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Taiwanese shoemakers lobby RP for lower cost of land, lease rates

Thursday, December 18, 2008 [ ]

TAIPEI, Taiwan: A group of Taiwanese shoe makers may relocate their operations to the Philippines provided the government brings down the cost of land and leasing.

“An important consideration for us to do our business in the Philippines is the cost of land and lease of factories, so we hope that your government would amend its policy on these costs,” Jack Lin, Taiwan Footwear Manufacturers Association chairman, told reporters in a visit to their office here Monday.

Frank Kung, Taiwan Footwear Manufacturers Association chief executive, said they are interested to invest in the Philippines, but production costs are relatively higher than in other Southeast Asian countries. “The ongoing global economic slump makes production costs a very important consideration among firms. We also have offers coming from Cambodia, Indonesia and Vietnam to relocate our factories there. We are comparing the production costs among these prospects, and we would likely set up shop where we could avail of the most competitive costs.”

Lin said land in China could be leased at about $1 per square meter, while in Cambodia and Vietnam, land could be used for free for a limited period. In the Philippines, he said government data shows that the cost of lease per month in export-processing zones runs from $2.50 to $6 per square meter. Also, a worker’s salary in Cambodia averages at about $1 a day, or cheaper than in the Philippines where the minimum wage stood at $8 a day, he said.

The group’s president conceded that the higher cost of labor and power in the Philippines is already acceptable to them due to the country’s pool of highly skilled workers in the shoemaking industry.

But in the case of land and lease costs, they would want the Philippine government to tweak the country’s policy to encourage investors, he said. A lease rate of $1 per square meter a month for them is most ideal, he added.

Kung said some Taiwanese footwear makers have already moved out to Cambodia, Indonesia and Vietnam. If the Philippines wants to corner investments from among the group’s members, the cost of doing business should go down, he said.

The group has 100 members, which supply mainly inexpensive footwear to stores in the US, mostly tapping factories in China. Sources said some of the group’s member-companies might transfer elsewhere due to the rising cost of production in the mainland. Meanwhile, the recent labor unrest in Vietnam is discouraging some from relocating there.-- Ben Arnold O. de Vera


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