Manufacturers quit China for Philippines

[illusion8]

MANILA, Philippines (AP) — Philippine officials say rising labor costs in China's southern coast are driving big foreign manufacturers to relocate to the country.

Trade Secretary Gregory Domingo said Tuesday there has also been "very strong" interest from Japanese investors who are looking for tracts of land in Philippine export processing zones. They include electronics, ship building and steel companies.

He said investors relocating to the country include foreign garments factories closing in China. A big company which left the Philippines has decided to return, while another one is seriously considering coming back, he said.

Domingo told a government economic briefing that so far this year the country is seeing "the most we've ever seen" of investor fact finding missions.

China, which after economic liberalization in the 1980s became the world's low-cost factory, is now grappling with rising wages and production costs that have made it less attractive to some foreign manufacturers.

The Philippine officials did not have estimates of the value of the incoming investment or the jobs that would be created. Domingo refused to name the companies that are relocating to the Philippines.

Foreign direct investment in the Philippines totaled 87.3 billion pesos ($2.04 billion) in the first nine months of last year, up slightly from 79.4 billion pesos ($1.85 billion) a year earlier.

The Philippine economy is forecast to grow 5 percent to 6 percent this year, driven by increased spending on infrastructure and more efficient budget spending, Socio-economic Planning Secretary Cayetano Paderanga said.

Domingo thinks economic growth could exceed 7 percent this year with the stock market achieving a new record high Monday, and strong growth in exports, the outsourcing industry, tourism and investments.

Officials also said the Philippines is estimated to hit its demographic "sweet spot" by 2015, when majority of Filipinos will be of working age, a situation which usually fuels growth.

Official: Manufacturers quit China for Philippines - Yahoo! News

 

[sexy gun]

China made hay when the sun was on them. Now its time for them to move up the value chain.

 

[Raphael]

Needs statistics - the entire article is based on speculation from the trade minister and an anecdote about a garment factory. But anyway, congrats to the pinoys. Maybe Africa can inherit the jobs once even they move up the value chain.

 

[AyanRay]

Not at all a good news for India. The fact that manufacturers are moving out of china but not setling in India means we are still not a attractive destination for them. With rising labour cost in china this was bound to happen, but it seems we are losing this opportunity. Thanks to our policymakers, scamsters, ngos's etc.

 

[illusion8]

Not at all a good news for India. The fact that manufacturers are moving out of china but not setling in India means we are still not a attractive destination for them. With rising labour cost in china this was bound to happen, but it seems we are losing this opportunity. Thanks to our policymakers, scamsters, ngos's etc.

We are not a heavy manufacturing base, more a service export destination. India was never a low cost manufacturing hub, owing to the lack of infrastructure, stringent labor laws, lack of manufacturing base for components, strong labor unions etc. So it would not necessarily effect us.

 

[Chinese-Dragon]

Not at all a good news for India. The fact that manufacturers are moving out of china but not setling in India means we are still not a attractive destination for them. With rising labour cost in china this was bound to happen, but it seems we are losing this opportunity. Thanks to our policymakers, scamsters, ngos's etc.

True. India has a similar population to China, but with an economy that is four times smaller. So per capita is much lower.

Naturally then, India had a big opportunity to become a manufacturing powerhouse, like all the great powers of the world did at one point or another. I.e. While they were still rising powers, both America and Britain were the largest manufacturers in the world.

But instead, the jobs seem to be going to Southeast Asia instead, who despite having a higher GDP per capita than India, have better infrastructure per capita, and thus can be more efficient in manufacturing.

 

[Sonyuke_Songpaisan]

True. India has a similar population to China, but with an economy that is four times smaller. So per capita is much lower.

Naturally then, India had a big opportunity to become a manufacturing powerhouse, like all the great powers of the world did at one point or another. I.e. While they were still rising powers, both America and Britain were the largest manufacturers in the world.

But instead, the jobs seem to be going to Southeast Asia instead, who despite having a higher GDP per capita than India, have better infrastructure per capita, and thus can be more efficient in manufacturing.

I heard Foxconn in Chennai has bulit a church for local workers because they would practice their religion during working time, is that true?

 

[ahfatzia]

We are not a heavy manufacturing base, more a service export destination. India was never a low cost manufacturing hub, owing to the lack of infrastructure, stringent labor laws, lack of manufacturing base for components, strong labor unions etc. So it would not necessarily effect us.

However, manufacturing jobs is precisely what India need to solve her unemployment problems. Services sector limited the number of workers and these workers are from the privileged class, so the benefits do not reach the majority of the Indians.

It's not too late though for the government to reform some of the labor laws and build some manufacturing hubs near the seacoast. Full employment of the populace will bring peace and harmony. Of course it is easy for me to say without any knowledge about her politics.

