Manila: The Philippines is emerging as the new preferred destination in Southeast Asia for companies with operations in China looking to expand, according to Philippine Economic Zone Authority (PEZA) Director General Tereso Panga. Panga highlighted this trend in a recent social media post, attributing the shift to the current United States government's tariff policy, which imposes a 20 percent tariff on all imports from China.
According to Philippines News Agency, Panga noted that the "C+1" strategy, where companies look for an alternative location to China, has evolved into "C+1+1" (or C + 2), with the Philippines now being considered as a new "plus one" destination in ASEAN for companies relocating from China. Vietnam had previously been the first choice for expansion due to its geographical proximity to China.
Panga shared insights from recent PEZA investment meetings held in Xiamen, Chongqing, Shenzhen, and Dongguan, where the agency presented investment opportunities in the Philippines to around 220 participants. The Aoxing group from Dongguan, an OEM for projector equipment and audio-visual products for global brands like HP, Epson, and Skyworth, has opted for the Philippines for its redundant manufacturing facility aimed at the US export market.
Additionally, American-Irish firm TE Connectivity plans to invest PHP1.7 billion in an electro-optical components and devices manufacturing facility within the PEZA zone, which is expected to generate over 2,000 direct jobs. TE Connectivity, which operates 20 factories in China, is also considering expanding its information technology and business process management operations in the Philippines.
Panga mentioned that several multinational corporations, particularly in the electronics, electric vehicle, and automotive sectors, have already moved parts of their operations to the Philippines, including contract manufacturing. PEZA continues to attract significant investments from global industry leaders, such as major producers of vitamins, dietary supplements, solar cells, and TV monitors.
PEZA has registered 118 mainland Chinese companies, contributing PHP28.7 billion in investments and creating 16,327 jobs. Additionally, 78 companies from Hong Kong and 84 from Taiwan have been registered with the investment promotion agency. Panga emphasized the Philippines' favorable conditions for becoming the new "plus one" destination for China-based manufacturers aiming to export to the US and European Union. The country's strong affinity with the US and its position as the ASEAN economy with the least trade deficit with the US are compelling factors for companies considering relocation from China.
