Philippines Aims to Become PPE Manufacturing Hub in Asia

Feb 2021

The Philippine government, through its lead investment promotion arm, the Board of Investments (BOI), is wooing Japanese manufacturers to turn the Philippines into their South East Asian hub for personal protective equipment (PPE) production, highlighting the country’s competitive advantages, which include cost-efficiency, a resilient talent pool and strategic policy reforms.

During the 3rd week of February, the BOI in partnership with Japan Hygiene Products Industry Association (JHPIA), organized an online briefing with JHPIA members to promote investment opportunities in the Philippines for manufacturers of PPE, hygiene products and medical supplies based in Japan. The webinar showcased the competitive advantage of the Philippines as a manufacturing base for companies not only from Japan but also from neighboring markets such as Taiwan, South Korea and Malaysia.

According to the Philippine Department of Trade and Industry (DTI), the country currently has an active and productive PPE manufacturing sector, with 300 businesses engaged in the textile and garments industry and a highly skilled workforce of 510,000 capable of efficiently producing PPEs. The Philippines produces over 80 million face masks monthly, as well as 10.2 million pieces of medical-grade coveralls and 65,700 face shields.

The Philippines also has a large and well-established chemical and chemical products sub-sector, which represents the second-largest contributor to the country’s manufacturing gross value added (GVA), at USD8.6 billion, employing over 200,000 people. The medical supplies industry in the Philippines is estimated to contribute at least USD165 million in sales annually. With the sudden increase in demand for disinfectants, including rubbing alcohol, hand sanitizers and cleaning materials, local companies which were traditionally engaged in the production of alcoholic beverages, personal care, and food manufacturing, transformed their facilities to produce sanitizers, disinfectants and similar products.

Given the high global demand for PPE, hygiene products and medical devices amid worldwide shortages caused by the Covid-19 pandemic, the Philippine Government has developed programs to provide financing support and additional fiscal and non-fiscal incentives to assist companies, which include the unhampered movement of goods and personnel and reduced corporate income tax.

One of several international businesses that benefitted from this program is Japanese face mask manufacturer Yokoisada, which announced an expansion in its Philippine operations in June 2020. According to Yuki Yokoi, CEO of Yokoisada, “The strategic location of the Philippines has been a great advantage for our company because our main markets are in East Asia and ASEAN. There is also available skilled and English-speaking workforce. During the lockdown, the DTI-BOI has assisted us in the transit of our employees, movement of cargoes, and sourcing of raw materials. Encouraged by the support from the Philippine government, our company recently decided to expand and double our current production capacity with the financial assistance we received from Japan’s government subsidy for its supply chain diversification program.”

To date, 42 production lines including textile factories, garment plants and yarn spinning mills have been repurposed to manufacture PPE, and over 1.5 million liters of alcohol, sanitizer and hand spray are now produced monthly in the Philippines.

(Sources: Department of Trade and Industry (DTI); BusinessMirror; Philippine Star)