Japan-RP Economic Deal, To Ratify Or Not?

MANILA, Philippines (Mindanao Examiner / 05 Sept) – Opposition Senator Loren Legarda on Wednesday questioned the effects on local trade of the controversial Japan-Philippines Economic Partnership Agreement (JPEPA) after one of the country’s oldest Japanese firm says it will shutdown operation in the country.

She asked: “Will Manila's weakened import tax system that comes with the Japan-Philippines Economic Partnership Agreement drive large Japanese companies to close down their factories here, and simply bring in at lower cost their finished products from Thailand, Vietnam and other Asian countries?”

Legarda, head of the Senate committee on economic affairs, raised this question shortly after Japanese condiment maker Ajinomoto Co. Inc. bared that it would terminate its Philippine manufacturing operations effective Oct. 10.

Ajinomoto, which has been in the country since 1953, said it would reduce its Philippine activities to the marketing, distribution and sales of ready-made condiments from facilities in Indonesia, Thailand, Malaysia, Singapore, Hong Kong and China.

The shutdown of Ajinomoto Philippines Corp.'s Pasig City factory would result in dislocation of 271 full-time workers.

Ajinomoto is a well-established brand in the Philippines. The firm produces mostly food seasoning, soup mixes and cooking oils, including monosodium glutamate (MSG), more popularly know here as "Vetsin" and the first-of-its-kind "Ginisa flavor mix."

The firm's Pasig plant also produced frozen foods and juices.

“If Japanese firms like Ajinomoto are already abandoning their manufacturing plants here, even before the onset of the lower (Philippine) tariff schedule that comes with the JPEPA, what assurance do we have that the promised increased productive investments from Japan will actually come in, once the Senate ratifies the accord?”

“What impact will the JPEPA actually have, for instance, on our automotive manufacturing industry, which is dominated by Japanese firms, and which employs thousands of Filipino workers?” Legarda asked.

The Department of Trade and Industry earlier said it expects a total of P222 billion in incremental investments from Japan over the next four years once the Senate ratifies the JPEPA.

“Once the JPEPA is in place, will Toyota Motor Phils. Corp., Honda Cars Phils. Inc., Mitsubishi Motors Phils. Corp. and Isuzu Phils. Corp., also start dismantling their manufacturing plants here? What will stop them from just bringing in, at lower cost, completely build up Japanese cars from Thailand or somewhere else?" Legarda asked.

"These are justifiable questions that the administration, which is pushing hard for the JPEPA, should answer straightforwardly," she said in a statement sent to the Mindanao Examiner.

"If the feared risk of migration by some Japanese manufacturers is real, then we hope the administration had the foresight to prepare a program of safety nets to go with the JPEPA, once the agreement is finally endorsed to the Senate," Legarda said.

Legarda, however, said economic and trade planners should clearly project and specify as to which sectors or industries stand to gain from the JPEPA, and the extent of the benefits in terms of jobs creation.