Industry Focus

by Dean Tseng, Fastener World

Opportunity is Here:

Philippines Fastener Trade &Investment Climate
機會降臨: 菲律賓扣件貿易趨勢與投資環境大解析
Philippines has had its new President in office since this May. Taipei Economic and Cultural Office in the Philippines statedin a press release that the economy team working with Ferdinand Marcos Jr. remains optimistic about the economic growth
momentum for this year in the midst of a potential inflation rate increase to a pressuring 4.5% - 5.5%. The Development Budget
Coordination Committee of Philippines announced the projected domestic GDP for 2022 were adjusted down from 7%-8% to 6.5%7.5%. However, increased private investment, the industrial recovery, high employment, and the growing tourism enable Philippines
to reopen its economy. The country began to see a positive growth of 8.3% in the first quarter this year. The second quarter will
surpass the first one and this upward drive is expected to continue through the end of this year. The Philippine Secretary of Financeestimates the country’s annual growth rate could reach 6.5%-8% from 2023 to 2028.
With the new Philippine regime on the front stage, this article analyzes Philippines’ fastener trend and the status quo of local
investment as a reference for fastener business owners to evaluate investment in this nation.

Philippines’ Fastener Export to Foreign Countries
Philippines exported USD 138 million worth of fasteners to the world in 2019. The number dropped to USD 107 million in 2020
and then bounced back to USD 142 million, which slightly surpassed the pre-pandemic level and reached USD 44.64 million in thefirst quarter this year. If the first-quarter growth momentum could last, there is a chance for the 12-month export value this year tosurpass last year’s. A clear phenomenon is that the value of Philippines fastener export to Japan exceeded 60% of the total
in 2021 and reached 70% in 2020, way past the U.S. which ranked second and accounted for just 10%. Clearly, Philippines
highly relies on fastener purchase by Japan. Philippines is one of the important sources of low price fasteners for Japan.
Additionally, Philippines has a small portion of fasteners exported to some European countries (such as Germany, the Netherlands,Italy, Poland), as well as Taiwan and China.

083
Emerging Fastener Markets no.11/2022

Industry Focus
Table 1. Philippines' Fastener Export to the World 2019-Q1 2022 (In Descending Order by 2021 Value)
2019
PartnersWORLD

Quantity(Kg)2020

Value(USD)

Share(%)

Quantity(Kg)

2021

Value(USD)

Share(%)

Quantity(Kg)Value(USD)

2022 Q1
Share(%)

Quantity(Kg)Value(USD)

Share(%)

