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FedEx returning AsPac hub to Philippines

Lawrence Agcaoili (The Philippine Star) - November 6, 2019 - 12:00am

WASHINGTON, D.C. – American logistics giant FedEx Corp. is reestablishing its Asia Pacific hub back to the Philippines after it abandoned the country over 10 years ago and relocated its operations to Guangzhou, China.

Philippine Ambassador to the US Jose Manuel Romualdez told visiting journalists FedEx is one of the American companies that have expressed interest in returning to the Philippines due to the US-China trade war.

Romualdez said Bases Conversion and Development Authority president and chief executive officer Vivencio Dizon is set to announce the return of FedEx “but in a bigger scale” at the Clark International Airport in Pampanga soon.

“FedEx is going to be operating a big hub in Clark. That is a big win for us. Hopefully that would be the magnet that will make other companies start looking at the Philippines,” Romualdez said.

The American logistics giant established its presence in the Philippines through the launch of the FedEx AsiaOne intra-Asia service with the opening of a hub at the Subic Bay freeport and special economic zone in 1995.

However in 2005, FedEx announced it was abandoning its Asia Pacific hub at the former US naval base in Zambales and would transfer to the Guangzhou Baiyun International Airport in China with a total investment of $150 million. The pull out from the Philippines was completed in June 2009.

“Now they are moving out of China. I am not sure what the reason is, but I assume it has something to do with the FedEx...

trade war or it is part of their strategy that they see that the Philippines is the center in Asia,” he said.

Romualdez said US President Donald Trump even described the Philippines as the most valuable real estate in Asia because it is located right in the center.

“Geographically, we are the best place to be located. But really the biggest obstacle is the economic barrier that we have.  These should be seriously looked into,” he said.

Jose Victor Chan-Gonzaga, economic affairs minister at the Philippine Embassy in Washington D.C., said the interim site of the planned hub in Asia Pacific would be completed in the second quarter of 2020.

Gonzaga said the long-term and bigger site is scheduled to be operational in 2024.

Aside from FedEx, Romualdez said Cargill Inc. as well as consumer product giant Procter & Gamble have also expressed interest in expanding their businesses in the Philippines.

Last November, Cargill announced it was investing $235 million to grow its business in the Philippines over the next two years. The amount would be used to finance the expansion of its animal feed and nutrition business and agricultural supply chain businesses and at the same time support the growth of C-Joy to deliver on increasing consumer demand for the chicken.

During a Philippine Economic Briefing in Washington D.C. last month, Romualdez said Finance Secretary Carlos Dominguez challenged US companies to invest more in the Philippines particularly in the massive infrastructure build up under the Build Build Build program.

“What are you guys doing, you should be more actively involved in the Philippines and get moving because your competitor is way ahead of you in terms of investments,” Romualdez quoted Dominguez as saying.

However, Romualdez cited economic barriers including limiting foreign ownership in various sectors at 40 percent continued to turn off investors.

Romualdez pointed out investors pick Vietnam over the Philippines due to its swift decision making process.

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