeni; East Japan Railway Company; Dai-ichi Life Insurance Co. Ltd.; Nippon Yusen Kaisha (NYK Line); Showa Denko, The Bank of Tokyo-Mitsubishi UFJ Ltd., and All Nippon Airways Co. Ltd. were all there scouring for new investment opportunities.
Dealing with ‘VIPs tough competition’
Not all investment-economies are created equal, so cornering the attention of the Japanese investors would not be easy, Mr. Lopez has admitted, noting that “we will be most challenged by our own Asean neighbors.”
“When it comes to competition, Thailand is the first choice for Japanese investors, so it’s difficult wrestling with them given the set of incentives that they can offer,” he averred.
Interestingly though, he rates that the country can still gain com¬petitive advantage against other Asean countries – or at least, it can be on a head-to-head race with Vietnam and Indonesia.
“We cannot compete with Thailand anymore. But the real compe¬tition is with the V-I-Ps,” he said, referring to Vietnam-Indonesia-Philippines. “Thailand is already saturated and Vietnam has been increasing its wages, so we might as well take advantage of those develop¬ments by making our own investment offers more attractive,” he stressed.
In a separate interview with the Japan External Trade Organization (JETRO), they acknowledged that “companies which have subsidiaries in the Philippines still find value in in¬vesting or expanding,” hinging more on the incentives being offered at the PEZA zones as well as the country’s highly-educated labor market. But the Japanese investors still complain of hurdles in the country’s “changing tax system” as well as the state of infrastructures which are relatively inferior to others.
The market size (or the lack of purchasing power because of smaller middle class base) may also serve as deterring factor, especially for companies which are gearing up for bigger sales. Such that when car parts manufacturing firms had to relocate because of the Thai floods, they have chosen Indonesia over the Philippines because of the former’s “richer” middle class.
The OFWs in the value chain
While reinvigorating investor confidence takes up a significant portion of the Tokyo embassy’s work, dealing with the needs of the Filipino workers in Japan is definitely not too low in the totem pole.
The ambassador ostensibly discussed the “policy matters” they have been taking up with the Japa¬nese government to improve the working conditions of Filipinos deployed there – including those that will be included in the fine-tuning of the Japan-Philippines Economic Partnership Agreement or JPEPA.
“The bulk of our OFWs here are seafarers, about 70%. And that may even increase to 75% because of higher demand,” Mr. Lopez has disclosed.
In the coming years, he is expecting that deployment of Filipino nurses and caregivers will also rise – yet there are hurdles that have yet to be addressed, including the overseas workers’ proficiency of the Japanese language.
A display of ‘selfless dedication to duty’ of at least four Filipino nurses when the double whammy of earthquake and tsunami ravaged Japan last year, which caught even the attention of the Japanese Prime Minister, has somehow been chang¬ing the ‘opportunity landscape’ for Filipinos in the profession, according to Mr. Lopez.
“It is what we’re telling the government of Japan, through their Foreign Ministry, that there is more to the nursing care than just passing the examinations – the extra care from the Filipinos and the loyalty,” he stressed.
In that same period when Japan was at its lowest point, there were other Filipino workers who were altruistic in extending their service even when confronted with extreme disasters – the information technology (IT) professionals who have not abandoned their jobs so they can help ensure some systems work – includ¬ing the banks’ automated teller machines (ATMs) because of the heavy withdrawals resorted to by people for survival.
“It’s a story that IBM told me. Many nationalities left, but the Filipinos stayed and they made the system work at the height of the calamity – especially those for the ATMs. You really have to expect those kind of chaos, but the Filipinos were there working,” he said.
The ambassador admitted “that has always been my lament that in everything that came out in the me¬dia, the dedication and the efforts of our Filipino workers in the face of the disaster were never highlighted – it should have been something that we should be proud of.”
Whether levering for investment flows or advancing opportunities for the overseas Filipino workers, Mr. Lopez noted that ultimately, the goal would be to move the Philippines out of obscurity and into the fast lane.
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