More firms seen relocating from China to Phl

MANILA, Philippines - The Export–Import Bank of Korea sees an influx of Korean companies relocating their operations from China to emerging market economies led by the Philippines due to rising costs.

In an interview, Korea Eximbank chief representative of the Manila office Tae-ik Park said Korean companies currently based in China are looking at the Philippines as a possible relocation site on the back of the country’s strong macroeconomic fundamentals and rising costs in the mainland.

Park said the Korean firms, mostly engaged in manufacturing, are now finding their operations in China getting expensive and are currently looking at cheaper alternative investment sites.

He pointed out that the Philippines is set to receive an investment credit rating either from London-based Fitch Ratings, New York-based Moody’s Investors Service or Standard and Poor’s.

The Philippines’ sovereign debt is currently rated by Fitch at one notch below investment grade on a stable outlook, and by Moody’s and S&P at two notches below investment grade on a positive outlook.

Aside from the impending credit rating upgrade, Park also cited other positive factors that include the relatively huge population of the Philippines and the sustained gross domestic product (GDP) growth.

“The Philippines has a high population and abundant natural resources that attract Korean firms,” he said.

The Philippines booked a surprising 6.4 percent GDP growth in the first quarter of the year on the back of higher government spending, recovering exports, and strong domestic demand.

The Cabinet-level Development Budget Coordination Committee (DBCC) forecasts the country’s GDP growth accelerating to a range of five percent to six percent from the revised 3.9 percent last year.

In preparation for the entry of Korean firms into the Philippines, the Korea Eximbank has decided to put up a representative office in the Philippines that was recently approved by the Bangko Sentral ng Pilipinas (BSP).

“More Korean companies will come to the Philippines. That is why we decided it was time to open a representative office here,” Park said.

The bank is engaged in providing cheap financial assistance to private firms and governments.

Park said the Korean government is now establishing a Country Partnership Strategy with the Philippines for 2012 to 2015 to be finalized next month. The CPS would help allocate 70 percent of official development assistance (ODA) budget to agriculture and water resources development, health and medical service, and socioeconomic infrastructure development.