Japanese firms find RP one of riskiest places to do business

MANILA, Philippines- Japanese companies view the Philippines as one of the riskiest countries to do business in, due to the rapid appreciation of the peso, lack of needed infrastructure, and intellectual property rights issues.

In its 2007 survey on international operations of Japanese firms the Japan External Trade Organization showed that while 66.4 percent of the Japanese companies which participated in the poll plan to expand overseas operations, the Philippines was an unpopular choice among 18 destinations.

The destinations included in the poll were:China, the United States, India, Thailand, Western Europ, Korea, Taiwan, Vietnam, Russia, Hong Kong, Central and Eastern Europe, Singapore, Brazil, Malaysia, Indonesia, Canada, Mexico and the Philippines.

According to the poll, the Philippines is the last place (18th) Japanese companies would want to expand sales operations in. Japanese firms ranked the country only the 13th best place to expand production of mid to low-end products, 13th choice to expand production of high-end products, 15th best place to conduct primary research and development in, and, worst place to conduct new product development.

The survey also showed that Japanese firms found the Philippines the second to the worst (17th) place to conduct localized research and development, second to the worst (17th) place to establish regional headquarters, and, third to the worst (16th) country to expand in distribution efforts.

The Philippines was cited in the top riskiest countries in four categories out of six that were included in the poll.

The poll also said Japanese companies ranked the Philippines fourth in high foreign exchange risk, third in inadequate infrastructure, fifth in underdeveloped legal system, third in lack of clustering or development of related industries, fourth in problems with protection of intellectual property rights, and fifth in labor issues.

But Japanese firms gave plus points to the Philippines in the areas of little language barrier, second; fifth in full set of preferential measures and incentives; fifth in low business costs; and fifth in easy to access local information and services.

The poll was conducted between November 27, 2007 and January 4, 2008, wherein 733 Jetro member firms participated. These companies are engaged in manufacturing, trading, and wholesale/trading.

Jetro is a Japanese government-related organization that works to promote mutual trade and investment between Japan and the rest of the world. It has a Philippine office located in Makati City.


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