By Riza Lozada
Korean companies operating in the Philippines are packing up and moving to Vietnam not because of political conflict but the cost of operating a business in the country, Korean Chamber of Commerce of the Philippines President Ho Ik Lee said.
“We like to invest here in the manufacturing side but unfortunately, many of the Korean companies located here (are) leaving Philippines and moving to Vietnam,” Lee said.
“When I asked them why they are leaving the Philippines, (they said it’s because) the cost is too high. It’s almost three times higher than Vietnam’s. This higher cost is killing manufacturing and that is why the Korean companies are leaving and moving to Vietnam,” he said.
“One of the reasons why I think it is three times higher than Vietnam is infrastructure, because logistics cost is too high here and the government, BOC (Bureau of Customs), and the others are also another point,” he added.
“Once they invest here, what are the incentives? So they are leaving now. We’re not saying open your country, all of it. We just ask your country (to be the) same level as other Asian countries like Indonesia and Vietnam,” Lee added.
Lee said while the domestic market is good and Korean investors want to invest, government rules and regulations are tight and some limitations of the foreign share and the foreign equity,” he said.
“Give some more incentives,” he added.
Members of the Joint Foreign Chambers (JFC) of the Philippines added prospects for business and investment climate remain positive, but some security issues have weakened the country’s image abroad.
Foreign businessmen have cited the need for the Philippines to have a level of peace and security that is not always grabbing headlines, saying such development is essential for the country to continue attracting investments and tourists.
Members of the Joint Foreign Chambers (JFC) of the Philippines said prospects for the Philippine business and investment climate remain positive, but some security issues have weakened the country’s image abroad.
“The recovery of peace and security level is very important for Japanese companies and also to others in the private sector. This is a very important one to make decisions for investments,” Japan Chamber of Commerce and Industry of the Philippines president Hiroshi Shiraishi said.
“All business looks to an environment that is peaceful, whether it is law and order or whether it’s the sense of security in personnel and property. So there’s no question, in any country, if there is a deteriorating peace and order situation, it has an adverse effect on investment. Conversely, if it’s under control or improving, it has a positive aspect. That is true in any country, that is true also in the Philippines,” Canadian Chamber of Commerce of the Philippines president Julian Payne said separately.
Payne said while some businesses are willing to get into a “more risky environment,” some are extremely conservative and look for a very stable and peaceful environment.
He said the Philippines, however, is not the only country facing peace and security concerns, citing regional neighbors such as Thailand and Myanmar as examples.
“There’s no question that peace and order does have an impact on business, but it does not necessarily stop business. As long as it is being addressed, then I think you’ll find the business community to be favorably impressed. The real question is when it is not being addressed,” Payne said.
European Chamber of Commerce of the Philippines president Guenter Taus said now is even a more important time for the Philippines to ramp up efforts in cleaning up its image as far as peace and security is concerned given the highly competitive environment in the region brought about by the recent ASEAN economic integration.
“So we need to market ourselves really very wisely worldwide because once investment is gone, it’s very hard to bring it back to the Philippines. Peace and order situation is absolutely vital to the economy to grow and to have inclusive growth and have job creation,” Taus said.
“We’ve lived here long enough so it’s easy to look inside out and understand the Philippines and how it works. Though if we look from outside in, if I’m an investor in Europe or anywhere else in the world and I’m putting $400 million to $500 million, would I really want to be in the country where there are issues and all these situations? And I think the answer is I will do very hesitatingly so because you don’t understand what’s coming your way,” he added.
Aside from investments, the JFC said tourism is also greatly affected by a worsening peace and security situation in any country.
“Obviously making an investment decision entails a lot of research. You won’t just look in the headlines, you’ll do your proper research. However, for a tourist making a vacation choice, they are not going to that that level of research. They are just going to look at the headlines,” said American Chamber of Commerce of the Philippines Bruce Winton said.
“Peace and order is always a headline in every country. The words martial law—although we understand the decision behind it—but it’s a headline abroad that concerns people and if you are choosing a place to go on vacation or a place to invest, you always look for as much positive indicators as possible,” Winton added.
Despite the country’s tourism sector taking a hit, Korean tourists, however, continue to visit the country. Korean tourists form the biggest chunk of foreign visitors in the country annually.
Korean Chamber of Commerce of the Philippines President Ho Ik Lee said the number of Korean tourists in the country are increasing despite the security issues and the martial law in Mindanao.
“We support peace and order. Increasing number of tourists show how attractive the Philippines is for the tourist part. We’re not supporting the illegal killings but we support the removal of crimes, drugs and any other corruptions. We hope the Philippines will be a better country in the future,” Lee said.