South Korean firms cite Philippines as a “good production base”

Korea, one of Asia’s economic giants, said the Philippines is becoming a good production base.

”For Korea’s small and medium enterprises (SMES), the Philippines is the emerging overseas investment area,” the Korean Economic Daily (KED), a publication owned by a syndication of conglomerates that include Samsung, Hyundai, SK and LG said in an article.

The Philippines is an attractive investment location because of its lower labor cost of only US$ 300 per month which is half the wage compared to China and of better infrastructures like roads and power compared to Vietnam, Philippine Trade and Investment Center (PITC) Seoul Commercial Counselor Nicanor Bautista said quoting the article.

Bautista said Mr. Chang of the Korean Chamber of Commerce and Industry in the Philippines (KCCIP) reported that there were increasing investment inquiries from Korean SMEs during the last quarter of 2012.

”There were more than 20 Korean SMEs with plant operations in China which had an exploratory mission in the Philippines in November last year,” Bautista quoted the KCCPI representative said.

He said that most of these SMEs have plants in China and believed that because of language, infrastructure, religion and cost uncompetitiveness, “China is fast losing its attractiveness to foreign investments.”

Meanwhile, based on the Korea Export Import Bank report, establishment of Korean companies in the country continued to grow with 69 in 2009, 74 in 2010 and 82 in 2011. In the first quarter of 2012, the number of new companies increased to 22 from 19. Among these new companies were Nurian International (garments) and two other electronics companies.

On the other hand, Exim Bank data cited in the article, said that the number of Korean SMEs in China has decreased from 634 in 2011 to 533 in the third quarter of 2012. A researcher from Korea’s SME institute said that the labor intensive companies are no longer considering investing in China.

”They are looking to ASEAN countries such as the Philippines as possible alternative locations for their expansion. China is now considered as a market and no longer as production base,” the researcher was quoted in the article.

(Story courtesy of the Philippine News Agency)