 

[illusion8]

However, manufacturing jobs is precisely what India need to solve her unemployment problems. Services sector limited the number of workers and these workers are from the privileged class, so the benefits do not reach the majority of the Indians.

It's not too late though for the government to reform some of the labor laws and build some manufacturing hubs near the seacoast. Full employment of the populace will bring peace and harmony. Of course it is easy for me to say without any knowledge about her politics.

Agreed, but divisional and vote bank politics is what is dragging us back.

 

[FairAndUnbiased]

However, manufacturing jobs is precisely what India need to solve her unemployment problems. Services sector limited the number of workers and these workers are from the privileged class, so the benefits do not reach the majority of the Indians.

It's not too late though for the government to reform some of the labor laws and build some manufacturing hubs near the seacoast. Full employment of the populace will bring peace and harmony. Of course it is easy for me to say without any knowledge about her politics.

the labor laws are not protecting the majority of Indians though. The electronics scavengers and manual shipbreakers are definitely industrial workers, but they make 6 times less money than Chinese workers do and work in the most horrific of conditions. The labor laws in India protect only the employees of the regime.

 

[Water Car Engineer]

True. India has a similar population to China, but with an economy that is four times smaller. So per capita is much lower.

Naturally then, India had a big opportunity to become a manufacturing powerhouse, like all the great powers of the world did at one point or another. I.e. While they were still rising powers, both America and Britain were the largest manufacturers in the world.

But instead, the jobs seem to be going to Southeast Asia instead, who despite having a higher GDP per capita than India, have better infrastructure per capita, and thus can be more efficient in manufacturing.

India is talking recent measures it never did before..

Union Cabinet OKs National Manufacturing Policy (NMP)


The Cabinet approved the revised proposal of the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry to put in place a National Manufacturing Policy.

The Cabinet in its meeting held on 15" September 2011 considered the National Manufacturing Policy and directed that the policy may be considered by a Group of Ministers (GOM) for further harmonizing the differences in some inter-ministerial positions notably relating to Ministry of Labour and Employment and the Ministry of Environment and Forests. The GOM in its meeting held on 14th October 2011 has resolved the relevant issues. A revised note incorporating the recommendations of the GOM has been approved by the Cabinet today.

The major objectives of the National Manufacturing Policy are to increase the sectoral share of manufacturing in GOP to at least 25% by 2022; to increase the rate of job creation so as to create 100 million additional jobs by 2022; and to enhance global competitiveness, domestic value addition, technological depth and environmental sustainability of growth.

The policy has been formulated after detailed consultations with the industry; subject matter experts; State Governments and the concerned Ministries/Departments of the Government of India. The policy envisages specific interventions broadly in the areas of industrial infrastructure development; improvement of the business environment through rationalization and simplification of business regulations; development of appropriate technologies especially green technologies for sustainable development and skill development of the younger population.

Industrial infrastructure development is envisaged not only generally but also through the creation of large integrated industrial townships called National Investment and Manufacturing Zones (NIMZs) with state-of-the-art infrastructure; land use on the basis of zoning; clean and energy efficient technologies; necessary social and institutional infrastructure in order to provide a productive environment to persons transitioning from the primary to the secondary and tertiary sectors. The land for these zones will preferably be waste infertile land not suitable for cultivation; not in the vicinity of any ecologically fragile area and with reasonable access to basic resources.

It is envisaged to ensure compliance of labour and environmental laws while introducing procedural simplifications and rationalization so that the regulatory burden on industry is reduced. The interventions proposed are generally sector neutral, location neutral and technology neutral except the attempt to incentivize green technology for sustainable development No subsidies are proposed for individual units or areas. The basic thrust is to provide an enabling environment for tapping the potential of the private sector and the entrepreneurial skills of the younger population.

The contribution of the manufacturing sector at just over 16% of India's GOP is much below its potential and a cause of concern especially in the context of other Asian countries in similar stages of development. This also has its socio-economic manifestations and prevents India from fully leveraging the opportunities of globalization.

India is a young country with over 60% of its population in the working age group. With over 220 million people estimated to join the work force in the next decade, the manufacturing sector will have to create gainful employment for at least half this number. With a view to accelerating the growth of the manufacturing sector, the manufacturing policy proposes to create an enabling environment suitable for the sector to flourish in India.

Delhi-Mumbai Industrial Corridor (DMIC)

Delhi-Mumbai Industrial Corridor is a mega infra-structure project of USD 90 billion with the financial & technical aids from Japan, covering an overall length of 1483 KMs between the political capital and the business capital of India, i.e. Delhi and Mumbai.

A MOU was signed in December 2006 between Vice Minister, Ministry of Economy, Trade and Industry (METI) of Government of Japan and Secretary, Department of Industrial Policy & Promotion (DIPP). A Final Project Concept was presented to both the Prime Ministers during Premier Abe’s visit to India in August 2007.

