MANILA (TheStreet) -- The Philippines, a nation long in need of industrialization, is taking steps this year pull investment away from Asia's manufacturing center: China. And some multinationals are already giving the Southeastern Asian archipelago a chance.
Manila's ambition to divert foreign investment intended for China has lured electronic hardware manufacturers such as Seiko Epson (SEKEY) and Lexmark International (LXK) . Food and beverages make up another booming sector, and officials expect a surge in bicycle manufacturing next.
Industrial parks in three provinces near the capital, Manila, attract easily trainable, English-literate workers for product assembly jobs or writing user manuals, says Benedict Uy, a Philippine trade representative in Taipei. English is one of the national languages, and the one most widely used in writing. Factory workers in the country may also get paid less than in China, where the minimum wage is 40% higher.
"Mastery of the English language -- a strong skill set, as [linguistic] dexterity is needed in [writing manuals for] electronics -- and lower wages compared to China," Manila-based Banco de Oro UniBank chief market strategist Jonathan Ravelas says, listing a few reasons that multinational companies try the Philippines.
The Philippines is also expanding its congested seaport in Manila and a notoriously traffic-choked system of roads leading south into the provinces intended for industrial development. Infrastructure will rise to 5% of the $292 billion GDP next year. Further helping exporters, Manila and the European Union last year reached a Generalized System of Preferences Plus deal that eliminates import tariffs from the Southeast Asian side on 6,274 goods.
Manila calls its ambition "China+1," a growth plan that pits it against Vietnam and other parts of emerging Southeast Asia that offer low-cost factory bases to multinational companies. China says its GDP growth has slowed to a "new normal" partly because foreign investment in factories has cooled. Investors complain of rising land and labor prices in China.
High-tech hardware is shaping up as a China+1 leader for the Philippines. Seiko Epson, Lexmark, and fellow electronics maker Brother Industries (BRTHY) have expanded in the Phillipines rather than China, Uy says.
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