Record-high foreign investment pledges to lift PH industrial sector

(First of two parts)

The Philippines posted substantial amount of investment pledges in the first half of 2023.

This is positive for the Philippine industrial sector as these projects are likely to take up industrial space and warehouses in the next 12 to 24 months.

Industrial parks in central and southern Luzon continue to entice investors and the continued expansion of developers’ industrial footprint should further boost the Philippines’ competitiveness as a manufacturing hub in Asia.

Colliers is cognizant of the government’s efforts to entice more investors. In our view, there should be a strong public-private partnership in attracting more foreign investments. Developers should assess the requirements of potential industrial locators and remain aggressive in offering concession to raise industrial space absorption within their facilities.

Industrial parks should also have township features.

Maximize investments from non-traditional markets and emerging trade blocs

Colliers believes that developers and operators of industrial parks and warehouses can maximize the government’s manufacturing push by actively targeting investments from the country’s traditional and non-traditional partners.

Aside from China, the Philippine government is actively attracting investments from Australia, New Zealand, Netherlands, and Germany. In our view, more companies will likely look into the South-East Asia region as new hub for manufacturing expansions driven by diversification of supply chain and tapping alternative resources outside of China.

The country should also attract more investments from trade deals including the recently-ratified Regional Comprehensive Economic Partnership (RCEP). These potential investments range from electric vehicles to food manufacturing, which are ideal locators of industrial parks.

Flexibility in locators’ request for concessions

Colliers believes that industrial park developers need to become more flexible to locators’ request for concessions especially given the significant completion of new industrial space and warehouses in central and southern Luzon.

In our view, landlords should be more proactive in accommodating locators’ requests such as implementation of extended fit-out periods and relaxed escalation terms. Overall, Colliers believes that industrial developers should be more open to lease rate negotiations especially amongst tenants whose expansion plans are still on a wait-and-see.

In our opinion, a proactive stance in providing concessions will also enable industrial parks to corner more investments from the Philippines’ traditional and non-traditional sources of foreign investments. (To be continued)With Brent Christian Respicio

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