PH expects more foreign direct investments from Japan

TOKYO, Japan – President Benigno S. Aquino III exchanges pleasantries with Japanese Prime Minister Shinzo Abe during the Summit Meeting & Working Lunch at the Prime Minister’s Official Residence in 2-3-1 Nagata-cho, Chiyoda-ku, Tokyo on Tuesday (June 24, 2014). The meeting is an opportunity for the two leaders to exchange views on recent regional developments and to discuss areas of cooperation to enhance the Philippines-Japan Strategic Partnership. (PLDT powered by SMART) (Photo by Gil Nartea/ Malacañang Photo Bureau/PNA)

MANILA — Amid escalating tensions with China, the country is expecting more foreign direct investments from Japan, according to an analytics firm. IHS Asia-Pacific chief economist Rajiv Biswas said that the rise of Japanese investment in the country may be attributed to Japan’s political conflict with China. Bisawas said that what would drive competitiveness in the Philippines is the “undergoing economic renaissance under President Beningo Aquino to boost FDI inflows over the medium term, including the introduction of new rules to allow 100 percent foreign ownership of its local banking sector.” “Japanese multinationals will continue to use Asean as an important risk mitigator for their regional manufacturing supply chains, notably to reduce vulnerability of their supply chains to China,” Biswas further said. He explained that this shift was an effect of the 212 riots in China which forced Japanese investors to look for other potential investment locations. “Asean has many ‘pull factors’ that are attractive to Japanese multinationals, such as the region’s combined GDP reaching $2.4 trillion in 2014, with a total population 635 million people and a rapidly growing middle class, representing one of the fastest-growing market opportunities over the next two decades,”  Biswas said.  Biswas also added that the increase may also be due to the increasing manufacturing wage cost in China. “The Asean region offers considerable opportunities for Japanese firms, not only as hubs for manufacturing production, but also because of the large population and fast-growing consumer middle class in some of Asean’s largest economies, including Indonesia, Philippines, and Vietnam,” Biswas said.  “[Prime Minister] Abe’s Asean pivot is already well under way, and this will generate substantial new FDIs from Japan to Asean over the medium to long term,” he added.