Lack of incentives driving away Japanese investors

Published by rudy Date posted on April 5, 2011

MANILA, Philippines – The Japan International Cooperation Agency (JICA) said that even if President Aquino is wooing displaced Japanese firms to locate in the country, the absence of a Philippine rescue incentive package makes other countries more attractive.

“Even if President Aquino expressed his desire to invite Japanese manufacturers suffering from the disasters, the Philippines cannot come up with a rescue incentive package,” Masaharu Oshima, the investment adviser of JICA said in his memorandum to the Board of Investments (BOI).

“Thailand BOI is considering a special incentive package tailored for such Japanese manufacturers and it will be approved by the BOI board meeting according to Thai Prime Minister,” Oshima added.

Trade Secretary Gregory L. Domingo is set visit to Japan this week to convince affected Japanese firms to locate in the Philippines.

However, Oshima said that under the current Philippine constitution and law, the BOI needs approval from the Senate and Congress before changing the incentive scheme for investors. This is why the Philippines cannot offer affected Japanese firms a rescue incentive package.

On the other hand, the BOI in Thailand does not require legislative approval to change their incentive scheme that is why they can act swiftly.

“We have to change our legislation system and consolidate all the IPA into one strong BOI which has a free hand to make incentive package,” Oshima said.

A study by the local BOI showed that the Japan-based operations of Honda, Nissan, Mitsubishi, Toyota and Suzuki have shortened their operations or temporarily suspended operations due to intermittent power supply and the difficulty in procuring certain parts.

The manufacturing plants of auto firms in the Philippines have excess capacity. The current operations here are relatively normal but their inventory can last only until mid-April. Beyond this, it is anticipated that overall parts supply situation will have to be worked out. –Ma. Elisa P. Osorio (The Philippine Star)

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