MANILA -- At a business summit at the Malacanang presidential palace on Thursday, several businessmen accompanying Japanese Prime Minister Shinzo Abe on his visit to the Philippines discussed their expansion plans in the country and expressed optimism for bilateral economic ties, talking up opportunities in manufacturing, exports and infrastructure development.
The meeting was a highlight of Abe's two-day state visit, his first stop on a six-day tour of the Asia-Pacific region that will also take him to Australia, Indonesia and Vietnam.
Japan is already a top trading partner and investor in the Philippines, but Tokyo wants deeper involvement. His hosts seemed receptive to the pitch from 24 executives from such top Japanese companies as trading houses Marubeni, Mitsubishi Corp. and Sumitomo Corp.
Philippine President Rodrigo Duterte, brought along executives from some of the country's largest companies, including SM Investments Vice-Chairwoman Teresita Sy-Coson, JG Summit Holdings President Lance Gokongwei, Ayala Corp. CEO Jaime Augusto Zobel de Ayala, San Miguel President Ramon Ang, PLDT and Metro Pacific Investments Chairman Manuel Pangilinan, and International Container Terminal Services and Bloomberry Resorts Chairman Enrique Razon.
"I sincerely ask for President Duterte's support in promoting further cooperation," Abe was quoted by a Japanese Foreign Ministry official as saying. "I hope this meeting will promote the expansion of business opportunities between our countries, and in turn result in greater revitalization of Japan-Philippines economic relations."
The latest data from the Philippine central bank showed that Japan had new net foreign direct investments totaling $923.6 million from January to October of last year, making it the largest single source of FDI and 14.9% of the total for the period. Japan was followed by Singapore, Taiwan, the U.S., Germany and Spain.
Japanese companies have a solid presence in the Philippine market through joint ventures with local companies. Convenience store chains Lawson and Family Mart have expanded in the Philippines in recent years, while Bank of Tokyo-Mitsubishi UFJ last year took a 20% stake in Philippines' Security Bank. Before that, Philippine telecom PLDT and conglomerate Ayala Corp. were backed by NTT group and Mitsubishi Corp., respectively, as strategic shareholders. Corporate Japan has a strong foothold in the archipelago and Abe is eager to maintain it amid a changing geopolitical landscape in the region.
Eye on China
In recent years China has showered Southeast Asia with investment and trade deals, expanding its influence in the region. By contrast, the U.S. may pull back as the administration of President-elect Donald Trump focuses on bringing investment back home.
Manila under Duterte seems to be moving into the pro-China camp. Duterte has opened the economy to all comers and has steered a foreign policy course that is closer to China and away from its traditional U.S. ally, which has criticized Duterte's bloody campaign against illegal drugs. The crackdown has seen thousands of people suspected of involvement in the illicit trade killed.
Following Duterte's visit to China in October, which yielded a $24 billion credit line and investment pledges, and Duterte's announcement in Beijing of his "separation from the United States," Chinese companies have been pitching investments in the Philippines from railways to power plants and steel mills.
In his third visit to the Philippines since becoming prime minister a second time in 2012, Abe pledged 1 trillion yen ($8.7 billion) in aid and private-sector investment over the next five years. That compares to the 800 billion yen he promised to Myanmar during his visit there late last year.
Manila and Tokyo also agreed to form a joint committee on economic cooperation and infrastructure. Hiroto Izumi, a special adviser to Abe, will lead the Japanese side. The Philippines, which has yet to form its team, will look into priority projects to be paid for with the aid.
Infrastructure conglomerate DMCI Holdings, which has partnered with Japanese trading house Marubeni on various projects, expects to benefit from Abe's assistance package. Victor Limlingan, the company's managing director, told the Nikkei Asian Review he is looking forward to new investments and grants.
But the visit has other aims besides drumming up business. Abe is using personal diplomacy to bolster bilateral ties that had to be built from scratch following the Philippine leadership change last year.
Apart from becoming the first foreign leader to call on Duterte, Abe is also the first to visit Davao with Duterte, who was long mayor of the southern Philippine city. In a sign of a budding personal connection, the leaders and their spouses shared breakfast at Duterte's modest residence in Davao on Friday before Abe left for Australia.
"In Tokyo, I said that Japan deserves its own rightful place in the constellation of the Philippines' friends," Duterte said at a dinner banquet for Abe at the Malacanang presidential palace on Thursday. "Tonight, let me reiterate that Japan is a friend closer than a brother. That means that Japan is a friend unlike any other."
PLDT and Metro Pacific Investments Chairman Pangilinan said the deepening rapport between Abe and Duterte is good for business. "They appear to get along with each other. I think that's good," he said. "Japan is a very important trading and investment partner of the Philippines."