The government of the country has decided to make a bold move – transform the Asian nation into a main car-manufacturing hub, sparking the interest of Japanese automakers.
President Benigno Aquino met business groups in Japan this month, following the policy makers approval of tax subsidies for automakers wanting to expand production of new autos in the country. “Japanese manufacturers are closely looking at setting up shop in the Philippines, ” comments Carmelo Bautista, president of GT Capital, Toyota’s Philippine partner. The carmakers, as well as other Japanese firms, such as Toshiba Corp. and Seiko Epson Corp., could be attracted by the very low labor and real estate costs and expand their manufacturing operations in the country. “Industrial property provides a good diversification opportunity by presenting diversified tenant, credit profiles, geography and industries to maximize returns,” comments an executive from a real estate industrial developer. The country’s only problem for now is the high power costs, impacting the improving manufacturing sector.
Additionally, the cheap labor and property expenses are hampered by increased logistics costs, says Antton Nordberg, head of research at KMC MAG Group Inc., Savills Plc’s Manila associate. Developers from Ayala Land Inc. to Megaworld Corp. are now interested in new industrial properties to diversify their portfolios, saying that most of their new clients are Japanese and Chinese manufacturers. The Philippines also seeks to attract companies from China, aiming to put itself as an alternative to the world’s second largest economy and biggest auto market.