36,129,961 138,115,316

100 34,016,319 107,041,505

100 46,643,925 142,467,784

100 13,641,069 44,646,038

100

21Japan

23,367,600

98,246,433

71.2 23,618,090

75,300,195

70.4 32,429,115

90,176,410

63.4

9,716,149 28,991,779

69.1

3
2

USA

4,795,340

13,200,346

9.6

4,372,729

9,322,081

8.7

5,726,535

14,326,120

10.1

1,271,953

3,744,200

8.9

4
3

Germany

2,633,194

8,952,672

6.5

2,198,532

7,757,829

7.2

2,730,312

10,332,144

7.3

576,685

2,708,877

100

4
5

South Korea

938,135

2,984,255

2.2

1,384,304

4,615,376

4.3

1,090,599

8,347,455

5.9

91,053

1,661,736

4.0

5
6

Taiwan1,121,284

3,277,946

2.4

482,271

1,271,219

1.2

2,068,938

5,581,337

3.9

540,171

1,689,881

4.0

6
7

Netherlands

191,503628,9380.5

195,172

705,035

0.7

605,4902,756,948

1.9

94,346

663,681

1.6

78

Italy

1,372,861

4,166,490

3.0

701,800

2,449,484

2.3

743,257

2,415,917

1.7

75,728411,007

1.0

8
9

China

141,283

545,7890.4

140,177

1,247,051

1.2

55,7902,032,188

1.4

10,504

243,8980.6

910Poland136,977

396,380

0.3

89,070306,9390.3

190,747

669,538

0.5

41,113

199,6340.5

1011India

67,302

282,5620.2

65,869291,2970.3

136,989

550,972

0.4

15,842

98,1450.2

11
12

Switzerland

86,425283,9510.2

44,826

165,8220.2

128,298

548,571

0.4

99,965

518,644

1.2

12
13

UK

202,229

1,114,071

0.8

117,473

628,9880.6

43,115536,845

0.4

3,652

85,0180.2

13
14

Malaysia

73,630308,750

0.2

41,991

193,233

0.2

13,034495,259

0.3

1,004

174,718

0.4

14
15

Denmark

109,357

361,586

0.3

70,731

233,435

0.2

98,851

410,6760.3

13,123

71,3300.2

15
16

Finland145,010373,2410.3

46,333

114,855

0.1

87,791

361,9620.3

28,361

176,342

0.4

16
17

Hong Kong

102

30,8730.0

275

252,4960.2

354

346,7460.2

25

137,771

0.3

1718

Thailand

42,277438,364

0.3

34,883386,256

0.4

33,004

320,906

0.2

6,685

193,319

0.5

18
19

Austria

50,818

182,618

0.1

58,611

208,3880.2

91,401

320,744

0.2

1,272

9,684

0.0

19
20

Mexico8,022

118,5160.1

27,160281,3970.3

30,525300,588

0.2

3,427

35,1950.1

20
21Sweden

46,473145,937

0.1

20,372

67,1160.1

53,663

279,067

0.2

15,716

101,466

0.2

In terms of import, Philippines imported USD 142 million worth of fasteners from the world in 2019. The number dropped toUSD 126 million in 2020 and then bounced back to USD 169 million, which surpassed the pre-pandemic level and reached USD
43.36 million in the first quarter this year. The import value is expected to surpass the level last year as well. We can find thatthe two top sources of fastener import for Philippines are China (taking up 29.6%) and Japan (26.7%). In an opposite
perspective, China and Japan are the top rivals to Taiwan and other countries selling fasteners to Philippines. China’sfastener price competitiveness and Japan’s fastener quality are very attractive to Philippines, which is a warning sign for Taiwan inpursuit of price competitiveness and other advanced countries with high-end quality.

084
Emerging Fastener Markets no.11/2022

Industry Focus
Table 2. Philippines' Fastener Import from the World 2019-Q1 2022 (In Descending Order by 2021 Value)
2019
PartnersWORLD

Quantity(Kg)Value(USD)

2020
Share(%)

Quantity(Kg)Value(USD)

2021
Share(%)

Quantity(Kg)Value(USD)

2022 Q1
Share(%)

Quantity(Kg)Value(USD)

Share(%)

49,760,359 142,452,085 100.0 40,508,093 126,521,902 100.0 52,679,672 169,471,285 100.0 12,146,338 43,362,303