Finally Government of India has announced establishing of the Multi-modal High Axle Load Dedicated Freight Corridor (DFC) between Delhi and Mumbai, covering an overall length of 1483 km and passing through the six States - U.P, NCR of Delhi, Haryana, Rajasthan, Gujarat and Maharashtra, with end terminals at Dadri in the National Capital Region of Delhi and Jawaharlal Nehru Port near Mumbai. Distribution of length of the corridor indicates that Rajasthan (39%) and Gujarat (38%) together constitute 77% of the total length of the alignment of freight corridor, followed by Haryana and Maharashtra 10% each and Uttar Pradesh and National Capital Region of Delhi 1.5 % of total length each. This Dedicated Freight Corridor envisages a high-speed connectivity for High Axle Load Wagons (25 Tonne) of Double Stacked Container Trains supported by high power locomotives. The Delhi - Mumbai leg of the Golden Quadrilateral National Highway also runs almost parallel to the Freight Corridor. This corridor will be equipped with an array of infrastructure facilities such as power facilities, rail connectivity to ports en route etc. Approximately 180 million people, 14 percent of the population, will be affected by the corridor’s development.


This project incorporates Nine Mega Industrial zones of about 200-250 sq. km., high speed freight line, three ports, and six air ports; a six-lane intersection-free expressway connecting the country’s political and financial capitals and a 4000 MW power plant. Several industrial estates and clusters, industrial hubs, with top-of-the-line infrastructure would be developed along this corridor to attract more foreign investment. Funds for the projects would come from the Indian government, Japanese loans, and investment by Japanese firms and through Japan depository receipts issued by the Indian companies.


This high-speed connectivity between Delhi and Mumbai offers immense opportunities for development of an Industrial corridor along the alignment of the connecting infrastructure. A band of 150 km (Influence region) has been chosen on both sides of the Freight corridor to be developed as the Delhi-Mumbai Industrial Corridor. The vision for DMIC is to create strong economic base in this band with globally competitive environment and state-of-the-art infrastructure to activate local commerce, enhance foreign investments, real-estate investments and attain sustainable development. In addition to the influence region, DMIC would also include development of requisite feeder rail/road connectivity to hinterland/markets and select ports along the western coast.

Reuters Insider

^Reuters: Mega infrastructure project: India's grand ambition

Reuters Insider

^Reuters: India's rail ambitions

Reuters Insider

^Reuters: New Delhi-Mumbai manufacturing hub

 

[sms]

Philippines Heavy rain, Moonsoon & Flooding all the times, Big disadvantage of Philippines vs China

Lack of skill labor, high attrition rate of employees, excessive govt. control/ interference in company affairs, increasing labor cost and new lending policies of China are big disadvantages of China vs Philippines.

 

[FairAndUnbiased]

Lack of skill labor, high attrition rate of employees, excessive govt. control/ interference in company affairs, increasing labor cost and new lending policies of China are big disadvantages of China vs Philippines.

wrong. China's human capital, average wages, average lifespan, literacy rate and average calorie intake are far higher than that of the Philippines. That's why no Chinese is working for Filipinos but thousands of Filipinos are working as maids for Chinese. That's why there's no Chinese working as maids to Gulf Arabs but thousands of Filipinos and Indians working as maids to Gulf Arabs.

 

[Chinese-Dragon]

India is talking recent measures it never did before..

That is the entire problem. Long-term investments such as these should have been done 10 years ago, in order to get the benefits today.

The result is that (according to your own post) the real benefits will come by 2022 instead of now.

The major objectives of the National Manufacturing Policy are to increase the sectoral share of manufacturing in GOP to at least 25% by 2022; to increase the rate of job creation so as to create 100 million additional jobs by 2022; and to enhance global competitiveness, domestic value addition, technological depth and environmental sustainability of growth.

And that is assuming that the Congress party will be able to properly implement this strategy. From what I've seen, the Congress party are die-hard political opportunists, and thus will be much more likely to favour "short-term gains" rather than "long-term investment". We can see that already with all the promises of reservations and entitlements.

 

[sms]

Lack of skill labor, high attrition rate of employees, excessive govt. control/ interference in company affairs, increasing labor cost and new lending policies of China are big disadvantages of China vs Philippines.

wrong. China's human capital, average wages, average lifespan, literacy rate and average calorie intake are far higher than that of the Philippines. That's why no Chinese is working for Filipinos but thousands of Filipinos are working as maids for Chinese. That's why there's no Chinese working as maids to Gulf Arabs but thousands of Filipinos and Indians working as maids to Gulf Arabs.

So, I stand corrected the cost is a BIG factor and Chinese labor is getting expansive. It makes companies to think twice to put manufacturing in China.