NOT TOP CHOICE FOR RELOCATION: Foreign firms in PH to downsize

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    The PH is not a chosen destination for relocators from China. (File photo)

    The Philippines is not the top destination for relocation of foreign companies based in China.

    It also has the highest proportion of foreign companies planning to downsize operations in view of the new coronavirus disease 2019 (COVID-19) pandemic.

    These were the results of the survey The Impact of COVID-19 on Foreign Firms in Asean of the American Chamber of Commerce in Indonesia (AmCham) and the Economic Research Institute for Asean and East Asia (ERIA) done in September in cooperation with 24 businesses organizations and chambers around the region.

    The survey showed while most companies (57 percent) are not considering reducing operations or production, 11 percent of those which do plan to cut are in the Philippines; the highest proportion.

    The survey also showed while majority (52 percent) of those with operations in China are not planning to move, 61 percent of those which do plan to shift their operation to an Asean country have chosen Vietnam and 23 percent chose Thailand.

    The Philippines and Malaysia are the third choice, at 15.38 percent.

    The survey covered 264 firms with operations in Asean which responded to 26 questions about the impact of Covid-19 on their business operations. The majority of companies have Indonesia as their principal domicile, followed by the Philippines and the United States.

    Almost all firms experienced a negative impact due to the pandemic, with impacts on output, revenue, and/or sales across all countries of operation.

    Most companies anticipate that business activities will stabilize in the new normal in the second quarter of 2021 or even later. About 51 percent think it will be better in two years, 42 percent think it will be the same, 7 percent think it will be worse.

    About 3/4 of firms experienced a significant reduction in output/revenue/sales.

    That reduction was due mostly to lack of demand (79 percent) while 72 percent of firms experienced supply chain interruptions.

    Measures taken in response to this included the introduction of remote working, hiring freezes, and reductions in the number of employees.

    Up to 43 percent of firms already have or are considering reducing operations or production and up to 27 percent may reshore operations. Up to 48 percent may move operations from China to another country.