100

12

China

35,118,703

42,531,255

29.9 29,440,414

34,611,995

27.4 40,259,565

50,181,602

29.6

8,911,578 11,944,660

27.6

23Japan

3,657,426

36,134,117

25.4

2,864,478

33,731,577

26.7

3,726,370

45,237,468

26.7

999,038 12,702,490

29.334Singapore

1,213,605

12,973,903

9.1

830,918

10,864,810

8.6

850,878

13,576,453

8.0

288,191

5,528,710

12.8

45

Taiwan4,110,774

12,779,852

9.0

3,244,458

9,957,463

7.9

3,294,196

12,012,270

7.1

641,769

2,701,727

6.2

56

Malaysia

315,902

1,708,294

1.2

269,478

2,517,092

2.0

345,722

6,369,320

3.8

73,9191,298,716

3.0

6

Thailand

665,113

5,308,554

3.7

845,592

4,717,497

3.7

706,184

6,031,059

3.6

155,883

1,429,286

3.3

7USA

135,422

3,943,471

2.8

113,254

4,038,340

3.2

139,441

5,029,198

3.0

32,027

771,561

1.8

8

Germany

258,941

3,967,961

2.8

193,723

4,685,087

3.7

162,754

4,952,936

2.9

37,898782,651

1.8

9Vietnam

1,161,793

3,533,002

2.5

816,6652,548,547

2.0

1,307,527

4,899,910

2.9

487,781

1,282,215

3.0

10South Korea

1,077,976

3,773,438

2.6

736,068

3,443,050

2.7

684,965

4,234,884

2.5

236,395

1,181,975

2.7

11

Hong Kong

315,951

3,917,552

2.8

210,964

2,654,599

2.1

303,384

3,942,275

2.3

46,597851,127

2.0

12France75,6501,406,279

1.0

111,977

2,120,648

1.7

101,533

2,050,701

1.2

2,259

118,7150.3

13Finland

6,905

203,865

0.1

72,0622,181,351

1.7

40,218

1,342,403

0.8

5,506

137,876

0.3

14Indonesia

170,959

1,110,211

0.8

101,936766,333

0.6

200,085

1,177,296

0.7

70,607

245,644

0.6

15

Italy

85,704

1,071,876

0.8

48,908741,460

0.6

52,2991,176,091

0.7

4,487

144,159

0.3

16

Belgium

13,916389,960

0.3

17,049230,433

0.2

15,496

1,033,075

0.6

6,127

328,268

0.8

17Australia

407,736

1,380,250

1.0

56,2991,407,196

1.1

49,281

892,297

0.5

14,020191,660

0.4

18

UK

53,971

930,646

0.7

20,277688,362

0.5

56,183

813,055

0.5

8,928

205,8300.5

19Netherlands

53,6101,107,060

0.8

97,701

962,5270.8

24,573751,150

0.4

9,568

183,530

0.4

20

Sweden34,733

1,080,743

0.8

71,890977,973

0.8

21,656741,2960.4

14,181

520,841

1.2

Taiwan’s Fastener Export to Philippines
The total value of Taiwan's global fastener export already jumped back to USD 5.3 billion in 2021, up from USD 4.3 billion in 2019 before
the pandemic. That value has reached USD 3.1 billion in the first half of this year with a chance to surpass last year’s level. Out of the totalvalue, Taiwan’s export to Philippines only represented 0.48% (USD 25.73 million) in 2021 and 0.34% (USD 10.9 million) in the firsthalf of this year; therefore, Philippines is a large potential market for Taiwan fastener industry.
Even so, there are several Taiwanese fastener companies already dedicated to developing the Philippine market. Long Pao Fasteners is awell-known Taiwanese fastener company in Philippines and its major product is self-drilling screws, having publicity and a high market sharein local wholesaling and retailing endpoints. Multi-Tek Fasteners & Parts Manufacturer Corp produces socket set screws in Philippines and it
has expanded production before. Lu Chu Shin Yee Works founded a plant manufacturing stainless steel fasteners in Philippines in 1988.

085
Emerging Fastener Markets no.11/2022

Industry Focus
Table 3. Taiwan Fastener Export to Philippines and theWorld (USD)
Targets
WORLDPhilippines

2019

2020

2021

Targets

H1 2022

4,316,380,032 3,969,114,428 5,319,669,018 3,185,158,250
21,659,571

17,159,062

25,738,798

10,902,282

Table 5. Taiwan Fastener Import from Philippines and theWorld (USD)
Targets

Table 4. Taiwan Fastener Export to Philippines and theWorld (KG)

2019

2020

2021

2019

2020

2021

WORLD 1,479,292,223 1,363,249,857 1,610,686,052
Philippines

6,507,057

5,035,279

5,872,163

H1 2022845,091,029
2,372,783

Table 6. Taiwan Fastener Import from Philippines andthe World (KG)

