PH business rules deter Taiwan firms

Taiwanese companies are prepared to relocate their manufacturing operations from China to the Philippines but cumbersome rules are preventing them from doing business here.

A top official of the Taiwan External Trade and Development Council, or Taitra, said several Taiwanese companies had been inquiring about investment opportunities in the Philippines.

“Every month there are at least two new firms inquiring from us. In the last two years, about 250 companies have asked about investing in the Philippines,” said Taitra Philippines director Harrison Lan.

Lan, however, said the companies learned about the difficulty of investing in the Philippines.

“This country is not very friendly to investors because of regulations. The laws are too many and are not easy to follow. I always tell potential investors to have patience,” he said.

Only 10 out of the 250 companies that inquired made actual investments in the Philippines, Lan said.

Lan added language was not a barrier for potential investors, citing companies were more concerned on the ease of relocating their business here.

About 90 percent of Taiwanese manufacturers are based in China and 10 percent still operate in Taiwan.

Taitra noted  that Japanese, Korean and Taiwanese companies in recent years started leaving China due to labor factors that affected their profitability.

Lan cited stringent local laws as well as those by the Securities and Exchange Commission and of the Bureau of Internal Revenue (BIR).

The agency, he said, would continue wooing big, world-class Taiwanese companies like Foxxconn and Pou Chen to set up local manufacturing operations in the Philippines.

The agency is confident big Taiwanese manufacturers would not think twice in investing in the Philippines once the laws local laws defined and streamlined to better serve foreign investors.

The Philippines is also trying to convince the world’s biggest shoe manufacturer and supplier, Pou Chen Group of Taiwan, to set up local operations in the country.

“We are working hard to convince them to come over. Every season I check if they are ready to set foot in the Philippines even just for an evaluation,” Lan earlier said.

The Taiwanese company is the biggest supplier of athletics and casual footwear for major global brands like Nike, Adidas, Converse, Asics, Clarks, Reebok, New Balance, Crocs, Merrell, Timberland and Salomon.

“If Pou Chen will set up a factory in the Philippines, it will bring its own chain of suppliers which are a lot. They’re so big that they will create their own industrial park anywhere in the Philippines,” Lan said.

Pou Chen is known for its ability to create an integrated supply chain wherever its builds a factory for its shoe business.

The group is known to bring in first-tier suppliers, usually around 10 companies, that deliver Pou Chen’s raw footwear materials.

Second-tier suppliers, meanwhile, normally comprise about 30 companies that will provide manufacturing support, while third-tier companies will give smaller integral parts for footwear manufacturing.

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