Manufacturers Considering Move from China to the Philippines Due to Rising Labor Costs

Rising labor costs in manufacturing facilities in China’s southern coast are causing foreign firms to consider moving to the Philippines instead, reports the Associated Press. According to Philippine trade secretary Gregory Domingo, officials are seeing an increase in fact-finding missions from foreign companies looking to relocate to the country.

Job seekers fill up application forms during a job fair in Mandaluyong City in this file photo. Officials say foreign companies are looking into moving manufacturing facilities to the country's ecozones, given rising labor costs in southern China, and that 2015 will mark the time when a majority of Filipinos are working-age. (AP Photo/Pat Roque)

Domingo says there is “very strong” interest from Japanese firms engaged in electronics, ship building and steel industries. Other foreign companies that have expressed interest in moving from China to the Philippines include garment manufacturers. A major garments company that decided to move from the Philippines to China has decided to relocate back, while others are planning to follow suit.

In an economic briefing, Domingo said 2012 marks “the most we’ve ever seen” of investor fact-finding missions. These companies are looking for land in the country’s export-processing zones, which often give tax breaks and other incentives to foreign investors.

The Department of Trade and Industry is unable to provide exact figures as to the value of incoming investments or job-generation. However, officials say the Philippine demographic will hit the “sweet spot” by the time these investments come into fruition, with a majority of Filipinos being of working age by 2015, which is considered to be a situation that usually fuels economic growth.

The Philippine economy is forecast to grow 5-6% this year, mostly driven by infrastructure investments, according to Socioeconomic Planning Secretary Cayetano Paderanga, Jr. The DTI says foreign direct investments rose in the first three quarters of 2011 to PhP 87.3 billion (US$ 2.04 billion), compared with PhP 79.4 billion (US$ 1.85 billion) in the same period 2010. Secretary Domingo is confident that growth figures could exceed 7% with strong growth in the exports, outsourcing and tourism industry, as well as investments and an all-time stock market high this week.