H1 2022

Targets

2019

2020

2021

H1 2022WORLD

159,937,426

154,202,514

204,201,927

108,229,405

WORLD

18,374,272

16,575,015

20,187,206

10,419,161

Philippines

3,505,319

1,511,922

5,401,383

2,570,308

Philippines

1,167,517

517,069

1,970,096

753,501

Philippine Market Investment Intelligence
Watch List for Taiwanese Companies

Watch List for Global Companies(1) Philippines lowers bar on foreign companies’ investment
Philippines puts a lot of red tapes on investments from overseas. Local
infrastructure is less than ideal and there is much instability in local policies.
In recent years, the preferential duties and lower cost offered by neighboring
countries have taken business opportunities away from Philippines. To
that, the former Philippine President approved foreign companies'
investment in more industries via legislation. For the first time theformer President allowed foreign companies to set up and completely
own their small and medium businesses, letting them have 100% equityof currently operating businesses.
Before the law amendment, foreign investors could only invest in small
businesses and they were required to hire at least 50 Philippine employees.
After the amendment, they just have to hire at least 15 local labors
and the minimal required amount of investment is halved to USD 100
thousand.
(2) Philippines approved NTD 4.76 billion investment by foreigncompanies in Q1 2022
This value was 54.1% down from last year (NTD 10.34 billion). The
supervisory authorities included Authority of the Freeport Area of Bataan,
Board of Investments, Clark Development Corp., Cagayan Economic Zone
Authority, Philippine Economic Zone Authority, and Subic Bay Metropolitan
Authority.
Japan at NTD 1.85 billion was the largest source of foreign
investment for Philippines in the first quarter, taking up 39.7%,
followed by South Korea at NTD 880 billion (18.5%) and Singapore at
NTD 886 million (18.2%). The foreign investment mostly came from theindustrial sector accounting for NTD 2.7 billion (57.4%). The electricity
industry was NTD 840 million (18.5%).
(3) Philippine construction market forecast
In 2019 before the pandemic, the Philippine construction market was thefastest-growing market in Asia Pacific with a growth rate of 9.1%. In 2020
the growth rate plunged 30.3%, and dropped 27.2% in Q1 2021 as a result ofsocial distancing policies. Nevertheless, Research and Markets forecast
the growth rate of local construction industry would be 21.9% in 2021
and will rebound above the pre-pandemic level by 2023. This research
institute forecasts the growth will be 14.9% by 2022 and grow at a annual rateof 7.8% up to 2025.

086

The Philippine government has announced a plan to add USD 23.7 billion
to aid main infrastructure including roads, bridges, transportation and harbors.

(1) Importers and Exporters Association of Taipei
Signed MOU with PHILEXPORT
Philippines has a population of 100 million who aremostly at young age. The country has great demographic
dividend. This MOU is expected to greatly increase civil
collaboration between Taiwan and Philippines after thenew Philippine regime takes office. Both countries will
exchange on e-commerce, logistics and brands to upgrade
bilateral relationship.
(2) Taiwan's investment in Philippines reaches USD
640 million
Taiwanese electronics industry’s investment has created
40 thousand jobs in Philippines. Taipei Economic andCultural Office in the Philippines has received a great
deal of inquiries from Taiwanese companies seeking
investment in Philippines. Furthermore, Philippine
Economic Zone Authority is lowering the investment
bar for Taiwanese applicants. The new measure is toissue a two-year visa to foreign investors and their
key employees. The administrative procedure forthe visa is shortened from one month to ten days toimprove local investment environment.

Revitalizing Trade & Lowering
Trade Barriers
Philippines is a Market of Potential
Worth Considering
Philippines got out of the mire of the pandemic and isgoing full on trade and tourism. The attraction is lowering
investment barriers for foreign investors. Given the positive
prospect for future GDP growth, Philippines’ fastener
import and export is expected to exceed the pre-pandemic
level, and on top of it is the government’s additional
investment in infrastructure. The prospect for the fastener
demand in Philippines is positive. The new regime inoffice this year can provide a chance for business owners
to assess investment and grab a ticket into the Philippine
market.

Emerging Fastener Markets no.11/2022