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PH lags behind flock of ‘Asian geese’

MANILA — The Philippines is lagging behind the flock of Asia’s “new flying geese” in attracting international direct investments which can be shifting away from China, no due to some limitations to entry within the native manufacturing sector and Manila’s geopolitical tensions with Beijing, Nomura mentioned.

In a report, the Japanese funding financial institution mentioned the Philippines and Indonesia don’t seem like the primary alternative for international corporations on the lookout for new manufacturing bases elsewhere, regardless of being among the many quickest rising economies within the area with favorable demographics and powerful reform prospects.

This, amid the shift in provide chains away from China that has set in movement what Japanese economist Kaname Akamatsu referred to as the “wild-geese-flying sample” of financial progress, whereby manufacturing shifts from the lead goose (superior nation) to the subsequent flock of geese (growing nations).

Among the many new flock of Asian geese, Nomura mentioned Vietnam and Thailand are the clear winners primarily based on knowledge it compiled and outcomes of a survey of round 130 corporations. The 2 front-runners are anticipated to proceed to construct on these positive factors, besides Thailand which is going through a structural deterioration in competitiveness.

‘Wild-geese-flying sample’

However Nomura mentioned this was not the case for the Philippines. For one, the financial institution mentioned the nation had not been capable of profit considerably from provide chain relocations within the electronics sector regardless of the commodity accounting for practically 60 % of its whole exports.

To make issues worse, Nomura mentioned the Philippines’ sea dispute with China is hampering the inflows of agency Chinese language investments.

READ: Marcos counters China’s demand on sea row: PH didn’t begin the issues

“In our view, that is symptomatic of a broader set of points within the manufacturing sector, which continues to be small and even declining in its share of whole output,” Nomura mentioned.

“Specifically, energy charges stay the best within the area and connectivity is comparatively poor after many years of underspending in infrastructure, retaining transport and logistics prices excessive,” it added.

“Lastly, latest geopolitical issues from the dispute within the South China Sea might be an obstacle to Chinese language corporations seeking to diversify provide chains into the Philippines,” it continued.

Restricted advantages

However Nomura mentioned there are nonetheless “restricted” funding alternatives for the Philippines, notably in industrial parks and nickel.

For example, Nomura mentioned corporations resembling Ayala Land are potential beneficiaries as they’ve acquired elevated commitments from Chinese language companies for industrial parks.

READ: International funding surges in Vietnam as corporations plan new factories

The financial institution additionally mentioned the Philippines—a big contributor to nickel markets—might money in on rising international demand for electrical car (EV) batteries, which rely closely on nickel.

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“Development in EV manufacturing straight interprets to elevated nickel demand … Current newsflow suggests the US and the Philippines are in discussions over methods to stop China from dominating nickel processing in Indonesia,” Nomura mentioned.



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