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J.P. Morgan notes Philippines luring relocating businesses

The Philippines, along with neighbours Indonesia, Malaysia, Thailand and Vietnam, can expect to benefit from decisions to relocate by companies adversely affected by the ongoing trade war between China and the US, investment bank J.P. Morgan said in a June 26 report e-mailed to journalists.

“Our analysis indicates [that] Southeast Asia benefits over other regions from supply chain shifts,” read the report that was authored by research analysts Ranjan Sharma, Rajiv Batra, Gokul Hariharan and Pranuj Shah. In our view, the attractiveness of Southeast Asia as supply chain geography is underpinned by large working-age populations, relatively low-cost wage structures and high skill levels. Vietnam/Malaysia are the biggest beneficiaries in Southeast Asia” while “Indonesia/Philippines emerge as beneficiaries, ahead of Thailand.”

J.P. Morgan also said that while Southeast Asia has been “seeing increased activity”, “bulk of relocation is yet to come” next semester.

“We find many companies are indicating shifting supply chains in 2H19/2020. Some companies are disclosing increased production from SE Asia from 1H19,” the report read, even as “optimism around resolution of trade tensions has potentially delayed plans of relocation.”

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