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Foreign investors flock into the Philippines

It is not just the capital markets that are looking up.

Already seeing good deals abound in the Philippines, CVC Capital Partners bought a 15% stake in local bank RCBC last year. In February, CVC bought Spi, a business process outsourcing (BPO) unit, from Philippines’ Long Distance Telecommunication Company. The sale should be completed in March.

Japanese corporates have started to look for business opportunities in the Philippines as well. Following the nuclear accident at Fukushima and the floods in Thailand, Japanese manufacturing companies need to diversify regional operations. Rising labour costs and territorial disputes with China have also forced Japanese manufacturers to look to the Philippines even though power is more expensive.

"The Philippines has a young, vibrant, English-speaking population and tax incentives in place for foreign business, which is attractive," says Antonio Paner, treasurer and head of financial markets group at the Bank of the Philippine Islands. "Places like Vietnam can be cheaper overall, but some investors are turned off because inflation is uncontrolled and real estate prices are getting higher. The Philippines becomes a much more feasible option even though we are a bit more expensive."

One of the most prominent investments comes from Sumitomo, one of the biggest Japanese construction companies, which owns a 30% stake in the First Philippine Industrial Park, located 50 kilometres south of Manila.

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