Japan firms more bullish on growth, expansion in Philippines

By Richmond Mercurio (The Philippine Star), Feb 21, 2018

MANILA, Philippines — Japanese firms in the Philippines are turning more bullish on their growth prospects this year, a business survey showed.

Results of the Japan External Trade Organization (JETRO)’s Survey on Business Conditions of Japanese Companies in Asia and Oceania showed the Philippines recorded a diffusion index score of 38.4 points for 2018, an improvement from 26 points in 2017.

The diffusion index is the difference between the number of firms expecting improvement in their operations and those expecting worsening conditions, JETRO said.

The Philippines’ score was 11th highest across Asia and Oceania, and sixth among ASEAN countries.

As far as profitability is concerned, 48 percent of the Japanese firms operating in the country expect profits to increase this year, while 42.5 percent see it remaining the same. Only 9.6 percent, meanwhile, see profits declining this year.

The percentage of Japanese firms bullish on profitability for 2018 in the Philippines ranked 10th highest across Asia and Oceania, and sixth among ASEAN countries.

For Japanese companies expecting higher profits, 50 percent of the firms cited improvement of production efficiency as the top reason behind their positive outlook.

Meanwhile, 63.4 percent of Japanese firms in the Philippines are planning to expand their operations in the next one to two years, while 35.2 percent seek to remain the same.

The level of Japanese companies eyeing expansion in the Philippines ranked seventh highest across Asia and Oceania, and fourth among ASEAN countries.

About 87 percent of the firms in the country cited sales increase as their major reason for the expected business expansion, while 44.4 percent cited the Philippines’ high growth potential.

In terms of local workforce, 55.1 percent of the Japanese companies in the country said they would add more employees in the next 12 months, 39.1 percent said they would implement no change, and 5.8 percent said they would reduce.

Among the major problems cited by the Japanese companies operating in the country include difficulty in local procurement of raw materials and parts, difficulty in recruiting engineering staff, quality of employees, difficulty in quality control, and wage increases.

The JETRO survey included 20 countries and regions, including five Northeast Asian countries and regions, nine Southeast Asian countries, four Southwest Asian countries and two Oceanian countries.

For the Philippines, a total of 382 Japanese firms in the manufacturing and non-manufacturing sectors were surveyed.